As financial markets floundered in 2008, the Federal Reserve injected trillions of dollars in short-term loans into beleaguered financial institutions and companies. And yesterday, at the behest of Congress, the Fed disclosed details of the 21,000 transactions they made during this tumultuous period—information it had long kept under wraps in an effort to prevent runs on vulnerable banks.

The data dump suggests that the financial crisis was more severe than previously thought, with Citigroup, Merrill Lynch, and Morgan Stanley each turning to the Fed for assistance more than 100 times. Perhaps most controversially, the accounting reveals that the Fed extended its emergency bailouts overseas, with several large central banks taking advantage of temporary credit lines and foreign banks like UBS and Barclays borrowing billions of dollars. The revelation has prompted debate about whether the Federal Reserve should have intervened internationally and what its role in the world should be going forward.

  • Has the Federal Reserve Become the World's Central Bank? asks Senator Bernie Sanders in a statement on his website, calling for a congressional investigation into how the Fed functions. The Vermont Independent, who drafted the amendment to the financial reform bill mandating the Fed's disclosure of its lending programs, notes: "Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations including two European megabanks - Deutsche Bank and Credit Suisse – who were the largest beneficiaries of the Fed's purchase of mortgage-backed securities ... The Fed said that this bailout was necessary to prevent the world economy from going over a cliff. But, three years after the start of the recession, millions of Americans remain unemployed and have lost their homes, life savings and ability to send their kids to college. Meanwhile, big banks and corporations have returned to making huge profits and paying their executives record-breaking compensation packages as if the financial crisis they started never happened."
  • The Fed Took an Expansive Internationalist View of its Role, argues Mary Bottari, the director of the Center for Media and Democracy’s Real Economy Project, in the Huffington Post: "When AIG was bailed out out in Sept. 2008 and immediately passed on huge sums to overseas counterparties including Société Générale (France) and Deutsche Bank (Germany), there was a public uproar. The Fed data out today confirms what many suspected. This back-door bailout of foreign banks was just the tip of the iceberg."
  • But This Is the Nature of Our Interconnected Global Financial System, points out Tim Ferguson at Forbes: "Just as now is the time for the U.S. to come to grips with its looming fiscal wreck, it is also time to consider how a global banking system has grown up in a world of fiat money, with no anchor or backing (as in the past, to gold) but instead just the full faith and credit of nations and their agents, the central banks. The U.S. has a special place in this, not just because it is still the biggest economy, but because it still has the dominant global means of exchange, the dollar. And, Bernie Sanders, the truth is more sweeping and staggering than the 'scandal' you have helped to expose with your nettling of the Fed: We have a world currency and a national central bank. Can this hold?" Ferguson warns that any "national fixes" that Washington cooks up have "the potential to trigger currency and trade wars that very soon get us back to the doorstep of financial collapse."
  • The Fed Engaged in Lending Overseas to Minimize Systemic Risk, add Bloomberg's Bradley Keoun and Hugh Son: "The growth of the U.S. mortgage-backed securities market and the dollar’s status as the world’s reserve currency enticed overseas banks such as Zurich-based UBS to buy assets in the country before 2008. They paid for the holdings with U.S. dollars, and when funding seized up, the Federal Reserve refused to take the risk that European firms would unload the assets and further depress markets for housing-related investments."