Rep. Paul wants to hear from Fed on foreign lending

By @ibtimes on

Persistent Federal Reserve critic Representative Ron Paul plans to hold a hearing on the central bank's emergency loans to the branches of non-U.S. banks, and could ask a Fed official to testify, his spokeswoman said on Saturday.

I was surprised and deeply disturbed ... to learn the staggering amount of money that went to foreign banks, Paul said in a statement.

These lending activities provided no benefit to American taxpayers, the American economy, or even directly to American banks, he said.

The Texas lawmaker, who advocates abolishing the Fed and returning to a currency backed by gold or silver, is planning a hearing on the discount window lending in May, Paul spokeswoman Rachel Mills told Reuters.

Paul chairs a the domestic monetary policy subcommittee of the House Financial Services subcommittee. While the subcommittee would not expect Chairman Ben Bernanke to respond to a call to testify, Bernanke could be asked to send a deputy, she said.

That's definitely a possibility, Mills said.

Data the Fed was required by courts to disclose on Thursday showed the U.S. branches of foreign-headquartered financial firms had made extensive use of the central bank's emergency lending discount window during the panic that gripped financial markets in the fall of 2008.

During that period, the Fed actively encouraged financial firms to obtain funding from an array of unusual emergency funding vehicles to prevent markets from freezing up entirely.

While making emergency loans is at the discretion of the individual regional Fed banks, the discount window is open to any firms in sound condition able to post good collateral.

(Reporting by Mark Felsenthal)

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