US Fed loaned Libya-backed bank billions

WASHINGTON (AFP) – The Federal Reserve lent a Libyan state-backed bank billions of dollars during the financial crisis, documents made public on Thursday have revealed.

The Arab Bank Corporation, which is today 59.3 percent owned by the Libyan government, borrowed in slices as big as $1.175 billion from the US central bank.

At the time the bank was not majority owned by the Tripoli government; other shareholders included the Kuwait Investment Authority and the Abu Dhabi Investment Authority.

The Bahrain-headquartered firm appears frequently in the Fed’s records of its emergency short-term lending facilities between March 2009 and March 2010.

Since then the United States has slapped sanctions on the Libyan regime and sought to isolate Moamer Kadhafi and his top lieutenants.

The Arab Bank Corporation, which is chaired by the head of Libya’s state investment fund, however is not subject to Libyan sanctions.

But some US lawmakers were incredulous about the Fed lending to the Libyan-government backed banks.

Democrat-allied Senator Bernie Sanders said the Fed made “46 emergency, low-interest loans” to the bank, providing a total of $26 billion in credit, though not at one time.

“It is incomprehensible to me that while creditworthy small businesses in Vermont and throughout the country could not receive affordable loans, the Federal Reserve was providing tens of billions of dollars in credit to a bank that is substantially owned by the Central Bank of Libya.”

The Fed records show huge numbers of short-term liquidity loans made to American banks and the US units of banks from all over the world at the peak of the financial crisis, many for far larger sums.

A New York unit of the French-Belgian bank Dexia, which had huge potential liabilities in guarantees on municipal bonds, garnered loans for as much as $33.5 billion.

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