British banks borrowed more than a trillion U.S. dollars

A general view of Barclays Bank Fleet Street branch in London, England.

TEXT OF INTERVIEW

STEVE CHIOTAKIS: British banks borrowed more than a trillion dollars from the Federal Reserve at the height of the global financial crisis. There are new figures out that show which banks and companies the Fed lent money to just as credit was freezing up.

The BBC's Rebecca Singer is with us now from London and she has the latest. Hi Rebecca.

REBECCA SINGER: Good morning Steve.

CHIOTAKIS: The Federal Reserve is the U.S. central bank. Why were foreign banks allowed to use it?

SINGER: Many of the European and UK banks which borrowed billions of dollars also had a substantial presence in the U.S. British bank Barclays. It took one of the largest loans but at the time it had bought the U.S. operations of Lehman Brothers. During the credit crunch they were all struggling for short-term funding. Peter Westaway is the chief European economist at the bank investment bank Nomura International. He says it not only shows how serious the crisis was --

PETER WESTAWAY: But I think it also shows just how interconnected the global financial system is. It's impossible for central banks just to worry about banks in their own country. It's all interconnected. And I think that's the main message I take away from those numbers.

CHIOTAKIS: Does this information give us any insight into the crisis and perhaps how we're going to cope with the next one?

SINGER: It shows us how extensive the Fed's assistance was. Financial institutions that didn't even appear to be in trouble took advantage of the loans. It was a short term solution that helped get the credit markets moving again. And Henry Dixon from Matterley Asset Management says at the time it was necessary to stop the collapse of the banking system.

HENRY DIXON: It is worth pointing out today that every single penny of that money has been repaid and that is inclusive of interest so I think it was great that it existed, it has been used but it has been paid back. So I don't think it should anger taxpayers in the states.

So maybe what these details show is that it can be done -- but I suspect they hope it'll never have to be used in the same way again.

CHIOTAKIS: Alright the BBC's Rebecca Singer in London. Rebecca, thanks.

SINGER: Thank you.

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