A cornerstone in the Federal Reserve Bank of New York building in New York City.
A cornerstone in the Federal Reserve Bank of New York building in New York City. - 
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Adriene Hill: Of course the Fed has been playing economic defense for a while -- both publicly and behind closed doors. Turns out that at the height of the housing crisis, the Fed made as much as a trillion dollars in secret loans to banks. That makes secret loan program was bigger than the TARP bailout. Bloomberg released a report on the loans today.

Marketplace's Nancy Marshall-Genzer reports.

Nancy Marshall-Genzer: The loans were supposed to remain a secret. But the Fed was forced to bare all after a freedom of information act request. According to Bloomberg, the Fed lent the most to Morgan Stanley, which got as much as $107 billion; Citigroup got about $99 billion. The Fed changed the rules to make things easier for the banks. It accepted risky collateral to back the loans like junk bonds and stocks. The Fed insists it didn't lose any money on the emergency, secret loans.

That doesn't wash with Len Blum, a managing partner at Westwood Capital.

Len Blum: That argument doesn't ring true to me. It's like someone saying they went to Las Vegas but it was safe because they won.

Blum says there are better ways to keep banks stable. Chief among them: Require banks to have a bigger stockpile of cash on hand, in case of emergency.

In Washington, I'm Nancy Marshall Genzer for Marketplace.