Bernanke Should Testify on Secret Fed Loans, Cummings Says

Federal Reserve Chairman Ben S. Bernanke should testify before a U.S. House of Representatives committee on the central bank’s loans to Wall Street firms during the 2008 financial crisis, Representative Elijah Cummings said.

Cummings, the top Democrat on the House Oversight and Government Reform Committee, requested the hearing in a letter today to the panel’s chairman, California Republican Darrell Issa, according to an e-mailed statement from Cummings’s office. He sent the letter following a Bloomberg Markets magazine report describing how the largest U.S. banks benefited from secret Fed lending.

“Many Americans are struggling to understand why banks deserve such preferential treatment while millions of homeowners are being denied assistance and are at increasing risk of foreclosure,” Cummings of Maryland said in the statement.

The Fed’s $1.2 trillion of secret loans during the financial crisis from 2007 and 2009 helped the largest U.S. banks get bigger and allowed them to reap an estimated $13 billion of income by taking advantage of the central bank’s below-market rates, according to the Bloomberg Markets magazine story.

Becca Glover Watkins, a spokeswoman for Issa, said the committee had received the request and will respond later. David Skidmore, a spokesman for the Fed in Washington, declined to comment.

Texas Governor Rick Perry, a candidate for the Republican presidential nomination, said in a statement today, “These outrageous secret federal loans to bail out big banks are why Americans are disgusted with business-as-usual Washington.”

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Nov. 28 (Bloomberg) -- Bloomberg Markets magazine's January issue examines how the Federal Reserve and big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. And how bankers failed to mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. (Source: Bloomberg)