Fed kept AIB afloat with $27bn in emergency funds
The ECB isn't the only one who has being keeping the shattered Irish banks afloat. Allied Irish Banks was a major beneficiary of the $3.3 trillion (€2.48 trillion) in emergency funding provided by the US Federal Reserve during the meltdown on Wall Street.
Files released by the US Federal Reserve, America's central bank, reveal that AIB racked up cumulative borrowings of more than $27bn (€20bn) under the Fed's Term Auction Facility, which was part of the response to prevent the complete collapse of the financial system around the time of the Lehman Brothers flame-out.
The scale of AIB's borrowing from the scheme is enormous given its relatively small size in the US. Barclays Bank, which bought Lehman's US operations out of bankruptcy, borrowed $232bn (€174 bn) from the Fed scheme.
AIB's biggest single loan -- $3.3bn (€2.48bn) -- was borrowed from the Fed on July 2, 2009. Banks were on the verge of collapse as international money markets slammed shut during the credit crunch forcing the Fed to step in to provide emergency loans to prevent widescale bank collapse.
Details of 21,000 transactions highlighting the short-term loans made by the Fed were released last week, prompting outrage in the US that its central bank had been used to prop up foreign banks. AIB tapped up the scheme 18 times with more than $3bn borrowed on six occasions.
Despite the emergency funding from the Fed, AIB continued to lurch from crisis to crisis.
The bank is set to be nationalised as investors believe it has no chance of raising the funds needed to meet regulatory requirements.