We haven't heard any British, French or German accents expressing gratitude, though we'll keep listening.

America Bails Out A Thankless World

Posted 12/02/2010 07:02 PM ET

Global Economy: So America has once again saved the rest of the civilized world — this time financially. But don't expect to hear many thank-yous from the recipients of trillions in secret Federal Reserve cash.

Socialist politicians in Europe — plus a few nonsocialist ones — were quick two years ago to demand the end of global capitalism as the financial crisis swept across the world. But our own socialist, Sen. Bernard Sanders, I-Vt., inserted a provision into this year's financial regulatory law forcing the Fed to reveal how U.S. capitalist booty saved the Europeans' booties.

Turns out the Fed had over a dozen emergency programs operating beginning in 2007-08, one of them lending close to $9 trillion to Merrill Lynch, Morgan Stanley and other troubled institutions, often at the comical interest rate of 1%.

Foreign banks got much of the Fed's emergency credit. They included Britain's Barclays — which on a single day in September 2008 apparently received nearly $48 billion. Others whose palms were greased include the Landesbanken and Deutsche Bank of Germany, UBS of Switzerland, BNP Paribas of France and Dexia of Belgium, not to mention the South Korean government-owned Korean Development Bank.

Even a banking institution in the tiny, oil-rich Mideast island country of Bahrain, ruled by the Sunni royal family of the House of Khalifa, got wired funds — and King Hamad ibn Isa Al Khalifa wasn't even having trouble paying his mortgage.

U.S. subsidiaries of banks based in East Asia, Canada and Europe were also aided. And the Bank of Scotland, Britain's RBS, France's Societe Generale and Germany's Dresdner Bank were all top beneficiaries of the Fed's Term Auction Facility (TAF) program.

Much of this capitalist largesse provided to Europe's enlightened mixed economy is already returned. Barclays, for instance, repaid its U.S. government loans before the beginning of this year.

Nevertheless, no U.S. taxpayer should bypass such a delicious chance to gloat. What would they have done had the fruits of America's free-market economy — namely, dollars and plenty of them — not been available? Is there another country in the world with enough real wealth to have come to their rescue, while demanding the minimum in collateral?

We haven't heard any British, French or German accents expressing gratitude, though we'll keep listening.

Dallas Fed President Richard Fisher brags to the Washington Post that "we didn't lose a dime, and in fact we made money on every one" of the foreign deals. That the U.S. government won this particular hand of blackjack with trillions of dollars of the taxpayers' money is great to know. But what about next time?

Most important, let's not forget the root cause of this worst economic calamity since the Great Depression: the politicization of mortgage lending in the U.S.

The truth is, no bank anywhere would have to be bailed out by American taxpayers if lenders were allowed to do their job on a sound financial footing, without politicians forcing them into the social welfare business.

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