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Banks weak and strong from all over the world flocked to the Fed’s discount window during the financial crisis.

Among two of the biggest emergency borrowers were Germany’s Depfa and Belgium’s Dexia, with loans totaling $51 billion at the end of October 2008. U.S. banks hit up the window as well, with Washington Mutual borrowing billions in the week before its collapse.

Banks are open

The documents also show that supposedly healthy banks were leaning heavily on emergency loans during the crisis. Three big banks – two of them among the supposedly healthier players on Wall Street heading into the financial crisis – were the biggest users of various emergency lending programs during a six-month stretch in the fall of 2008 and winter of 2009.

The Fed has long resisted disclosing the details of loans made at its so-called discount window, but it released thousands of pages of documents Thursday after the courts sided with Bloomberg and Fox in lawsuits seeking access to the information.

The Fed’s primary dealer tri-party collateral report documents the securities that various banks pledged in exchange for emergency loans, under the Primary Dealer Credit Facility, Term Securities Loan Facility and Fed open market operations. The PDCF and TSLF were created in 2008 to ensure investment banks could keep borrowing from the Fed when debt markets dried up, but loans under those facilities were classified as discount window borrowings.

The borrowings have since been repaid and the Fed didn’t lose money on the loans, but anger over the bailout of risk-taking, well-compensated bankers continues to put the Fed’s actions under a less than flattering light.

Weekly reports filed between November 2008, two months after the collapse of Lehman Brothers, and January 2009, when Citi (C) and Bank of America (BAC) each received special assistance, show which firms were thirstiest for Fed liquidity at various times. The biggest borrowers include not only Citi but also two healthier banks, Goldman Sachs (GS) and Credit Suisse.

In November 2008, the biggest user of Fed emergency loans was Credit Suisse. It had $62 billion worth of collateral pledged with the Fed as of Nov. 7, 2008, $68 billion worth two weeks later and $63 billion worth at the end of the month. Most of the collateral the firm pledged was in the form of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac.

By the middle of the next month, the biggest user was Goldman, the Wall Street titan that got $5 billion in assistance from Warren Buffett at the height of the crisis in September and was a big beneficiary of the AIG (AIG) bailout that month. Goldman had pledged $64 billion of securities as of Dec. 19, $81 billion on Dec. 29 and $74 billion in the first week of January.

Goldman also borrowed relatively small sums five times at the conventional discount window between 2008 and 2010 — apparently contradicting its claims to the contrary, Bloomberg reported.

And soon thereafter, the demands started coming from Citi, the bank that received the most government capital and loan guarantee assistance during the meltdown. It had $59 billion in collateral pledged at the Fed as of Jan. 16, 2009, $58 billion the next week and $57 billion the week after that.

The Fed’s outstanding lending under these programs ranged between $200 billion and $400 billion during the period cited. As the financial system stabilized, most banks pulled back from the facilities, and total loans outstanding declined to $96 billion in the first week of April 2009 and $83 billion the week after.

But Citi was still at it, borrowing $44 billion in the week ended April 3 and $36 billion the next week. Every little bit helps.

Also on Fortune.com:

• The Fed’s dodgiest deals
• Fed douses Fuld fantasy
• Washington’s odd couple

Follow me on Twitter @ColinCBarr.

Filed under: Street Sweep

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Don’t look now, but the rating agency just issued a report with this headline:

Municipal Risk For Rated U.S. Banks Appears To Be Contained

You might have thought no one in the financial markets would ever use that word with a straight face after Fed chief Ben Bernanke’s March 2007 testimony before Congress on the subprime crisis. As you may recall, he said [emphasis is mine]:

Contain your subprime enthusiasm

Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.

Or not, as the case may be. We shall see how S&P, which is if anything a less sympathetic character than Bernanke, fares this time around. Sticks to beat the rating agencies with are not exactly in short supply nowadays, but hey, another one is always handy.

Also on Fortune.com:

• Revenge of the muni bonds
• Why munis are still safe
• The flip side of the pension crisis

Follow me on Twitter @ColinCBarr.

Filed under: Street Sweep

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Ireland’s banking crisis took yet another turn for the worse Thursday.

The government said its latest effort to purge lenders that gorged themselves on inflated property loans during the bubble will set taxpayers back 24 billion euros ($34 billion).

The announcement by finance minister Michael Noonan brings the tab for public support of the country’s banks to $99 billion. That’s a staggering 40% of annual economic output. A comparable figure in the United States would run above $5 trillion.

That explains Noonan’s comment Thursday that the previous government’s September 2008 decision to stand behind the teetering Irish banks “will go down in history as the blackest day in Ireland since the Civil War broke out.”

Under the plan announced Thursday, two of the loss-soaked banks will be combined and a third will be forced to divest itself of insurance and asset management businesses.

The good news about Thursday’s plan is that it won’t force the government to go back to its lenders at the European Union and the International Monetary Fund to ask for more money. Ireland took $115 billion in bailout promises from the EU and IMF last year.

But the plan does contain some elements of wishful thinking that could yet again raise the tab if things don’t work out, as has happened once or twice.

While Noonan acknowledged that taxpayers will once more be left holding the tab, he stressed that “significant contributions from other sources including from subordinated debt holders, by the sale of assets to generate capital and where possible by seeking private sector investors” would help to defray the cost.

But European leaders have been dodging and weaving around the question of when they should try soaking bondholders to recoup some of taxpayers’ losses. Some leading central bankers have been calling for Europe to impose losses on lenders in a bid to share the pain borne so far largely by taxpayers, but policymakers fear doing so will precipitate a bank funding crisis that could unravel the Continent’s delicate recovery.

The other top worry in Europe – that a possible debt default in strapped Portugal could undermine the health of banks in Germany, France and Spain – got a little more acute Thursday as Portuguese bond yields surged above 8.5%. The country is without a prime minister following the fall of the government last week, and now the question is whether the European Central Bank can keep the country afloat for two months until elections are held.

In what is becoming all too familiar a refrain, it’s the central bankers, for all their flaws, who stand between us and the reckoning.

Also on Fortune.com:

• The world’s dumbest banks
• Portugal in the bailout trap
• 2011: year of the bank run?

Follow me on Twitter @ColinCBarr.

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The government is getting ready to start cashing out of another bailout.

Ally Financial filed Thursday to sell shares to the public. The company didn’t say how much money it expects the offering to raise, but a report in the Detroit News puts the likely figure at perhaps $6 billion or so. All the proceeds will go to taxpayers as Treasury whittles down a 74% stake in the lender.

All told the company has taken $17 billion in federal funds, two-thirds of which have been converted to common shares held by Treasury. The news comes as the government and various watchdogs debate the true cost of the 2008-2009 rescue of major banks, automakers and insurers.

Ally, the leading lender to U.S. car buyers, was known as GMAC when it was rescued by Treasury at the end of 2008. Ally lost $10 billion in 2009 as it wrote down the value of bubble-era mortgage loans made when GMAC was a major subprime lender, and escaped a massive loss the year before only by swapping existing bonds for new ones – a transaction that allowed it to book a large accounting gain.

But like its bailout brethren Citi (C), AIG (AIG) and General Motors (GM), Ally has been on the mend over the past year. The company posted a $1 billion profit for 2010, and CEO Michael Carpenter has been saying since he was hired in August that he believed the bank would repay taxpayers in full.

How long that might take is another question, and the government isn’t showing its hand. “Treasury will retain the right, at all times, to decide whether and at what level to participate in the offering,” the government said Thursday. The offering will be led by Citi, in a touching show of bailout solidarity.

In any case, the IPO filing puts Ally on the road toward getting off the dole — an event that looked unlikely not too long ago.

Also on Fortune.com:

• Treasury aims to exit Ally bailout
• Ally CEO sees 2011 IPO
• GMAC: the scariest zombie

Follow me on Twitter @ColinCBarr.

Filed under: Street Sweep

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