Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

When the crisis in the money market funds knocked the last remaining support out from under the commercial paper market, the Fed took the unprecedented decision not just to backstop banks and the mutual funds but to enter the lending business directly. It established its own SPV, the Commercial Paper Funding Facility, to buy top-quality short-term commercial paper. In total it provided $737 billion in funding through this facility, with a peak outstanding in January 2009 of $348 billion. The largest user of the system was the troubled Swiss giant UBS, which soaked up 10 percent of the Fed’s funds. Another 7.3 percent went into Dexia, and 5 percent each into Fortis and RBS. Some of the most severely stressed European banks received 27 percent of the entire program. In total, the European share cannot have been much less than 40 percent.