Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

At the top of the Fed’s list were Citigroup and Bank of America and the two highly stressed US investment banks, Merrill Lynch and Morgan Stanley, with their respective London operations. Then came a comprehensive list of the big European and American players in the global dollar banking business. Of the liquidity on one-month or three-month terms that the Fed provided to big banks, European banks took the majority. European banks and the London operations of the major US investment banks accounted for 23 percent even of the overnight primary dealer credit facility. When this support is added to the gigantic swap line facilities provided for the European central banks, the conclusion is inescapable. What the Fed was struggling to contain in 2008 were not two separate American and European crises but one gigantic storm in the dollar-based North Atlantic financial system.