Barclays tapped US Fed funds for $1bn

Emergency lending by the US Federal Reserve came to the aid of international as well as American banks during the financial panic of 2008, according to data reluctantly released by the central bank last night.

The UK's Barclays at one point borrowed $1bn (£624m) from the Fed's so-called "discount window", meant to provide short-term loans to ease liquidity problems at systemically important institutions, it was revealed.

And second-tier banks from continental Europe drew even more on the lending facility. On 29 October, 2008, the day that discount window lending peaked at $111bn, the Belgian-French firm Dexia borrowed $26.5bn and Dublin-based Depfa, a subsidiary of German property lender Hypo Real Estate, borrowed $24.6bn.

Banking analysts, historians and journalists have begun picking through more than 25,000 pages of documents released following a Supreme Court ruling that supported freedom of information requests by Fox News and the Bloomberg financial news agency.

The Federal Reserve had argued that secrecy has been a vital ingredient of the success of the discount window facility, since banks would be reluctant to use the Fed as a lender of last resort if they feared the news would get out, risking a panic by counter-parties and a run on the bank. Nonetheless, numerous US courts ruled that the Fed had no basis on which to block the requests, and the final Supreme Court ruling was hailed last month as a victory for transparency.

Wall Street reform laws written since the start of the case clarify that the Fed must detail future discount window lending, but with a two-year time-lag to protect banks.

Expanded use of the discount window was the Fed's first attempt to quell the gathering financial crisis in 2007. It cut the interest rate charged on short-term borrowing from the window before it cut headline interest rates, and it repeatedly expanded the type of collateral that it would accept for the loans.

The Fed says all discount window loans were paid back with interest.