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Foreign Banks Benefited from U.S. Bailout

New York ( TheStreet) -- Several large foreign banks benefited heavily from the U.S. government's $3.3 trillion bailout of the financial system, according to documents released Wednesday.

A initial review of information released by the Federal Reserve shows that foreign banks such as Royal Bank of Scotland (RBS - Get Report), Barclay's PLC (BCS), Dresdner and Society Generale (GLE) borrowed heavily from the Fed's Term Auction Facility (TAF) during the initial days of the financial crisis.

The TAF program was created in 2007 as markets were seized and gave banks access to short term funding. The program was open to all banks with access to the Fed's primary discount window and allowed foreign banks access through local reserve banks where branches were located.

The last TAF auction was held in March of this year.

The Fed posted the data on its website to comply with a court order following a lawsuit filed by Bloomberg

While much of the information will not come a surprise, details could post a political risk to the U.S. government's support of the bank system.

"My guess is there's probably no financial risk to the system arising from this disclosure but there likely will be more political risk," says Robert Goldberg, Adelphi University adjunct professor in finance and former Wall Street investment banker. "So, once again, a one-sided bet, where banks take risk, things go bad, they get bailed out. Things go good and they reap the rewards. It's a sweet deal."

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