NEW YORK ( TheStreet) -- Federal Reserve Chairman Ben Bernanke responded to a critical letter from a left-leaning lawmaker by either skirting questions or pointing out their ignorance, depending on one's point of view. Sen. Bernie Sanders (I., Vt.) sent Bernanke a barbed letter on Dec. 6 regarding the Fed's liquidity programs during the financial crisis. A few days earlier, the Fed had
dumped a trove of data related to 21,000 transactions meant to unfreeze credit markets and stimulate economic activity. Last summer, Sanders authored the law that now requires the Fed to reveal such information - against Bernanke's wishes. In his letter, Sanders requested more information on the liquidity programs, which he portrayed as a hand-out for fat cats and foreigners. "While small businesses in the state of Vermont were being turned down for loans, not only did large financial institutions and major corporations receive these ultra-low interest loans, but foreign companies and banks, and some of the wealthiest people in the world also received a major bailout from the Fed," the lawmaker says in his letter. Sanders, a self-described socialist , also called the emergency credit facilities "a clear case of socialism for the rich, and rugged free market capitalism for everyone else." He went on to question apparent conflicts of interest regarding bank executives who also sat on the Fed's regional board of directors; to outline how much money was lent to wealthy individuals, like hedge fund manager John Paulson; and ask the Fed to explain why funds were funneled to foreign companies, foreign banks and non-financial corporations. Though U.S. banks like Bank of America ( BAC), Citigroup ( C), JPMorgan Chase ( JPM), Wells Fargo ( WFC), Goldman Sachs ( GS) and Morgan Stanley ( MS) all utilized the Fed facilities, foreign banks represented a surprisingly significant chunk of transactions. Sanders said the questions were based on a preliminary review, adding: "I expect that my office will have further questions once we have had time to dig a little deeper into these approximately 21,000 transactions." Bernanke, who seems to have lost patience with faux niceties that are typically part of his job, didn't really answer any of Sanders' questions directly. Instead, in a six-page response, Bernanke explained how the funding facilities functioned - not for the first time - and hinted that some of the answers were in the data dump, if Sanders had bothered to look.
"My staff is available to help navigate the information, if that would be useful to you and your staff," Bernanke noted. In regards to conflicts of interest, Bernanke said directors are trained on how to address the matter and that "Reserve Bank corporate secretaries have the expertise" to advise them on compliance. (He didn't get at the heart of the matter: The revolving door between the financial industry and the central bank charged with regulating it.) Bernanke also indicated that the Fed hadn't actually lent money to the rich guys Sanders referred to; they just happened to be "material" investors in the companies that received loans. (He didn't get at the core issue of whether the Fed ought to be helping out companies that are funded by rich guys, though.) Additionally, under laws that were, of course, structured by Congress - the Fed is required to provide U.S. divisions of most foreign banks with the same access to funds as American banks. He added that commercial paper credit extended by the Fed to foreign and domestic entities "was repaid, with interest" and explained that "liquidity swap lines" with foreign central banks were crucial to stabilizing the dollar. (Again, though, he didn't take a position on whether U.S. taxpayers ought to be funding support for foreign entities.) Bernanke did, however, take pains to note that the top-down liquidity strategy did have some success in helping U.S. consumers and small businesses. He pointed out that one program, known as TALF, supported nearly 2 million auto loans, over one million student loans, 900,000 small-business loans, 150,000 other types of business loans and "hundreds of millions" of credit-card loans in the U.S. He added that the U.S. branches of foreign banks are "important providers of credit to U.S. businesses" as well, and that the dollar swap lines "helped stabilize...funding markets both abroad and at home." -- Written by Lauren Tara LaCapra in New York. >To contact the writer of this article, click here: Lauren Tara LaCapra. >To follow the writer on Twitter, go to http://twitter.com/laurenlacapra. >To submit a news tip, send an email to: firstname.lastname@example.org.