U.S. regulators closed Chicago-based Park National Bank in October 2009 when it owed $345 million to one of the lowest-cost lenders in town: the Federal Reserve’s discount window. Park National had been a constant customer at the window for more than 18 months before it failed, Bloomberg reported.

That glimpse into the loan program, obtained through a Freedom of Information Act request, will be expanded this week with an unprecedented view of the secret lifelines the Fed extended to hundreds of banks. Officials plan to release documents that total to more than 6,000 pages, according to court records.

Without identifying them yet, Fed officials say all the discount window loans made during the financial crisis have been repaid with interest. Cases such as Park National’s show how the lending amounted to a secret public subsidy, with few questions asked.

“Solvency is the big issue,” said Arthur Wilmarth, a professor at George Washington University Law School, in an interview with Bloomberg. “Was the Fed keeping banks alive when they should have died?”

This week, the central bank is expected to release documents related to discount window lending from August 2007 to March 2010, including the peak month of October 2008, when loans hit $111 billion.

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http://www.bloomberg.com/news/2011-03-29/dying-banks-kept-alive-show-secrets-fed-s-data-will-reveal-for-first-time.html