SHOCKER: GAO Audit Reveals Fed Played Fast and Loose With Loan Rules. “At the height of the financial crisis, the Federal Reserve evoked emergency powers to make loans to Wall Street firms without bothering to adequately explain the legal grounds for those loans. And nearly three years after the loans were made, the Fed still hasn’t provided a satisfying answer for why it made loans to the London-based broker-dealer subsidiaries of Merrill Lynch, Goldman Sachs, Morgan Stanley, and Citigroup, as well as the U.S. broker-dealer subsidiaries of Merrill Lynch, Goldman Sachs, and Morgan Stanley, according to the Government Accounting Office’s newly released audit of the Federal Reserve’s financial crisis activities.”