by Project Censored
Published: Updated:

When Chrysler Corporation sought a government loan guarantee to prevent plant closures and massive employee layoffs, it became one of the big stories of 1979. But when Western Union went to the government for a 750 million loan, not a guarantee, it didn’t raise a whisper among the media.

Western Union went to a bank that permits the government to do off ­the-balance-sheet financial transactions. The bank, called the Federal Financing Bank (FFB) helps the government hide how big the national deficit really is and allows government agencies to go ahead with projects the Congress thought too costly or unneeded.

Here is how the FFB works. The TDRSS (Tracking and Data Relay System Satellite) is a super-sophisticated space communications satellite that NASA wanted to track other satellites.

Because of its already heavy space shuttle budget, NASA suspected Congress wouldn’t appropriate the $ 750 billion needed for the project. Instead, NASA tried to get a private corporation to develop and build the TDRSS by guaranteeing to lease back part of the satellite for ten years at a rent high enough to pay, back the company’s construction loan. Meanwhile, the builder could use or lease part of the system for a profit.

That plan looked good except that the company, Western Union, couldn’t get a loan of that size through a private bank unless the government guaranteed that the loan would be repaid. Instead, Western Union went straight to the Federal Financing Bank which approved the loan for the project.

In essence, the TDRSS loan to Western Union became one quietly made by the government, guaranteed by the government, and one that the government says it will repay.

The FFB is a little known, obscure off-budget government bank that works out of a small office in the Federal Treasury Building in Washington. According to government records, the bank, which only has a handful of staff members, has made up to $ 65 billion in loans since it started in 1974. For contrast, that sum exceeds the total outstanding, loans of the world’s largest private bank, the Bank of America.

One of the nation’s leading financial publications, Forbes, once referred to the FFB as the “Ghost Bank” and said its loan portfolio would “make any examiner wince.”

The lack of coverage given the government’s “ghost bank” and its questionable financial transactions qualifies this story for nomination as one of the “best censored” stories of 1979.


Chicago Tribune Service, Dec. 16, 1979, ” ‘Buck Rogers’ high finance in costly U.S. space venture,” by James O’Shea; Forbes, Mar. 15, 1976, “Ghost Bank.”