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Expensive and Beautiful Silk Panty Garments (or Discount Window Access)– for Everyone!
The two lessons we take away as standouts from the credit crisis are probably somewhat unconventional, but we think they are of great import. First of all, "big" has a way of changing to "trivial" overnight when one is talking about government spending. Second, the "biggest of the big" isn't summed up by large, complex models. Instead, it gets added up on scratch paper. Or via the calculator feature of a Blackberry. Or scrawled on a cocktail napkin with a leaky pen. Today, drawing from these lessons, we think that five simple lines portend something, well, big.
Section. 1118. Access to the Discount Window.
A financial holding company subject to stricter stand-
ards shall have the same access to the discount window
lending of an appropriate Federal Reserve bank as is
available to a member bank of such Federal Reserve bank.
What would this text be doing as an amendment to the Wall Street Reform and Consumer Protection Act of 2009? That is, after all, a bill intended:
To provide for financial regulatory reform, to protect consumers and investors, to enhance Federal understanding of insurance issues, to regulate the over-the-counter derivatives markets, and for other purposes.
What exactly does Mr. Miller of North California (no legislative slouch, really) have in mind here?
Whatever it is, you can be pretty sure it is not likely to please any of the 18 primary dealers who hithertofore have enjoyed exclusive discount window access and to which they are able to pledge radioactive solids of just about any toxicity or half-life in exchange for loans of sweet, short term liquid elixir (read: cash) at vanishingly small interest rates. Or if you prefer:
The Discount Window functions as a safety valve in relieving pressures in reserve markets; extensions of credit can help alleviate liquidity strains in a depository institution and in the banking system as a whole. It also helps ensure the basic stability of the payment system by supplying liquidity during times of systemic stress.
Right now that means just under $20 billion outstanding. Expect that to change if this amendment becomes law. The phrase "financial holding company subject to stricter standards" isn't defined in the single-sheet amendment text, but insofar as the discount window is primarily a tool for what might safely be called "emergency liquidity," one wonders why it would be necessary to grant access to this facility to even a moderately large fraction of the 565 Financial Holding Companies already in existence.
Further, in the paperwork of corporate formation, becoming a financial holding corporation ranks in difficulty somewhere between creating a Delaware limited liability company and getting a canine breeder's license in Nebraska. What benefit, exactly, is there to, say, the taxpayers, in giving Poca Valley Bancshares, Inc. (or the Royal Bank of Scotland Group, plc- no we aren't kidding- for that matter) unbridled access to this kind of emergency capital. Or, perhaps, the Distinguished Gentleman from North Carolina knows something about the emergency liquidity needs of a large fraction of the financial institutions in the country that isn't quite public knowledge yet? Is it the regionals that are an issue? Or perhaps this is aimed at shoring up heretofore well concealed problems among insurance giants?
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Building a Blingfence for the approaching storm
Rep from North Carolina. BAC is in Charlotte.
Things that make you go WTF?
Nice find, now if you put Panty garments in the list of tags you might have 200,000 views.
and then what would happen??
Made me look! (no panties just silky smooth prose laden knowledge).
I think I'm going to file the financial holding company paperwork and then go the payday loans route.
Why AA CAT and the likes of them better change their status into financial holding cor.And while we are at it,and before they miss the boat,AAPL AMZN MSFT better join the crowd too. Can we all have a shot at that too?. Who knows how many small time traders are planning to establish such named companies so they can replicate what GS and others are doing?. And honestly,why not,as the say goes"what is good for the goose,is good for the gander".........
GMAC
Perhaps they simply need more stooges to whom they can "loan money" which they will use to "purchase" hundreds of billions of the ongoing flood of US Treasuries for which there is no longer a natural market. These new stooges will think they are getting a risk free NIM courtesy of the taxpayers until the whole fraudulent edifice comes tumbling down and they go down with it. The people running this government/Fed are liars who are pursuing policies that will surely destroy this country.
Great job finding this latest sign of the ocean of money printing to come in 2010!
Hey the fed is broke and underwater from just a few people.
I know open it up to everyone and then when it fails we can blame it on EVERYONE!!
Same stupid games. Different decade.
You know I have always wanted to make horror movies...but I could never find anyone stupid enough to fund them...so are you telling me I can form a bank, fill it with "mark to myth" assets and the Fed will give me free money? So I can finally start Trainwreck Productions!
Marla,
I probably should shut up, there is no way I have the horsepower or breadth of experience you people do, but did anyone see this:
http://www.ibj.com/simon-buying-prime-outlets-in-23b-deal/PARAMS/article...
Retail is going to hell. So why buy all these? Do you really believe in the big recovery? Or the big failout?
What if you build yourself up to be a "too big to fail?" CRE underpins so many pensions, annuities, and other retirement vehicles. And if you know about this legislation in process, you can buy toxic shit, hold it at mark to fantasy, wait for everyone to freak out about CRE exploding, appeal for some stimulus (oh those panties feel sooooo good, yes, yes, ah, ah), become a holding company of some kind in the interim, and get in line to give all your toxic shit to the FED. Hmmm? What about that as a grand plan???
Tell me where I have this wrong.
"The move comes as Simon maneuvers to take over its nearest mall rival, Chicago-based General Growth Properties Inc., which is going through bankruptcy reorganization. Simon has been buying the company's debt in anticipation for an eventual bid."
nice one MsC
simon says, better get me a bucket baby:
http://www.youtube.com/watch?v=BlK62rjQWLk
Now that is liquidity!
That's why it all won't end till the currency fails. The site of the next meltdown is the currency markets.
Do you see them falling one by one, or do they all take turns devaluing against each other while gold makes a run for $5K?
same thing the big banks did with residential MBS. buy low sell high pay big bonuses go BK restructure (eliminate debt) get bailout wham bam thank you maam, and you're ready for round 2
Ok so here is what a little digging yielded. This Brad Miller is a Democrat. He was a high ranking state legislator when NC got an extra congressional seat. He participated in the drawing of a district that was talor made for him. I worked for a guy who did that once, to my home town no less, so I am intimitely familiar with that process. Needless to say this guy is clearly skilled at inside dealing.
Here are his staffers: http://www.legistorm.com/member/378/Rep_Brad_Miller/63.html Interestingly enough it seems like his staff doesn't have much experience with financial matters, with the braintrust coming from Brian Bard's office (D-WA) who had no financial committee assignments.
His wikipedia touts him ripping former AIG CEO Liddy a new one during some hearings. Also it notes he was an author of the financial product safety bill and the cramdown proposal.
http://en.wikipedia.org/wiki/Brad_Miller_(congressman)
Something here doesn't fit. Either way it seems like this amendment will be considered when this guy comes up on the hosue floor since the committee markup is done.
PS: Watch Harvey Birdman run through my town :-D :-D :-D http://www.youtube.com/watch?v=1xkhqce43mA
first time chiming in, i'm from NC & brad miller is good as far as politicians go (or my view from here at least) he's a patches on the elbows of old brown suit-jacket kinda guy. if that really means anything.
The day is not far off (perhaps it is the case even now) when all anyone will have to do to get "liquidity"/"loans" at the discount window is take a dump at the Fed. Now that's what I call "posting collateral".
my ice cream was like a projectile vomit.
that was VERY funny shit GG!
"posting collateral" is one that I will remember....
Glad I was able to amuse you :-)
Funny, since I am working across the street from the HQ right now. I will go there tomorrow to use the bathroom. Then to the teller to get my $$$$$.
Nothing turns me on more than when a woman tells me she isn't wearing any "discount window access."
William Greider is commenting on this at the Nation: http://www.thenation.com/doc/20091221/greider
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the 4th time and I wanted to cheer her up. This was not the movie to go to especially since it was a year ago that we had to put our long time pet down Mezzanine Floor