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The Fed Does It Again: $80 Billion Secretive "Bank Subsidy" Program Uncovered, Providing Bank Loans At 0.01% Interest
- Barclays
- Barney Frank
- Bob Ivry
- Credit Suisse
- Deutsche Bank
- Discount Window
- Fannie Mae
- Federal Reserve
- Federal Reserve Bank
- Financial Regulation
- fixed
- FOIA
- Freddie Mac
- Freedom of Information Act
- goldman sachs
- Goldman Sachs
- House Financial Services Committee
- Lehman
- Lehman Brothers
- Money Supply
- New York Fed
- RBS
- Royal Bank of Scotland
The Fed does it again. Following consistent allegations that the Federal Reserve operates in an opaque world, whose each and every action has only had a purpose of serving its Wall Street masters, led to repeated lawsuits which went so far as to get the Chairsatan to promise he would be more transparent, Bloomberg's Bob Ivry breaks news that between March and December 2008 the Fed operated a previously undisclosed lending program, whose terms were nothing short of a subsidy to banks. Says Ivry: "The $80 billion initiative, called single-tranche open- market
operations, or ST OMO, made 28-day loans from March through December
2008, a period in which confidence in global credit markets collapsed
after the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. Units of 20 banks were required to bid at auctions for the cash. They
paid interest rates as low as 0.01 percent that December, when the Fed’s
main lending facility charged 0.5 percent." 0.01% interest is also known by one other name: "outright subsidy." It doesn't get any freer than that: 0.01% interest on one month cash. Just how close to a complete implosion was the financial system if 0.5% interest seemed too high? Not surprisingly, this program was widely used: "Credit Suisse Group AG, Goldman Sachs Group Inc. and Royal Bank of Scotland Group Plc each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public...Goldman Sachs, led by Chief Executive Officer Lloyd C. Blankfein,
tapped the program most in December 2008, when data on the New York Fed
website show the loans were least expensive. The lowest winning
bid at an ST OMO auction declined to 0.01 percent on Dec. 30, 2008, New
York Fed data show. At the time, the rate charged at the discount
window was 0.5 percent." Yes, that Goldman Sachs. The same one that perjured itself when it said before the FCIC that it only used de minimis emergency borrowings. Just how many more top secret taxpayer subsidies will emerge were being used by the Fed to keep the kleptocratic status quo in charge?
From Buisnessweek:
“This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”
Congress overlooked ST OMO when lawmakers required the central bank to publish its emergency lending data last year under the Dodd-Frank law.
“I wasn’t aware of this program until now,” said U.S. Representative Barney Frank, the Massachusetts Democrat who chaired the House Financial Services Committee in 2008 and co- authored the legislation overhauling financial regulation. The law does require the Fed to release details of any open-market operations undertaken after July 2010, after a two-year lag.
Records of the 2008 lending, released in March under court orders, show how the central bank adapted an existing tool for adjusting the U.S. money supply into an emergency source of cash. Zurich-based Credit Suisse borrowed as much as $45 billion, according to bar graphs that appear on 27 of 29,000 pages the central bank provided to media organizations that sued the Fed Board of Governors for public disclosure.
New York-based Goldman Sachs’s borrowing peaked at about $30 billion, the records show, as did the program’s loans to RBS, based in Edinburgh. Deutsche Bank AG, Barclays Plc and UBS AG each borrowed at least $15 billion, according to the graphs, which reflect deals made by 12 of the 20 eligible banks during the last four months of 2008.
And even now, we don't know how much these individual subsidies were:
The records don’t provide exact loan amounts for each bank. Smith, the
New York Fed spokesman, would not disclose those details. Amounts cited
in this article are estimates based on the graphs.
The usual excuse is used: the purpose of the program was to prevent the Ice-6ing of shadow markets
One effect of the program was to spur trading in mortgage- backed securities, said Lou Crandall, chief U.S. economist at Jersey City, New Jersey-based Wrightson ICAP LLC, a research company specializing in Fed operations. The 20 banks -- previously designated as primary dealers to trade government securities directly with the New York Fed -- posted mortgage securities guaranteed by government-sponsored enterprises such as Fannie Mae or Freddie Mac in exchange for the Fed’s cash.
ST OMO aimed to thaw a frozen short-term funding market and not necessarily to aid individual banks, Crandall said. Still, primary dealers earned spreads by using the program to help customers, such as hedge funds, finance their mortgage securities, he said.
One name stands out: Goldman Sachs.
The New York Fed conducted 44 ST OMO auctions, from March through December 2008, according to its website. Banks bid the interest rate they were willing to pay for the loans, which had terms of 28 days. That was an expansion of longstanding open- market operations, which offered cash for up to two weeks.
Outstanding ST OMO loans from April 2008 to January 2009 stayed at $80 billion. The average loan amount during that time was $19.4 billion, more than three times the average for the 7 1/2 years prior, according to New York Fed data. By comparison, borrowing from the Fed’s discount window, its main lending program for banks since 1914, peaked at $113.7 billion in October 2008, Fed data show.
Goldman Sachs, led by Chief Executive Officer Lloyd C. Blankfein, tapped the program most in December 2008, when data on the New York Fed website show the loans were least expensive. The lowest winning bid at an ST OMO auction declined to 0.01 percent on Dec. 30, 2008, New York Fed data show. At the time, the rate charged at the discount window was 0.5 percent.
More on Goldman:
As its ST OMO loans peaked in December 2008, Goldman Sachs’s borrowing
from other Fed facilities topped out at $43.5 billion, the 15th highest
peak of all banks assisted by the Fed, according to data compiled by
Bloomberg. That month, the bank’s Fixed Income, Currencies and
Commodities trading unit lost $320 million, according to a May 6, 2009,
regulatory filing.
The source of the data: a FOIA lawsuit, just because the plebs knowing where billions of their money goes is not really in the best interests of the lords.
The bar charts were included in the Fed’s court-ordered March 31
disclosure under the Freedom of Information Act. The release was
mandated after the U.S. Supreme Court rejected an industry group’s
attempt to block it
So there it is again: a secret bailout program used to "rape" the peasantry by the entitled kleptocrats, which nobody thought would be exposed, and would allow those in control to lie blatantly to Congress. But have no fear: the wheels of justice are turning: instead of having those who rape millions under house arrest, we get the spectacle of those who allegedly rape one. The former, after all, are just a statistic.
And how long before the peasantry just snaps from the barage of endless lies?
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The Pigmen will always bend the rules and screw the little guy.
Learn it, love it, trade it.
THE BUMS WILL ALWAYS LOSE!
Fuck it, tatoo it on your forehead, Lebowski.
Lloyd lied....outright, blatantly, bold-faced lied to Congress.
Not that it matters for someone like him.
Where are the whistle blowers?
wouldn't this be in the time frame when the squid wanted to go private?
perhaps with free money from their privately owned central bank?
http://www.businessinsider.com/2008/11/could-goldman-sachs-gs-go-private-
on Thu, 05/26/2011 - 09:07
#1312713
Where are the whistle blowers?
*****************************************************************
Secret Hold On Whistleblower Protection Narrowed Down To Two Senators http://goo.gl/INklc
UBS Whistle Blower in Jail for helping the IRS with over 2,000 Tax Dodgers! http://goo.gl/s8JYp
'Austrian tax evasion whistleblower' dies in Swiss jail http://goo.gl/w3bqP
Swiss tax whistleblower to give WikiLeaks new data & in Jail for it http://goo.gl/KiQhV
No Bankers in Jail, No Tax Dodgers in Jail and Wall Street is Leveraged MORE than before! Tell the Truth? Go To Jail!http://www.banktech.com/articles/229700093?cid=nl_bnk_daily
Top U.S. Lobbying Banks Got Biggest Bailouts
TWICE.
TWICE.
TWICE.
Would that total be 2, 3, or 6?
Love it. "where is the fucking money Labowski?"
Long brass, lead, and gunpowder for sure.
Exactly. Fuck it. Life is short. Live your life, Worship God, Love people and BTFD.
More like Live your Lies.
Beginners Chart Of The Day
"no revenue will be left to pay for other government spending, including constitutional functions such as defense."
...and you think that's a bad thing?
Oh dear, some people never learn - stil prefer to invest in bombs, weapons and destruction than ensuring your fellow man is fit and able to work.
You are destined to a life of disappointment I'm afraid - the word 'entitlements' is there for a reason - people are 'entitled' to receive their surplus labour value back in the form of medicare and other benefits - as opposed to handing it to the wealthiest in society as tax cuts (or in this case sheer subsidy)
Is it you feel that people who work for a living are not entitled to benefits - but those who gamble are?
here we go.
You won't solve the problem by ignoring it - that has been the lesson until now.
Those entitlements are theft, plain and simple.
The people drawing them didn't contribute the fair value of what they take in return. Instead, they loot MY paycheck, making it harder for me to provide for my own loved ones. I wish we would just cut social security and medicaid off completely so the leaches would die.
SCOTUS found in contempt of the American People....GUILTY!
Huh?
"The release was mandated after the U.S. Supreme Court rejected an industry group’s attempt to block it"
yeah, i know. i was surprised too. do the supremes want more cash under the table?
The Federal Reserve act did not cover this.
Ah yes ...... and one more time:
http://www.youtube.com/watch?v=HlVhx7LHF98&feature=channel_video_title
Now Goldman can plead, we didn't borrow at the Fed Window, we borrowed from the Fed at their super secret save the banks lending program. You should have asked about that program and of course we would have said they borrowed there.
Problem is, they did both. Bzzzzzz. Thanks for playing.
That's why bankers never testify without any army of lawyers sitting behind them.
That's one broken window even Bastiat could love.
Its amazing...it is us vs them....and them are winning..and laughing....what a joke....some of the quotes make me want to puke....
Awesome how in the US no Demos against banksters:¡
Jersey Shore is on...
The idiots at Stone(d) Street...will probably come out with a justification..
Got also pretty upset by the entitlement thinking of these money nerds
Isn't that what the consumer gets at BestBuy, GM etc? 0% financing for a little while...
So if i pray to this St. Omo guy do i get a bailout?
You will need to fill out a pledge card.
10% is the recommended tithe.
They will be watching when the collection plate passes through your pew.
I am sure none of these programs ever ended. The may have changed names or become an insiders secret society Sams Club of money. But, the spice must flow.
I thought it was Ice-nine, if you are refering to that stuff that freezes all the water on the planet so that Marines don't have to wade in mud.
You are correct. And it is an inversion inside joke.
Too bad all our prosecutors suck ass, or we could rid ourselves of Goldman once and for all, and Benny Boy. But alas, they are are paid off and playing gold everyday with taxpayer funds.
According to my senator, 1) the Fed already is thoroughly audited, 2) more audits would mean political interference and would "disrupt financial markets", and 3) she already supported more audits. She actually managed to speak out of all 3 sides of her mouth at once.
Don't waste your time with elected officials. They are nothing more than the facade of the establishment.
Does that include Alan Grayson, Marci Kaptur, and Ron Paul?
Alan Grayson is no longer an "elected offical."
There is a Senator out there who is for media freedom, acknowledges Global Warming, against our trade policies with China, against the Iraq War from the begining, and introduced a bill to audit the federal reserve. Bernie Sanders for President right? http://www.sandersforpresident.org/
Nope he's not running and if I ever told you as a hard core Republican that I would vote for a Jewish Socialist i would have laughed at you. Then again 3 years ago if you were to tell me that I would have a 2 acre garden, a safe with silver, gold, and lead along with an array guns preparing for dieoff I would have told you your crazy and I am no damn tinfoil nut. Things change quickly when you educate yourself outside the MSM alphabet networks. Sometimes I feel so fucking stupid for the old wants and failing to realize my future needs. Better late than never. Good Luck!
"It would be ultimately the tax payer who would bear the brunt of any lossess resulting from polices caused by untimely disclosure of sensitive information."
I love how people still believe America is a free society.
perhaps you should create her a forth side of her mouth from which to speak.
Kay Hagan is a Wall Street ho. She's got the back of her former colleagues at BAC. Have to wait 2 more years to vote this fascist shill out of office.
Remember, Goldman Sachs became a bank holding only end of Sep '08!
So they had some catching up to do in December...
As me, Leo Kolivakis and Robot always repeated, nothing will ever change.
The American public doesn't care. Deal with it.
What the hell is going on here? They are so brazen now. The taxpayers get screwed, lose jobs, lose hope, but STILL we have to support the economic elite.
They keep getting away with it. Where is the anger? Where is the public outrage?
This sucks. Will there ever be justice, or will they just cull the ordinary people when they've sucked them dry?
Bloody plutocracy. Makes me want to throw up.
I'm ready to bet $100k that a new Obama/Bush will be elected in 2012.
LOL...
HE ! HAMY WANGER ! WOW You have class,
i am truly devastated what the GOP come up with.
So you'll be contributing to which fascist puppet?
That's the best joke I've heard in weeks. Thanks!
Were they having problems making payroll on a monthly basis too?
Notice they are trying to use the word "subsidy" instead of "bailout".
A subsidy implies mutual benefit. IE The govt. is giving farmers a subsidy for the purchase of fertilizer to ensure crops. NOT The govt. is giving a subsidy to stop a banks bankruptcy.
Yup.
In general, subsidies are a wealth transfer mechanism that benefit low-income consumers, not the high income earners, in a progressive tax system such as the USA where half pay no income tax.
Ha! It's just hilarious at this point... can ANYTHING be uncovered that will make a difference? I've said it before, and been proven wrong..for now, but any organization that amasses this much power eventually gets taken down. It's the way of history. It's just when...
I wish it were true. I used to believe there would be justice but I don't anymore.
If anyone from Anonymous happens to cruise through here, I have a request: Please redirect your considerable talents against Goldman & quit mulekicking Sony in the nads.
Thank you.
Or JPM, BAC, WFC, etc. Then again those places have enough money to find you and hurt you. Hell GS can call the FBI and have youa rrested for stealing market manipulation code, and get to keep the code!
"Royal Bank of Scotland Group Plc each borrowed at least $30 billion in 2008"
...and still it wasn't enough to save them.....so how close to total meltdown did we come....and how long before the sheepeople realise that the danger has merely been averted for now....but is coming back with a vengance as we speak.
Time to assume the brace position.
Yeah, brace ourselves for an even bigger shafting by the banksters. They'll jump off the train before it derails. They'll get away with it.
Do you really think the people will stomach a second time on this carousel?
I mean when the EU peripherals start to fail, and when the banks collapse again as a result - do you really think TARPII is a possibility?
I strongly believe there are people - good people - all around the world who would rather die than see TARPII a reality.....and I think those people have enough support to stop it.
There will be people throwing themselves through the windows of wall street and chaining themselves to the front door of the FED building when they hear those words again "near economic collapse"
Mmmm...strongly in doubt. But full of hope. You reckon we can? (right answer Yes - and so on BS...
The FED prints the money and they can give it to whomever they want. The Treasury, US banks, foreign banks or foreign governments. They are a private corporation and it's none of your business what they do with it. Just keep paying the bill, it's for your own good....
"Permit me to issue and control the money of the nation and I care not who makes its laws." ~ Mayer Rothchild
The rest is a dog and pony show.
Amazing. If they were taking these emergency bailouts back in March 2008, that means the Fed was fully aware that the collapse was coming. Yet, the sheeple were still told that the stock market was the answer to all their financial dreams.
Exactly....they will do what ever it takes to kick the can down the road
dupe.
One only has to look at the Discount Window borrowing to know that the Fed was aware (or should have been) that the crisis wave was cresting.
Interesting that the outline of the TARP plan was initiated in June-July 2008.
Geithner was Mr. Bailout.
Same people in charge now. And people think "this time is different". LMAO.
And we are the ones who are considered freaks for being part of the "fringe" blog that exposes these people on a daily basis. I love scapegoating.
Obviously in this "capitalist" society the cream has risen to the top. These are the most productive workers and they should be compensated accordingly! You all are just suffering from envy. /sarc off
They do human sacrifice down there too.
100:1 that QE3 is already in place and running full blast...green shoots are coming!!
I'd like some free money too. Where can I get some?
Only two choices. One is illegal, and the other is for criminals.
pro found
http://www.theaustralian.com.au/business/news/bid-to-use-gold-as-collate...
Bid to Use Gold as Collateral Advanceshttp://online.wsj.com/article/SB1000142405270230452080457634555143102685...
Bail the banks... fuck the people..the whole thing is a joke.
Capitalism has failed they just won't admit it.
I did not junk but in Capitalism they would let the banks fail. I don't know what we are in now.
Thank you, that is my point exactly
Barter Town.
The empire is run by the Banksters who oversee the cage match between Capital and Labor.
Labor is pinned to the cage. The masses are cheering their own demise!
...but are banks which are TBTF surely an inevitable result of a system which is based upon capital accumulation?
You could let them fail - but then your economy fails with it - such are the two so intertwined. The change may have been gradual - but it was obvious this would be the end result.
....we just weren't sure when the crunch would come.
I don't know if you need banks in capitalism. The Soviets had banks. Banks and capitalism do not always have to coexist.
As Sgt. Shultz so aptly put it.... "I see nothing....."
I am due to have to buy a car soon. Can I ask Ben for a loan? I'm an American Citizen, so that means I qualify, right? I'm willing to pay 0.02% (twice the banks rate).
I bet you can head to your local GM dealer and get a far better rate.
"Just how many more top secret taxpayer subsidies will emerge were being used by the Fed to keep the kleptocratic status quo in charge?"
China is on the phone. As the world's second-biggest dollar holders, they object to being left off the list of who is doing the subsidizing here.
The American public is too stupid and "idolized" to give a shit. On a PBS segment yesterday, they asked people on the street what they thought about QE2, and the closet anyone got to knowing what they were talking about was as far off as an ocean liner. We are so fucked.
That is why the Kleptocrats, hardly bother to hide what they are doing any more.
Really people do get the government they deserve.
Saw a bumper sticker in Minneapolis the other day that read, "If you do not know who Ben Bernanke is you are part of the problem."
I thought that was pretty spot on.
Is it FASCISM yet......
Justice in the US IS A JOKE....
............................
It is way past time to hit the RESET BUTTON.....
Congress has referred perjured testimony to federal prosecutors for much less than what blankfein did.
But you see, GS and Fed had decided that it was in our national interest that the kleptoponzi be kept alive.
Time for everyone to switch their avatar to Sudden Debt's.
so instead of a tea party, could we start a RealMoney party?
dup.
St. Omo's Fire!
Pathetic govt.
Pathetic is the perfect word...I am sick to my stomach just reading about this...this is so blatent...criminal to me..normal business practice to a Goldman Sachs....
STOMO, POMO, HOMO, OBAMA = Only Banksters Appreciate My Ass
Sell EuroUSD and stocks
Buy long end of US treasuries
http://deadcatbouncing.blogspot.com/
No one cares.
http://www.bloomberg.com/news/2011-05-25/goldman-sachs-needs-a-new-audit-committee.html
http://www.bloomberg.com/news/2011-05-25/goldman-sachs-needs-a-new-audit-committee.html
http://www.bloomberg.com/news/2011-05-25/goldman-sachs-needs-a-new-audit-committee.html
http://www.bloomberg.com/news/2011-05-25/goldman-sachs-needs-a-new-audit-committee.html
St. OMO?
The Patron Saint of the Federal Reserve?
"Bound to protect and serve the Wall Street Sindicate?"
Ordained by the Chairsatan himself.
No worries, Mon...just borrow more from the federal pension fund. No one seems to mind.
They lie and deceive. We know they lie and deceive. They know we know they lie and deceive, and they just don’t give a shit. They don’t care, because, they don’t have to. They know that no one, not even the highest government authorities, has the guts or the means to stop them.
This is truly criminal........this isn't supposed to happen in a free and open democracy. The whole system has been corrupted and in need of a total house cleansing......the same goes for the political class.......absolute insanity....
Fuck Off HammyWanger...you fucking sack of scum sucking shit.
You seem like a long lost cousin of the Bernanke.....
Fuck Off and die....
...and this is the only gripe i have about zero hedge. the constant stream of comments along the lines of the people reaching the breaking point and soon to but bullets into the heads of bankers.
the average american has no idea whatsoever what is going on right under their noses.
i appreciate a little optimism, but that's just delusional.
...and this is the only gripe i have about zero hedge. the constant stream of comments along the lines of the people reaching the breaking point and soon to but bullets into the heads of bankers.
the average american has no idea whatsoever what is going on right under their noses.
i appreciate a little optimism, but that's just delusional.
$80 Billion for nothing?! Crime Pays Bitchez!
Not surprised in the least. The Fed gives away money to W$ and banks like a neighbor giving away a bumper crop of zuccinis and tomotoes. I'm sure those at the Charmin factory get to take home a little - or at least get to take home seconds for .0001 cents on the dollar...
If they are actioning money in a accute liquidity (or solvency) crisis period, how is it that the best (winning) bid at the auction was .01%? Who had access to this capital- just primary dealers? GE? GMAC? Regional banks?
With American Idol now winding down-- perhaps the peasantry will begin to take heed, but I'm sure there will be more meaningless scandals to keep us busy for now.
You gotta love how they play the contained/couldn't of seen it coming angle, when lo and behold this was done when? Oh yeah, up to ~1/2 year before lehman.
Because such a facility BEFORE lehman was completely normal.
But of course we all know of SHTF meeting in summer of 2007 where the worldwide kleptocrats decided to play it out.
Of course no one saw it coming as a result of Glass-Steagall's repeal, or it's weakening years earlier. Of course not from the ending of Bretton Woods I, or way earlier Federal Reserve.
It took many laws to surround us, and generations of assholes to get us here, but we're here.
Now if we could just pass our 'precious'...the one economic law to rule them all....Glass-Steagall