Federal Reserve

"[The Fed] is bigger than the Congress, [it] has more power than the Congress. The Fed Chairman probably is more powerful than our president, and yet we refuse to look at it. The time has come for us to look at the Fed" - Ron Paul

• Securities held outright: $1,501 billion
  (an increase of $128.7 billion MoM, resulting from $32.6 billion in new
  Treasury purchases, $82.4 billion increase in MBS and $13.7 billion in Agency Debt), or $10.7 billion increase sequentially
• Net borrowings: $320.3 billion, a decline of $5 billion compared to two weeks prior
• Float, liquidity swaps, Maiden Lane and other assets: $248.9 billion, an $2 billion decrease on ongoing $1 billion reduction in CPFF (an issue discussed repeatedly by Zero Hedge) while liquidity swaps, after bottoming out recently and gradually reversing, have again declined by $2 billion sequentially.

Total Federal Reserve balance sheet assets for the week of September 2 of $2,070 billion

Judge Loretta Preska, who earlier this week ruled against the Fed in its long running FOIA lawsuit with Bloomberg, and demanded it disclose firms benefiting from and loan amounts handed out under various emergency order, has filed a stay on the original order and has awarded the Fed with a September 30 deadline to appeal the order.

Total Federal Reserve balance sheet assets for the week of August 26 of $2,049 billion

August 24, 2009 will undoubtedly go down as a day of celebration at Zero Hedge as the thus-far bullet proof Federal Reserve was ordered to produce documents improperly withheld from Bloomberg reporters Mark Pittman and Craig Torres.

Score another one for the little guys.

A one hour program in which Ron Paul provides the basics of the Federal Reserve and why it is high time transparency was introduced to this most critical of institutions. Must watch.

Last week's $300 million decline in Foreign Holdings was promptly reversed and this week saw an increase of $7.2 billion. Yet, like last week, the comparison between domestic and foreign weekly securities purchases is trivial: $7 billion versus $86 billion: the US is promptly becoming its own largest debtor... by a factor more than 10x.

Foreign holdings of US Securities decreased for the first time in 5 months by $299 million sequentially (weekly) to $2,809.9 billion from $2,810.2 billion in the prior month. Keep in mind in the same time period the Fed purchased over $16.6 billion of Treasuries, indicating that in the last week the Fed was the only purchaser of Treasuries. In a normal environment this would be a very troubling development.

"When people kid around that the Fed has become another hedge fund now that it is the lender of first, second and last resort — to mention the market-maker for everyone including RVs and mobile homes — it really is no joke at all. See NY Fed in Hiring Spree as Assets Soar. The New York Fed is seeking to bolster its staffing of traders — not research staff, but traders — by nearly 70%!! When will the Fed start hiring investment bankers? That is what we would like to know."

Foreign holdings of USTs and Agencies increased by $23.5 billion monthly to $2,810 billion from $2,787 billion in the prior month. This is now less than 20% of the comparable increase in Securities Held Outright by the Federal Reserve, implying foreign purchasers are starting to fall far behind in their purchases of US securities relative to the Fed's monetization rate.

Zero Hedge recently submitted a FOIA to the Federal Reserve regarding information prepared by Davis Polk and Morgan Stanley in their capacity as legal and financial advisors to the Fed in its negotiations on whether or not to push AIG into bankruptcy. We present their response.

And speaking of the Fed's balance sheet (and not the public side but the $9 trillion in off-balance sheet voodoo), here is some good reading, especially with certain politicians hell bent to prevent HR1207 from occurring despite the 280 or so congressmen in support of the proposal (a very self-destructive apathy that Zero Hedge will speak more on in a few days).