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On The FFB - Once More
I frequently discuss the unregulated government lender, the Federal Financing Bank (FFB). I keep writing about its activities in the hope that someone in the MSM will pick up the story and run with it. So far, no luck.
The FFB story is an example of how the Obama Administration is using off-balance sheet financing to further its goals.
The FFB's holdings as the date Obama took office and as of June 2012 are listed below.
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The loans outstanding have risen by $25Bn (65%) in three and a half years. The largest increases are in these categories:
Post Office - $6.1Bn–93% increase
Electric cars - $6.7Bn – 100% increase
Solar/Wind - $4.3Bn – 100% increase
Rural Utilities - $10.9Bn – 42% increase
The PO loans are garbage. There is no way that the PO can pay it back. Congress will have to do a bailout. The Congressional guarantee on the PO loans will be honored (it has to be) so the taxpayers will take the full loss.
Electric car loans probably will be paid back in full at some point. I say that because the borrowers of the cheap money from the FFB are actually companies in good credit standing. But that is the point. If companies are capable of funding their own growth and research, why does the government have to give them a hand out? In June another $385Mn flew out the door. This is just another screwy subsidy for a few successful companies.
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The largest increase comes from loans to Rural Utilities (+20Bn). I have no clue what is going on in this category of lending. This is a very big program. The potential problems are there. I doubt anyone is really looking at this.
A total of $525Mn of loans to rural utilities were rolled over in June 2012. The interest rates are as low as 0.10% (Lake Country Power, Brazos Electric, Nelson Telephone Coop). The maturities extend to 2046 (Highline Electric, Orcas Power, East Kentucky Power and Little Ocmulgee Electric.)
These borrowers are not big players that can finance their own operations. So they are stuck on the federal teat. The following pictures show the names of the borrowers that hit up the feds for new money (or a rollover of old) in just one month. Many borrowers are involved. (Note: There are too many names to make a readable list. If you want to see details, go to the FFB report (Link).
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Most troubling is the non-stop stream of new loans to solar and wind projects. Obama is going to call this effort a “big success” this fall. He will say that the construction has created jobs, and that it is a good “investment” for the country to develop alternative energy.
Here are the names of the solar/wind projects that have borrowed $4.3Bn (so far) from the FFB:
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This will sound “good” to Obama’s supporters. But the questions are,
(1) who is getting rich off of this lending, and
(2) what is this going to cost the taxpayers?
The answer to #1, is that big shots are getting rich. Guys like Warren Buffett have a winning ticket (Link). Many of the “winners” are connected back to Obama.
The second question is impossible to answer. The payoffs for the taxpayers (if any) are several decades away. The losses are already being realized.
Solyndra, the Administration’s “show pony” investment that went sour, is now working its way through the Bankruptcy Courts. Not surprisingly, the FFB advances show up in the court papers as being “Impaired.” That’s a legal way of saying they are worth about 10 cents on the dollar.
Lets hope the hard working folks in the MSM take this as their opportunity to look at the FFB. I think there are many questions that need to be asked. I’ve highlighted a few. Here's another:
In June, Xavier College rolled over $127Mn of its FFB IOUs at 0.14%. Dillard University rolled over $135Mn at the same rate.
I’m not objecting to federal assistance to these schools. I’m asking why the FFB is involved as a “lender”? These “loans” are actually grants. The near zero interest rates, and the perpetual maturities, prove that they are not viable loans. This is just a charade.
If America chooses to invest in new technologies, or selected Universities, then the money should be appropriated in the year that the money is spent. Creating unpayable debt to fund losing propositions (AKA - the PO), is just kicking the can down the road. The FFB facilitates the process.
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The several Solar Partners LPs are SPV's of BrightSource Energy, a California company whose former CEO was named Secretary of Commerce in the Obama Administration. They received DOE loan guarantees totalling $1.3B for the Ivanpah solar energy project, which Brightsource spun off into its own SPV just prior to their application for an IPO last year. They filed for the IPO despite several years of losses and increasing difficulties with their flagship project, Ivanpah, related to turtle migration concerns. After one year or kvetching, BrightSource pulled its application for an IPO in April 2012, citing difficult market conditions.
Gettin' the itchy trigger finger.
Euro owes me one more trip to the bar @ ~1.2457.
Should be early tomorrow morning, say about 0320 local time. That's when all signals will cross and the chaos should begin. Aussie is on the ropes as the mother of all proxies to the hounded Euro and the signals coincide with the closure of the upside Gartley on the AUDUSD Hourly back to ~1.057. You guessed it- to a lower high.
At the breach of these signals, prepare to sell Euros like toilet-cake samwhiches. First stop, EURUSD 1.198. Secondary target to 1.169. It is advised to wait for the breach of these levels and confirmation of a failure to push higher. (Your best guess, Mr. Spock...)
All the Eurotrashers out in the world have just seen their best set-up light yellow. Eat 'em alive, boyz.
:}~
Evil Orly
Bwahahahaha-hahahahaha-hahahhahhhhhh- hhhhhhhhhhhhhhhhuuunh...
<cough>
Please forgive the reply to myself but the moves in the Australian dollar vis-a-vis the Euro are simply phenomenal. It's worth a look.
The AUDUSD pair is highly volatile and moving higher but the interesting thing is that the Euro is not biting at all and is currently stuck in a dubious wedging pattern on the H4 chart.
I've never seen anything like this before. But what does it mean? I'll stick by my prior statements say that this may be the result of semi-rich people heeding the advice of their "planner" and getting long Australian dollars.
Pump it up again and pray the Euro follows...but he has to break that wedge first. A hella struggle...
Amazing days. Amazing days.
:D
Saw the effect of these loans with a couple of Telephone, now Utility Co-Ops in rural TN, AL, and KY. They went on a buying spree starting in 2010 and still going on today. Some of the smaller Co-Ops have been bought up and now everyone can have hi-speed internet, VOIP, and a million channels, with nothing on, in thier single and double wides!
One of my Co-Op customers told me that customers will pay their "cable" bill before they buy food or will sign up for goverment's Lifeline program and then some of it is free.
Post Office: only item that is in the US Constitution, and no place does the Constitution say the Post Office has to operate as a business or at a profit.
Other Solar: say all you want about Solyndra. The Big Oil subsidies are much, much larger.
Exactly. How much has the unconstitutional NPR and PBS returned to the taxpayer? They run commericials now, they thank everybody and everybody's brother, but not to this day have I heard them thank the taxpayer. I guess it would be like a rapist thanking the rapee or a mugger thanking the victim.
All the unconstitutional programs are ok, but the constitutional ones got to go. Great thinking.
Tea Pot Dome?!
Very nice expose. I really hope this kind of information gets some play in the MSM. I have never followed the FFB until your articles Bruce.
I don't know if the USPO loans will never be paid back. You don't think privatization of the USPO would generate at least this amount in proceeds? I'm sure UPS and FDX would be happy to split the cost to participate in a duopoly...
it would seem ZH has been officially overrun with codgers lacking a sense of humor.
See Bruce, if they get e-lec-tricity and broadband ethernet to rural areas it will revive production, career employment, and end this depression because people can buy plastic crap from WalMart online and play Farmville from Agra, Kansas (population 265).
And surely, throwing public money at your private campaign contributors and cronies will "trickle down" to the starving masses yearning for EBT!?!?
The last couple of articles posted by Bruce are telling me that he's leaning Romney. Failing, of course, to understand the incredibly fucking basic point that it doesn't matter either way. Bruce: please kindly remove your head from your ass and realize what's actually happening dude. It's all over this site. Not to terribly hard to figure out.
I live in NY. I promise you that NY will vote for Obama. So I probably won't vote at all.
I supported Obama in 08. Color me disappointed.
I'm looking for the right angle to take a shot at Romney. I think he's an empty suit.
I'll find an angle, and I will blast him.
bk
"The State is a gang of thieves writ large." -- Murry Rothbard
Read Your Rothbard!
Did you know that he has an unpublished volume five of "Conceived in Liberty?"
Sitting in a box somewhere in longhand (which he claimed no one else could decipher).
WANT!
This reminds me of the old Jerry Clower joke about the two Mississippi farmers that kept trading the same mule back and forth, raising the price a little bit each time. One day, one farmer went to the other to re-buy the mule, to which the other farmer said, "I sold him to some fool from Texas for $400!"
To which the other replied, "Why did you go and do that? We were both making a good living offa that mule!"
as TARP showed us, these interim bridge-liquidity facilities will be paid back in full. plus interest.
and although government funds are being extended to the needy recipients via these programs, it is the taxpayer who reaps the windfall on these investments.
http://tinyurl.com/buxfxru
http://tinyurl.com/d7gsvsm
So contrary to what you may hear in the media or from the American Bankers Association or the Independent Community Bankers Association, the extension of the FDIC TAG program is not about economic growth or jobs. TAG is simply another act of government intervention in the US economy, this under the guise of protecting the banking public. The winners are the largest banks, while the smaller institutions and the public are net losers. The remarkable fact that the Washington trade associations for both the large and smallest US banks support a further extension of TAG illustrates the pervasive influence of the TBTF banks in all aspects of American political life. z/h
Cliff's notes version:We are doomed.
What jumps out is the change in SBA loans - from 8.4 million to the recent 0.1 million.
$8,400k down to $100k is a 99% drop? Yeah thank goodness the feds are all about the little guy. The "State" is a criminal organization what will it take for people to see this...
peAce
all of this has gone on for years...for decades. why do you think congress created these banks....to push tax payer money to the rich. the problem is we are printing 70% of the money now and that cant go on forever.
"The rich." Please define this term. It is particularly important in a case like this. You seem to think a bunch of multibillionaires are getting these payoffs. Look again. The better guess is that Obama's cronies are getting most of this, and are feeding it right back into his campaign, one way or another. This is not about what we traditionally think of as "the rich (e.g., Mitt Romney) getting richer." This is about Obama using taxpayer money to steal the election.
I doubt 'most' of the dough is being rolled back to the campaign. In fact I bet Obama is actually a pretty cheap date. This is purely guessing but I'd bet that for each $50M in governement grant the contribution bill is less than $1M. After all the giving limit is under $5k per individual, how many relatives and employees can be trusted to take the dough and then donate it to the right guy? The new entities however may have changed all this. Maybe the vig IS much higher and the grantee is expected to run endless supportive TV ads....while remaining independent of the campaign of course. It is hard to keep up with corruption when it is not one's area of expertise.
Same thing happened with the Porkulus, much of that got recycled thru the bundlers and the rest to Soros funded front groups.
Same thing happened with the Porkulus, much of that got recycled thru the bundlers and the rest to Soros funded front groups.
Be interesting to correlate these FFB entities with campaign contributions back to the DNC, Senate and Congressional campaign committees and Super PAC groups.
Exactly.
Central planning sooner or later goes bust
Right, central planning always fails but the cental planners keep much of the assets and the taxpayer gets the liabilities.
Central planners will sooner or later end up owning the entire world
fixed it
" Government is a crappy venture capitalist ".......Larry Summers
[ might be the only thing he ever got right ]
Venture capitalists are a front for the Government, so actually he got that wrong too
The FFB is chump change.
I don't see the word trillion - this is soooo 2008
That just means they likely don't bother with tracking aggregates. Besides, as we've seen before, the size of these entities is subject to abrupt change without notice.
Jeeze what a pork factory. The GOP will be happy to get it's hands on this one.
Why? So they can improve the operations of their own pork factories?
Ya want good jobs for good wages?
There ya go.
Add in Krugman's multiplier effect and we're back in the black.
Economics is easy. It's the arithmetic that's tough.
One would think that with a public investment portfolio like this Obama would be pretty vulnerable to another presidential candidate who had a good track record of having made wise, capital allocation decisions and generating positive ROI in the private sector...
Aiding and abetting criminal actitivies A? The FFB and how many more?? Good work Bruce, you're the best as always.
More socialism for the rich.
"...you will see the MSM 'suddenly' realize there is a story here to be covered."
Not a chance in hell. Stossel will do a special about it that runs on Sunday afternoon, 12 people will see it, and that will be the end of it. Only way it could get traction is if very large amounts of cash can be traced directly back to Obama's reelection campaign. Even then, the dots are too far apart for most MSM.
ALL of this bullshit is not sustainable and all government spending needs to be "on balance sheet" (including all war spending). Let the taxpayer know exactly what they are puchasing already. My guess is that this will happen when banks finally mark their assets to market. In other words, fucking never.
We'll be looking at $50,000,000,000 bills before we see mark to market in anything governmental again.
Or anything on a private BANK balance sheet for that matter. Atlas continues to shrug, long black markets then.
This will work out fine in the end. (/sarc)
What's a little Hyperinflation between friends?
Nothin', long as I'm the borrower.
You may get your wish about the MSM coverage. I'm guessing the election fix is in for a Romney win this fall. If so you will see the MSM 'suddenly' realize there is a story here to be covered. Pretty much the same suit will be at the top but at least we will be rid of Holder.
Ain't no way DF. Obama is a lock for reelection because the investment of "the monied interests" in him is too great to waste now. They went all in back in 2008, and they are doubling down this time around. Romney may actually raise and spend more money, and everything that has occurred in the last four years demands that Obama be thrown out of office, but it wont' happen. The big boys figure that Romney is nothing more than another pale imitation of Obama, and he is already bought and paid for. The people may actually vote Romney into office, but the election returns will show otherwise. This one is over.
MSM will avoid this regardless of which clown wins American Idolatry. It's a big secret for a reason.
Go out on the street and start asking people their opinion on this "bank." Unless you're standing in front of the employee entrance to a financial institution, you won't find 4 people out of every hundred who have even heard of it.
Out of those, only one will know enough to have an opinion.