The Fed Responds To Zero Hedge: Here Are Some Follow Up Questions

Tyler Durden's picture

Over the weekend, we gave the Dallas Fed a chance to respond to a Zero Hedge story corroborated by at least two independent sources, in which we reported that Federal Reserve members had met with bank lenders with distressed loan exposure to the US oil and gas sector and, after parsing through the complete bank books, had advised banks to i) not urge creditor counterparties into default, ii) urge asset sales instead, and iii) ultimately suspend mark to market in various instances.

Moments ago the Dallas Fed, whose president since September 2015 is Robert Steven Kaplan, a former Goldman Sachs career banker who after 22 years at the bank rose to the rank of vice chairman of its investment bank group - an odd background for a regional Fed president - took the time away from its holiday schedule to respond to Zero Hedge.

This is what it said.

We thank the Dallas Fad for their prompt attention to this important matter. After all, as one of our sources commented, "If revolvers are not being marked anymore, then it's basically early days of subprime when mbs payback schedules started to fall behind." Surely there is nothing that can grab the public's attention more than a rerun of the mortgage crisis, especially if confirmed by the highest institution.

As such we understand the Dallas Fed's desire to avoid a public reaction and preserve semantic neutrality by refuting "such guidance."

That said, we fully stand by our story, and now that we have engaged the Dallas Fed we would like to ask several very important follow up questions, to probe deeper into a matter that is of significant public interest as well as to clear up any potential confusion as to just what "guidance" the Fed is referring to.

  • Has the Dallas Fed, or any other members and individuals of the Federal Reserve System, met with U.S. bank and other lender management teams in recent weeks/months and if so what was the purpose of such meetings?
  • Has the Dallas Fed, or any other members and individuals of the Federal Reserve System, requested that banks and other lenders present their internal energy loan books and loan marks for Fed inspection in recent weeks/months?
  • Has the Dallas Fed, or any other members and individuals of the Federal Reserve System, discussed options facing financial lenders, and other creditors, who have distressed credit exposure including but not limited to:
    • avoiding defaults on distressed debtor counterparties?
    • encouraging asset sales for distressed debtor counterparties?
    • advising banks to avoid the proper marking of loan exposure to market?
    • advising banks to mark loan exposure to a model framework, one created either by the creditors themselves or one presented by members of the Federal Reserve network?
    • avoiding the presentation of public filings with loan exposure marked to market values of counterparty debt?
  • Was the Dallas Fed, or any other members and individuals of the Federal Reserve System, consulted before the January 15, 2016 Citigroup Q4 earnings call during which the bank refused to disclose to the public the full extent of its reserves related to its oil and gas loan exposure, as quoted from CFO John Gerspach:

    "while we are taking what we believe to be the appropriate reserves for that, I'm just not prepared to give you a specific number right now as far as the amount of reserves that we have on that particular book of business. That's just not something that we've traditionally done in the past."

  • Furthermore, if the Dallas Fed, or any other members and individuals of the Federal Reserve system, were not consulted when Citigroup made the decision to withhold such relevant information on potential energy loan losses, does the Federal Reserve System believe that Citigroup is in compliance with its public disclosure requirements by withholding such information from its shareholders and the public?
  • If the Dallas Fed does not issue "such" guidance to banks, then what precisely guidance does the Dallas Fed issue to banks?

Since the Fed is an entity tasked with serving the public, and since it took the opportunity to reply in broad terms to our previous article, we are confident that Mr. Kaplan and his subordinates will promptly address these follow up concerns.

Finally, in light of this official refutation by the Dallas Fed, we are confident that disclosing the Fed's internal meeting schedules is something the Fed will not object to, and we hereby request that Mr. Kaplan disclose all of his personal meetings with members of the U.S. and international financial system since coming to office, both through this article, and through a FOIA request we are submitting concurrently.

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Haole's picture

Trust the Fed, trust me...

Deathrips's picture

Whoever denied it, supplied it.


Fuck the FED!!



techpriest's picture

There's a saying that you "never comment to people below your level." ZH is more significant than the mainstream wants to admit.

Byte Me's picture

Mark to market... how quaint and retro.

Manthong's picture

“the Fed is an entity tasked with serving the public”

Is that anything like “wrestling is a sport”?

The Juggernaut's picture

Fuck you, Fed Reserve!  You're monetary communists!

Cognitive Dissonance's picture

The Dallas Fed's denial IS the confirmation.

Soul Glow's picture

At least now we know the Fed reads Zero Hedge.

nope-1004's picture

The Fed will respond to ZH questions as follows:


"It was my understanding there would be no math."


Upswaller's picture

I didn't have sex with such a woman.

KesselRunin12Parsecs's picture




Stackers's picture

Me thinks he doth protest too much...

KesselRunin12Parsecs's picture

The first rule of FIGHT CLUB is:

"You DO NOT talk about FIGHT CLUB"


The 2nd rule of FIGHT CLUB is:




SheepRevolution's picture


thesonandheir's picture

Don't believe anything until it's been officially denied.

ali_baba's picture

Here's a question: How many of the banks that make up the Fed are jewish owned?


Just an innocent question....

TerminalDebt's picture

It was my understanding there would be no truth

KesselRunin12Parsecs's picture

I hereby nominate SheepRevolution to become the next LongSoupLine...

TahoeBilly2012's picture

Zerohedge 6 points (plus extra 2)

Khazarian Mafia 0

macholatte's picture

“…Robert Steven Kaplan, a former Goldman Sachs career banker…an odd background for a regional Fed president…”


Correction: his background would have been odd for a Fed President if he had never worked at Government Sachs.



Corruption: it’s what’s for breakfast

-- Barry Soetero

jcaz's picture

LOL-  an odd attempt at misdirection.  The Fed is so inundated with GS people at this point that they have make light of it-

"Shh- nobody say anything,  the sheep will never make this connection on their own....."

jcaz's picture

Dammit-  Tyler is gonna get droned with Spicoli now, gonna be a messy Tuesday.....

CapnJackDaniel's picture

If it feels like ZH is doing actual journalism, it's because they are. And if you feel you're being lied to by the FED, well . . .

Manthong's picture

Izzat up there a bit post from techpriest about to be the first 500 up-vote comment on the site?

Thought cloud... I wonder who he was in his other life  :-).

..and CD ain't doing too bad in the attribution category either.

... and ...and whomsoever would down vote either of those posts has serious cognitive dysfunction.  

maybe it has happened before, but...

edit.. Bingo! 500 happened sometime around 0500 EST




janus's picture


whatever you do, don't sit down for an interview with sean penn.


Manthong's picture

.. and Dallas grassy knolls and sewer grates.

..and Federal buildings in Oklahoma as well as steel frame skyscrapers in NY that collapse with office furniture fires and below the melting point of structural steel.

two hoots's picture

We  need a hybrid Glass–Stegall Act that also applies to the Federal Reserve.  Section 8 of the Glass-Steagall Act states that “No Federal reserve bank may engage in open (my add:  or backdoor, closed or any) market operations,  Delete this part >  except in accordance with regulations of the Federal Reserve Board.

Gather those rosebuds's picture

This must be Robert Kaplan's first night at Fight Club.  Just following Rule Number Eight.

old naughty's picture

com'on, old hand bob had 4 months...

honeymoon is over !

RiverRoad's picture

The Fed is going to be SO SORRY they walked into this room.

BlackChicken's picture

The FED has nothing to fear; the system was designed to be beyond reproach.

The FOIA suit means "nothing" as they are no more of a Federal entity than Federal Express. It's a private club, and WE are not in it. Nothing will come of that effort(unfortunately).

Fuck all of them in Hell...

CuttingEdge's picture

"ZH is more significant than the mainstream wants to admit"

Sorry techpriest, but shouldn't that read:

"ZH is more significant than the mainstream" ???



strannick's picture

Fuckin A ZH.

Fuck you CNN

tjeffersonsghost's picture

If we hear of a nailgun accident over the next few days we'll know who leaked the info... just saying..

McCormick No. 9's picture

I think ZH just put a Kaplan in the Fed's ass.

Or, heard in the ZH newsroom..."Ain't nuthin' like Kapln' the Fed's ass, bitch!"


Eirik Magnus Larssen's picture

Explosive. This is something to follow up closely.

Mentaliusanything's picture

Explosive indeed! Clearly when the money was lent to the Oilers it looked good on paper with oil at $120/ barrel. Banks are cautious and would have applied a discount to that barrel(normally 30%) and taken a note over any assets. Now with oil at sub $30/ barrel the loans would be in distress as the assets are worth little and the income is loss making by a large margin. Banks would be looking at a substantial haircut and an ever diminishing return OF CAPITAL as the diminishing assets are the only claw back.

If I were a bank I would be shitting blood at the very thought disclosing the real deal. We are talking losing "Big Bills" on that sure bet.

So ... The truth will never see the light.

When you see Oilers asking for capital off the sheep "for purchase of 'opportunities' in a distress market" they are begging for your money just to stay afloat... Run Forest Run

FreedomGuy's picture

Tyler for President! Okay, how about Fed Chair?

Antifaschistische's picture

technically, you would have to analyze the demographics of every share owner to determine demographic ownership.

but to do so would actually be asking the wrong question.  It's more about control that it is share ownership.


All Risk No Reward's picture

The key villains here are the people who own and control the debt-money systems that are enslaving everyone else within society. Yes, all you irrational people, this included 99.9++% of Jewish people, too.

You think you are so smart, but you are blind as a bat or, perhaps, acting to protect the real villains from razor sharp scrutiny.

You see, if you can convince someone to be mad at his Jewish neighbor, whom he can see, he will have no time to be mad at Devid de Rothschild, the criminal Debt-Money Monopolist (and naturopathic physician - look it up!).

David de sends his kindest regards.

Now, if you really dislike the Rothschilds and simply lack the mental capacity to know where the hot coals of vitriol deserve to be heaped, well, that makes you simply pathetic and what the Debt-Money Monopolists would term a "useful idiot."

My hope is to fire up the two brain cells that need to connect such that the real evil people doing the real evil deeds get the blame and not the completely clueless masses.

It is like thinking every white person is an inventive genius because Ben Franklin had some cool inventions.

Oh... do you believe that, too? I guess I should have asked first.

Crush the cube's picture

Rothschild, as in Wroth Child, as in children of wrath.   

Janet Shalom Bernanke's picture

Dear Fed:

You would think that $5 trillion (what we know of) of printed money would be enough to maintain double-digit inflation in everything from rents, health-care costs, tuition, food, and and even energy prices, along with your favorite pet-project, stock prices.

Only problem is, the world economy is in it's death throes from these bubble policies, and there are many perverse consequences to your grand experiment.  

Maybe print another $5 trillion, or go with negative interest rates.  That should really distort reality and create more Frankensteins to destroy entire industries and ways of lives for hard-working sectors of the world economy.

There truly will be a day of reckoning for you.  Your actions will result in the End of the Fed, and I prey that you will be held legally responsible for your crimes against humanity.

Jutice always finds the criminal.  Eventually.

7againstThebes's picture

All Risk No Reward,

      I think you make a serious point.  Yes, most Jews, like most of every other people, are just trying to make their way.

      But there are points that have to be made.

* The Jews have a long tradition of ethnic networking, and this conveys to them an advntage in commerce. It is inevitable that they will be viewed as group.

* Zionists -- in league with the gangster state of Isreal -- pulled off the false flag attack of 9/11.  These Zionists had some help from goyim like Dick Cheney, but at its vital core, Zionism is purely Jewish.  These Zionists Jews, many of whom are dual citizen, have penetrated and subverted American institutions like the judiciary and many big corporations of the MIC. After 9/11 the Zionists used their influence in Washington to gin up endless wars in the Middle East. They are responsible for the death of thousands of Americans, and for the death of hundreds of thousands of people in the Middle East who  never presented a threat of us. Zionist Jews in league with Israel, since 9/11, have so much blood on their hands that one is inclined to quote Macbeth -- they have turned the multitudinous seas incarnadine.

So, yes, you are right. Many Jews, most Jews , are innocent of these deeds, and even horrified by them.  But ah, like the Good Germans, they are the Good Jews. They are not using their power and influence to try to rid themselves of the evil infection that festers in their midst, and that their tribe harbors, protects and does not repudiate. 

In politics, subtle distinctions are hard to make. We cannot tell from a distance which Jews are good, and want to live in  a political order in which the same rules apply to all, and which Jews are among the most evil people in human history.  Just as the immune system of the body sometimes rejects bacterial intrusions that are beneficial, we have to reject all Jews until the infection of Zionism is overcome.

Herd Redirection Committee's picture

Hey Fischer, fuuuuuuuuuuck yooooooooou.