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Did The Fed Quietly Bail Out A Bank On Tuesday?
Over the past month we have been closely documenting a major funding squeeze in the all important shadow economy - the "synthetic liquidity" conduit which far more than traditional sources of cash, has become all important for proper bank functioning over the past decade. Courtesy of adverse development in Europe, one by one various components of this unregulated funding scheme have become frozen necessitating the first of many central bank interventions on November 30 to provide liquidity to global banks, primarily to offset such shadow conduits as locked up commercial paper, repo and money markets. Logically, as noted over a week ago, European banks scrambled to obtain cheap dollars by borrowing over $50 billion from the Fed, and plug dollar shortfalls. Yet as all band aid measures designed to offset a broken liquidity equilibrium fail eventually, it was only a matter of time before we saw a direct bail out by the Fed of one or more banks in the aftermath of the November 30 global "bail out." Sure enough, we have our first clue that "something" happened in the week ending Wednesday December 14 that involved an upgrade of the Fed's indirect (and thus untargeted) bailout of global banks, to a focused, and very much targeted rescue of one (or more) banks. And with some additional diligence, it may be possible to narrow down the date of an actual bank bailout: Tuesday, December 13.
Exhibit A - Reserve Bank Credit
Two years ago, when discussing the transition of the world to one coordinated, centrally-planned regime we said that the only financial statement of any importance, updated weekly, is the Fed's H.4.1, or the "Factors Affecting Reserve Balances" which traces that flow of "last resort" cash from the Fed to the various organization that make up the reserve bank, primary dealer, and various other financial entities under the Fed's Lender of Last Resort umbrella. Simply said, anything abnormal in this weekly report of "flow and stock" (a simplistic distinction where the Fed is far more focused on what the absolute level of reserve numbers is, whereas Zero Hedge and the market believe it is the "flow", or marginal change, that determines, artificially, asset prices) would confirm our speculations that the Fed has stepped into into its now traditional role of bailing out the world.
The first thing that caught our attention was the all important total reserve bank credit - the most important big picture metric announced by the Fed on a weekly basis. As the chart below shows, after having plateaued with the End of QE2, and remaining stable during the duration of the "sterilized" Operation Twist (as it should), in the week ended December 14, total reserve credit soared by a whopping $81 billion or the most since May 27, 2009 when the Fed was actively undergoing the early stages of QE1 damage control.
So what was the reason for this huge jump in reserve credit? Two things - on one hand we had the already long-ago telegraphed increase in Fed liquidity swap lines by over $50 billion, or from $2.3 to $54.3 billion to be exact. However that does not explain the remainder. So where did the other $30 billion in credit expansion come from?
Exhibit B - The Plot Thickens: First Net MBS Bulk Purchase Since QE1
It appears that in addition to reverting to such an "old school" QE1 global bailout mechanism as FX swap lines, the Fed also did something it had not done in a long time, or since QE1 to be exact: it bought a boatload of Mortgage Backed Securities, an act it last engaged in on a net basis back on August 11, 2010, which in turn was a delayed settlement of an earlier purchase. As a reminder, the Fed's balance sheet settles any MBS purchases on the mid-month update so while the big spikes in the chart below between January and July 2010 are indicative of broad MBS purchases by the Fed under the auspices of QE1, when it was out purchasing a total of $1.25 trillion in MBS in hopes of lowering mortgage rates and stimulating housing, and thus employment (something it failed at miserably), in the mid-month week just ended, the Fed bought, and settled concurrently, an unprecedented $31 billion in MBS.
Obviously $31 billion jump in settled MBS purchases is notable considering the pattern of previous MBS net flows since August 2010. But under what auspices did the Fed go ahead and buy this whopping amount of Mortgage debt? And why?
As New York Fed itself tells us:
Agency MBS Tentative Purchase Amounts and Historical Operational Results
The Desk’s tentative agency MBS purchase amounts associated with the reinvestment of principal payments from agency debt and agency MBS in agency MBS are shown in the table below. The numbers listed are subject to change, should the Federal Open Market Committee (FOMC) choose to alter its guidance to the Open Market Trading Desk (the Desk) at the New York Fed during the monthly period or if market conditions warrant. The amounts listed are approximately equal to the amount of principal payments from agency debt and agency MBS expected to be received over the monthly period, adjusted for any variations from prior periods, as described more fully in the FAQs.
In addition, in order to ensure the transparency of its agency MBS transactions, the Desk will publish historical operational results, including information on the transaction prices in individual operations, at the end of each monthly period.
Specifically, in the period between December 13 and January 12, the Fed had permission to buy, wait for it, $30 billion.
And yet, there is a discrepancy as in a subpage detailing gross and net purchases the Fed reveals only $7.550 billion in net MBS purchases for the week ended December 14.
So obviously while the temporal matching is still not precisely clear, what is clear is that in the week ended Wednesday, The Fed provided a whopping $81 billion in additional reserve credit between FX swaps and MBS purchases, the latter having no other purpose than to release even more liquidity to banks which have simply converted one illiquid security, into another: cash. This answers the important question of "why" the Fed did what it did. It is also unclear whether this outlier transaction was demand driven or forced by the Fed. All that will be confirmed once we get the official breakdown of MBS POMO on January 13. Incidentally, here is what typical MBS purchases and sales look like on a monthly basis (excel table).
While these two balance sheet outliers would have in themselves made for curious observations, if insufficient to draw any particular conclusions, it is Exhibit C that puts things into perspective.
Exhibit C - Average Discount Window Borrowings
When the Fed updates its H.4.1 every Thursday at 4:30 pm, it provides two sets of data: an average over the period, and a period end number. And if one was looking to find a flashing red light within Bernanke's book, which has always without fail been a big change in Discount Window borrowings (either Primary, Secondary or Seasonal Facility), looking at the period end number would have shown nothing out of the ordinary: there was a modest $42 million borrowed from the Primary Credit Discount Window facility on the day ending December 14, Wednesday, far less than previous 2011 outliers. However, things rapidly change when one observes the average usage of the Discount Window for the past week.
The result is as follows: a $393 million surge in average borrowings:
And since we know that of the 7 days that make up the average period, one can be eliminated (as there was no borrowings on Wednesday), the implication is that on one day in the week ended December 14, the Fed lent out up to a whopping $2.5 billion (as the $393mm is an average 6 day number) to a bank in the form of last recourse cash via the Discount Window.
Confirming just this speculation is Barclays' Joseph Abate:
After months of virtually no use of the Fed’s discount window, borrowing jumped to an average of $400m/day in the week through Wednesday. The Fed reports only the weekly average of daily borrowing and the daily amount outstanding on Wednesday. From these figures, we estimate that on one day last week, total discount window borrowing reached $2.5bn. Of course, the same $400m/day weekly average could have been achieved with a bank borrowing $900mn on Friday. It is unclear what prompted this pick-up in borrowing from the Fed. There was neither a spike in the fed funds rate nor any disruption in the repo market, so we are a bit puzzled. Of course, under Dodd-Frank, the borrowing bank’s name will be released – after two years.
Yes, the name of the bank that received what amounts to a Fed bailout will be released in two years, but no, we disagree that there was no disruption in the Repo Market. Perhaps Joseph forgets that the Fed lends out Discount Window cash to "eligible" entities out of Europe... where the repo market is in total collapse and wholesale disarray.
Furthermore, the borrowing was from the Primary Credit facility, or that reserved for stable banks, not Secondary Facility eligible names which have to pay an addition 50 bps in punitive interest. And since the bulk of Primary Credit eligible banks domestically already are swimming in $1.6 trillion in fungible excess reserves (which is the reason why discount window borrowings have been so modest ever since QE1 unleashed a liquidity tsunami for the bank, which serves no other reason than to plug capital shortfalls - it certainly is not being lent out) it is obvious that the Fed is now back to its old job of bailing out banks. And not just any banks - European banks.
Some appropriate reminders from the Fed on the "lender of last resort" discount window use:
Terms & Features
To access the Discount Window, eligible depository institutions first must execute the necessary documentation and pledge collateral to the Federal Reserve.
|
Feature
|
Primary Credit
|
Secondary Credit
|
|
Rate
|
Above the FOMC's target for the federal funds rate. | Primary credit rate plus 50 basis points |
|
|
||
|
Term
|
Overnight | Short-term, usually overnight. Can be extended for a longer term if such credit would facilitate a timely return to reliance on market funding or an orderly resolution of a failing institution, subject to statutory requirements (FDICIA restrictions). |
|
|
||
|
Eligibility
|
Depository institutions in generally sound financial condition; same as eligibility for daylight credit. | Depository institutions that do not qualify for primary credit. |
|
|
||
|
Use
|
Generally no restrictions. May be used to fund sales of federal funds. |
As a backup source of funding on a very short-term basis, or to facilitate an orderly resolution of serious financial difficulties. |
|
|
||
|
Administration
|
Ordinarily no questions asked. | Reserve Banks will collect information necessary to confirm that borrowing is consistent with regulatory requirements. |
Eligibility
Depository institutions to which the law grants access to the Discount Window and which the Federal Reserve deems generally sound are eligible to obtain primary credit. Reserve Banks determine eligibility on an ongoing basis using supervisory ratings and capitalization data; supplementary information, when available, may also be used.
|
Examination Rating
(CAMELS or equivalent) |
Capital
Designation |
Generally
Eligible for |
|---|---|---|
|
1, 2, or 3
|
Adequately or well capitalized
|
Primary credit
|
|
|
||
|
4 or 5
|
Any
|
Secondary credit
|
|
|
||
|
Any
|
Less than adequately capitalized
|
Secondary credit
|
|
|
||
Common Borrowing Situations
The new Discount Window programs offer an enhanced opportunity for eligible depository institutions seeking an efficient solution to meet unexpected, short- term funding needs.
| Likely Situations for Borrowing Primary Credit |
Generally, there are no restrictions on borrowers’ use of primary credit. Here are some examples of common borrowing situations:
- Tight money markets or undue market volatility
- Preventing an overnight overdraft
- Meeting a need for backup funding, including a short-term liquidity demand that may arise from unexpected deposit withdrawals or a spike in loan demand
- Arbitrage opportunities
Conclusion
We know two things with certainty: In the week ended December 13 (14th excluded) one or more banks, most likely European, borrowed up to $2.5 billion from the Fed's Primary Credit Discount Window. And since US banks are drowning in dollar-based liquidity, any need to approach the Discount Window now, in the context of trillions of Excess Reserves, carries with its exponentially greater stigmata than it ever did during Lehman days. Also, in the week ended December 14, the Fed did a mid-month settlement of $31 billion in MBS purchases - a transaction which allowed a Primary Dealer to source critical liquidity, based on $30 billion in buyback authorization granted for the period beginning December 13. What we do not know for fact is whether the $30 billion in MBS purchases was completed on Tursday or Wednesday, and whether this is a delayed settlement for previous purchases, although due to the mid-month settlement process, it is possible that any transaction could have settled immediately. And for those seeking a specific "bank bailout" date, the 13th looks quite reasonable: it was the first day when an MBS purchase was permitted and it was the last day when a bulk Discount Window loan could have been performed.
But wouldn't the market learn of even a hushed European bailout? And wouldn't there be a massive sell off if it became clear that exactly two weeks after the Fed's coordinated broad bailout of European banks, it had to engage in another, far more politically tenuous bailout, this time via a $2.5 billion free money loan to a cash scrambling bank? Well, if the news was leaked at 2pm on Tuesday it sure would explain the market reaction...
So while much of the presented above is circumstantial, perhaps the next time Congress is debating with Ben Bernanke just how good it is for the US taxpayers to bail out European banks, someone can ask him just who it was that the Fed once again bailed out the week of December 14. Because America obviously does not have enough problems of its own...
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Guns kill people.
No, people kill people.
Yawn...................
philipat - sorry - for me the funniest was - 'no bullets kill people'. it's true. it's not really the gun. without a bullet, the gun is pretty harmless.
"it's not the bullet that kills you, it's
the hole." anon.?
C'mon. EVERYBODY knows you die from lack of oxygen to the brain.
Phillipat's case will probably be autoeroticasphyxiation...
Lotso, We will open a pawn shop! Guns for sale! lets combine the cash for gold and check cashing under one roof. Close two shops! Lay people off! Put up large blue for lease signs. The yabyum strip mall buisness model is fluid, like all third world models should be.
No payday loans? The next great biz in AMERIKA!
COOL -- with enough partitions and plumbing, a regional mall could become a housing project for 50,000 people.
Plenty of parking, too!
You took my idea. I will be investing heavily in the idea of Malls being converted to communities. The old Footlocker store is now home in the back business in the front. Indoor, self sustaining communities (screened for safety) with a community garden where the open spaces and parking lots are today.
Already done, FEMA camp's with two hot's and a cot........
They basically filmed the movie "Logan's Run" in a shopping mall (but it represented a futuristic domed city)...
Ok, so Logan and Jessica go back to the city, destroy the computer and take everybody outside.
So, a few questions:
Just asking.
#41
This is actually a recurring nightmare I use to have in the '80's - thanks. Won't be sleeping for awhile. My "mall commune" nightmares were WAY over-crowded and, well, there's no words.
Old schools, libraries and hospitals fall into that group too.
weren tranformed into over-priced condos rather than a planned community.
Aren't malls already a habitat for humanity or what passes as humanity?
very good.
Most malls are actually HabiTrails for Humanity, after all.
I'm only quoting what Noyer says officially in the context of the three year bazooka. I am not a banker and I have no special access to the movements of bank transactions on the Bourses or in shadow banking. It was common knowledge that Euro banks were getting squeezed in their dollar purchases on Libor.
The fact that you question what has officially been said by Bank of France chief, and the implicit assumption that it reflects all the 17 as well; otherwise it would be incongruous; is an indication that something fishy is occurring, if you are looking in that particular direction...
Fed's new slogan...............
'Bailouts 'R' U.S.'
If you are using a weapon that takes three years to get operational you have already lost the war.
Not if you're fighting a Hundred Years War.
Time is relative.
The longest day of the year is not in fact 7/21 (summer solstice), but in fact the day your mother in law spent at your house.
6/21?
You are correct sir. I stand corrected. Can't have the summer solstice in July, that puts the winter solstice into January, raher than December.
6/21 it is.
TD : Here is an article by Soc Gen CEO. On credit crunch.
Pas de "credit crunch" en vue, selon Frédéric Oudéahttp://www.latribune.fr/entreprises-finance/banques-finance/industrie-fi...
posted yesterday in FRENCH. Confirming the Immediate operability of the ECB BAzooka.
To Lord Wellington : Its valid three years and in action as of this week. SO the article says.
But ...It could be game of false mirrors...they are capable of anything, these bankstas!
PS : Same article says that UK will not stop the 26 to use the EU institutions to revise treaty. So, No blocage by UK in upcoming EU revision agenda, inspite of current spat...
Londres laissera les 26 autres pays de l'Union utiliser les institutions communautaires http://www.latribune.fr/accueil/a-la-une.html
Parlez vous frog?
you do for both of us.
Wii.
wii wii - no poo poo
A former employee (auditor) of Soc Gen killed his ex-wife and himself on Thursday.
http://www.recordonline.com/apps/pbcs.dll/article?AID=/20111217/NEWS/112...
I guess it's fair to say that unstable people have created an unstable world.
I think it's fair to state this from that news story.
"Trapp was suing his former employer, Societe Generale Corporate & Investment Banking, alleging it had harassed, discriminated against and eventually fired him after he took several months' sick leave when he was diagnosed with Marfan syndrome, a genetic disorder, in late 2008."
His murder/suicide appears to have absolutely nothing to do with the financial state of Soc Gen.
Hence, the problems were congenital.
I think his mistress jilted him...cherchez la femme. Great expectations are sometimes a bitch for men who play five card stud with derivatives and mistresses. Its one or the other.
"Is that so?
"Dexia Drew Most From Discount Window in Record Week in 2008""
But how big was the Fed-ECB $ swap line then? Isn't it a lot easier for european banks to get $ from the ECB now?
Does borrowing from Fed or ECB have to be mutually exclusive? I sense a fake debate.
I think the Tylers know a lot...and are sometimes able to piece together what they don't know.
At this global level of finance, only the inside players know, the rules change and secret deals/lending agreements are cut.
I think you are right. Fake debate.
And we will all be astonished when and if the truth comes out about who was lending to whom and under what circumstances.
TD!!! So is Dexia the linchpin in the worldwide bank cartel? How does the Friday night downgrade of Belgium by 2 handles work on this? Will Monday be bloody?
thanks for the lipstick! I was hoping to make a century.
And the ECB goes to the Bundesbank...
http://www.bloomberg.com/news/2011-12-15/germany-s-hidden-risk-bloomberg...
Good grief, that needs a counterpoint!
http://www.youtube.com/watch?feature=player_embedded&v=n2vN8SWoKRk
ori
/this-that-and-the-4th-reich/
Just left of the frame, Bawney Fwank is waiting to catch this sugar-plum in pink.
Plums, plural.
SPRITZZZZZZZZZ !!!
Well. shit...there goes the coffee again.
Imagine as his male ballet partner you place your hand underneath to lift him up and discover he has no balls. Would that make him a Fedsvestite?
This clearly answers the question; Does Bernanke have the balls to do the right thing?
Regards,
Cooter
wb7 - i hit the up vote button and they gave me two! wow.
dude - i love you. seriously. i browse here and yahoo finance. yahoo finance stopped any comments on monday.
the fix is in. please stay on as long as possible. i hoping though at somepoint, when the fraud is
finally exposed, they will give up trying to stop us,
and just be looking for a cave to hide in.
Yahoo Finance suspended comments?
Yes. Looks like Yahoo has removed the ability to enter comments for any article on their financial pages. The sheeple can still comment on any article about the Kardashian Kuntz however.
That is troubling.
i noticed it i think monday dec 12. it is EXTREMELY troubling.
my observation straw poll would be that 10% of the comments were positive regarding current political/economic policies and 90% were negative. generally seemed to be less of a financial industry insider class than ZH (ok - can i say 'working class'?) but many of the observations where rational and reasonable as opposed to just 'angry' at things like watching job losses, 401k losses, savings at zero %.
i personally enjoyed reading it because i felt it did give me more of an insight into what the less experienced people were seeing and thinking. it really is a problem.
I agree lotsoffun. It was about 90% negative lately and anybody defending the Fed or the Squid was spanked. The level of discourse was far below ZH but still valuable to me since I'm not a trader and a novice. ZH is like a Grad level course compared to anywhere else I've been on the inter-tubes.
You must have been singled out by yahoo because the comment section is still up and running. Or maybe it was just shut down temporarily?
Perhaps it was a temporary glitch? It seems all right now.
jena - as always - you would appear correct. as of close yesterday - the entire week it was down. does seem to be up. very strange.
Confirmed. Commenting is back as of today. Who knows WTF is going on there.
Right before the comments disappeared the automatic censoring of profanties completely disappeared.
Although I enjoy a conspiracy theory just as much as the next guy, i've got to go with the simpler explanation. Likely it was hacked and the autocensor went off line. A week to get it up and running again isn't that long if you've ever outsourced programming to Mumbai.
Put $ signs in his eyes and impale him upon a Euro symbol and you've got the cover for Time Magazines "person of the year 2012".
Nice work William.
OH SNAP!!! Damn William, that's scary.
Did anyone really believe that the FED would NOT bailout European banks? As if any US law could prevent them from doing anything. They´ll always find a way.
END THE FED!
... and support Ron Paul´s weekend moneybomb: https://secure.ronpaul2012.com/
Exactly. The only power these guys have is the ability to create a lot of fiat. Why would they not use their elixir?
I meant to do this yesterday and got run over by real life. Thanks for the reminder.
+25 to RP from me! :-)
Regards,
Cooter
I just heard that pos suppurating lesion David Frum say that when you see RP to hit the mute button because he's a complete ignoramus. He also said RP is great if you want a great depression and want to buy apples with a silver nickel.
And the PM/RP corporate media smear campaign continues unabated.
+RP+ I greened him twice.
i've given plenty to charitys, i've written letters and emails. i have never contributed to a campaign.
i've voted twice in 35 eligible years to vote - once for david dinkens (so he could be the first) and once for kerry (that was a wash).
i just sent money to ron paul. this HAS to happen. no more dope and chump change. no more sociopaths. a mature adult with a brain has to be put into office. we can only hope.
i'm plotting a guest host on why in a real democracy one doesn't 'fund' campaigns. and clearly (thanks jon corzine, thanks bloomberg, thanks, etc. etc.) - if i can buy air time and votes, i can get elected. corzine and bloomberg paid from their own egos/pockets. other 'candidates' pay from somebody elses pocket to fund themselves. whatever. a real democracy has to have a better solution. regardless - and for 54 years i've been relatively politically agnostic (it IS that bad right now i need to do something). thanks guys - wish us luck.
Here are your transaction details:
Donation amount: $100.00
Transaction date/time: 2011-12-17 12:12:23
Transaction ID: 326558485
exactly! me too on all points
When is this nonsense going to stop.
The inevitable end is a disastrous worldwide financial collapse. The only question is timeframe.
Zerohedgeinista's will likely be the first to cypher-out when the actual collapse occurs. So we got that goin' for us.
Maybe MF is indeed Lehman except for the fact that there won't be a subsequent correction until the absolute final one.
In that case you might have a year or so up to Dow 20K.
MF filed for bankruptcy on halloween .. the scum like to do important things on such 'significant' dates .. and the significance of the bankruptcy is that the market mechanism has been broken.
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/12/8_Ji...
The dawning of the fact that we cannot trust anything anymore is a slow-motion train wreck, getting bigger all the time.
Oh, three new Jim Rickards interviews that I didn't catch ...
This guy goes great with oatmeal, eggs, molases, and coffee on a lazy Sat morning. :-)
Regards,
Cooter
Goats cheese and beer for me.
I read Currency Wars this week or last and I really enjoyed it. It covers a lot of territory, even some fairly deep territory, without being too technical or boring. Recommend it to anyone.
I just bought a copy for my old man for xmas (my only gift this cycle). It is an excellent read.
KWN has 50 audio interviews with JR (I checked my local disk archive that I made my audio CDs from for when I drive). It is really must-listen stuff if you liked the book. He talks about all the same stuff, but explores many vectors in much greater detail. Just hit the KWN archive page, start the the botton, and snag all his MP3s.
I think there is a part two of his most recent interview out in a day or three, so that would make 51. About 15+ hours of audio in total.
Regards,
Cooter
Thanks Cooter.
I listen to these at the gym on my iPod. Much easier to transfer and most cars today you can buy an iPod dock for.
When they decide to stop the nonsense or when thing's are so fucked up they have no choice but to stop the nonsense.
Whichever comes first. In the end, you will get it in the end. That's ASSured.
Investigative financial journalism at its best.. respect!
Ditto!
Unfortunately, if history is any guide, the Fed's open-handed generosity will only serve to levitate Wall Street's liquidity meter -- the S&P 500.
Which is probably the idea. CHRISTMAS GIF', UNCLE BEN!
Good work TD.
I'm going to go with this was an American bank, more than likely one with the word America in it.
Wait, are you contradicting Dick X Bove? How dare you!! BAC is absolutely on sound financial footing. Haha ... Saturday afternoon humor.
Uncle Warren thanks you.
The magnificent bastards get bailed out every damn day.
tOO BiG To fAiL LOan MOdIFiCATioN FOrm r.1.A.002.B.XXXX
Taste great..or less filling?
"QE1 unleashed a liquidity tsunami for the bank, which serves no other reason than to plug capital shortfalls - it certainly is not being lent out)"
I suspect that this claim is wrong.
While the reserves are not being 'lent out' in normal bank operations (eg... loaning you money to build, say, an apartment building or factory), the banks can and do 'lend' their reserves amongst themselves in the overnite market (which loans can themselves be rolled over for extended periods of time). This is the "Fed Funds Market." The total amount of reserves appear to be the same on the FED's books, but the ownership of same alters over time.
This Fed Funds borrowing and loaning (which appears on the banks records as Fed Funds Bought or Sold, go figure) is, I further suspect, used in combination with securities lending and extended repo'ing to fuel stock and commodity speculation. That's why QE encourages price inflation in stocks and commodities even though the Fed/Ben claims that the reserve expansion is 'sterilized' (held in place at the FED and doesn't enter the real economy) due to the fact that the FED is paying a tiny bit of interest on reserves. The consistent level of overall reserves masks all sorts of movements within the mass of reserves that have various real world impacts.
Thus, the growth of bank reserves via QE is not simply to mask bank capital problems.
Overall liquidity is unaffected by banks lending Fed funds among themselves -- for every borrower there is a lender.
How would banks rehypothecate reserves at the Fed to leverage themselves? As the Talking Heads used to say, 'That ain't allowed.'
one clue of this is the fact that banks are allowed to group Fed Funds Borrowed/Sold + Securities lent/borrowed + Repos in one category for reporting purpose, suggesting the relationships are joined at the hip.
And perhaps the leverage to which you refer is not at the bank level, but at the level of associated clients (eg hedge funds) who participate in these transactions.
And there are surely few things that banks 'ain't allowed' to do if they set a mind to it, David Byrne notwithstanding.
Let me put the question to you - IF the typed up QE generated bank reserves are truly sterilized, as the FED says and the overall level of reserves on the FED BS seems to suggest, then how does QE generate price inflation? Because QE was paid for via typing up reserves.
Now this would have been an interesting conversation...which unfortunately came to an abrupt halt.
Yes, let's all talk about the Money Bomb and other assorted BS...
A french bank perhaps? That might explain the sudden anti UK hostility from the CESM.
QE is well in its way, but until they say so in the open, nobody will notice. Why don't they just say they will QE and do nothing? It will still be good for a few thousand points on the DOW.
Tyranny goes from soft to hard in the blink of an eye...
Well, interesting investigative work there.
In the context of this comment from Tyler:
"the Fed did a mid-month settlement of $31 billion in MBS purchases - a transaction which allowed a Primary Dealer to source critical liquidity"
If this MBS transaction was done for "bailout" purposes, then we should look at the Fed Primary Dealer list and scan for European banks and moreover those that would most likely have been under funding stress.
If we do this, then if this was indeed a bailout, it would have had to have been a bailout of BNP Paribas or Societe Generale.
why not a japanese bank?
"There are three kinds of men, ones that learn from books, men that learn from observin and men that have to pee on the electric fence for themselves" Will Rogers
BenRoid will have to pee on the fence, best not be touching him when he does.
Run.
Excellent work Taylor, thank you!
Please stop by your ATM as soon as possible and make withdraws.
Time is short.
thank you.
Hey Irish66, Just for the record,I am pretty sure the super-humans name is "Tyler". Calling him"Taylor" is kinda like calling "Bill"..."Bull"
Durden. Tyler Durden.
Who down arrows the man's name while your on his site, Jamie, Ben, lloyd is that you??
Any way to get the CUSIPs on those MBS that the Fed bought? Would that be a way to figure out who was feeding at the Fed trough?
holdbuysell - could very well not be, because many tranches or passthrus so distributed. on the other hand - could very well be as often a single tranche is bought in whole, or there could be a process of elimination as to set theory - which bank held each cusip.
the data isn't always 100% - the HDS function on bloomberg allows one to see who owns what cusip on a quarterly basis. not sure if foreign holdings need register if not held in an american subsidiary registered here in US. others would be able to fill in my gaps.
BOOM goes the dynamite
Yeah, having a marxist revolutionary as president sure puts a damper on freedom and business. Commie rats also like to undermine the Constitution. This is not going to end peacefully. Once in power, Reds never give up unless forced out by We The People.
fuck off
Quit your hating. Anybody who bothers to do the research can easily uncover Obama's Marxist beliefs.
if only it was social marxism and not the gangster capitalism that passes for communism in russia today, even the russians can't stand their leaders.
Yeah he said on drrams of my father that he hung out with marxists and was careful who he cultivated as friends so that his authenticity would not be doubted.
He didnt try to hide it. Unlike the last ten pages of his college term paper which will never be released. The first few pages criticised the founding fathers for insufficient wealth distribution.
Screw the last ten pages, how about his grades? How about anything he ever wrote at the Haaahhvahd law review?? Maybe an ex-girlfriend, anyone who knew him other than Bill Ayers prior to his political life, no..
Down arrow for general stupidity.
If Europeans go to the ECB for bailout funds, might that mean ... a UK bank?
Any ideas?
Barclays was downgraded this week??
Was wondering same thing myself? Polish bank? Norwegian bank? Someone not in euro zone so fed stepped in?
Italy and Spain.
Lots of people concerned and angry about all of the Bernank money printing and buying MBS crapola in our name... so this time he just doesn't tell anyone about it?
Call on line one, Ben, guy from San Quentin has a few questions regarding accomodation...
Soon they'll drop title transfers from helicopters!
My longshot bet it was DB or Commerzbank from Shurmany.
The Tylers channelling the ghosts of the great American pamphleteers. Wow does ZH shame the lame stream media. The truth nothing but the truth so help me God.
http://en.wikipedia.org/wiki/Pamphleteer
If it is a bank or banks from the Primary Dealer List
Along with BNP and Soc Gen, you'd need to look at Barclays and RBS surely?
if the advance by the fed was for MBS securities of $31 billion - why would a european bank - french - own that huge amount? - unless the two events are unconnected directly - wouldnt that party be domestic as advance of MBS and then perhaps lending to european bank as intermediary ? say blackrock
what dont i understand?
List of Primary Dealers - link.
Latest Primary Dealer holdings including MBS - link.
Most Americans have never heard of Mizuho Securities USA Inc. yet they are allowed to borrow at the discount window without having anything to do with the American 'real' economy per se. Same goes for Daiwa and Nomura. Apparently, all you need is a US based address.
Mizuho was one of the TBTFs bailed out by the Fed in 2008, I believe. Nice and revealing that list.
A good BAC will become a wholly owned sub of JPM; the bad BAC will be shoved up the taxpayer's ass.
i perceive 4 parts to BAC. 1- the retail storefronts - sold to jpm and or wfc. 2- ML retail brokerage - not sure who gets that. 3 - the investment bank run by thomas montag. slots back into GS? 4 - countryeffingwide - we the people get that baby.
Maybe fed takes all mortgages And sets the interest rate to 1%?
http://www.ecb.int/press/key/date/2011/html/sp111216.en.html
The reform of the international monetary systemSpeech by Lorenzo Bini Smaghi, Member of the Executive Board of the ECB ...stick this in your pipe and chew on it...dont for a second think that we are heading for a single world currency..esp with that fraud as president of the US..
very useful info
and remember, several congressmen met with bernanke, mondy i think, and they all came out saying that bernanke WOULD NOT bail out european banks.
Dudley was asked about this in yesterdays hearing if I recall, replying that the Fed does not deal in bailing out European institutions. Either the Fed is fully audited or you'll never see a hint of transparency.
I wish Jim Carrey's son in 'Liar, Liar' would make all the senior management of all financial institutions tell the truth, and nothing but the truth. For one week. You think the system would survive such a predicament?
Corzine: "The money is in a vault below my house. I take baths in it every evening at 10:30 PM. On Tuesdays I practice butterfly style"
Blankfein: "Thanks to some accounting shenenigans I don't understand, this quarter we managed to make the 1.2 bln loss look like a 200mln profit. Ask me about my bonus".
He can say not European banks knowing this doesn't include Barclays, RBS, HSBC and Lloyds to name a few.
Coincidental timing? The Bernake was on capitol hill dec 14 warning republicans (in a closed door meeting?) about the situation in europe. Caucuses are usually closed door. Where have we seen that before?
http://money.cnn.com/2011/12/14/news/economy/bernanke_europe_senate_gop/index.htm
I suggest a check of the republican US senators and staff trading accounts for Dec 14/15 would reveal which bank was bailed out, which banks are next and provide an indication of the seriousness of the situation. The put/call ratio of the option positions held in the trading accounts of congress people and their staff is not a contrary indicator.
It would explain weakness as all their donors got the sell signal as well
Oh, that? Just a stock pitch. Nothing to see here.
Regards,
Cooter
Can't wait for the theatrics of the CEO testifying in congress in two years.
I'd like to know whether it was a French bank.
Great article ZH, Thanks.
ya know....$2.5bil or $30bil just dont seem like big numbers anymore.....soon $2.5tril wont seem that big.....!
The point is that someone needed $2.5 billion in addition to the trillions already in the system. The action is always at the margin.
Also that they did not have the liberty of being stealthy about it...this smacks of massive desperation.
I am afraid of what's going to happen when these banks that have been receiving Fed capital injections eventually fail. Right now, all of the capital that has been injected is essentially sequestered from the real world on bank balance sheets. But when the bank(s) go under, I fear that the excess capital that is on balance sheets for now is going to be unleashed into the consumer market, causing greater inflation.
I am a babe in the woods but my gut instinct regarding this week's gold takedown was that some people badly needed cash in a hurry - rather than the esoteric explantions about backwardisation, inverted contangos and negative gold lease rates. There will be banks selling their office furniture before the New Year.
Above all, that lying SOB keeps lying to the very people who put trust on him. He is a criminal at best.
observation: ZH better be hoping for an economic collapse bcoz if it doesnt happen and the global economy stabalizes albeit with a relatively modest amount of pain than this total anarchy & survival guide BS currently preictd by this website, it all over. As soon as this European drama concludes, whatever the level of negative outcome achieved, its game over for this website.
Man they sensationalize shit to the extreme
RON PAUL 2012
tell you what, pretend the past almost 6 weeks that you've been trolling here never happened.
Now you can go back to BI, the tech ticker and looking for a job.
A lack of preparation on your part does not constitute an emergency on mine. Remember that.
If you come sniffing around my house, you better be lean and pre-seasoned.
"If you come sniffing around my house, you better be lean and pre-seasoned." +100
I have a hunch that train of thought will be wide spread if shtf. Mental notes are being taken on the crowd who bleet, oh that is all horse shit and will never happen, ha.
Pick your car and pick your lane. If a fix is possible, great! If not imo it is complete foolishness not to be educating and preparing ourselves to survive through the other side.
I tell folks who think they are stopping by for a hot and a cot after the fun to bring butter lotsa butter.. My kids like their long pork fried..
And another thing... where ZH is concerned, form follows function.
If the world weren't mired in financial hokus-pokus obfuscated daily by financial oligarchs and covered up by their political henchmen, we would be discussing and sharing our outstanding trading prowess.
Nobdy likes this shit.
I can't understand why people who disagree with a website so much bother to troll. Just fucking leave. You're obviously not here to learn anything. Your choice of course.
Love the Ron Paul "endorsement".....psyops starting to work on dividing and crushing Ron and his followers.
Next news item (if he starts to win primaries)...a donation from a Nazi white supremacist...."look....Ron Paul hates Jews and blacks? Do you support Ron Paul? If yes, then you also hate Jews and blacks." etc etc etc
Only way out of this is to create a real alternative media that is big enough to counter the corrupt MSM. ZH needs IPO????