Why Is The Fed Redacting Bank Of Canada's Presence In FX Swap Lines, And Hiding The Terms Of Its Currency Transactions?

While many will focus on the borrowings by various insolvent banks from the Discount Window (yes, we know Bank of America/Merrill Lynch was broke and went to town with taxpayer money after Lehman blew up, and it also was the bank most impacted by the quant blow up in August 2007 when it borrowed $500 million from the Fed on 3 occasions), a possibly far more important question is why does the Fed persist in its secrecy even when supposedly forced to disclose unredacted data. While total discount window borrowings peaked at just over $110 billion, this is nothing compared to FX swap lines between the Fed and other banks, which as we said before was the means by which the Fed bailed out the world (even as Belgian Dexia and German Defma were the biggest borrowers from the Discount Window in those days in early November) amounted to $529.4 billion at the peak. So we decided to look at just what the terms were on these various borrowings and to our surprise were met with a whole lot of "NR", aka redacted data. The data on par lent out, par received, net change, limit and undrawn available, which is critical to determine whether the Fed actually lost money on its FX swap transactions is not available. And what is even more stunning is that one of the banks in the list, which we believe can only be the Bank Of Canada is purposefully and diligently redacted out of the 977 pages in the document highlighting the currency swap data. We have a simple question: why? And why pretend that the Fed is following court transparency orders if it continues to censor such critical information on how it actually impacts markets through its operations.

Exhibit A: the email from Brian Candler highlighting bank participation including on NR bank - Bank of Canada?

Exhibit B: the full breakdown of FX transaction on the peak day of FX swap transactions: November 3, 2008.

Full filing for those who wish to scratch their heads some more.


FX Swap Activity Reports