The Federal Financing Bank (FFB) released its most recent monthly data today. The Treasury owns this bank, meaning the citizens own it. The folks at the FFB are doing a heck of job. Assets rose in the month by a very respectable $866,000,000 (18% annualized growth!). The bank ended November with assets totaling $58.4B; it’s levered 15-1.
A look at where that “growth” came from.
The Post Office got (another) $84.9 mil, bringing the total IOU up to a hefty $13.6B. I looked at the monthly advance and thought, “Gee, that’s an odd number.” Actually it makes perfect sense. Multiply the November draw ($84.9) by 12 and you get 1,018.8B. Of that number, an even Billion is the legal annual borrowing limit of the PO. The balance of $18.8mm is the interest on the whole IOU at an average interest rate of ...hold on... 0.14%.
This result speaks for itself. The deep thinkers at the FFB have this figured down to the penny! An “elegant” solution, at that. Near zero cost of debt and the willingness to lend more principal to receive interest (keep the loan “current”) avoids a stinky problem in an election year. An artful kick of the can that almost no one sees.
The FFB made great strides in expanding the book of loans to large private sector companies. Ford got (another) $145 large:
Private sector loans now total $2.2B. In addition to Ford, the list of borrowers includes Nissan, Fisker, Tesla and Vehicle Production Group.
A big “Way to go!” is due for the record-breaking increase in the FFB’s exposure to solar farms during the month. An additional $181mm came on the books. Some mid-night oil was consumed to achieve all that! The loans (secured by a first lien on mirrors and plastic in the desert) now total just shy of $2.2B. The only negative to this good news is that any aspiring presidential candidate wanting to cast stones at this Administration's solar investments need look no further then this list to find the necessary stones to toss. Still, a very impressive effort. On the flip side, the Administration needs some help in the sand states, and this delivers on a promise to the Greens.
Another area where the FFB deserves an A+ for its efforts is the big refinancing and new loans for America’s rural utilities. No less than 73 individual loans were refinanced during November. At the same time, a whopping $465,000,000 of new loans were booked. This outstanding performance brought the total utility loans to a record $29.8B. (I hear the boss, Tim Geithner, has a bottle of champagne ready for the day the FFB hits $30B. – Get it cold Tim!)
So who are these titans of industry that the FFB is loaning our money to? And at what terms? It’s a very long list. It can be found here. The following are just a few of the well-know companies that are getting some “extra attention” from Uncle Sam.
It’s hard to find any new business effort where the FFB is not getting the job done. But, to be balanced, there is one area that needs some attention. Two years ago, the FFB’s portfolio of loans secured by Foreign Military Sales stood at a healthy $545M. Here we are two years later, and the loan balances have fallen to a miserly $294M. That’s a 47% drop in just two years! These Department of Defense sponsored loans are “money good” investments - good business for America. There are plenty of opportunities out there. More effort is warranted. Another $200M of foreign military sales will pay big dividends! Rumor has it, some "big" deals are in the works.