26
Jul
2013
Just One of Many Fed Interventions
I’m doing research for a paper on Fed interventions during the financial crisis; there’s a great timeline provided by the St. Louis Fed here. I had not been aware of this entry for November 2008:
The U.S. Treasury Department, Federal Reserve Board, and FDIC jointly announce an agreement with Citigroup to provide a package of guarantees, liquidity access, and capital. Citigroup will issue preferred shares to the Treasury and FDIC in exchange for protection against losses on a $306 billion pool of commercial and residential securities held by Citigroup. The Federal Reserve will backstop residual risk in the asset pool through a non-recourse loan.
I don’t have any links handy, but I remember the total cumulative amount of “emergency loans” given by the Fed to not only the banks, but many non-bank major corporations, such as Caterpillar, since 2008 totals in the vicinity of $9 – $12 trillion.
Makes sense, really. The majority of that would go to offshore central banks, while the rest would be given to banks here to hold in reserve and directly to other corporations.
Are you referring to this?
http://www.econbrowser.com/archives/2011/12/777_trillion_in.html
No, I was actually referring to an article or paper not full of straw men and ignorant apologia.
More like this:
http://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm
“The Wall Street firm that received the most assistance was Merrill Lynch, which received $2.1 trillion, spread across 226 loans.”
Remember, I said CUMULATIVE amount of loans.
oh, you mean the article with the same type of terrible accounting?
Accounting depends on context.
The context is cumulative total of loans.
The accounting is from the Fed.
You mad bro?
Sorry, didn’t realize adding “cumulative” made the figure any less nonsensical.
It isn’t “nonsensical” to add up all of my loans to you over a period of say 1 year.
If I loan to you $100, and you pay me back $105, and then I loan to you $200 and you pay me back $210, it isn’t “nonsensical” to state that I loaned to you a cumulative total of $300.
I think a more honest way of accounting would be to get something like the 1 year adjustable mortgage interest rate (approx 2.5% at the moment) and then total up the interest saving on those short-term loans as compared to what normal people pay.
That saving won’t be 9T but it will be large, and to all intents and purposes is it a gift.
It’s not “dishonest” to take a particular concept, such as “cumulative total of loans”, and then accurately reporting it.