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US Federal Reserve Data On Loans During Crisis Released
oDDmON oUT writes "Pursuant to a FOIA request, Bloomberg has acquired numbers from the Fed on loans made to banks and businesses during the financial crisis between 2007 and 2009. They also posted a direct link to the spreadsheets in zipped format and updated their data visualization of the lending."
Someone forgot they don't work for the Government when they approved the release.
Is Verizon a bank?
IANAB, but I wonder why the US Federal Reserve is loaning money to foreign banks. SHouldn't that country's equivalent be insuring its solvency?
We don't need our deposits protected.
The FDIC already had that covered and actually makes banks LESS in need of protection, since their most important creditors, the american people who have deposits with them, can't get shafted if the bank goes bankrupt.
Just let the banks fail already. Having the FDIC cover deposits is all the bailout we need.
explain please what they did with all the profits? let's take the case of one huge member bank, Bank of America.......
In other words, they take these low interest loans and buy treasury notes with them. All the interest they earn from the Treasury Department ends up being their profit.
This is nothing more than common theft really.
Individuals often are wanting handouts, not loans.
Honk! bullshit! I'm an individual. I'd go for a no interest loan any time. Are you offering?
There is a lot of difference between a loan and a handout.
Honk! bullshit! The difference is in name only. They both save you money.
The only difference between the banks and individuals is that rich powerful people run the banks, so they got the freebie loans.
...than the banks. Looks like only about $100 billion not paid back by banks, but the two government sponsored organizations are expected to have losses approaching $300 billion. SEC is now suing the former CEO's for fraud.
After this and other "bombshell" revelations by Bloomberg this year, they are apparently the only financial news organization worth its salt in the US. Kudos to them, and shame on everyone else (WSJ, FT, Economist, etc etc).
In Soviet Russia, articles before post read *you*!
It's very simple. When you see the number `4`, a pony is killed. A `7' means they are all out of red paint, come back Tuesday. A `2` means water fountain. And so on and so forth.
rewriting history since 2109
We don't need our deposits protected.
The FDIC already had that covered and actually makes banks LESS in need of protection, since their most important creditors, the american people who have deposits with them, can't get shafted if the bank goes bankrupt.
Just let the banks fail already. Having the FDIC cover deposits is all the bailout we need.
I like how this got promoted to level 5 even though anyone who has taken a brief course in remedial business knows that the FDIC does NOT guarantee insurance on all funds, and for those funds, it is only insured up to 100,000$.
Have fun getting only 100k or less of your retirement account back :)
GG, better start reading other blogs
Your deposits are perfectly safe because they don't really exist. They could burn your dollars on deposit and print you new ones on withdrawal. To you it's precious acquired wealth - tokens representing the sweat of your brow, the profits of careful negotiation. To them, it's just not.
Help stamp out iliturcy.
While all the banks on the list were in the crapper and unable to lend cash lots of major companies borrowed from the Fed I see BMW Toyota and Ford on the list along with GE and Caterpillar Verizon and even McDonald's this sort of implies things would of been a lot worse if these companies were unable to secure funds though other means though it is odd that Korea as in the country is on the list though its for a small amount. Ford seems to of borrowed money from the Fed for there credit arm Ford Motor Credit which is not the same as the bailout to GM and Chrysler but more likely used to allow them to finance auto loans for customers and it was paid back 100% in under a year
A possible outrage would be a bank that got taxpayer money to survive, refusing to refinance or restructure said taxpayers' mortgages. That would be the least they could do, considering that by refusing, all they're doing is adding to foreclosed property inventory and keeping housing and the economy down, prolonging everyone's suffering.
The FDIC limit was bumped to $250,000 in 2008. SIPC insures $500,000 of security investments.
Do you even lift?
These aren't the 'roids you're looking for.
The magnitude of the losses would have been such that the FDIC fund would have been sucked dry in a heartbeat. Then it would be up to the U.S. Government to make up the shortfall, piling the new government debt on to the national debt pile. Haven't we been doing enough to "pile on" already?
Also, there's a lot of "interconnected-ness" in the banking industry. If one large bank fails, it will drag another handful with it. They will drag others with them, etc. Only "smallish" banks can fail and have the system absorb the impact without massive "domino effect" collapse. "Too big to fail" is a sobering thought...
Retirement accounts were not protected by FDIC insurance, since they are invested in various mutual funds and such. Most people have lost a significant fraction of their 401k despite any bailouts. Unlike financial sector salaries, I don't think 401K accounts have rebounded much, either.
http://www.yale.edu/law/leo/052005/papers/Warren.pdf
Did you mean "ends up being revenue?" Since the banks were taking losses from mortgage defaults, many did not turn profits until the tail end of that period.
Have fun getting only 100k or less of your retirement account back :)
Retirement accounts were not protected by FDIC insurance, since they are invested in various mutual funds and such. Most people have lost a significant fraction of their 401k despite any bailouts. Unlike financial sector salaries, I don't think 401K accounts have rebounded much, either.
http://www.fdic.gov/news/news/press/2006/pr06029.html
try again.
1) The fact that someone's retirement is all in one basket is bad financial planning, and I'm fine with them failing. Everyone who does serious investing should know what the FDIC insurance covers and plan accordingly.
2) A lot of people's retirement is actually in the stock market, bonds, or assets that wouldn't be impacted if their specific bank happened to fail.
Assuming the FDIC doesn't go bankrupt, how long can a person expect to wait for their funds to be returned to them? How long can any of you be without your savings?
It calls the money which FED lent "public money." But it wasn't money lent out of the US Treasury. It was money lent by the FED itself. The fact that the loans were branded as "emergency" just made them shorter term and lower interest loans (shorter term loans would always have to be lower interest). FED's main reason for operation is to be the underwriter of all banking. It lends money to banks which then re-lend it in smaller denominations. I am still not seeing why there is this large scale attempt to create an impression that this was tax-payer money which was lent. It was money lent out of FED's reserves. One could argue that those reserves are in-name only. But that's an argument against all the loans that FED makes rather than just these specific loans.
Any guest worker system is indistinguishable from indentured servitude.
The "shadow banking system" took huge deposits from institutions and wasn't subject to FDIC regulation or insurance.
There was a real risk of a domino effect. Look at the near-collapse that followed the Lehman bankruptcy.
Finally! It's all so clear now...
Bio questions? Ask me to start a Q&A journal. Computer analogies available for most topics!
How would that differ from the debt that was piled on to bail out the banks?
you know what happened last time we had institutions that were "too big to fail"? We broke those institutions up. Of course, they didn't like it last time; so now they have paid off our government enough now to prevent such a repeat.
So what?
Between government debt from covering the FDIC underflow and government debt from propping up the banks I'd let the greedy banks take a well deserved fall over innocent depositors any day.
Besides, if the banks get bailed out every time they fuck up they have no incentive to behave themselves.
I'd say that having the feds NOT bail out banks will actually make them MORE reliable, since they'll start smartening up and quit sucking Uncle Sam's thumb.
Long now, shorter in the future on average once the bad banks get eaten alive in liquidation, and the leftover banks get enough of a fear of bankruptcy in them to not goof off and then expect the feds to cover them.
Let them fail.
Right now those institutions are using their "too big to fail" status as leverage to get away with irresponsible behavior.
We don't need our deposits protected.
The protection is not unlimited.
This matters in your retirement and estate planning. Deposit Insurance Summary
Just let the banks fail already.
When a bank is in trouble what usually happens is that its assets and customers are absorbed by a larger and much stronger bank.
You have fewer choices. Local branches are more distant. That is a small problem for the rich --- and a world of hurt for the poor. All benefit programs are moving to direct deposit. You must have a bank account.
No matter how hard it may be to maintain the minimal balance required and and avoid being mulcted by transaction fees and other charges,
This is an important point. One of the biggest economic phenomena in history, the US housing bubble, was not even acknowledged by prominent economists, government or private. They solemnly intoned such a thing didn't exist and all was well. Economics remains firmly a social science. A worthwhile field of study, but not subject to scientific rigor and generally not yielding testable hypotheses.
Many say the massive stimulus (deficit spending) saved the world economy. It's an unfalsifiable assertion.
The Economist magazine had a most interesting discussion on the similarities between the 1930s and today, with a discussion of the responses.
The magnitude of the losses would have been such that the FDIC fund would have been sucked dry in a heartbeat. Then it would be up to the U.S. Government to make up the shortfall, piling the new government debt on to the national debt pile. Haven't we been doing enough to "pile on" already?
Would have been better to add debt by bailing out citizens' bank accounts than to add debt by bailing out the banks who would then just give their execs massive bonuses while laying people off.
"When information is power, privacy is freedom" - Jah-Wren Ryel
I'm sure that if you are not vigilant you could lose money in a 401k. I switched funds (401k investments) and made money (good solid returns) during the 2008-2009 years. Also, government pension funds are doing very well. You will see dips and "losses" during economic turmoil but these can be temporary. Real companies a that offer needed services and well managed funds are insulated against major losses. Hearkening back to the Enron example, their employees had all of their 401k invested in ONLY(!) Enron stock. That is not diversification! Sure they experienced windfalls (which will never happen in a well manged and diversified fund) but they also felt the bite of total loss.
I object to power without constructive purpose. --Spock
My investment experience is limited to Fidelity funds and 401k's (and some stocks purchased individually). These are well managed and yield positively over the long run. [No, I'm not a shill] Playing stocks on your own (sole nest egg) is a tricky game and best left to the people who get paid to do it (professionals). Fidelity is a solid and trustworthy company (in my opinion) . Stay away from banks and non-professional investment as a means to retirement. The funds held and managed by a professional investment firm benefit from the power wielded by their massive interest in the companies. When their funds are invested in a particular company it is usually a significant sum and they are actively involved in communicating with and researching the companies they invest in. This tends to keep things in check, for if the fund managers detect any funny business they get out and put the money elsewhere. The fund manager's main concern is the firm's reputation and stock holder yields. If you care to research for yourself there are a several funds and firms which have weathered the entire economic downturn. It can be done. The news media loves doom and gloom (only conflict sells), so these success stories are not the average parrot garble.
I object to power without constructive purpose. --Spock
These days, even small banks have internet banking. I'm far from rich, but I have no problem not having a "local" branch. My bank is nearly 300 miles away from me, has been for years, and has not been an issue, even when purchasing a house. Internet banking and old-school fax machines solve any need to actually set foot in a bank.
As for minimum balances and fees.....again, small banks often don't have those. Get away from the "big" national banks and one can avoid the nonsense.
That's not even considering the idea of small credit unions -- I've never dealt with them, so I can't claim to know anything about them or their practices.
This is slashdot. You are expected to know that the opening inclusion symbol (left curly-brace) or, "{", is the symbol for fountains. The number 6-9 are not used, while 1-5 are warnings given by the Ring of Warning.
"Yeah...it was the numbers that were irrational, not the murderous cult of vegetarians...." -- Hippasus of Metapontum
"Too big to fail" is a sobering thought...
Which is why one iether does not let them get too big or restricts them so that they cannot engage in practices and businesses likely to make the fail. The fact that we spent the last twenty or so years removing these constraints were at the root of this particular downturn. The fact that this problem has not been addressed as a result is our shame.
That is all.
Or alternatively, they took the $7 trillion at 0.01%, invested 250 billion of it in treasuries at 3%, then had $6.75 trillion in working capital.
In effect, he handed them $6.75 TRILLION dollars, and received $250 billion of government bonds back for the money.
Those derivatives, CDRs CDS's etc. they are just Ponzi schemes, they work only as long as they pay out less than money coming in. When that happens, they take a huge bonus to reward themselves. When it turns, they would collapse normally like any betting shop. They only pay out more than investor money coming in, because the Federal Reserve extends more and more credit against less and less assets.
When one of them gets too far ahead (e.g. lending at 40:1 where others are only allowed 20:1) the Fed gets a little embarrassed about the free money and lets that one fail.
If the Fed obeyed its own rules and only lent dollars against hard assets then none of this would be a problem. Wallstreet ponzi schemes would collapse quickly, they'd lose their assets and we'd move on. But with the Fed involved this theft (I agree it is theft) will keep going till it finally collapses into a Russian Ruble style meltdown.
You earn the value in the dollar, but Wallstreet gets to spend it, and that will continue as long as there's so much crossover between the Federal Reserve and Goldman Sachs et al.
The crossover needs to be stopped, the Fed needs to be forced to obey the rules it was constructed under (even if it means criminal sanctions against Fed officers), and Wallstreet parasites won't have any more money to lob at the Gingriches of this world.
I have a small selection of companies I've picked and like, and invest in. There's an equally small list of companies I've picked that burnt me, but I always got out before I lost too much. Overall I'm ahead. Some of the ones I've held onto are way up in value and I'll sell them as soon as I think they can't sustain that value. At least one stock hasn't gained -anything- in the 3-4 years I've held it, but they consistently pay out about 8% annually in dividents, and I consider that a pretty good return.
I've learned the most about investing through the stocks I bought myself. It's not that bad to take $2000 or so, find a company whose products you believe in, and invest. You'll learn a lot about how the market works.
We have a pretty wide selection of savings on top of that - 401k, two Roth IRAs (one of which is a 2010 conversion of a 2009 401k rollover), cash savings, company stock (held only as long as I have to), home equity - so I feel we're as diversified as we can be to hedge against losses. I'm the type of person that never really closes an account (we have four credit union accounts in two states) so it doesn't bother me to spread out investments with different companies and methods.
It doesn't hurt to be nice.
This is the USA where all our life has been under the control of the Jewish bankers and their buddies in the government. Cash will soon be banned so they can monitor all facets of our life. It has been told in the bible. You need a mark to buy anything, and that mark is your bank account.
Merry Christmas to you all.
Twitter: @dainsanefh
Also some services (Such as Merrill Lynch) will gladly auto-split your large deposit accounts into multiple accounts, thereby covered by the FDIC. It's not hard to be covered.
So much derp, so many mods, must be slashdot.
FDIC is not insurance that waits for banks to fail and then pays off claims. They don't work that way. It isn't what it is. They follow the banks' finances closely, and during the crisis they did in fact step in and take over banks that were in danger of not being able to cover their deposits if there was a run. To be covered, banks have already given up a lot of autonomy; in fact that lack of autonomy is the main benefit to depositors.
They step in before a bank fails, when they only have enough left to pay out depositors. The 100k thing is window dressing. In reality you get back more than that, because FDIC prevents the bank from squandering the deposited funds before it gets that bad. Generally in the case of "failed" banks, most depositors get all their money back. Except that they don't get it "back," they just don't lose it; their bank gets a new name. Just ask WAMU customers.
Love it or hate it, but most of TARP is already paid back, and the rest is on schedule.
and a world of hurt for the poor. All benefit programs are moving to direct deposit. You must have a bank account.
No matter how hard it may be to maintain the minimal balance required and and avoid being mulcted by transaction fees and other charges,
Well, no, here in Oregon the benefit programs go to direct deposit and they contract with one of the banks (US Bank) to give out special debit cards that are only for the benefit accounts. They let you use an ATM for free 2 times per month, which is the same as you would get if they were sending out checks. And if you have a normal bank account, you just move it twice a month and then use ATMs as much as you want, and if you don't have a regular account, you probably couldn't cash government checks without going to a "Check Cashing" business and paying a large fee.
So automated banking is an improvement even for the poor.
After all the 'profit' a company accrues can/will/must be used to employ future generations to survive.
Or it can be paid out to shareholders in the form of dividends. A stable company in an established market can continue to make a profit and pay it out to shareholders without needing to grow, until someone introduces a disruptive technology into that market.
I am TheRaven on Soylent News
Back in the Enron days it was typical that companies would match 401k contributions with company stock, and employees were not free to reallocate this money until they neared retirement age.
So, that means that your employer ended up being about half of your 401k by default if you didn't buy a dime of their stock voluntarily.
In the case of Enron the value of the stock went up with the bubble so that what started out as half of the value of account could easily become 90%+ of it.
Since Enron was an accounting scam, the reality is that most of that 401k value never really existed at all except on paper. The day of the collapse was just the day that everybody realized it.
Part of me thinks that retirement benefits in general need a lot more regulation. Companies promise pensions/etc to employees, but from time to time they fail to deliver on that promise. The employee can't take back the years of faithful service - companies shouldn't be able to go back on their end of the bargain. Companies shouldn't be allowed to manage pension funds - they should have to put it in a fund that the employee has complete control over. The valuation of these contributions should also be regulated, so that a company can't promise an employee 50% of their salary during retirement if they only are putting in enough money to realistically cover 20%.
The downside to this approach is that lots of people simply are dumb. Should they be unable to retire as a result of being born of average or below-average intelligence? Keep in mind that half of the people alive fit this description.
Retirement in general needs a lot more regulation - and better regulation (which means being upfront about what it really costs and not promising something the government can't deliver). Either that, or we need to do something to make the elderly more employable.
IT IS A HANDOUT IF THE LOAN INTEREST RATES ARE BELOW MARKET RATES! Because you can just put the money somewhere which earns higher rates and then pay back the Feds and keep the difference. And they were below market rates despite what the Feds claim.
If the Feds loaned me a million at 1.39% (apparently it was 1.39% in certain cases) with easy repayment terms, I'd turn around dump it somewhere relatively safe that gives me 3% (for example), wait the required time, collect the 3%, pay the Feds their 1.39%, and keep the rest. How is that not a handout? It may not be a 1 million dollar handout but it is a 16 kilobux handout. If they loaned me 1 trillion, it is a 16 billion dollar hand out.
So the Feds basically created money to bailout the banks. You may argue that the trillions loaned out don't count since they didn't actually hit the rest of the world but instead eventually returned to the Feds. But the "free billions" from the loaned trillions do count, and thus there was net creation of money.
And every time the Feds create US dollars they are actually taxing everyone in the world who holds (or is owed) net positive amounts of US dollars. Because those US dollars become worth less.
What they did it is just a fancy way to create money to bail out cronies. Fancy enough to fool lots of people it seems.
It may be slicker than what Robert Mugabe and friends did in Zimbabwe (print money directly), but it's basically the same thing.
The difference between the USA and Zimbabwe is China[1], Japan, Saudi Arabia, and the rest of the world don't sell/buy oil/electronics/toys in Zimbabwe dollars and aren't owed an immense value of Zimbabwe dollars.
So it is a big deal to those who actually understand what is going on and will be (and have been) affected.
Remember in Zimbabwe when Mugabe printed those Zimbabwe dollars, he gave some to his cronies (who support him), and the rest of the country became poorer. When the Feds created those US dollars, did they give some to the US citizens? If they didn't then the US citizens should realize they are no longer considered cronies and may wish to reconsider their continued support of their "US Mugabe".
[1] the US likes to complain about China manipulating China's currency, but when the US owes China trillions of US dollars and then creates trillions/billions of US dollars to bail out cronies, who is really screwing who?
What was paid back to not lower the debt though, it was spent on other programs... Technically your correct, but if i owed you $20 then went out and invested it on your behalf for something you can't cash for 10 years, are you really paid back?
you do know we're talking about Chase, JP Morgan, Bank of America, etc.
You care to revise your BULLSHIT assertion?
The IRA coverage and stuff is for uninvested cash and insured CDs (ie from American, not Antiguan banks), not for investments. The grandparent isn't exactly right, but not wrong either. I'm not exactly familiar with every single 401k plan out there, but every single one I've ever seen, you pick an investment strategy and the plan manager puts your contributions into appropriate mutual funds selected by risk level.
If I have been able to see further than others, it is because I bought a pair of binoculars.
The so called liquidity crunch already had plans in place, the discount window with the federal reserve.
Why TARP needed to get involved in the first place is beyond me.
Right now, banks have the so far valid assumption that they are too big to fail and the feds won't let them suffer for their mistakes.
This makes them arrogant bastards who are pretty much free to squander their money and get away with it.
In the long run more will be saved by getting the banks to behave themselves and not mooch off the feds than will be lost in the short run by letting things go to hell.
Your hard-earned "wealth" in your account is nothing more than a couple fields in an Oracle database. No printing even required. Just an UPDATE query. Your magic plastic suddenly has a positive value for a while.