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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."
Is Verizon a bank?
It’s one thing to say that the Federal Reserve is an independent institution. It’s another thing to say that it can keep us all in the dark.
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.
Foreign banks with branches in the U.S. are treated as U.S. banks for some purposes, though they're no longer eligible for FDIC insurance (since 1991). Some more info here.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
Seems like fourth largest bailout recipient, Royal Bank of Scotland Group received $64bn from the UK government as well. Must be nice to double-dip into the gravy boat.
That really is amazing how many foreign banks AND CORPS got LOADS of money.
I can understand why they did not want this information getting out.
Royal Bank of Scotland
UBS
Deutsche Bank
Barclays
BNP
etc. etc. etc.
That is just amazing.
I prefer the "u" in honour as it seems to be missing these days.
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.
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...
All these banks have very large US operations, and their branches in US are essentially US banks. What puzzles me is that our friendly makers of luxury sports cars from Bayerische Motoren Werke AG (aka BMW), for some reason got upwards of $4B. Admittedly they have a finance branch, but I thought the idea was to save a couple of critical banks not profitable car makers.
http://www.yale.edu/law/leo/052005/papers/Warren.pdf
From a very general view, banks manage cash flows. There are in flows and out flows from both loans, deposits and various instruments. There is never a one to one match between the in flows and the out flows and there are gaps in both time and nominal amounts. The banks manage these gaps by keeping a liquidity buffer by borrowing and lending from/to each other. Banks make money by making sure their inflows are greater than their outflows. For example, a very simple way is to lend money with long maturity (high interest) and borrow money with short or no maturity (deposits, low interest).
In a liquidity crisis like the one we had, the inter bank borrowing and lending stops dead because no one knows who's gonna go bust next. So, even if a bank has solid finances with 100 billion of loans maturing next month they may still go bust if a client wants to withdraw 50 bucks and they simply don't have the cash today. That's why the government stepped in, to provide liquidity when no one else dared to (it was one of the official reasons anyway).
This is also why they lent money to foreign banks. They had obligations in dollars and couldn't get dollars any other way. I'm not an expert on this large scale banking stuff but I was quite surprised to see RBS as number 4 on that list.
They received bailouts for the same reason GM and Chrysler received bailouts. "too big to fail" isn't just limited to 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.
The thing is, the Constitution delegated to Congress the rights to "coin money" for a reason. They have interpreted that instead as a right to delegate the right to print currency, and delegated said right to the Federal Reserve so they dont have to waste time actually doing their jobs. And every time the Fed turns on the printing press, by diluting the pool of currency, it's the same effect as milling coins or flat-out counterfeiting really - it's a hidden, involuntary tax. We all pay the bill through inflation and reduction in value of our savings and retirement. That makes it the people's money just the same if it were revenue taxed openly.
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Friends don't let friends enable ecmascript.
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,
Isn't the "inflation tax" lower than any flat tax that's ever been proposed?
Well if we had just an "inflation tax" perhaps that would be relevant, but it just gets piled on top of all the other taxes. As I see it, it isn't the level of taxation from inflation that is the problem, it's that it taxes savings. It is one more thing creating an environment hostile to wise personal financial decision making.
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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.
That's an interesting argument against government take over of all industries. If any industry is taken over (even partially) by the government, then FOIA allows anyone to request all paperwork produced by that industry. This destroys ALL privacy in EVERYTHING. I wonder if anyone has tried to use FOIA to subpoena all medical records of all Medicare patients. I also wonder if it would hold up.
Any guest worker system is indistinguishable from indentured servitude.
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
The politicians wanted to "calm down" the markets so things would get back to normal. The loans were not that short (1+ years as far as I remember) because they wanted to "show strong, long term support". Banks have rather long mismatches in their balance sheets (like 30 year house loans but no 30 year deposits) which usually isn't a problem as long as the flow of new loans/deposits is more or less predictable over time. If the government had provided only short loans, the market would not know how long the banks would survive since the gov't could change its mind any day. The government had to provide loans that were long and large enough to make the market believe the banks would survive the crisis.
Also, many banks were in really deep shit. Asking for a large interest could have caused a couple more defaults and thus added to the mess. Yes, it was a donation to the financial industry but the fear of the alternative (a long and deep liquidity crisis) was real. The liquidity crisis was rather short lived though so that actually worked out well. We still have a crisis but not a liquidity crisis. The real crisis is about bad debts all over the world. That has not been resolved yet.
This is based on what I remember from the news and discussions back then so it may require a grain of salt or two. I'm sorry for sounding like a politician/banker. I don't exactly buy all the crap above but I do understand some of the reasoning behind it.
Wrong. They have a massive factory in Greenville-Spartanburg South Carolina.
"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.
With regards to Medicare, I'd imagine (hope?) that HIPAA would trump FOIA.
You raise an interesting point though; I wonder if this means we could get documents from GM?
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz
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.
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?