Fed Gave Banks Crisis Gains on $80 Billion Secretive Loans as Low as 0.01%

[PocketChange]

The IRS should tax the banks the fair market value of these loans.
0.01% is a gift and well below fair market value.
All recipients of bail outs should be required to report as income the difference between prime interest rate and the rate given to them by the fed.

 

[Martinghoul]

Quote from Soon2Bgreat:
Agreed, was just multiplying by 10 since they said March-December (maybe still wrong). Either way, you make a good point for both points of view. Thanks.

Yeah, but they did say that $80bn was the total amount lent over the whole period, rather than monthly. At any rate, my point is that all this noise is obscuring the main issue, which, in my mind, is TBTF. That's the one thing I do blame the Fed for, although Hoenig and a few others have been saying the right things. I hope he gets his way.

 

[benwm]

Quote from Optional:

As scared as an arsonist who has just set his house ablaze.

Or Dominic Strauss Kahn on the run after his liason with a maid

 

[soldsoldsold]

Quote from benwm:

Or Dominic Strauss Kahn on the run after his liason with a maid

++

 

[AKUMATOTENSHI]

Quote from nutmeg:

You can google this info and it seems to be out there on the web back as early as 09. Maybe we're not talking about the same thing.

Example.

New York Fed:

“On March 7, with spreads between 1-month Treasury repo and 1-month Agency MBS repo having reached as high as 140 basis points, the Desk began to initiate a series of 1-day forward 28-day single-tranche RPs.6 This 28-day RP book grew to $80 billion over the course of the year (Chart 6). These operations were intended to narrow the 1-month repo spread between Treasury and Agency MBS collateral and provide the primary dealers a steady financing source for Agency MBS. In response, the spread eventually narrowed to about 20 basis points, close to historical norms.”[1](Via Prins)



“In 2009, the Fed offered a total of $80 billion for short-term loans to holders of mortgage-backed securities."

And you wonder why I am leaving the country with this nonsense going on. I don't even care about the US tax payer anymore. The quality of service they are getting for their money is pathetic. Let the system fall. I don't want to be here when it happens.

Akuma

 

[nutmeg]

Quote from nutmeg:

You can google this info and it seems to be out there on the web back as early as 09. Maybe we're not talking about the same thing.

The bloomberg article didn't pass the smell test, sometimes one gets confuesed but looks like we have a bit more insight on link.

"Secret Fed loans" that were not so secret.


http://www.zerohedge.com/article/secret-fed-loans-were-not-so-secret

 

[lorax2013]

Quote from Martinghoul:

I'm just curious whether anyone actually bothered to calculate just how much of a "subsidy" to the banks this was?

There's a lot of outrage, so I'm curious what sorts of numbers people are thinking about. What's the estimate? Did the Fed give banks trillions, billions or unthinkable bazillioons?

It is not just that they are getting tens of millions worth of a direct handouts/theft in the form of a lower interest rate. The other point is that they are getting any money at all. So these banks overleverage, crash the system, you have temporary deflation and.... They just run to the Fed and get hundreds of billions in loans at under 1% interest. Then they turn around and lend it at 5% with practically guaranteed profit since all these billions are sure to create high inflation. Rinse and repeat - yet people still defend this scheme.

 

[the1]

There's a thing called imputed interest but that only applies to sorry saps like you and I. The banks, of course, are above the law and outside the reach of the IRS. The US is turning into exactly what the revolutionary war was faught to escape.

Quote from PocketChange:

The IRS should tax the banks the fair market value of these loans.
0.01% is a gift and well below fair market value.
All recipients of bail outs should be required to report as income the difference between prime interest rate and the rate given to them by the fed.

 

[MarketMasher]

Quote from the1:

There's a thing called imputed interest but that only applies to sorry saps like you and I. The banks, of course, are above the law and outside the reach of the IRS. The US is turning into exactly what the revolutionary war was faught to escape.

Yes, big banks are above the law.

The gov't needs them to be above the law.

 

[Martinghoul]

Quote from lorax2013:
It is not just that they are getting tens of millions worth of a direct handouts/theft in the form of a lower interest rate. The other point is that they are getting any money at all. So these banks overleverage, crash the system, you have temporary deflation and.... They just run to the Fed and get hundreds of billions in loans at under 1% interest. Then they turn around and lend it at 5% with practically guaranteed profit since all these billions are sure to create high inflation. Rinse and repeat - yet people still defend this scheme.

Some of what you say makes sense, while some doesn't. At any rate pls feel free to offer a viable alternative to the way the system is organised now. I have offered my views a number of times.