The article is incorrect... Maybe they mean to say the "securities the Fed bought from the mkt which, in turn, bought them from the Treasury" and decided to skip the bit in the middle. The difference is important.
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The Fed's annual profit surges to $81.7 billion
- Thread starter atticus
- Start date
Quote from Martinghoul:
What non-performers? This is agency MBS we're talking about, right? So Fannie, Freddie and a bit of Ginnie... Where do you get the non-performing, credit bit from? Where should the Fed mark the liabilities of the US Treasury, other than par?
Sure, I can understand that... I am not a fan of using accrual accounting in a banking environment, since it's a very uneasy marriage. Neither do I actually like it done in a money mkt fund context, 'cause then you get a Leh-style sh1tshow. However, I do believe there's a place for it. Hold-to-maturity types like pension funds and insurers are natural users of accrual accounting and it makes sense. Basically, as long as there's no "liquidity gap", there's no problem. There's most certainly no such issues at the Fed, as there's unlimited liquidity, by definition.
The pernicious(ness) of the mark relates directly to the UST's guarantee on this garbage. The money to pay my Progressive auto policies comes from somewhere (wealthy ex wife).
Are you saying the UST is like my ex wife?
I don't have the honor of knowing your ex-wife, excellent woman that she is, I'm sure.Quote from atticus:
The pernicious(ness) of the mark relates directly to the guarantee. The money to pay my Progressive auto policies comes from somewhere (wealthy ex wife).
Are you saying the UST is like my ex wife?
So correct me if I'm wrong, your problem isn't with the Fed marking this crap at par, but with the guarantee itself?
Quote from Martinghoul:
I don't have the honor of knowing your ex-wife, excellent woman that she is, I'm sure.
So correct me if I'm wrong, your problem isn't with the Fed marking this crap at par, but with the guarantee itself?
No, I have a problem with the mark to par, but that's just the nip that's showing. I can't convince my clearer to mark to par the Fannies, Freddies and Ginnies I buy (assuming coupon < spot rates), regardless of the guarantee.
Another ray of sunshine! http://www.bloomberg.com/news/2011-...k-loan-data-as-high-court-rejects-appeal.html
Yeah, but that's 'cause you might not have enough money in case you get a margin call. You're subject to liquidity constraints/cashflow issues and therefore you have to mark-to-mkt. The Fed can't have liquidity issues, by definition. You're most powerful and intelligent, no doubt, but you ain't the Fed. You are leveraged fast money. Fed's about as real money as it gets.Quote from atticus:
No, I have a problem with the mark to par, but that's just the nip that's showing. I can't convince my clearer to mark to par the Fannies, Freddies and Ginnies I buy (assuming coupon < spot rates).
Quote from atticus:
MBS portfolio marked to par! Outright accounting fraud.
Fed is holding mostly Agency MBS that are a bit higher on the coupon stack, considering that the current Fannie coupon is 4.5.
Guess what - that paper is actually trading at a premium and they are marking it at flat. Sounds like fraud to me - they are under-reporting their MtM gains.
PS. Just looked at the actual Fed portfolio - it's mostly fannie 4.5 paper (TBA 4.5s are all at a premium)
This does not make sense. Are you buying TBAs or seasoned paper? Are you holding them at your PB as cash or repo them out? What exactly do you mean by spot rate - current TBA coupon?Quote from atticus:
No, I have a problem with the mark to par, but that's just the nip that's showing. I can't convince my clearer to mark to par the Fannies, Freddies and Ginnies I buy (assuming coupon < spot rates), regardless of the guarantee.
Fed's Fisher will get kicked off the Fed Reserve Board if he doesn't shut his yap.
You must toe the party line or face the consequences.
You must toe the party line or face the consequences.
Fisher is actually a very very good guy. Apart from his using Lindsay Lohan's name in vain, for which he's gonna get sued, I'm sure, he's very credible.Quote from bond_trad3r:
Fed's Fisher will get kicked off the Fed Reserve Board if he doesn't shut his yap.
You must toe the party line or face the consequences.