dagblog - Comments for "$7,400,000,000,000"

At the very least, are there

eds — Tue, 25 Nov 2008 11:03:22 +0000

At the very least, are there any formal standards for what is acceptable as collateral and how it must be valued by the Fed? And shouldn't there be at least summary reports even if borrower info is redacted and otherwise lumped together so as to not release confidential info?

As for the lawsuit, keep in mind that it formally only asks for a one-month window back in April-May. If the Fed were to comply for that period, that could of course open the gate for disclosure of more recent lending and collateral data.

Yet the Obama team is not

Emma Zahn — Tue, 25 Nov 2008 09:00:28 +0000

In reply to $7,400,000,000,000

Yet the Obama team is not calling for widespread public disclosure either, and I think this is a telling point. Why?

Probably because Obama's economic team is headed by the President of the FRB-NY and on the FRB Board of Governors. In other words, he is one of the defendants in Bloomberg's suit.

If you knew that your bank was bailed out, would you pull your money out?

My bank has taken TARP funds. It was disconcerting to see their name on the list but they have also recently taken over deposits of a couple of failed banks at the request of the FDIC. Not sure what to make of the mixed signals.

It's fair to ask for an accounting; but the information should be given to those who need to know and can keep it in confidence - the stakes are truly high here. I mean key congressional leaders and key governors (OH, MI, CA, FL, AZ, etc) should be given a full accounting - especially finance/banking committee members.[Emphasis added]

No, no, no, no. The last thing I want in a President or Senator or Representative is to be treated like a child or an idiot. Remember this promise from Obama? It is the basis of my support for Obama.

I am reminded every single day that I am not a perfect man. I will not be a perfect president. But I can promise you this: I will always tell you what I think and where I stand. I will always be honest with you about the challenges we face. I will listen to you when we disagree and most importantly I will open the doors of government and ask you to be involved in your own democracy again. -Barack Obama

I am perfectly willing to give them some leeway and the benefit of the doubt but only so far and only so long.

Beyond the need for transparency in government, financial markets need useful and reliable information to function. Bloomberg made a fortune providing it. I really doubt they would have initiated a lawsuit against the FRB just for the general news value of the information.

Emma - Good post. After the

AlaskaGrown — Tue, 25 Nov 2008 07:10:18 +0000

In reply to $7,400,000,000,000

Emma -

Good post. After the Bush admin and the horrendous waste in Iraq, etc. it is very hard to believe there are sometimes good reasons why full transparency is not best. Yet the Obama team is not calling for widespread public disclosure either, and I think this is a telling point. Why?

If you knew that your bank was bailed out, would you pull your money out? Perhaps not, because it is insured by the government up to $250,000. But if you are a small bank president with a few million of your depositors' cash in Wells Fargo rather than in your tiny vault, it is not insured! Would you pull it out if you were worried about Wells? Yes! If too many small banks or companies do this, it could collapse a large bank. Don't believe me? Well, that's what happened to WAMU and Wachovia - over a weekend! This is why the Fed is hesitant to publicize which banks are getting interbank support.

Market wide, the cost of borrowing shot up sharply and fast. So quickly, that even "good" companies had their short-term borrowing cost go way up. Most companies have to pay their people and suppliers first, and then they get paid by their customers. Many make up the time gap by borrowing using commercial paper. And the cost just went way up. If you were a supplier and knew a company was borrowing from the Fed rather than the market, would you start demanding they pay up front in cash? That makes the problem worse for this company. What should they do? Cut operations and lay people off?

The Fed is buying commercial paper and supporting interbank lending. They're not saying who. Not because of individuals like us, but because of the suppliers and small banks that work with companies either borrowing from the Fed or borrowing commercial paper. We don't want another WAMU collapse. We don't want companies to lay people off just because of a borrowing spike.

To use Obama language, we need to be as careful getting out of this crisis as we were careless getting in. It's fair to ask for an accounting; but the information should be given to those who need to know and can keep it in confidence - the stakes are truly high here. I mean key congressional leaders and key governors (OH, MI, CA, FL, AZ, etc) should be given a full accounting - especially finance/banking committee members.

Thanks for posting. My

miguelitoh2o — Tue, 25 Nov 2008 07:05:00 +0000

In reply to $7,400,000,000,000

Thanks for posting. My understanding of the current economic debacle is that the crisis arose in large part due to a lack of transparency on the credit default swaps being marketed on Wall Street. How do you evaluate the risk in a financial product without knowing what its components are? So this appears to be more of the same. Truly voodoo economics. In truth I have more confidence in Ayizan, Goddess of the marketplace, than in these guys. Can someone explain to me how having the financial transactions of the the Fed performed in a windowless room on a cloudy, moonlit night improves anyones confidence that these actions are to be endorsed by anyone other than the recipients? If Paulson and Bernanke don't know what's happening, as I suspect is the case, I wish they would admit it and begin making offerings to Ayizan.

On a rather off-topic note,

Hilarym99 — Tue, 25 Nov 2008 06:50:37 +0000

In reply to $7,400,000,000,000

On a rather off-topic note, seeing that number this morning, I actually had to look up what comes after trillion. It's quadrillion. Logical, of course, but my mind instantly went to zillion, or even better, the infamous bazillion, which are apparently fictitious numbers. Now that's disappointing. ;)

:)

Emma Zahn — Tue, 25 Nov 2008 05:04:28 +0000

In reply to $7,400,000,000,000

When they first filed this I

Lux Umbra Dei — Tue, 25 Nov 2008 05:01:44 +0000

In reply to $7,400,000,000,000

When they first filed this I thought there was a good chance they might win, at least until appealed.

But now I am not so sure. I have a feeling that somebody may be out of compliance here and its probably FRBNY.

I like the notion simply

Plus Ultra — Tue, 25 Nov 2008 04:58:59 +0000

In reply to $7,400,000,000,000

I like the notion simply ending intervention in Iraq will more than adequately fund whatever expenditures are needed to fix the economy, I think its silly though.

Nothing beats original source

Emma Zahn — Tue, 25 Nov 2008 04:42:05 +0000

In reply to $7,400,000,000,000

Nothing beats original source documents.:)

Thanks for the info.

Emma Zahn — Tue, 25 Nov 2008 04:41:09 +0000

In reply to $7,400,000,000,000

Thanks for the info. Everything is even worse since your friend sent it to you. For example, from Reuters today:

"Five-year Treasury CDS grew to 43.5 basis points versus 43.0 basis points late Friday, it said."