You didn't really think that the Fed's balance sheet wouldn't be hurt by lending $85 billion to AIG, pouring liquidity into the markets, opening new borrowing facilities, guaranteeing Bear Stearns obligations and taking junk collateral at inflated prices, did you? And surely you didn't really buy all that nonsense that the Fed was spending it's own money on these bailouts rather than taxpayer money. The government has wiped away all those illusions. It is borrowing money, and handing it to the Fed to shore up the balance sheet.
Direct from the Treasury Department's press release.
The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives.
Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes.
Posted by guest , Sep 17, 2008 10:20AM
See gold go up $42 almost isstantly on this announcement.
Posted by guest , Sep 17, 2008 10:20AM
First. Vince Offer
Posted by guest , Sep 17, 2008 10:26AM
First paragraph - double negative. Please refrain from that JC.
Posted by MostOffensive , Sep 17, 2008 10:26AM
print that money, print print that money
Posted by guest , Sep 17, 2008 10:28AM
T-bills, T-bill, everyone get your Alt-A t-bills...
Posted by guest , Sep 17, 2008 10:31AM
I want a $1,000,000 bill. They should start printing to save on raw material costs.
Probably will be able to exchange for the 100€ bill in my pocket in a year.
Posted by guest , Sep 17, 2008 10:33AM
carney is pulitzering it.
best options trading since the GOOG run in '05
remember '05?
print baby, print.
-retail
Posted by guest , Sep 17, 2008 10:39AM
Fuld negotiating for the Fed - Treasury offers 100 billion, Fuld adamant the dogshit currently on Fed balance sheet worth 4 trillion......
Posted by guest , Sep 17, 2008 10:40AM
wow gold did take off
that won't last long
Posted by guest , Sep 17, 2008 10:41AM
This is nearly tautological -- where ELSE would the liquidity come from, your piggy bank?
Posted by guest , Sep 17, 2008 10:42AM
I'm no longer choking on my own vomit, I'm spitting up blood.
I've been beer bonging Pepto all morning, but I'm getting no releif.
Posted by guest , Sep 17, 2008 10:44AM
I can haz printing press?
-BB
Posted by guest , Sep 17, 2008 10:45AM
Loan funds blowing up
Posted by guest , Sep 17, 2008 10:48AM
Finally...we're monetizing debt!
I thought this day would never come.
Posted by guest , Sep 17, 2008 10:57AM
A deflationary depression has been avoided, but a much bigger hyperinflationary crisis is now brewing.
Posted by guest , Sep 17, 2008 10:59AM
@15 When writeoffs and losses are half a trillion to date, hyperinflation is held in check.
Posted by guest , Sep 17, 2008 11:00AM
we should get a new coin to commemorate this with Ben's head on the front and the middle finger on the back.
Posted by guest , Sep 17, 2008 11:01AM
before I was anxious...now afraid...
Posted by guest , Sep 17, 2008 11:04AM
@16 Writeoffs and losses are being remonetized, and that new money isn't going into assets.
Posted by guest , Sep 17, 2008 11:19AM
Just wait until the FDIC runs out of money. Then the printing presses will really get fired up...
Posted by guest , Sep 17, 2008 11:27AM
Carney, you should post the FRBNY statement too as it provides some color.
I view it as a Fed Funds management tool more than anything else.
----
Statement Regarding Supplementary Financing Program
September 17, 2008
Today, the Treasury Department announced the initiation of a temporary Supplementary Financing Program. The program will consist of a series of Treasury bill auctions, separate from Treasury's current borrowing program, with the proceeds from these auctions to be maintained in an account at the Federal Reserve Bank of New York. Funds in this account serve to drain reserves from the banking system, and will therefore offset the reserve impact of recent Federal Reserve lending and liquidity initiatives.
Posted by guest , Sep 17, 2008 11:34AM
What the FUCK? Great... can the Treasury Department file for Chapter 11 after it figures out that the debt they are backstopping is totally worthless and unrecoverable?
If the US Government had to come in and rescue the INSURER of the bad bonds... what makes the Government think that AIG or anybody else has the capital and wherewithal to pay back two gigantic loans on the production of vapor assets?
Posted by guest , Sep 17, 2008 11:34AM
what is going on with MS? is anyone hearing anything?
Posted by guest , Sep 17, 2008 11:42AM
Doesn't this indicate that the Federal Reserve has tied up its entire balance sheet and cannot sell anything off to drain bank reserves? What does this mean?
Posted by guest , Sep 17, 2008 11:42AM
23, yes, their stock is way down today.
Posted by guest , Sep 17, 2008 11:44AM
what are you hearing? is due to merger talks?
Posted by guest , Sep 17, 2008 11:49AM
MS has got to be scared. This just gets better and better
Posted by guest , Sep 17, 2008 11:51AM
Right not the fed is busy trying to find a buyer for WM.
Perhaps that is why JPM is being named.
Hank leaning on Jamie for giving him all the Fed guarantees on the BSC takeover/bailout. Jamie was first and thus got the absolute best fed deal. Now it is payback. Which would be the ONLY reason jamie would do this prior to FDIC taking over WM.
Next bailout definately goes to FDIC. After that Wachovia, Wells Fargo...
WB - %60 sub prime mortgage exposure is in California and Florida. In thier models they have house prices peak to trough down %20. I am going to guess in california and florida that is more likely going to be %40 to %50.
Posted by guest , Sep 17, 2008 11:55AM
More Power!!
http://tinyurl.com/4lwz42
Jess (rhymes with Bess)
Posted by guest , Sep 17, 2008 11:58AM
@28
Agreed.
FDIC is fuzzed by about a few hundred bills.
McCain and Obama have decided to put partisanship aside and join forces in an effort to deal with this. New party is called The New Democratic Republicans of the United States of America.
Posted by guest , Sep 17, 2008 12:07PM
Sell it all and buy muni's at +110 to tsy. Good enough for Gross, good enough for me.
Posted by guest , Sep 17, 2008 12:08PM
Sell it all and buy muni's at +110 to tsy. Good enough for Gross, good enough for me.
Posted by guest , Sep 17, 2008 12:38PM
11 here, reporting that I just coughed up a fetus.
(I'm a dude.)
Posted by bittergreen , Sep 17, 2008 12:54PM
@10
The Federal Reserve conducts it's operations from it's uh.. reserves.
@22
AIG does have assets nothing it could sell "orderly" enough to cover margin calls on derivative contracts.
Posted by guest , Oct 09, 2008 5:20PM
Look at it now
http://fms.treas.gov/dts/
Posted by guest , Oct 09, 2008 5:20PM
Look at it now
http://fms.treas.gov/dts/