A kiss is just a kiss and a loan is just a loan ... as time goes by. Hmmmmmmmmmmm a loan is not a loan cuzzz its a PDCF. hmmmmmmmmm
Fed Audit-- Liveblog on Data Dig | OurFuture.org
Just starting to parse through the Fed audit data. Looks like the Primary Dealer Credit Facility is predominantly a bailout for Citigroup and Bank of America. More to come . . .
Looks like in the early days the Primary Dealer Credit Facility was almost exclusively used by Bear Stearns, Countrywide, Barclays and Cantor Fitzgerald. At this point, Bear and Countrywide were JPMorgan Chase and Bank of America, respectively. From April 16, 2008 through July 30, 2008, these four firms were the only ones to access the PDCF, and they did it every day the facility was open.
The Fed accepted CCC-or-lower collateral under the Primary Dealer Credit Facility from September 15, 2008 until May 12, 2009. A total of $490.9576 billion in such collateral was accepted. That's billion, with a "b." And you thought TARP was a bailout.
The Fed accepted a total of $1.31 trillion in junk-rated collateral between Sept. 15, 2008 and May 12, 2009 through the Primary Dealer Credit Facility. TARP was nothing compared to this.
Anyone suggesting that the Fed's "emergency lending" facilities are just part of macro or monetary policy is kidding themselves. The Fed refused to accept junk-rated collateral until Sept. 15, 2008. When it became clear that Lehman was going off the rails, they started accepting junk-rated collateral-- even from Lehman Brothers itself!
That makes it very clear that the Fed was bailing out these firms in the midst of a crisis. They made a conscious decision to lower their lending standards in order to save big Wall Street firms with no strings attached.
From March 4, 2009 through May 12, 2009, Citigroup and Bank of America were the sole companies to borrow through the Fed's Primary Dealer Credit Facility, and they used it every single day. A total of 16 firms were eligible for the facility.
When crisis goes nova in Sept. 2008, two Merrill Lynch facilities start borrowing everything they can from the Fed. They're called "Merrill Lynch Government Securities Inc." and "Merrill Lynch Government Securities Inc. -- London"
So far as I can tell, the distinction between London and the U.S. is just an excuse for Merrill to take double advantage of the Fed's bailout facilities. Both borrow every single day once the crisis sets in, and both pledge loads of junk bonds as collateral.
Goldman Sachs also used foreign subsidiaries to double-down on Fed bailout facilities. Just like Merrill, they hae a U.S. unit taking out loans, and a London unit.
Morgan Stanley also opened a London subsidiary to double-down on Fed bailout facilities, although it appears they caught onto the scam later than Goldman and Merrill.
Moderately funny. Citigroup, home of Clinton Treasury Secretary Robert Rubin, didn't figure out the foreign subsidiary scam until Nov. 24, 2008, a month after its competitors.
BofA and its predecessors Countrywide and Merrill Lynch accessed the Fed's Primary Dealer Credit Facility 416 times, for a total of $2.783 trillion. A full $476 billion in junk bonds were pledged as collateral for the loans, or roughly 17 percent.
The PDCF is an overnight facility, so a lot of these loans are simply being rolled over day-to-day. Nevertheless, it's a staggering amount of money, with an enormous degree of totally worthless collateral being pledged to justify it.