Where's Your .0078% Loan? Where's Mine?
The Fed has been helping the poor and downtrodden -- poor and downtrodden banks (nine of them foreign) in outrageous ways. Shahien Nasiripour writes for HuffPo on the new welfare mother -- the big, international Wall Street bank:
NEW YORK -- For the lucky few on Wall Street, the Federal Reserve sure was sweet.Nine firms -- five of them foreign -- were able to borrow between $5.2 billion and $6.2 billion in U.S. government securities, which effectively act like cash on Wall Street, for four-week intervals while paying one-time fees that amounted to the minuscule rate of 0.0078 percent.
That is not a typo.
On 33 separate transactions, the lucky nine were able to borrow billions as part of a crisis-era Fed program that lent the securities, known as Treasuries, for 28-day chunks to the now-18 firms known as primary dealers that are empowered to trade with the Federal Reserve Bank of New York. The program, called the Term Securities Lending Facility, ensured that the firms had cash on hand to lend, invest and trade.
The market was freezing up. Effectively free money, courtesy of Uncle Sam, helped it thaw.
The European firms -- Credit Suisse (Switzerland), Deutsche Bank (Germany), Royal Bank of Scotland (U.K.), Barclays (U.K.), and BNP Paribas (France) -- borrowed $5.2-6.2 billion in Treasuries 20 different times. The one-time fees they paid on each transaction ranged from $403,277.78 to $481,110. Deutsche led the way with seven such deals.
On each transaction, the fee paid for the 28-day loan is equal to a rate of just 0.0078 percent.
The first of these sweetheart deals began April 17, 2008. They ended nearly a year later on March 5. On that day, Goldman Sachs borrowed about $5.8 billion and paid just $450,000 for the privilege.
But the state and fed then chastises the general population for taking out 381% payday loans to avoid 587% fees on bounced checks.
They can kiss my ass!!!!!
And that is just my quick ephemeral reaction.
Jim P. at December 1, 2010 11:49 PM
Far better that we should let Greece fail, then Ireland, then Portugal, then Spain because none of that can possibly affect us here.
Yes, capitalism is a messy, unfair system. It's too bad the alternatives don't work. Who wouldn't want one of those Bell, California city pensions? Who wants to pay for those pensions?
Did anyone notice that the biggest lobbyists for the inheritance tax are all insurance companies? Warren Buffet is a big proponent of the inheritance tax. Warren Buffet's company owns several insurance companies. People act in their own self interest.
We aren't making those loans because we like banks or Europe.
MarkD at December 2, 2010 6:16 AM
Buffet also lobbies hard for "clean energy" subsidies. Guess what? He has a substantial interest in wind-energy companies. Link
(Note the link is to a Google cache version; the real version will try to install an executable on your computer.)
Cousin Dave at December 2, 2010 2:27 PM
I was listening on the news last night how our position in the IMF could mean us being on the hook for loaning $250,000,000,000 to the European Union for bailing out the PIIGS, and then the next story was how the Republicans are working to stop unemployment benefit extensions for Americans.
Eric at December 2, 2010 2:34 PM
At this point, I'm thinking we should let the system go and rebuild. It essentially took two generations to lose the wisdom that our grandparents had acquired.
Another great depression would suck -- but everyone could start over.
Jim P. at December 2, 2010 8:36 PM
Mark D we arent really capitalist. If we were we would let companies that make stupid decisions fail so that they might be replaced by better managed companies. We would take the short term hit to the economy for long term gain. We wouldnt be helping establish and maintain monopolies and wouldnt be subsidizing crap.
The real reason things are so messed up is because governments keep putting their respective dicks were they dont belong and fucking with the economy.
Suvorov at December 3, 2010 1:44 AM
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