Posted on 12/02/2010 5:44:29 AM PST by Palter
I've been going through The Fed's "data dump" that the WSJ has linked and made "easier" for us.
And I've got lots of questions.
Let's, for example, look at "Bank of Amer NA", otherwise known as BAC.
They used the TAF a lot. Here's a snapshot:
Pay particular attention to that pink column I highlighted.
Why?
Well, BAC borrowed $15 billion an awful lot. Maybe the same $15 billion.
Look at the face value of what they posted as collateral.
$127 billion - or in one case $185 billion - to borrow $15 billion?
What was being posted there - that's a more than 90% haircut!
That's a fairly clear declaration by The Fed that these "Assets" were worth no more than $15 billion, right? After all, that's all they got credit for when posting their collateral.
Ok, two immediate questions:
Ah, Kemosabe, now we get to a problem, don't we? See, if BAC had to borrow $15 billion, why would they post collateral at that sort of haircut? Further, that's a God-Awful loss embedded in those instruments that's being assumed by the NY Fed and BOG and we damn well ought to know through their quarterly reports where that presumed loss of value went and where it was.
There's a problem of course - BAC never reported that sort of loss any time during this "crisis." That leaves me with the question as to where these so-called "assets" are now, what they're marked at, and whether we're still dealing with massive and outrageously bogus "marks" - that is, claims of value - in these securities!
By the way, they're not alone. Barclays has a bunch of these transactions with big haircuts too. So does Goldman, with several TSLF transactions that show $2 billion borrowed and $25 billion+ of notional value of alleged "collateral" deposited.
Then there's Wells, which has a nice single-page output that looks like this:
Have a look and take a gander. And don't keep your investigation to the above - try to find just ONE large institution that had all of its collateral postings valued at, say, 80 cents on the dollar or better.
Best of luck.
Remember, the claim was that all of these "facilities" were liquidity operations.
The Fed told us explicitly - many times - that it was taking "good collateral" to back up these loans and that it was quite confident it would not lose any money.
That, it turns out, was true.
What we were not told is that the "collateral" they took was so bad that it was in some cases valued at TEN CENTS on the dollar or less, and in each of these cases it leaves open the question as to where is that collateral now, having been returned to the bank, what is it actually worth, and how is it being carried on the books - because what we do know from the bank's financial reporting is that it most-certainly was NOT written off.
There's more than enough here in these tables to call for a massive forensic investigation into the accounting practices of each and every one of these institutions as the fact that FRBNY valued this "collateral" at such a tiny fraction of it's claimed value by the submitting institution leads to an immediate question as to how one squares that valuation with the values reported by the banks in their quarterly and annual reports, and whether they were at the time, or are today, in point of fact, at anything approaching actual valuations, insolvent.
We the people deserve both answers AND HONEST ACCOUNTING.
don’t understand all the numbers. Does it mean we’re broke? Already knew that.
At some point, hunting parties will form.
Sounds like the banks were posting non performing close to worthless mortgage backed securities at full face value as collateral while the Fed bailed out their balance sheets with loans. Best way to describe this scheme is financial hide the salami.These non performing assets are still hidden either with the risk and loss quietly transferred from the banks to the Fed or lurking hidden somewhere in the bank’s assets waiting for the day of reckoning.
I think Karl has gone off the deep end on this argument.
There is no indication that the collateral put up represented a fair necessity for the amount being borrowed. The fact that there are DIFFERENT valuations each time pretty much shows that the government wasn’t asking for a “90%” collateral.
In fact, if you had to guess, and since these were overnight transactions meant to provide quick bursts of liquidity so the banks didn’t have to sell off assets into a frozen market, it could well be that the “collateral” listed was really just the current valuation of the bank’s total value, or the value of some easily identifiable part of the bank’s operations. Since they would never default, and the transaction would be ended before it had to be reported on any balance sheets, the banks would want to spend as little money as possible figuring out an asset set to put up as collateral.
Time to eliminate the FED...
Mortgages were written for amounts the property is unlikely to be valued at for a long,long time.
Too much of banking is tied up in that real estate.
If the dollar fails, they still have to accept it for mortgage payments.
Yes, most banks are insolvent.
Yes, the banks are insolvent. We are in a massive depression, but the media is not aware yet. They’re still trying to reanimate the animal spirits (manipulate the public) to get you to spend, spend, spend.
The game’s almost over.
Oh you’re one of those kooks. Without the FEd or some central bank running the economy (they’re the smartest guys in the room) we would never reach the era of unending prosperity we are in.
That’s sarcasm.
Some people still fail to see that the idea of central banks managing the money supply is Marxist to the core. People still believe it is necessary. People still believe the crap they teach in schools and MBA programs.
Having a strong central bank is part of the communist manifesto.
“If the dollar fails, they still have to accept it for mortgage payments.”
Not a chance. “They” are not averse to changing the rules in the middle of the game as you are no doubt aware. The model for this is of course Argentina.
Argentina lacks an armed population already growing angry with bankers.
I see your point, but “if the dollar fails” by definition means that nobody is going to accept it. At least, mortgage payments wouldn’t be very high on the radar.
Maintain that the rule of law - contract law, property rights, etc - are inseparable from human rights, otherwise it’s just who has the bigger mob.
Don’t get me wrong so many things about the system are just sickening, but “they” have booby trapped the whole thing. There may be a decent window for the nimble to settle in depreciating currencies but the plan here
is apparently to unass Americans from their country, it’s been going on for a long time, and it’s working.
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