[kabar]

What was revealed in the audit was startling: $16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest.

That is not how the dollar swap arrangement works. From the report:

"Concurrent with the announcement of TAF, the FOMC announced the establishment of dollar swap arrangements with two foreign central banksto address similar disruptions in dollar funding markets abroad. In a typical swap line transaction, FRBNY exchanged dollars for the foreign central bank’s currency at the prevailing exchange rate, and the foreign central bank agreed to buy back its currency (to “unwind” the exchange) at this same exchange rate at an agreed upon future date (for a more detailed explanation, see app. IX).

The market for interbank funding in U.S. dollars is global, and many foreign banks hold U.S.-dollar-denominated assets and fund these assets by borrowing in U.S. dollars. In contrast to U.S. commercial banks, foreign banks did not hold significant U.S.-dollar deposits, and as a result, dollar funding disruptions were particularly acute for many foreign banks during the recent crisis. In December 2007, the European Central Bank and Swiss National Bank requested dollar swap arrangements with the Federal Reserve System to increase their ability to provide U.S. dollar loans to banks in their jurisdictions.

Federal Reserve Board staff memoranda recommending that the FOMC approve these swap arrangements noted that continuing tension in dollar funding markets abroad could further exacerbatetensions in U.S. funding markets.

On December 6, 2007, the FOMC approved requests from the European Central Bank and Swiss National Bank and authorized FRBNY to establish temporary swap lines under section 14 of the Federal Reserve Act. During 2008, the FOMC approved temporary swap lines with 12 other foreign central banks.

FRBNY’s swap lines with the 14 central banks closed on February 1, 2010. In May 2010, to address the re-emergence of strains in dollar funding markets, FRBNY reopened swap lines with the Bank of Canada,the Bank of England, the European Central Bank, the Bank of Japan, andthe Swiss National Bank through January 2011. On December 21, 2010,the FOMC announced an extension of these lines through August 1,2011. On June 29, 2011, the Federal Reserve Board announced an extension of these swap lines through August 1, 2012.

[Arthur Wildfire! March]

I see no one countered your specificity, kabar.

So the question is [I guess], how much loan money was defaulted? And I’m asking around: does the Fed get freshly printed currency? Or is it involved in quantitative easing?

[Arthur Wildfire! March]

Part of kabar’s post 24:

“Concurrent with the announcement of TAF, the FOMC announced the establishment of dollar swap arrangements with two foreign central banksto address similar disruptions in dollar funding markets abroad. In a typical swap line transaction, FRBNY exchanged dollars for the foreign central bank’s currency at the prevailing exchange rate, and the foreign central bank agreed to buy back its currency (to “unwind” the exchange) at this same exchange rate at an agreed upon future date (for a more detailed explanation, see app. IX).”