Posted on 06/21/2013 9:05:47 AM PDT by whitedog57
Now that we know that The Fed is likely to withdraw its stimulus over the next year, global sovereign rates are rising.
And the US Treasury 10 year continues to rise.
Then there was this tantalizing story in the Wall Street Journal.
Bernanke: Majority of Fed Officials Don’t Expect to Sell MBS
The good news? MBS pay down quickly because of prepayments and other mortgage terminations. Hence, mortgage duration is fairly low.
The bad news? Duration of Fannie Mae 4% MBS was 0.5 on September 25, 2012 and is now at 5.8 (thanks to rising Treasury rates).
So, as Treasury rates rise, the risk (or life) of The Fed’s MBS portfolio grows as well. This will slow down the burn rate of the Fed’s portfolio.
Unfortunately for Bernanke and The Fed, the market finds a way (much like in Ian Malcolm’s speech in Jurassic Park).
Bernanke: “Please make the invisible hand of the free market go away, I beseech thee!”
Don’t forget, Bernanke does exactly as instructed by Bo.
Depends upon the definition of “FAIL”
Actually, Bernanke does the bidding of the too-big-to-fail-or-jail bankster casinos that own a controlling interest in the Federal Reserve. All other so-called “mandates” are just a facade and theater.
Bernanke can be replaced in a heart beat by Bo. So you don’t think banks are subject to control by Bo and the rest of his gang? You best recall what happened at GM. Bo’s bud was put in as CEO, and 90% of bond holders equity was stolen and gifted to the unions. It is too common a misconception to think that any business entity is not subject to the whims of politicians. They control it all.
No, BO and Ben have the same bosses. The bosses are the guys who actually own the Fed.
Really, my grandfather was president of a bank for many years and I have a cousin that is also. Both have a bit of a different take. Are you a banker?
I was a banker, yes.
Ben is on his way out. Interest rates are starting to climb. He is getting out while the getting is good. They will replace him with a dove who will keep printing.
The only folks who will make money are the ones who can get it for free (large investment banks) and who will turn and buy Treasuries. No “risk” and all NIM. Free profit.
Private banks own the Fed? Always makes me laugh when I hear that silly claim.
Free? Really?
No “risk” and all NIM. Free profit.
You want to finance long term bonds with overnight loans? Which bonds would you buy?
You can’t be serious... The Fed IS owned by private banks. Look it up.
Here is one of many sources confirming private ownership of the Fed. A handful of the biggest have a controlling 2/3rds ownership. It is a revolving door for leadership between the Fed and the US treasury and other key Federal Govt jobs. The big banks not only own the Fed, they control it to their own benefit under veils of secrecy and public facade.
http://www.factcheck.org/2008/03/federal-reserve-bank-ownership
The financial Industrial Complex is one of the more blatant examples of industrial capture and control over all branches of governmental “oversight” and regulation.
I am serious.
The Fed IS owned by private banks. Look it up.
Maybe you can help translate this for me......
Release Date: January 10, 2013
For immediate release
The Federal Reserve Board on Thursday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $88.9 billion of their estimated 2012 net income to the U.S. Treasury. Under the Board's policy, the residual earnings of each Federal Reserve Bank are distributed to the U.S. Treasury, after providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in.
The Federal Reserve Banks' 2012 estimated net income of $91.0 billion was derived primarily from $80.5 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities). Additional earnings were derived primarily from net realized gains on the sale of U.S. Treasury securities of $13.3 billion, net income of $6.1 billion attributable to the consolidated limited liability companies that were created in response to the financial crisis, and income from services of $450 million, offset by losses of $1.1 billion that result from the daily revaluation of foreign currency denominated asset holdings at current exchange rates. The Reserve Banks had interest expense of $3.9 billion on depository institutions' reserve balances.
Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $3.7 billion in 2012. In addition, the Reserve Banks were assessed $1.2 billion for the cost of new currency and Board expenditures, and $387 million to fund the operations of the Bureau of Consumer Financial Protection and Office of Financial Research. In 2012, statutory dividends totaled $1.6 billion and $461 million of net income was used to equate surplus to capital paid-in.
The preliminary unaudited results include valuation adjustments as of September 30 for Term Asset–Backed Securities Loan Facility (TALF) loans and the consolidated limited liability companies. The final results, which will be presented in the Reserve Banks' annual audited financial statements and the Board of Governors' Annual Report, will reflect valuation adjustments as of December 31.
The attached chart illustrates the amount of Federal Reserve Banks' residual earnings distributed to the U.S. Treasury from 2003 through 2012 (estimated).
For media inquiries, call 202-452-2955
How much did the private bank "owners" get out of the Fed's $91 billion in earnings last year?
Thanks for the link. It doesn't back up either of your above claims. It did say this....
The concept of "ownership" needs some explaining here, however. The member banks must by law invest 3 percent of their capital as stock in the Reserve Banks, and they cannot sell or trade their stock or even use that stock as collateral to borrow money. They do receive dividends of 6 percent per year from the Reserve Banks and get to elect each Reserve Bank’s board of directors.
And this....
"The Federal Reserve System is not ‘owned’ by anyone and is not a private, profit-making institution. Instead, it is an independent entity within the government, having both public purposes and private aspects."
And who owns the “ member banks.”
You can believe that a central bank is a wonderful thing, but the inflation brought about since the fed was founded has eroded your money by about 98 %.
It should be abolished.
Their shareholders. Individuals and mutual funds, mostly.
but the inflation brought about since the fed was founded has eroded your money by about 98 %.
I haven't been holding cash since 1913.
So who gets the free money again? What's the rate on that free money? How much are they borrowing?
No “risk” and all NIM. Free profit.
You want to finance long term bonds with overnight loans? Which bonds would you buy?
You are naive.
You don’t think that the member banks get money at a discounted rate, and that they are not turning around and lending it—or simply buying Treasury bonds. Low risk interest income.
Ok, you haven’t held dollars since 1913. That’s fair. Do you have any money in savings? Well, the fed took away 2% of that last year.
And, the Feds injection of $85 billion per month is not going to lead to inflation?
You must work for CNBC if you really believe that the people ruining the Fed, and the member banks give a flying f&@k about you or me. They care about the dividends and interest that they get for running the economy.
You have to agree that the increase of interest rates on government debt is not going to drive the economy into the ground.
Be more specific, at what rate can they borrow from the Fed?
that they are not turning around and lending it—or simply buying Treasury bonds.
Which bonds should they buy? Be more specific.
Do you have any money in savings? Well, the fed took away 2% of that last year.
I don't hold much cash and the Fed didn't take away any of it. I did manage to cut my mortgage rate by a full percentage point. I should save 5 figures on that.
And, the Feds injection of $85 billion per month is not going to lead to inflation?
If the banks don't have the capital, or the inclination, to lend.....no.
They care about the dividends and interest that they get for running the economy.
Dividends? How much do they get?
You have to agree that the increase of interest rates on government debt is not going to drive the economy into the ground.
Huh?
Thank you ... You are correct and I was incorrect. I’ve heard it so often that I obviously accepted it uncritically. Thank you for the info.
http://en.m.wikipedia.org/wiki/Federal_Reserve_System
While Wikipedia isn’t the “last word” on anything, it does provide a good summary about the structure of the Federal Reserve System. From my read, it does appear that the system is largely controlled by the major private banks, however.
Thx,
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.