To big to FAIL.
Wonder how much the Fed will flush down the toilet THIS time.
“Fed audit: $16 TRILLION in loansto banks in less than 3 years.”
Yes, that’s sixteen trillion dollars in “emergency” loans to financial institutions from the beginning of the recession in December 2007 to just one year ago. The long-awaited GAO audit shows that the Federal Reserve loaned more than the worth of the annual US economy, and not just to American banks, although US institutions got the lion’s share. Citibank was the largest beneficiary:
Of the $16.1 trillion loaned out, $3.08 trillion went to financial institutions in the U.K., Germany, Switzerland, France and Belgium, the Government Accountability Office’s (GAO) analysis shows.
Additionally, asset swap arrangements were opened with banks in the U.K., Canada, Brazil, Japan, South Korea, Norway, Mexico, Singapore and Switzerland. Twelve of those arrangements are still ongoing, having been extended through August 2012.
Out of all borrowers, Citigroup received the most financial assistance from the Fed, at $2.5 trillion. Morgan Stanley came in second with $2.04 trillion, followed by Merill Lynch at $1.9 trillion and Bank of America at $1.3 trillion.
And there is a pattern to the disbursements, too:
The audit also found that the Fed mostly outsourced its lending operations to the very financial institutions which sparked the crisis to begin with, and that they delegated contracts largely on a no-bid basis. The GAO report recommends new policies that would eliminate such conflicts of interest, and suggests that in the future the Fed should keep better records of their emergency decision-making process.
Now it is so big they will all fail:
“This morning I saw the following from Nouriel Roubini on my twitter feed -Roubini Global Economics Paper:
Are CDS Worthless Because Greece’s Exchange Won’t Trigger a Credit Event? http://bit.ly/ttrgFS followed by this from Chris Whalen - @Nouriel
Precisely. Fed, etc encourage CDS to generate income for TBTF banks, then the banks welch on the bets by “investors” Kleptocracy.
As anyone who follows me knows, I’m in lock step with that particular
opinion espoused by Chris. Still, the bigger and much more pertinent
question looms... Aren’t the big US investment banks carrying trillions
of dollars of unhedged exposure? Quick answer: Yeah!”
“The top four banks with the most derivatives activity hold 94% of all
derivatives, while the largest 25 banks account for nearly 100% of all
contracts. Overall, the US banks derivative exposure is $249 trillion and is more than four folds of World’s GDP at $58 trillion.”