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The deal was ‘you get the cash but show you are closing down your subprime operations and then pay back as soon as you can which is whenever you can’.

I love the bailouts where you have to pay back the loan, with interest.

Private equity groups will pay back nothing because they posted the worthless collateral and the Fed holds that paper.

Private equity groups are not allowed to borrow at the discount window.

If you think otherwise, then it demonstrates what is already known about you. I expect you to show your ignorance here as in all things you post about.

See, you post errors about private equity groups borrowing at the discount window and then you claim I'm ignorant. You're funny! And wrong. Again.

Why don’t you stop trying to BS on these threads. You have half the facts and act like you have all of them. I get my information direct from people in the markets. It is direct information, yours is a reading from who knows where. You obviously don’t know how the markets work from your misguided comments.

Private equity groups are indeed allowed access to the discount window when they are affiliated with a member bank, and most are because otherwise they would not be holding that worthless bank paper.

Those affiliations are part of the problem. Banks have allowed hedge funds to buy their paper. Those funds are unregulated and are used by banks to unload debt much as Enron created SPEs to offload debt. The Bear Stearns hedge funds went out of business because they held subprime MBS that Bear unloaded on them.

Bear crafted their own bailout but never followed through. The mark to market valuations on the paper they unloaded were zero because there were no buyers for the paper. That caused margin calls throughout the sector. Those margin calls caused a huge selloff in equities causing such giants as Countrywide Financial to talk of bankruptcy. That is when and why the Fed stepped in.

To unload the worthless paper held by affiliated unregulated private equity hedge funds, the Fed cut the rate at the discount window. Those hedge funds got in line at the window with their margin call letters from member banks. That’s all they needed.

Toddy -- Private parties **can** borrow at the discount window on occasion. The most famous example of this occurred in the evening of 19 October 1987, Black Monday.

The arbs who were trading S&P futures against either shares or cash S&P got absolutely hammered that day, when the futures went to a then-unheard-of 40 pt discount to cash. They were in the dinger for better than a billion dollars.

Greenbean to the rescue. He opened the discount window for them. Good thing, too. Futures trades must be settled up daily, and -- had he not -- the Chicago Merc probably wouldn't have been able to open for business the next day.

Granted, this was an exception to normal policy, but it do happen.

;^)