Fed to Bloomberg: “F*** off”
December 12, 2008 – 2:45 am
The Fed has refused to comply with Bloomberg’s request for information regarding its massive new lending programs. The Fed is worried such a disclosure would reveal all the big banks are effectively bankrupt, causing widespread panic and, I suppose, a possible run on the entire banking system.
Dec. 12 (Bloomberg) — The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets
the central bank is accepting as collateral. [chart from WSJ]
Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about
the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.
The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.
“If they told us what they held, we would know the potential losses that the government may take and that’s what they don’t want us to know,” said Carlos Mendez, who oversees about $14 billion at New York-based ICP Capital LLC…
In its response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” when the “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”…
“Notwithstanding calls for enhanced transparency, the Board must protect against the substantial, multiple harms that might result from disclosure,” Jennifer J. Johnson, the secretary for the Fed’s Board of Governors, said in a letter e-mailed to Bloomberg News.
“In its considered judgment and in view of current circumstances, it would be a dangerous step to release this otherwise confidential information,” she wrote…
The Fed lent cash and government bonds to banks that handed over collateral including stocks and subprime and structured securities such as collateralized debt obligations, according to the Fed Web site.
Taxpayers will end up eating the losses on toxic securities held by the Fed as collateral, unless of course the Fed successfully reflates asset values. But then taxpayers will lose anyway as the purchasing power of their dollars will be greatly reduced.
This ain’t over, by the way. The U.S. District Court can still force the Fed to reveal the info.
Posted in Fed, Wall Street, bailout, banking, bankruptcy, bubble, credit crunch, taxpayer issues |
17 Responses to “Fed to Bloomberg: “F*** off””
Maybe the Fed will pull out the “we aren’t the government” big guns.
By Aaron Krowne on Dec 12, 2008
I have a hunch that a secret grand dury is meeting somewhere right now to decide what to do with these criminals at the Fed.
By Tom Lowe on Dec 12, 2008
RW, I think you are spot on about revealing the true condition of the big banks possibly causing panic & a bank run.
I am loathe to support anything the Fed & treasury are doing right now, but in view of the possible outcome, keeping some info. from the public might be for the best at this time.
By shinola on Dec 12, 2008
This just cannot really be the case. How is it possible that we were told over and over again, before the trillions started getting gifted to every one of these idiots, that this was all going to be entirely transparent? That nothing would be cloaked - That they know that the only way to garner the taxpayer trust and confidence is to be above board with everything they do….and here we stand.
They have done the exact opposite of damn near everything they said they would do. You know why they won’t hand over those documents? Sure you do. Because they aren’t taking one feaking thing as collateral. Or, if they are, they are the worst of the worst that will never pay off, period. Even worse is the possibility that the money is just being diverted to off-shore accounts for everyone of the super-rich co-conspirators. Or billions are being skimmed and they want nobody to know it. Why is that so far fetched? That kind of money, as we’ve already witnessed over the past 10 year, is the ultimate corruptor.
Besides a handful of bloggers, shouldn’t there be people in the street with torches and pitch forks taking back their country from these half-witted sickos?! Where is the outrage? Where is the unrest? The “like frogs being slowly boiled to death” mantra is so dead-on that it’s just plain scary.
Actually it’s just more sad than scary. We’re watching the slow destruction of our entire nation before our very eyes. Believe this - This ain’t over until it really is OVER for the US.
By Jeff on Dec 12, 2008
“but in view of the possible outcome, keeping some info. from the public might be for the best at this time.”
Unless, of course, they’re just stealing it. What other justification for non-disclosure is there? Either the recipient is hopelessly insolvent - or a crook (along with our Fed).
Either way, they should not be given a single penny. Even if the recipient’s insolvency is ‘honest’ - why the heck would we want to perpetuate their failures?
Let the banking system fall - it is a house of cards. You and I don’t make money from nothing anyway … as a result, we can go back to work. The belief that banks are required to manufacture money to lend it to productive elements of society is a farce (most loans are based on debt and debt instruments anyway, not deposits - or real money/savings).
By SoundPolitics on Dec 12, 2008
Release of this info would cause panic and further maim the economy, but it needn’t cause a run on the banks since depositors are insured to $250k. te gov’t can always print more money.
By John on Dec 12, 2008
If you really want to know if the top 20 banks are insolvent just like Jim Rogers spoke of on CNBC today just click this link.
Forget the Fed Bloomberg, all the info you need is right here.
http://www.itulip.com/forums/showthread.php?p=63569#post63569
By The Sentinel on Dec 12, 2008
The scary facts & forecasts keep bubbling up over the months/weeks from the kinda, sorta paranoid type websites into becoming reality and onto the mainstream news. What was far-fetched 3 months ago is now matter-of-fact…ho-hum and that is the truely frightening thing! The public doesn’t know what or who to believe, only that they better not lose their job or their clients. Fear is omnipresent in all but the elite circles. I discounted a lot of the stuff I read in Sept. and Oct. of this year on the gold bug sites having seen the same predictions in the early ’80s, but this is different, the U.S. is more vulnerable now and the entire globe is in financial decline (except maybe Switzerland). We’re in for something completely different…and I’m afraid, REALLY BAD.
By Kernel Klunk on Dec 13, 2008
This information has been available from several sources for some time. It seems the risk is greater than the reward to take it public.
By Taylor Bradford III on Dec 13, 2008
Of course they are stealing the money
stole 700 billion (losses)
700 billion bailout there will be 700 new billionaires will be the only result of bailout
wall street crooked corporations now own the US government
its not an economic problem
its a criminal problem
you cant solve a criminal problem
with an economic solution
more info from bloomberg
“Why does Goldman Sachs run your government? What’s wrong with America is that it’s run by investment bankers, mostly from the same bank. How can Americans stand for it? Is Barack Obama from Goldman Sachs, too?”
- Taxi driver in Kuala Lumpur
from http://solari.com/
more on Kleptocacy
http://www.michael-hudson.com/
By EVmarc on Dec 13, 2008
You are assuming that the “toxic” assets are really “toxic”. Let’s assume that the government does end up owning these assets. Since the government does not need to mark to market and can also hold until maturity, there is a reasonable probability that not only will there be a recovery of funds, but profits on those funds. For that not to happen not only would foreclosure rates need to pick up significantly from current levels, but real estate values would likely need to decline an additional 50% (or perhaps more).
To your other point, I think reflation is a foregone conclusion. It is the easiest way for the government to deal with current debt loads and to help the value of real estate. The value of the dollar will decrease (the big question in my mind is when). However, the taxpayer only loses if wages and savings don’t keep up with inflation.
By Maverick on Dec 13, 2008
Maverick….House prices have collapsed. Even prime loans are defaulting in ever greater numbers. Housing prices aren’t coming back, which means the loans on banks’ balance sheets are permanently impaired, which means the banks aren’t just illiquid, they’re insolvent.
Are any serious people still claiming the government is going to “make money” on the deal? The only ones who ever did were the bankers selling the stuff to Treasury.
There’s far more evidence that asset values still haven’t fallen far enough than that they’ll shoot past old highs.
As for reflation, it is not a foregone conclusion at all. See for instance here.
By RolfeWinkler on Dec 13, 2008
Rolfe…Housing prices have collapsed. However, they would need to drop by much more to result in a total impairment of the underlying securities. The reason these securities are temporarily impaired is a mark-to-market phenomenon. I am not suggesting that these securities are worth 100 cents on the dollar, but even if they are worth 60 cents at maturity, at current pricing, there is a lot of upside.
The mark-to-market phenomenon is also the driver behind the technical insolvency of the banks. With time, this too shall pass.
To your other points, the fact that housing prices haven’t come back yet (and did you expect they would so soon?) is irrelevant. First, there is still value in homes - there may not be equity value for homeowners, but the underlying collateral still has value, even if it is less than the loan value. Next, values will improve over time. Since the government has an eternal time horizon, it can afford to wait.
Perhaps “foregone conclusion’ was too much…how about highly likely? My guess is that we have disinflation, or perhaps modest deflation in the near-term, with inflationary pressures building in the mid-term. As an aside, it is likely that inflation will be a world-wide phenomenon since virtually all developed countries are providing lots of liquidity these days.
By Maverick on Dec 13, 2008
Rolf, here is the simple truth. Our economy since Reagan took office in 1980(which by the way I played my part by voting for him twice) has been built upon the ever increasing issuance of debt, both in the financial world and in government. The issuance of debt is finite…it cannot go on forever, particularly if the rate of your growth in income cannot keep pace. Looking back at the trendline for GDP since 1980 shows that America’s GDP increase has been declining since about 1982. That is to say, except for the recessions in 1991, 2001-2003 and today, all the years we have seen positve growth has been less percentage wise year after year. Yet debt issuance as a market tool and the accumulation of debt by the federal government (as well as personal debt) has skyrocketed.
Now…here’s where it gets really bad. Couple the facts above with this unassailable fact. The economy for the last 6 years has been built upon lie after lie concerning the real estate market. Banks and investment firms lied to millions of people investing in new investment vehicles that were so exotic that even the firms issuing them were not quite sure what they were doing. Ratings agencies gave full faith and credit to these institutions even though they knew these products to be risky at best and fraudulent at worst. The Feds whose job was to provide oversight was either completely asleep at their post or were complicit in the whole deal. Homeowners who have noticed that their real wages had stagnated over the last several years and that the economy has not been growing as it had suddenly bought the bull**it from Wall Street and began either flipping houses like pancakes or turning them into ATM’s.
And now we have the perfect storm of the toppling of both the house of debt and the trust that undergirded our capitalist system. The depth of mistrust is matched by the height of the big lie that was spread and the massive destruction caused by the debt collapse is matched by the amount we have built up over the last 25 years.
50% additional value fall in houses you say? Sounds about right. Particularly when you factor in several million jobs being lost next year. Hard to pay off a house when you’re jobless and broke…which in turn makes it very hard to price YOUR house when all your neighbors around you are walking away from theirs or are being forced out through foreclosure.
You seem to doubt that all these assets are toxic. You can gauge this pretty easily…look how toxic the people were who pushed these things upon us…look how toxic the mass of people who bought into the Big Lie and look how toxic our government has become.
Now you tell me in all honesty and with a straight face that the vast majority of these assets are not toxic.
By The Sentinel on Dec 14, 2008
Sorry Rolf, I meant the above for Maverick. My apologies.
By The Sentinel on Dec 14, 2008
Let’s face it. There comes a point in time when any problem or series of problems, become so large there is no longer any reasonable positive solution to be had. We have now reached that juncture.
Anyone who believes this capitalistic system that America’s elite has long promoted as being the answer to everyone’s financial dreams is now learning the harsh truth. Captitalism is just another dirty word that means greed, deception, and in the end financial ruin for the masses.
Greed rules and greed destroys. This is the heart and essence of what has run this country and what will finally bring it down.
So you can talk all day about the intricacies of what has happened and the details on who is to blame. Bottom line is the game is finanlly coming to an end. Listen closely because the fat lady is getting ready to sing.
RIP America.
By Jim on Dec 15, 2008
Taxpayers do not lose money when the Fed buys assets, even if the asset value falls to zero. The Fed is not the Treasury. The Fed can print money. It can’t go broke. The worst that can happen is that the money printed by the Fed causes inflation. But inflation would be a great scenario considering the alternative, depression.
By David on Dec 18, 2008