Fed made $9 trillion in emergency overnight loans

[Shwa]

I supposed being one of the many fixated on that 700 billion dollar figure, this comes as a little surprise:

Fed made $9 trillion in emergency overnight loans

NEW YORK (CNNMoney.com) -- The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday.

The loans were made through a special loan program set up by the Fed in the wake of the Bear Stearns collapse in March 2008 to keep the nation's bond markets trading normally.

The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed -- an annual rate of between 0.5% to 3.5%.

Still, the total amount was a surprise, even to some who had followed the Fed's rescue efforts closely.

Very interesting!

[bush_cheney2004]

Wait..it gets better. Remember all that bragging about Canadian banks...they were also in line for some Fed help:

...Five Canadian banks – Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Toronto-Dominion Bank – tapped into Fed loans through their U.S. units.

The five banks all borrowed money through a program known as the Term Auction Facility, which was created in late 2007 so banks could access Fed funding without the stigma attached to its traditional avenue for lending, known as the discount window.

http://www.theglobeandmail.com/report-on-business/economy/canadian-banks-tapped-fed-crisis-loans/article1820857/

US Federal Reserve...Bank to the World!!

[AngusThermopyle]

Wait..it gets better. Remember all that bragging about Canadian banks...they were also in line for some Fed help:

Well if you guys are tossing the bucks around at a nice low rate then why not?

[Bonam]

From what I understand most of this money has been paid back without incident. It is just part of the circulation of money. It is like saying $100 trillion dollars changed hands in the world economy last year. Sure, it's a big number, but it doesn't really mean anyone lost any money, it just means money has been circulating through the economy, as it's supposed to.

[GostHacked]

BC the world bank and IMF owns us all.

[dre]

Well if you guys are tossing the bucks around at a nice low rate then why not?

Yeah! If the cows gonna rub its tits in your face you might as score a little milk!

[eyeball]

US Federal Reserve...Bank to the World!!

Yeah but lets get real, its not MONEY money.

[August1991]

...Five Canadian banks – Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Royal Bank of Canada, and Toronto-Dominion Bank – tapped into Fed loans through their U.S. units.

The five banks all borrowed money through a program known as the Term Auction Facility, which was created in late 2007 so banks could access Fed funding without the stigma attached to its traditional avenue for lending, known as the discount window.

BC, don't drag us down to your level.

Canadian banks necessarily have corresponding American banks. If these American banks have severe liquidity problems, Canadian banks are forced to seek solutions.

But here's the more accurate bottom line: US banking, for over 200 years, since the revolution, has been a mess: Panics, bubbles, runs, bankruptcies, wildcat banking. The nature of America is crazy banks.

In comparison, we Canadians with our banks have looked on in wonder.

Another poster here wisely noted that English-Canadian banks are Scottish and American banks are English. Despite RBS, there is some truth to the comment.

[bush_cheney2004]

BC, don't drag us down to your level.

You dragged yourself "down" to that level.

Canadian banks necessarily have corresponding American banks. If these American banks have severe liquidity problems, Canadian banks are forced to seek solutions.

Of course...just like American banks in Canada.

But here's the more accurate bottom line: US banking, for over 200 years, since the revolution, has been a mess: Panics, bubbles, runs, bankruptcies, wildcat banking. The nature of America is crazy banks.

...and lots more available capital than in Canada.

In comparison, we Canadians with our banks have looked on in wonder.

Now we know why...the US FED's teat!

Edited December 3, 2010 by bush_cheney2004

[Shwa]

US Federal Reserve...Bank to the World!!

Yeah, that is the sense I was getting as well. I think there is more to the financial deal with China as well, but not sure where that fits in with all this.

[bush_cheney2004]

BC the world bank and IMF owns us all.

That's fine by me...the banks pay me interest....I have no debt.

[GostHacked]

That's fine by me...the banks pay me interest....I have no debt.

You may have no debt, as do I. But that is not a representation of the crappy state the economy as a whole is in. And you say Canadians have the repugnant smugness.

[bush_cheney2004]

You may have no debt, as do I. But that is not a representation of the crappy state the economy as a whole is in. And you say Canadians have the repugnant smugness.

I am not responsible for the economy "as a whole", just my own decisions. Smug is good...just admit to it.

[GostHacked]

I am not responsible for the economy "as a whole", just my own decisions. Smug is good...just admit to it.

Smug is not good. It gets people into trouble because I like to equate smug to ignorance.

[bush_cheney2004]

Smug is not good. It gets people into trouble because I like to equate smug to ignorance.

Do as you please...everybody is ignorant about something.

[GostHacked]

Do as you please...everybody is ignorant about something.

Well there are many things we do agree on and in the end BC, I like you.

[Shwa]

Well there are many things we do agree on and in the end BC, I like you.

Excuse me for interupting the bromance, but could BC explain how the US Federal Reserve is connected to the credit the Chinese are holding?

[bush_cheney2004]

Excuse me for interupting the bromance, but could BC explain how the US Federal Reserve is connected to the credit the Chinese are holding?

The Chinese are connected just like any others holding US treasuries bought at auction.

[August1991]

You dragged yourself "down" to that level.

BC, you're trying to argue that Canadian banks relied on US Fed largesse to survive.

I am arguing that Canadian banks have corresponding banks in the US since many Canadians deal with Americans. Through these correspondent banks, it appears that Canadian banks benefitted from US fed largesse.

Was the Fed largesse critical to Canadian banks? No, not at all.

----

There's a much broader issue involved. In the past 200 years or so, US banks have gone through an amazing story of boom, bust, collapse, free money, private money, panics, gold standards, silver standards, greenbacks, continentals, wildcat banking, bank runs, bank holidays and so on.

In Canada, in the past 200 years or so, our banks have been boring. They work.

The US Fed was first created in 1913 - after various failed attempts at a central bank in the 19th century. The Bank of Canada dates from 1935. Why? Because Canadian banks managed a central bank on their own before.

----

English Canadians often seek a way to distinguish themselves from Americans. I have always been surprised that this distinction of the way banks/money operate in the two countries is so little noticed.

Heck, Robert Mundell is Canadian.

Edited December 4, 2010 by August1991

[bush_cheney2004]

BC, you're trying to argue that Canadian banks relied on US Fed largesse to survive.

Nonsense...I am "arguing" that the much heralded Canadian banking system was not above exposure to risk and mitigation steps offered by the US Federal Reserve. I am further "arguing" that this activity had gone largely unnoticed and unreported...until now.

There's a much broader issue involved. In the past 200 years or so, US banks have gone through an amazing story of boom, bust, collapse, free money, private money, panics, gold standards, silver standards, greenbacks, continentals, wildcat banking, bank runs, bank holidays and so on.

In Canada, in the past 200 years or so, our banks have been boring. They work.

Except for the ones that famously failed back in the 80's:

Facing Failure: Canadian Banks in Trouble

Edited December 4, 2010 by bush_cheney2004

[GostHacked]

BC, you're trying to argue that Canadian banks relied on US Fed largesse to survive.

I am arguing that Canadian banks have corresponding banks in the US since many Canadians deal with Americans. Through these correspondent banks, it appears that Canadian banks benefitted from US fed largesse.

Was the Fed largesse critical to Canadian banks? No, not at all.

----

There's a much broader issue involved. In the past 200 years or so, US banks have gone through an amazing story of boom, bust, collapse, free money, private money, panics, gold standards, silver standards, greenbacks, continentals, wildcat banking, bank runs, bank holidays and so on.

In Canada, in the past 200 years or so, our banks have been boring. They work.

The US Fed was first created in 1913 - after various failed attempts at a central bank in the 19th century. The Bank of Canada dates from 1935. Why? Because Canadian banks managed a central bank on their own before

So what changed? Why did it need to change? And who changed it?

Any country that has a 'federal reserve' or a central banking system seems to be ultimately tied into the World Bank and the IMF. The US, Canada, Britain, all are tied into those two entities.

[bush_cheney2004]

...Any country that has a 'federal reserve' or a central banking system seems to be ultimately tied into the World Bank and the IMF. The US, Canada, Britain, all are tied into those two entities.

....but the most horsepower comes from backing by the US Fed.

Edited December 4, 2010 by bush_cheney2004

[BubberMiley]

Well there are many things we do agree on and in the end BC, I like you.

At this point, I believe you're supposed to ask "Do you like me too?"

Edited December 6, 2010 by BubberMiley

[GostHacked]

At this point, I believe you're supposed to ask "Do you like me too?"

I don't care if he likes me or not, and I doubt he loses sleep over it.

So where is this 9 trillion going? China?

[bush_cheney2004]

I don't care if he likes me or not, and I doubt he loses sleep over it.

We agree on this anyway...the lefty loos are very big on being liked.

So where is this 9 trillion going? China?

Nope...the $9 trillion was the aggregate amount of short term loans and guarantees made over a period of years. The US Fed just reached into its bottomless pit of money and rescued domestic and international concerns (banks, manufacturing, insurance, etc.).

President Bush saved the world!!