Hi Jon, great to see you! I give you massive kudos because I know that you talked about this epic bull market in US Debt...up in price down in yield. I know you and I talked about it extensively on the phone this past year.
Truth be told I'm as dumb as a sack of nails..... I kind of remember talking about some of this carnage and Trillions of dollars of writedowns--- FED injections.. debates on the FED's entire lending ability being $800 Billion...... how 9 months ago was that stuff!...... Beware of John Bogle...... I have seen him make 3 or 4 of the most factually incorect statements on CNBC. He is just about peerless in this regard.
Kudos.. no load mutual funds.. visionary..... worth all kinds of money. Let's leave that.
How is it that we have a 7.7 Trillion dollar number of asset invervention corrective action and Bloomberg seems quite happy to point out that the US FED does not want to come up with a list of 2 Trillion dollars of where they have either purchased assets or done some type of Repo......
Those of you who have been around here long enough have heard me comment that Central Banking is best left to the Central Bankers. Also the quote Kathy Bates made to the Jay Leno character in "the Late Shift" ..... you just want me to keep serving you up the steaks, you don't want to know about the cows I am killing
I guess this topic is one of my little hobby horses... that i like to explore much like the Michael Bloom of Bloom county comic strip of the 1980's .. where he has this anxiety closet that beckons him to peer into it during the wee hours of the night.
Blommie still trying to get Freedom of information act on this stuff:
I will point out that in a participatory Republic as the USA is; that we actually need a group of citizens to be advocating for information availability, accountability and check and balances of our institutions and our Government.
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Fed Refuses to Disclose Recipients of $2 Trillion (Update2)
By Mark Pittman
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.
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.
(editorial note by JP ... for those who ever belived that a full and independant audit of all departments of the Federal Reserve was actually occurring.... this should demonstrate the equivical documentation that such a full auditing and accounting was not going to occur in your lifetime. ed...JP)
“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, a senior managing director at New York-based ICP Capital LLC, which oversees $22 billion in assets.
The Fed stepped into a rescue role that was the original purpose of the Treasury’s $700 billion Troubled Asset Relief Program. The central bank loans don’t have the oversight safeguards that Congress imposed upon the TARP.
Total Fed lending exceeded $2 trillion for the first time Nov. 6. It rose by 138 percent, or $1.23 trillion, in the 12 weeks since Sept. 14, when central bank governors relaxed collateral standards to accept securities that weren’t rated AAA.
(So bingo... Bogle was right about the $800 billion balance sheet of the FED until Sept 14th 2008 when they decided that they could expand it by 138%........) It seemed to be a highly seemless process to expand the FED balance sheet by over 100%.ed... JP )
‘Been Bamboozled’
Congress is demanding more transparency from the Fed and Treasury on bailout, most recently during Dec. 10 hearings by the House Financial Services committee when Representative David Scott, a Georgia Democrat, said Americans had “been bamboozled.”
Bloomberg News, a unit of New York-based Bloomberg LP, on May 21 asked the Fed to provide data on collateral posted from April 4 to May 20. The central bank said on June 19 that it needed until July 3 to search documents and determine whether it would make them public. Bloomberg didn’t receive a formal response that would let it file an appeal within the legal time limit.
On Oct. 25, Bloomberg filed another request, expanding the range of when the collateral was posted. It filed suit Nov. 7.
In response to Bloomberg’s request, the Fed said the U.S. is facing “an unprecedented crisis” in which “loss in confidence in and between financial institutions can occur with lightning speed and devastating effects.”
(JP editorializing... well at least I am in complete agreement on that statement; We need the FED to do this but also we need some recognition by the 3% of society that has any concept of this stuff to be kept informed that it's going on. Central banks and Markets with Zero transpartcy.... are not good..... ed.. JP)
Data Provider
The Fed supplied copies of three e-mails in response to a request that it disclose the identities of those supplying data on collateral as well as their contracts.
While the senders and recipients of the messages were revealed, the contents were erased except for two phrases identifying a vendor as “IDC.” One of the e-mails’ subject lines refers to “Interactive Data -- Auction Rate Security Advisory May 1, 2008.”
Brian Willinsky, a spokesman for Bedford, Massachusetts- based Interactive Data Corp., a seller of fixed-income securities information, declined to comment.
“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.
‘Dangerous Step’
“In its considered judgment and in view of current circumstances, it would be a dangerous step to release this otherwise confidential information,” she wrote.
New York-based Citigroup Inc., which is shrinking its global workforce of 352,000 through asset sales and job cuts, is among the nine biggest banks receiving $125 billion in capital from the TARP since it was signed into law Oct. 3. More than 170 regional lenders are seeking an additional $74 billion.
Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson said in September they would meet congressional demands for transparency in a $700 billion bailout of the banking system.
The Freedom of Information Act obliges federal agencies to make government documents available to the press and public. The Bloomberg lawsuit, filed in New York, doesn’t seek money damages.
‘Right to Know’
“There has to be something they can tell the public because we have a right to know what they are doing,” said Lucy Dalglish, executive director of the Arlington, Virginia-based Reporters Committee for Freedom of the Press.
“It would really be a shame if we have to find this out 10 years from now after some really nasty class-action suit and our financial system has completely collapsed,” she said.
The Fed’s five-page response to Bloomberg may be “unprecedented” because the board usually doesn’t go into such detail about its position, said Lee Levine, a partner at Levine Sullivan Koch & Schulz LLP in Washington.
“This is uncharted territory,” said Levine during an interview from his New York office. “The Freedom of Information Act wasn’t built to anticipate this situation and that’s evident from the way the Fed tried to shoehorn their argument into the trade-secrets exemption.”
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.
Borrowers include the now-bankrupt Lehman Brothers Holdings Inc., Citigroup and New York-based JPMorgan Chase & Co., the country’s biggest bank by assets.
Banks oppose any release of information because that might signal weakness and spur short-selling or a run by depositors, Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, a Washington trade group, said in an interview last month.
‘Complete Truth’
“Americans don’t want to get blindsided anymore,” Mendez said in an interview. “They don’t want it sugarcoated or whitewashed. They want the complete truth. The truth is we can’t take all the pain right now.”
The Bloomberg lawsuit said the collateral lists “are central to understanding and assessing the government’s response to the most cataclysmic financial crisis in America since the Great Depression.”
In response, the Fed argued that the trade-secret exemption could be expanded to include potential harm to any of the central bank’s customers, said Bruce Johnson, a lawyer at Davis Wright Tremaine LLP in Seattle. That expansion is not contained in the freedom-of-information law, Johnson said.
“I understand where they are coming from bureaucratically, but that means it’s all the more necessary for taxpayers to know what exactly is going on because of all the money that is being hurled at the banking system,” Johnson said.
The Bloomberg lawsuit is Bloomberg LP v. Board of Governors of the Federal Reserve System, 08-CV-9595, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Mark Pittman in New York at mpittman@bloomberg.net;
Last Updated: December 12, 2008 17:12 EST
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I'm looking for any and all opinions on this.... does anyone care..... I guess this stuff is so far removed from our daily lives that why should we care... and I completely understand the I am overwhelmed perspective.
I will take a stand here in that those of us that care about the USA, our systems; our government, our Freedoms and Liberties should spend a bit of time following this situation and also acting as local points of light to others in our country. Freedom and a republic ---- democracy was a hard fought gift given to us.... it's not our "birthright"
The Far right and the Far left are not what made this country.... America... It was the basic integrity of the average citizen and now is a time for local leadership in making sure that we maintain the structural freedoms that has Made America Great.
John |
