US Federal Reserve Data On Loans During Crisis Released 173
oDDmON oUT writes "Pursuant to a FOIA request, Bloomberg has acquired numbers from the Fed on loans made to banks and businesses during the financial crisis between 2007 and 2009. They also posted a direct link to the spreadsheets in zipped format and updated their data visualization of the lending."
Verizon got a bailout! (Score:2, Interesting)
Is Verizon a bank?
Re:prevented collapse? (Score:4, Interesting)
Re:foreign banks? (Score:4, Interesting)
Re:foreign banks? (Score:5, Interesting)
From a very general view, banks manage cash flows. There are in flows and out flows from both loans, deposits and various instruments. There is never a one to one match between the in flows and the out flows and there are gaps in both time and nominal amounts. The banks manage these gaps by keeping a liquidity buffer by borrowing and lending from/to each other. Banks make money by making sure their inflows are greater than their outflows. For example, a very simple way is to lend money with long maturity (high interest) and borrow money with short or no maturity (deposits, low interest).
In a liquidity crisis like the one we had, the inter bank borrowing and lending stops dead because no one knows who's gonna go bust next. So, even if a bank has solid finances with 100 billion of loans maturing next month they may still go bust if a client wants to withdraw 50 bucks and they simply don't have the cash today. That's why the government stepped in, to provide liquidity when no one else dared to (it was one of the official reasons anyway).
This is also why they lent money to foreign banks. They had obligations in dollars and couldn't get dollars any other way. I'm not an expert on this large scale banking stuff but I was quite surprised to see RBS as number 4 on that list.
Re:Open Sourcing Numbers. (Score:4, Interesting)
Many say the massive stimulus (deficit spending) saved the world economy. It's an unfalsifiable assertion. [forbes.com]
The Economist magazine had a most interesting discussion on the similarities between the 1930s and today, with a discussion of the responses. [economist.com]
Re:foreign banks? (Score:5, Interesting)
The politicians wanted to "calm down" the markets so things would get back to normal. The loans were not that short (1+ years as far as I remember) because they wanted to "show strong, long term support". Banks have rather long mismatches in their balance sheets (like 30 year house loans but no 30 year deposits) which usually isn't a problem as long as the flow of new loans/deposits is more or less predictable over time. If the government had provided only short loans, the market would not know how long the banks would survive since the gov't could change its mind any day. The government had to provide loans that were long and large enough to make the market believe the banks would survive the crisis.
Also, many banks were in really deep shit. Asking for a large interest could have caused a couple more defaults and thus added to the mess. Yes, it was a donation to the financial industry but the fear of the alternative (a long and deep liquidity crisis) was real. The liquidity crisis was rather short lived though so that actually worked out well. We still have a crisis but not a liquidity crisis. The real crisis is about bad debts all over the world. That has not been resolved yet.
This is based on what I remember from the news and discussions back then so it may require a grain of salt or two. I'm sorry for sounding like a politician/banker. I don't exactly buy all the crap above but I do understand some of the reasoning behind it.