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: (Score:2)
Is Verizon a bank?
In a sense. With some of their overpriced services, they're certainly making bank.
Freddie and Fannie losses much more... (Score:3, Informative)
...than the banks. Looks like only about $100 billion not paid back by banks, but the two government sponsored organizations are expected to have losses approaching $300 billion. SEC is now suing the former CEO's for fraud.
Re: (Score:2, Insightful)
So why are they not going to jail? Suing an individual that isn't Bill Gates or other billionaire sounds pointless at best. This is how the system buries the problem: "Look what we did to those criminals" when the criminals that caused the issue in the first place was Congress, the SEC, Bill Clinton's administration and every president after him including the current clod in the White House.
Re: (Score:2)
Uh, no. The banks have borrowed 16 trillion , and haven't come close to paying it back. Despite getting their loans at 0% interest while continuing to charge their customers usurious interest rates (i.e., the same taxpayers that are bailing them out) or just buying Treasury Bonds.
Man, I wish I could borrow money from the government at 0% interest, only to borrow that money back to the government and receive interest in return.
Re: (Score:2)
You don't "borrow back," it is called loaning.
Bloomberg (Score:5, Informative)
After this and other "bombshell" revelations by Bloomberg this year, they are apparently the only financial news organization worth its salt in the US. Kudos to them, and shame on everyone else (WSJ, FT, Economist, etc etc).
To Anyone Who Wants Information (Score:3, Informative)
misleading article (Score:2)
Re:misleading article (Score:5, Insightful)
Re: (Score:2)
Isn't the "inflation tax" lower than any flat tax that's ever been proposed?
Re: (Score:2)
Isn't the "inflation tax" lower than any flat tax that's ever been proposed?
Well if we had just an "inflation tax" perhaps that would be relevant, but it just gets piled on top of all the other taxes. As I see it, it isn't the level of taxation from inflation that is the problem, it's that it taxes savings. It is one more thing creating an environment hostile to wise personal financial decision making.
Re: (Score:2)
Well if we had just an "inflation tax" perhaps that would be relevant, but it just gets piled on top of all the other taxes.
Actually, it would be much, much worse. At least today we have a notion of taxes so we have a language in place to discuss the effect of inflation. If inflation was the only tax, it would grow much faster (all corruption begins with nepotism because no one can deny their family and family also has family). It would be a rapid expansion of cronyism. In fact, once it is allowed to take foot hold, it would be all pervasive within a generation.
Re: (Score:2)
Your predictions remind me of y2k Armageddon!
Re: (Score:2)
Re: (Score:2)
Wait, it happened to Japan?
Also, your fear of inflation is hyperbolic and irrational. "In 1920, I could buy a suit for $20!" But a computer cost $Infinity...
Re: (Score:2)
Re: (Score:2)
First, provide some data.
Second, has any country explicitly made taxes voluntary and created money to fund the budget?
What I'm proposing is to keep fundamental American freedoms (unlike Zimbabwe), and use the created money to stimulate innovation through providing everyone with a basic income and holding challenges (which biz can hold too, like google, netflix). We have not just lost a world war, so comparisons to Weimar are invalid.
What matters is innovation and the advance of knowledge, because that is wh
Re: (Score:2)
If you were guaranteed a basic income, you wouldn't need to devote so much wisdom to money matters, and could use it instead to advance knowledge and create technology that would further raise standard of living and keep the currency strong because we produce things others want. (Consider Japan with a 200% debt-to-gdp ratio and a currency whose value they consider too high.)
Re: (Score:2)
Well, retirement policy is no different than other issues surrounding socialism.
Most people aren't able to do competent financial planning. Many people can. The people who can are almost certainly better off doing it themselves, and the majority who can't are better off if the government does it. However, socialism doesn't work if you can opt-out, since by its nature it requires transferring wealth from those who are more able to earn it to those who aren't.
The problem is that we want to have our cake an
Re: (Score:2)
Debt is a complete distraction, a purely psychological phenomenon, not physical. We do not have a production capacity problem. The real problem is why should bankers have an exclusive, divine right to create money? Instead, let govt create it too, and empower individuals to create new technology and advance knowledge so that standard of living keeps increasing. (Note: I didn't say take anything away from the "job creationists", just provide a public option for those of us who don't function well under the p
Re: (Score:2)
Telsa was financially incompetent, but produced. Give the Teslas a chance to do what they do best. Don't force them to waste their intellect studying finance just because your ideology tells you they should.
The economic problem is not the central problem of manking. Knowledge is.
Re: (Score:2)
Financial literacy should not be required. Saying everyone should have to think about money is like saying everyone should have to think about sports, it's unnecessary and indicates a desire to control others' thoughts. The economic problem is not the central problem of mankind. Mankind survived without money for hundreds of thousands of years...
Re: (Score:2)
"A lifetime of financial dependence through induced incompetence is a nightmare, both for the individual and I'm convinced eventually for the society as well."
On the contrary, the government can stimulate innovation and empower individuals to take advantage of the natural creativity and scientific spirit they're born with, but is too often drummed out of them by the free market, as they are forced to give up their dreams and take menial jobs for unnecessarily low pay under little Napoleon control-freak boss
Re: (Score:2)
Re: (Score:2)
That's why we should vote for govt to empower each of us with a basic income. Let the fed create money (as it has been doing) but instead of giving it to financial institutions, give it to each of us.
Think of it like this: People are Corporations! Give us loans at 0.1% interest so we can buy t-bills at 3% and pocket the difference and keep the loans rolling over, just like banks do...
Re: (Score:2)
I have to reply to this with the same response I just gave below:
"I addressed that point. What you are saying is an argument against FED being the underwriter of ALL borrowing. It's NOT an argument against these specific loans. My point is that this is being heralded as something out of the ordinary that FED did, but, in fact, it was FED doing what FED does. Whether or not FED should be the entity which is responsible for the levels of issued currency is a DIFFERENT argument.
Re: (Score:2)
Re: (Score:2)
Or, if they understood what it is and what it does, they would whine less.
Re: (Score:2)
Isn't there a high demand for dollars? So isn't creating more just decreasing the artificial scarcity?
Re: (Score:2)
Which is a problem because we are talking about "currency" - something with no value at all outside of that artificial scarcity.
Re: (Score:2)
The value is psychological. If we believe only scarce things have value, then the knowledge in wikipedia is worthless? Sunlight, air is valueless? The more freedom we have, the less it's worth?
Note that physics doesn't operate on this principle. The more mass you have, the more gravity. Mass isn't "worth less" if there's more of it in physics equations.
Psychology is changeable. One way of changing the idea that artificial scarcity creates value is to look at a graph of the money supply in the US [wikipedia.org]. Notice how
Re: (Score:2)
Psychology is changeable.
No.
Re: (Score:2)
Think of Germany after WWII. Think of changing attitudes towards blacks, women voting, alcohol prohibition, etc. The strength of our species lies in its ability to change our psychology. Once we were convinced the earth was the center of the universe. Now we think of ourselves as one tiny point in a universe that is itself only one tiny part of a multiverse...
Re: (Score:2)
Re: (Score:2)
Re: (Score:2)
I'm guessing, in your fantasy world, that you believe since Northrop Grumman has been delegated the authority to build bombers for the US military, that those are somehow "private" bombers?
You are arguing with a point which hasn't been made. That money isn't public or private. FED issues money by making short-term loans. It's issued money. It's not owned by the recipients because they have to repay them. The equivalent in your military manufacturing wouldn't be production and sale of bombers. It would be production and lease of bombers. Since your analogy doesn't hold, the rest is moot. My explanation was not a fantasy, by the way. It was factual. So the whole "in your fantasy world
Re:FOIA from the Federal Reserve? (Score:5, Informative)
It’s one thing to say that the Federal Reserve is an independent institution. It’s another thing to say that it can keep us all in the dark.
Re: (Score:2)
Re: (Score:3)
Re: (Score:3)
With regards to Medicare, I'd imagine (hope?) that HIPAA would trump FOIA.
You raise an interesting point though; I wonder if this means we could get documents from GM?
Re: (Score:2)
With regards to Medicare, I'd imagine (hope?) that HIPAA would trump FOIA.
The concept of "preemption" in the law is exactly that - where a state has a law and the federal government has a similar law, the fed loses to the state law [Erie R. Co. v. Tompkins, 304 US 64 1938 (certain rights are "reserved by the Constitution to the several States" and not preempted unless there is a specific Constitutional basis)].
However, the Congress has the right under the Constitution to regulate interstate commerce [which is practically everything] so can enact laws that specifically preempt Sta
Re: (Score:2)
FOIA is the Freedom of Information Act first signed into law by LBJ in 1966. Various states have similar laws that allow requests of state gov't bodies as well. The Act only deals with non-Constitutionally enumerated bodies [courts, Congress and the President] and instead deals only with executive branch government agencies. There are lots, as Rick Perry can attest. ["Name 3!"]
The statute is intended to be broad in scope, with documents only excluded from a request based on specifically enumerated causes
Re: (Score:2, Informative)
We don't need our deposits protected.
The FDIC already had that covered and actually makes banks LESS in need of protection, since their most important creditors, the american people who have deposits with them, can't get shafted if the bank goes bankrupt.
Just let the banks fail already. Having the FDIC cover deposits is all the bailout we need.
Re:prevented collapse? (Score:5, Informative)
We don't need our deposits protected.
The FDIC already had that covered and actually makes banks LESS in need of protection, since their most important creditors, the american people who have deposits with them, can't get shafted if the bank goes bankrupt.
Just let the banks fail already. Having the FDIC cover deposits is all the bailout we need.
I like how this got promoted to level 5 even though anyone who has taken a brief course in remedial business knows that the FDIC does NOT guarantee insurance on all funds, and for those funds, it is only insured up to 100,000$.
Have fun getting only 100k or less of your retirement account back :)
GG, better start reading other blogs
Re:prevented collapse? (Score:5, Informative)
Re: (Score:2)
Re: (Score:2)
Retirement accounts were not protected by FDIC insurance, since they are invested in various mutual funds and such. Most people have lost a significant fraction of their 401k despite any bailouts. Unlike financial sector salaries, I don't think 401K accounts have rebounded much, either.
Re: (Score:2)
Re: (Score:2)
Back in the Enron days it was typical that companies would match 401k contributions with company stock, and employees were not free to reallocate this money until they neared retirement age.
So, that means that your employer ended up being about half of your 401k by default if you didn't buy a dime of their stock voluntarily.
In the case of Enron the value of the stock went up with the bubble so that what started out as half of the value of account could easily become 90%+ of it.
Since Enron was an accounting
Re: (Score:2)
The IRA coverage and stuff is for uninvested cash and insured CDs (ie from American, not Antiguan banks), not for investments. The grandparent isn't exactly right, but not wrong either. I'm not exactly familiar with every single 401k plan out there, but every single one I've ever seen, you pick an investment strategy and the plan manager puts your contributions into appropriate mutual funds selected by risk level.
Re: (Score:2)
Re: (Score:2)
I have a small selection of companies I've picked and like, and invest in. There's an equally small list of companies I've picked that burnt me, but I always got out before I lost too much. Overall I'm ahead. Some of the ones I've held onto are way up in value and I'll sell them as soon as I think they can't sustain that value. At least one stock hasn't gained -anything- in the 3-4 years I've held it, but they consistently pay out about 8% annually in dividents, and I consider that a pretty good return.
Re: (Score:2)
The downside to this approach is that lots of people simply are dumb. Should they be unable to retire as a result of being born of average or below-average intelligence? Keep in mind that half of the people alive fit this description.
Retirement in general needs a lot more regulation - and better regulation (which means being upfront about what it really costs and not promising something the government can't deliver). Either that, or we need to do something to make the elderly more employable.
Re:prevented collapse? (Score:5, Insightful)
The magnitude of the losses would have been such that the FDIC fund would have been sucked dry in a heartbeat. Then it would be up to the U.S. Government to make up the shortfall, piling the new government debt on to the national debt pile. Haven't we been doing enough to "pile on" already?
Also, there's a lot of "interconnected-ness" in the banking industry. If one large bank fails, it will drag another handful with it. They will drag others with them, etc. Only "smallish" banks can fail and have the system absorb the impact without massive "domino effect" collapse. "Too big to fail" is a sobering thought...
Re: (Score:2)
How would that differ from the debt that was piled on to bail out the banks?
Re: (Score:2)
The so called liquidity crunch already had plans in place, the discount window with the federal reserve.
Why TARP needed to get involved in the first place is beyond me.
Re: (Score:2, Insightful)
you know what happened last time we had institutions that were "too big to fail"? We broke those institutions up. Of course, they didn't like it last time; so now they have paid off our government enough now to prevent such a repeat.
Re: (Score:2)
So what?
Between government debt from covering the FDIC underflow and government debt from propping up the banks I'd let the greedy banks take a well deserved fall over innocent depositors any day.
Besides, if the banks get bailed out every time they fuck up they have no incentive to behave themselves.
I'd say that having the feds NOT bail out banks will actually make them MORE reliable, since they'll start smartening up and quit sucking Uncle Sam's thumb.
Re: (Score:2)
Love it or hate it, but most of TARP is already paid back, and the rest is on schedule.
Re: (Score:3)
The magnitude of the losses would have been such that the FDIC fund would have been sucked dry in a heartbeat. Then it would be up to the U.S. Government to make up the shortfall, piling the new government debt on to the national debt pile. Haven't we been doing enough to "pile on" already?
Would have been better to add debt by bailing out citizens' bank accounts than to add debt by bailing out the banks who would then just give their execs massive bonuses while laying people off.
Re:prevented collapse? (Score:5, Insightful)
"Too big to fail" is a sobering thought...
Which is why one iether does not let them get too big or restricts them so that they cannot engage in practices and businesses likely to make the fail. The fact that we spent the last twenty or so years removing these constraints were at the root of this particular downturn. The fact that this problem has not been addressed as a result is our shame.
Re: (Score:3)
So much derp, so many mods, must be slashdot.
FDIC is not insurance that waits for banks to fail and then pays off claims. They don't work that way. It isn't what it is. They follow the banks' finances closely, and during the crisis they did in fact step in and take over banks that were in danger of not being able to cover their deposits if there was a run. To be covered, banks have already given up a lot of autonomy; in fact that lack of autonomy is the main benefit to depositors.
They step in before a bank
Re: (Score:2)
Assuming the FDIC doesn't go bankrupt, how long can a person expect to wait for their funds to be returned to them? How long can any of you be without your savings?
Re: (Score:2)
Long now, shorter in the future on average once the bad banks get eaten alive in liquidation, and the leftover banks get enough of a fear of bankruptcy in them to not goof off and then expect the feds to cover them.
Re: (Score:2)
The "shadow banking system" took huge deposits from institutions and wasn't subject to FDIC regulation or insurance.
There was a real risk of a domino effect. Look at the near-collapse that followed the Lehman bankruptcy.
Re: (Score:2)
Let them fail.
Right now those institutions are using their "too big to fail" status as leverage to get away with irresponsible behavior.
Re: (Score:3)
We don't need our deposits protected.
The protection is not unlimited.
This matters in your retirement and estate planning. Deposit Insurance Summary [fdic.gov]
Just let the banks fail already.
When a bank is in trouble what usually happens is that its assets and customers are absorbed by a larger and much stronger bank.
You have fewer choices. Local branches are more distant. That is a small problem for the rich --- and a world of hurt for the poor. All benefit programs are moving to direct deposit. You must have a bank account.
No matter how hard it may be to maintain the minimal bala
Re: (Score:2)
These days, even small banks have internet banking. I'm far from rich, but I have no problem not having a "local" branch. My bank is nearly 300 miles away from me, has been for years, and has not been an issue, even when purchasing a house. Internet banking and old-school fax machines solve any need to actually set foot in a bank.
As for minimum balances and fees.....again, small banks often don't have those. Get away from the "big" national banks and one can avoid the nonsense.
That's not even considerin
Re: (Score:2)
and a world of hurt for the poor. All benefit programs are moving to direct deposit. You must have a bank account.
No matter how hard it may be to maintain the minimal balance required and and avoid being mulcted by transaction fees and other charges,
Well, no, here in Oregon the benefit programs go to direct deposit and they contract with one of the banks (US Bank) to give out special debit cards that are only for the benefit accounts. They let you use an ATM for free 2 times per month, which is the same as you would get if they were sending out checks. And if you have a normal bank account, you just move it twice a month and then use ATMs as much as you want, and if you don't have a regular account, you probably couldn't cash government checks without
Re: (Score:2)
Right now, banks have the so far valid assumption that they are too big to fail and the feds won't let them suffer for their mistakes.
This makes them arrogant bastards who are pretty much free to squander their money and get away with it.
In the long run more will be saved by getting the banks to behave themselves and not mooch off the feds than will be lost in the short run by letting things go to hell.
Re:prevented collapse? (Score:4, Interesting)
Re: (Score:2)
Re: (Score:2)
You care to revise your BULLSHIT assertion?
Bullshit detector honks! (Score:4, Insightful)
Individuals often are wanting handouts, not loans.
Honk! bullshit! I'm an individual. I'd go for a no interest loan any time. Are you offering?
There is a lot of difference between a loan and a handout.
Honk! bullshit! The difference is in name only. They both save you money.
The only difference between the banks and individuals is that rich powerful people run the banks, so they got the freebie loans.
Re: (Score:2)
Honk!
What are you, 8 years old?
Re: (Score:2)
Honk honk *quaaaaaack*
Re: (Score:3)
A possible outrage would be a bank that got taxpayer money to survive, refusing to refinance or restructure said taxpayers' mortgages. That would be the least they could do, considering that by refusing, all they're doing is adding to foreclosed property inventory and keeping housing and the economy down, prolonging everyone's suffering.
Re: (Score:3)
If the Feds loaned me a million at 1.39% (apparently it was 1.39% in certain cases) with easy repayment terms, I'd turn around dump it somewhere relatively safe that gives me 3% (for example), wait the required time, collect the 3%, pay the Feds their 1.39%, and
Re:Can someone please explain the outrage here? (Score:5, Informative)
This is nothing more than common theft really.
Re: (Score:2)
After all the 'profit' a company accrues can/will/must be used to employ future generations to survive.
Or it can be paid out to shareholders in the form of dividends. A stable company in an established market can continue to make a profit and pay it out to shareholders without needing to grow, until someone introduces a disruptive technology into that market.
Re: (Score:3)
Foreign banks with branches in the U.S. are treated as U.S. banks for some purposes, though they're no longer eligible for FDIC insurance (since 1991). Some more info here [frb.org].
Re: (Score:3)
Re: (Score:3)
I can understand why they did not want this information getting out.
Royal Bank of Scotland
UBS
Deutsche Bank
Barclays
BNP
etc. etc. etc.
That is just amazing.
Re: (Score:2)
I think that banks pay into various insurance funds, so if the above banks did this just like American banks, then it would make little difference if they're "foreign". After all, any of these create lots of jobs in the US.
Re:foreign banks? (Score:4, Interesting)
Re: (Score:3)
Re: (Score:2)
But AFAICT, BMW didn't have any manufacturing in the United States. Just dealers, drivers, mechanics, and the folks that manage them from an ivory tower somewhere. They are not the domestic employment juggernaut that is GM or Chrysler.
Would they be missed if they were gone? Sure. But then, so is Saab. *shrug*
(Disclaimer: I drive a BMW. It's a perhaps a bit older than relevant in this discussion, but I've had most of it apart. Almost every part is proudly stamped with the name of some European countr
Re: (Score:3, Informative)
Wrong. They have a massive factory in Greenville-Spartanburg South Carolina.
Re: (Score:2)
Ah, so they do. Looks like it employs ~7,000 heads.
I still don't know if that's $4,000,000,000.00 worth of "too big to fail," but it's at least substantial.
Thanks, AC.
Re: (Score:2)
Re: (Score:2)
Gee, I got pilloried just yesterday for pointing that out. I am sure that their argument would have been that if foreign banks fail it drags us down. But the reason it was kept secret until now was because of the extreme backlash. This is the ultimate "Friday Document Drop" - it will get lost in the Christmas slow news days.
QE1 and 2 were as much about devaluing the dollar to permit this as they were about the states purposes.
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: (Score:2)
But why didn't they charge reasonable interest? If the banks just needed a few short term loans, they can get them. At 1000% interest let's say. If the bank is as solid as you say it can survive that. Sure a few bonuses might have to be cut but why should the taxpayers not profit?
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.
Re: (Score:2)
Yes, it was a donation to the financial industry [...]
I long for the days when the government made donations to the technology industry...
Re: (Score:2)
Re:Open Sourcing Numbers. (Score:4, Funny)
It's very simple. When you see the number `4`, a pony is killed. A `7' means they are all out of red paint, come back Tuesday. A `2` means water fountain. And so on and so forth.
Re: (Score:2)
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]