The Federal Reserve has just released a vast trove of documents that detail a massive $3.3 trillion dollar aid program offered to the financial industry during the height of the financial crisis. Until now, the details of the program have been kept secret. But, thanks to a lawsuit from Bloomberg News and Congressional action, the details have now been made public.
As the financial community and press sift through the details of the 21,000 transactions from six loan programs, we'll be frequently updating this live blog.
Check back here for more updates on the Federal Reserve's latest document dump.
4:31 PM ET Fed Director's Bank Lavished With Billions From The Fed
The Federal Reserve Bank of Atlanta made six major loans to SunTrust Banks at the height of the financial crisis totaling at least $7.5 billion. James M. Wells, the Chairman and CEO of SunTrust, sits on the Board of Directors at the same Atlanta Fed that lent his company the money.
SunTrust also received $4.85 billion in bailout funds from the TARP program on November 14th and December 31st of 2008.
According to data released Wednesday by the Federal Reserve, SunTrust's first billion dollars came on November 6, a week before it received TARP money, lent through the Fed's Term Auction Facility. A week after it took the TARP money, it took another billion dollars from the Atlanta Fed. On December 4, it took another $1.5 billion from the Atlanta Fed. The bank received two more billion dollar loans in January from the Atlanta Fed, followed by a May loan of $2.5 billion from the same bank -- Ryan Grim
3:05 PM ET Funds Borrowed $71 Billion
Mutual funds, hedge funds and bond funds borrowed more than $71 billion from the Fed's Term Asset-Backed Securities Loan Facility, the WSJ reported. This includes $7.1 billion borrowed by the massive bond fund PIMCO, run by veteran investor Bill Gross.
Gross's involvement in the details of the bailout, which included a campaign for public-private partnerships to undwind toxic assets, raised more than few eyebrows from critics. -- Ryan McCarthy
2:27 PM ET Wall Street Pledged $1.3 TRILLION In Junk Collateral In Exchange For Cheap Fed Money
Wall Street firms teetering on the verge of collapse pledged more than $1.3 trillion in junk-rated securities to the Federal Reserve for cheap overnight loans - almost a quarter of all the long-term securities pledged to the Fed with a credit rating -- according to data released by the Fed on Wednesday.
The program, initiated to keep securities firms afloat during the height of a financial crisis that saw the collapse of two storied investment banks, the rescue of the world's largest insurance firm and the largest banks, was designed, in the Fed's words, to "improve the ability" of Wall Street's biggest firms to "provide financing to participants in securitization markets."
Essentially, the Fed gave Wall Street overnight loans with interest as low as 0.50 percent in order for the firms to have cash that they could then use to buy other securities or make loans. Those firms could trade with that cheap money and profit handsomely.
As collateral for those loans, Wall Street firms gave the Fed securities that were, in essence, junk.
Of the 50 overnight loans with the most speculative-grade securities pledged as collateral, 35 came from Citigroup. 11 of those loans were taken out by Morgan Stanley; two from Bank of America, and one each from defunct investment firm Lehman Brothers and Wall Street powerhouse Goldman Sachs.
The 18 firms, known as "primary dealers" because they're authorized to directly trade with the Fed, pledged $1,315,863,900,000 in non-investment grade collateral for the loans from March 2008 to May 2009.
Overall, the firms pledged about $9.7 trillion in collateral, which came in the form of whole loans and securities. About $5.7 trillion of that came in the form of long-term securities with a credit rating. The totals likely include double-counting, as the firms may have pledged the same collateral on multiple days.
The loans totaled about $9 trillion because the Fed took excess collateral in case its Wall Street borrowers defaulted.
The fact that Wall Street was able to pledge junk to the Fed in exchange for cheap financing is likely to enrage lawmakers who view the Bush and Obama-era crisis programs as largely benefiting Wall Street while "Main Street" has been left behind.
Adding insult to the perceived slight, banks have ramped up their requirements for new loans to borrowers, making it ever more difficult for cash-strapped households and businesses to take out new commitments. -- Shahien Nasiripour
rest at http://www.huffingtonpost.com/2010/12/01/federal-reserve-documents_1_n_790433.html?fbwall
I like our President and I think he really cares about us. But of course our country tries to recover after crisis in 2008. Even before the crisis there was an unemployment problem in our country but now the situation has changes into the worse. Lots of people are looking for ways to stay afloat and need to find a steady source of income but it’s easier for those who already have some job experience. For youth it’s much harder to get a decent job because in most of occasions they lack required experience and employees don’t want to hire them. Because of financial crisis many consumers turn to fast payday loans online direct lenders or other lending services to stay afloat and cover at least basic expenses.
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