Category Archives: Federal Reserve

Does Everybody Get To Be a Bank? Now Amex Joins the Club

James Carville said that when he died, he wanted to come back as the bond market, that way he could intimidate everybody. If asked today, i suspect he’d ask to come back as a bank. They get all the bennies. Seriously, Amex becoming a bank? This is patently ludicrous. Amex poses no systemic risk, so […]

Fed Reverses Self on Promises of Transparency, Continues to Stonewall on Collateral, Lending Disclosure

As this Bloomberg article discusses in detail, the Fed has violated promises it made to Congress, both regarding the amount it would lend (the amounts are vastly in excess of anything envisaged) and its commitments about transparency (which have gone completely by the wayside). Bloomberg has petitioned to get certain details disclosed via a Freedom […]

The Black Hole Gets Bigger: AIG Back for Yet Another Bailout

The Financial Times reports that AIG is up to its old tricks, back again to the trough for more money. Christmas The Iceland credit default swaps settlement is coming soon, you know. The worst is that AIG is pretending to act as if this is a negotiation as opposed to extortion. Get a load of […]

Fed Stonewalling on Giving Details About Collateral Accepted for Loans

In case you somehow managed to miss it, our friendly pawnbroker of last resort central bank has been taking lots of crap collateral in return for loans under its alphabet soup of facilities. As we are learaning in our housing meltdown, collateral may not prove to be worth as much as it was said to […]

Improvement in Libor Overstates Credit Market Recovery

Although Asian markets opened up nicely on the Obama victory, Europe is focusing on credit market woes, and US futures are down at this hour. From Bloomberg: Credit markets are still creaking even after the biggest decline on record in the rate banks say they charge each other to borrow dollars. The London interbank offered […]

Fed Hires Bear Stearns Risk Chief…To Supervise Bank Soundness

You cannot make this stuff up. From the Federal Reserve Bank of New York’s web site: Michael Alix has been named a senior vice president in the Bank Supervision Group of the Federal Reserve Bank of New York. He will serve as a senior advisor to William L. Rutledge, executive vice president, Bank Supervision Group…. […]

CDS Pricing in Increasing Treasury Default Risk

We have noted that Treasuries (and the dollar) are the remaining bubbles, although some doubts are starting to surface on the Treasury front. Paul Amery at Prudent Bear gives a good recap: The tectonic plates underlying the whole superstructure of debt have started to shift. On the surface nothing remarkable is happening – the 30 […]

AIG Arbitrages the Fed Via Its New Commercial Paper Program

Let’s see, AIG had to ask to be included in the Fed’s new commercial paper program. AIG was reported to have said it needed a wee bit more money, but no more than $10 billion. No reasons were given in any news stories. Now we find out the intended use. From Reuters (hat tip reader […]

SF Fed’s Yellen Troubled by Economic Data, Pushes Mortgage Aid

San Francisco Fed president Janet Yellen is concerned about recent economic data and recommends more action to save homeowners from foreclosure. From Bloomberg (hat tip reader Dwight): Federal Reserve Bank of San Francisco President Janet Yellen said recent data on the U.S. economy is “deeply worrisome” and the government should consider new ways to help […]

Is the "Commodities as Anti-Dollar" Trade Back?

Commodities had a nice day Wednesday, with oil in particular spiking up. Although the trigger appeared to be the Fed rate cut, one has to wonder at the seemingly disproportionate price reaction, particularly given deteriorating fundamentals and hence falling demand. One reason for the sudden enthusiasm for commodities is that, as in the frenzied days […]

Fed Establishes New IMF Facility. Dollar Swap Lines with Brazil, South Korea, Mexico, and Singapore

As Senator Everett Dirksen famously said, “A billion here, a billion there, and pretty soon you are talking real money.” Today, the Fed provided Brazil, South Korea, Mexico, and Singapore with dollar swap lines of $30 billion each (hat tip readers Robertm, Dwight). From the Fed’s press release: Today, the Federal Reserve, the Banco Central […]

How Credit Default Swap Settlements Are Draining Liquidity From Interbank Market

This informative discussion that sheds further light on the stresses created by credit default swap settlements comes in the current issue of the Institutional Risk Analytics weekly, “In the Fog of Volatility, the Notional Becomes Payable“: Another example of the ongoing discontinuity in the markets comes in the linkage between the unwind of credit default […]

Dollar Falls on Rate Cut Expectations as High as 75 Basis Points

I’ve kept seeing mention of a possible 75 basis point cut by the Fed. As much as some traders seem to be lobbying for it, your humble blogger would regard Fed setting its policy rate at that level as entering the famed ZIRP (zero interest rate policy) land that has played a big part in […]