Fed Spreads Money Around
Research for Online Investors

by John Dalt

12/02/10

The document dump from Wikileaks is all over the headlines and leads off to most news shows.  The real story is under the radar because many don’t understand how it affects them.  The Fed released a list of companies that received aid yesterday.  There were 21,000 transactions under the emergency program of overnight lending.

One of our readers asked if the Federal Reserve couldn’t just extend a credit card to all governments to solve the world sovereign debt problems.  It appears the Federal Reserve almost went that far.  Business Week reports, they loaned $48 billion to Britain's Barclays Bank on Sept. 18, 2008

Defunct Bear Stearns took $28.5 billion along with Lehman Bros. who got $28 billion before they went broke.  BNP Paribas Securities Corp. took $4.6 billion, Credit Suisse Securities borrowed $1 billion, Deutsche Bank Securities $500 million, Daiwa Securities $440 million and Dresdner Kleinwort was a real piker having only borrowed $93 million.

According to the U.K. Daily Mail, almost one-third of the money lent by the Fed went to British banks!  They even lent money to the European Central Bank (ECB).

The report was mandated by congress in the financial regulation bill.  The Fed increased lending by almost $14 trillion dollars under the "emergency" program.  They loaned money to General Electric 12 times totaling $16 billion dollars; Harley Davidson 33 times for a total of $2.3 billion; Verizon borrowed twice for a total of $1.5 billion, and a group of Caterpillar dealers borrowed $733 million.  The report also details $1.25 trillion in purchases of mortgage securities (dodgy debt) from Fannie Mae and Freddie Mac.

Bloomberg reports that Bayerische Motoren Werke AG, the maker of BMW, Mini and Rolls-Royce autos gained over $3.6 billion in its largest loan from the Federal Reserve.  A company spokesman said “We tapped into this program in 2008 and 2009 during the financial crisis…”

According to the Washington Post, the Korean Development Bank (owned by the S. Korean government) borrowed billions in overnight loans.  The Fed even loaned money to a bank in Bahrain.

Richard Fisher, Dallas Federal Reserve President, said “We took an enormous amount of risk with the people’s money…and we didn’t lose a dime, in fact we made money on every one of them.”

These disclosures of Fed actions to use the dollar to prop up companies over the world should lead to anger, restrictions on activity and increased oversight.  We have a monster that operates for the banker’s interests without regard to national boundaries.

Quote:
I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.---Thomas Jefferson--1802

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

MarketToday Archive

Back to Top