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173 comments

first (0, Funny)

Anonymous Coward | more than 2 years ago | (#38484214)

first bailout!!!

Re:first (0)

Anonymous Coward | more than 2 years ago | (#38484924)

Must be a lot of good stuff in here since they released it on Christmas Eve.

FOIA from the Federal Reserve? (1)

JimCanuck (2474366) | more than 2 years ago | (#38484222)

Someone forgot they don't work for the Government when they approved the release.

Re:FOIA from the Federal Reserve? (1)

swalve (1980968) | more than 2 years ago | (#38484828)

Yeah, I'm pretty sure FOIA laws don't just apply to strictly governmental institutions.

Re:FOIA from the Federal Reserve? (1)

JimCanuck (2474366) | more than 2 years ago | (#38485026)

Then that would be a violation of the 5th Amendment as it can lead people to discriminate themselves. After all companies are legally citizens now.

Re:FOIA from the Federal Reserve? (1)

Anonymous Coward | more than 2 years ago | (#38485858)

Then that would be a violation of the 5th Amendment as it can lead people to discriminate themselves.

Are you trying to say 'incriminate'? Do you bother to look up the meaning of those big words?

Re:FOIA from the Federal Reserve? (2)

superwiz (655733) | more than 2 years ago | (#38485252)

That's an interesting argument against government take over of all industries. If any industry is taken over (even partially) by the government, then FOIA allows anyone to request all paperwork produced by that industry. This destroys ALL privacy in EVERYTHING. I wonder if anyone has tried to use FOIA to subpoena all medical records of all Medicare patients. I also wonder if it would hold up.

prevented collapse? (-1)

Anonymous Coward | more than 2 years ago | (#38484228)

Has the Fed saved all our deposits and most of our assets by preventing a global economic collapse?

Re:prevented collapse? (2, Informative)

shentino (1139071) | more than 2 years ago | (#38484288)

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? (5, Informative)

Subratik (1747672) | more than 2 years ago | (#38484516)

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? (5, Informative)

larry bagina (561269) | more than 2 years ago | (#38484630)

The FDIC limit was bumped to $250,000 in 2008. SIPC insures $500,000 of security investments.

Re:prevented collapse? (0)

Anonymous Coward | more than 2 years ago | (#38486272)

recently bumped to an infinite amount in non-interest accounts....check the small print next time your at the checkout counter.

Re:prevented collapse? (1)

Mitreya (579078) | more than 2 years ago | (#38484660)

Have fun getting only 100k or less of your retirement account back :)

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:prevented collapse? (1)

Subratik (1747672) | more than 2 years ago | (#38484734)

Have fun getting only 100k or less of your retirement account back :)

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.

http://www.fdic.gov/news/news/press/2006/pr06029.html [fdic.gov]

try again.

Re:prevented collapse? (0)

Anonymous Coward | more than 2 years ago | (#38484814)

If the link is what you meant then you need to read this yourself. $250,000 isn't much by today's standards for those that have saved for 30 or more years to a 401K as a replacement for a defined type of retirement account. It's a paltry sum in most cases (even though it's more than I've saved).

Re:prevented collapse? (1)

datavirtue (1104259) | more than 2 years ago | (#38485552)

I'm sure that if you are not vigilant you could lose money in a 401k. I switched funds (401k investments) and made money (good solid returns) during the 2008-2009 years. Also, government pension funds are doing very well. You will see dips and "losses" during economic turmoil but these can be temporary. Real companies a that offer needed services and well managed funds are insulated against major losses. Hearkening back to the Enron example, their employees had all of their 401k invested in ONLY(!) Enron stock. That is not diversification! Sure they experienced windfalls (which will never happen in a well manged and diversified fund) but they also felt the bite of total loss.

Re:prevented collapse? (1)

Anonymous Coward | more than 2 years ago | (#38484772)

1) The fact that someone's retirement is all in one basket is bad financial planning, and I'm fine with them failing. Everyone who does serious investing should know what the FDIC insurance covers and plan accordingly.

2) A lot of people's retirement is actually in the stock market, bonds, or assets that wouldn't be impacted if their specific bank happened to fail.

Re:prevented collapse? (1)

datavirtue (1104259) | more than 2 years ago | (#38485618)

My investment experience is limited to Fidelity funds and 401k's (and some stocks purchased individually). These are well managed and yield positively over the long run. [No, I'm not a shill] Playing stocks on your own (sole nest egg) is a tricky game and best left to the people who get paid to do it (professionals). Fidelity is a solid and trustworthy company (in my opinion) . Stay away from banks and non-professional investment as a means to retirement. The funds held and managed by a professional investment firm benefit from the power wielded by their massive interest in the companies. When their funds are invested in a particular company it is usually a significant sum and they are actively involved in communicating with and researching the companies they invest in. This tends to keep things in check, for if the fund managers detect any funny business they get out and put the money elsewhere. The fund manager's main concern is the firm's reputation and stock holder yields. If you care to research for yourself there are a several funds and firms which have weathered the entire economic downturn. It can be done. The news media loves doom and gloom (only conflict sells), so these success stories are not the average parrot garble.

Re:prevented collapse? (0)

Anonymous Coward | more than 2 years ago | (#38484986)

BofA has about $1T on deposit. All banks have about $13T.

FDIC has reserves measured in $Bs. Expect to wait and get repaid in Fed-printed $s if your bank goes bust.

Anyone who still has $ in the Too-Big-To-Fail banks is a bit dim, IMHO

Re:prevented collapse? (4, Insightful)

flatulus (260854) | more than 2 years ago | (#38484650)

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:prevented collapse? (1)

TFAFalcon (1839122) | more than 2 years ago | (#38484882)

How would that differ from the debt that was piled on to bail out the banks?

Re:prevented collapse? (0)

Anonymous Coward | more than 2 years ago | (#38486236)

There's no such debt today - the banks got over the liquidity crunch and paid back the emergency funds. This was the Fed's assumption when they made the temporary, short-term funds available - which assumption was correct.

The deficit increase you are referring to is largely the result of the unfunded Bush tax cuts and of the unfunded Bush wars.

Re:prevented collapse? (2, Insightful)

Anonymous Coward | more than 2 years ago | (#38484898)

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:prevented collapse? (1)

shentino (1139071) | more than 2 years ago | (#38485004)

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:prevented collapse? (2)

GameboyRMH (1153867) | more than 2 years ago | (#38485278)

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? (4, Insightful)

frank_adrian314159 (469671) | more than 2 years ago | (#38485886)

"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:prevented collapse? (1)

taxman_10m (41083) | more than 2 years ago | (#38484810)

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:prevented collapse? (1)

shentino (1139071) | more than 2 years ago | (#38485044)

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:prevented collapse? (1)

Beryllium Sphere(tm) (193358) | more than 2 years ago | (#38484854)

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:prevented collapse? (1)

shentino (1139071) | more than 2 years ago | (#38485052)

Let them fail.

Right now those institutions are using their "too big to fail" status as leverage to get away with irresponsible behavior.

Re:prevented collapse? (2)

westlake (615356) | more than 2 years ago | (#38485120)

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 balance required and and avoid being mulcted by transaction fees and other charges,

Re:prevented collapse? (1)

fotbr (855184) | more than 2 years ago | (#38485642)

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 considering the idea of small credit unions -- I've never dealt with them, so I can't claim to know anything about them or their practices.

Re:prevented collapse? (0)

Anonymous Coward | more than 2 years ago | (#38485824)

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 balance required and and avoid being mulcted by transaction fees and other charges,

Please say what country you're talking about. If it's the UK I can advise you on how to collect your money without a bank.

Re:prevented collapse? (0)

Anonymous Coward | more than 2 years ago | (#38485762)

You do realize that the amount of money that was gone, by "insured" depositors was several magnitudes larger than the FDIC reserves? You do realize that the money in most corporations, by corporate charter is held in money market accounts that aren't insured, and all that money was/is gone? That in two weeks without action, if the banks failed, all economy activity was likely to have stopped? Of oourse you don't, otherwise you wouldn't have this position.

Re:prevented collapse? (3, Interesting)

symbolset (646467) | more than 2 years ago | (#38484530)

Your deposits are perfectly safe because they don't really exist. They could burn your dollars on deposit and print you new ones on withdrawal. To you it's precious acquired wealth - tokens representing the sweat of your brow, the profits of careful negotiation. To them, it's just not.

Verizon got a bailout! (2, Interesting)

Anonymous Coward | more than 2 years ago | (#38484246)

Is Verizon a bank?

Open Sourcing Numbers. (0)

Anonymous Coward | more than 2 years ago | (#38484274)

Now all we need is Slash-commentators that actually understand what the numbers mean.

Re:Open Sourcing Numbers. (0)

Anonymous Coward | more than 2 years ago | (#38484302)

good luck on that

Re:Open Sourcing Numbers. (3, Funny)

JustOK (667959) | more than 2 years ago | (#38484510)

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.

Character Assignment (1)

Niscenus (267969) | more than 2 years ago | (#38485838)

This is slashdot. You are expected to know that the opening inclusion symbol (left curly-brace) or, "{", is the symbol for fountains. The number 6-9 are not used, while 1-5 are warnings given by the Ring of Warning.

Re:Open Sourcing Numbers. (0)

Anonymous Coward | more than 2 years ago | (#38484590)

Good luck with that. Hell, judging by the state the economy is in not even economists understand what the numbers mean.

Re:Open Sourcing Numbers. (4, Interesting)

Beeftopia (1846720) | more than 2 years ago | (#38485226)

This is an important point. One of the biggest economic phenomena in history, the US housing bubble, was not even acknowledged by prominent economists, government or private. They solemnly intoned such a thing didn't exist and all was well. Economics remains firmly a social science. A worthwhile field of study, but not subject to scientific rigor and generally not yielding testable hypotheses.

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]

Can someone please explain the outrage here? (0)

Anonymous Coward | more than 2 years ago | (#38484282)

Why is this a big deal? They loaned money and likely got all of it back with interest. Sure it was a bit below market rate, but I'm honestly OK with that. Individuals often are wanting handouts, not loans. Even people underwater with a mortgage likely don't want a below market loan, they want a principal reduction. There is a lot of difference between a loan and a handout.

Re:Can someone please explain the outrage here? (1)

rubycodez (864176) | more than 2 years ago | (#38484300)

explain please what they did with all the profits? let's take the case of one huge member bank, Bank of America.......

Re:Can someone please explain the outrage here? (0, Insightful)

Anonymous Coward | more than 2 years ago | (#38484594)

The Federal reserve banks are not-for-profit, quasi-government institutions. Any "profit" they generate (through fees, bonds, or interest) is transferred to the US Treasury department.

Re:Can someone please explain the outrage here? (0, Troll)

Anonymous Coward | more than 2 years ago | (#38485034)

Fucking wrong.

Re:Can someone please explain the outrage here? (0)

Anonymous Coward | more than 2 years ago | (#38486460)

Not true! The Federal Reserve is owned by member banks. They each hold shares based on how many branches they have in a given district, thus the profit from these Federal Reserve banks go to... the banks!

Re:Can someone please explain the outrage here? (0)

Anonymous Coward | more than 2 years ago | (#38484332)

from the article: "An October 2008 report by Daniel Thornton, a vice president at the Federal Reserve Bank of St. Louis, said the primary credit rate, which is paid by most borrowers from the Fed’s discount window, had been “consistently lower” than the certificate of deposit and Eurodollar rates since March 2008."

Re:Can someone please explain the outrage here? (5, Informative)

zill (1690130) | more than 2 years ago | (#38484378)

In other words, they take these low interest loans and buy treasury notes with them. All the interest they earn from the Treasury Department ends up being their profit.

This is nothing more than common theft really.

Re:Can someone please explain the outrage here? (1)

lurgyman (587233) | more than 2 years ago | (#38484710)

Did you mean "ends up being revenue?" Since the banks were taking losses from mortgage defaults, many did not turn profits until the tail end of that period.

Re:Can someone please explain the outrage here? (0)

Anonymous Coward | more than 2 years ago | (#38485218)

I think its time to bring up something a great man, Peter Drucker, once said. There are no such thing as profits, only the future costs of staying in business. In fact not only did he say that, but he also said that until companies start discussing their perceived "profit" in terms of future costs and future employment, public sentiment would grow. This book was written in the 1980's...look at whats going on now. Its in vogue to hate on big business and corporate America. Now I'm not defending the banks here, just pointing out something interesting I read the other day that was predicted 30 years ago and is happening to the T.

By the way, Drucker also scorned the CEO's who take excessive bonuses and performance pay based on 'profit' that has not been adjusted to correctly reflect inflation/deflation and other future costs as embezzlers.

Something to think about...After all the 'profit' a company accrues can/will/must be used to employ future generations to survive.

This was, along with many other interesting things such as population demographics can be read in the book, Managing in Turbulent Times if you are interested.

$7 trillion = $250B in Treasuries (1)

Anonymous Coward | more than 2 years ago | (#38486058)

Or alternatively, they took the $7 trillion at 0.01%, invested 250 billion of it in treasuries at 3%, then had $6.75 trillion in working capital.

In effect, he handed them $6.75 TRILLION dollars, and received $250 billion of government bonds back for the money.

Those derivatives, CDRs CDS's etc. they are just Ponzi schemes, they work only as long as they pay out less than money coming in. When that happens, they take a huge bonus to reward themselves. When it turns, they would collapse normally like any betting shop. They only pay out more than investor money coming in, because the Federal Reserve extends more and more credit against less and less assets.

When one of them gets too far ahead (e.g. lending at 40:1 where others are only allowed 20:1) the Fed gets a little embarrassed about the free money and lets that one fail.

If the Fed obeyed its own rules and only lent dollars against hard assets then none of this would be a problem. Wallstreet ponzi schemes would collapse quickly, they'd lose their assets and we'd move on. But with the Fed involved this theft (I agree it is theft) will keep going till it finally collapses into a Russian Ruble style meltdown.

You earn the value in the dollar, but Wallstreet gets to spend it, and that will continue as long as there's so much crossover between the Federal Reserve and Goldman Sachs et al.

The crossover needs to be stopped, the Fed needs to be forced to obey the rules it was constructed under (even if it means criminal sanctions against Fed officers), and Wallstreet parasites won't have any more money to lob at the Gingriches of this world.

Bullshit detector honks! (3, Insightful)

Kludge (13653) | more than 2 years ago | (#38484406)

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:Bullshit detector honks! (0)

Anonymous Coward | more than 2 years ago | (#38484462)

Wow. That incessant honking really is irritating. It's like you had something important to say and then made _sure_ no one would pay attention to you by prefacing it with a stupid noise. The only thing more pathetic was your inane attempt at political discourse.

I'd suggest you either get it checked out by a professional or commit suicide, preferably both.

Re:Bullshit detector honks! (0)

Anonymous Coward | more than 2 years ago | (#38484658)

y u no like honkers? honkers good. honkers honk. who would honk if honkers didn't honk? especially now, during honknika

Re:Can someone please explain the outrage here? (2)

fafaforza (248976) | more than 2 years ago | (#38484546)

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:Can someone please explain the outrage here? (0)

Anonymous Coward | more than 2 years ago | (#38484554)

I'm fine with emergency bailouts to prevent a genuine (read as, not bs rhetoric) depression. That's scary shit.

But now I want those asshats to pay for what they did. And by "pay", I don't just mean pay off the loans and go on with business as usual. I mean they owe us. They sunk their companies. Game over. And we came to the rescue because it was "save their necks or we all go down".

foreign banks? (1)

Anonymous Coward | more than 2 years ago | (#38484286)

IANAB, but I wonder why the US Federal Reserve is loaning money to foreign banks. SHouldn't that country's equivalent be insuring its solvency?

Re:foreign banks? (2)

Trepidity (597) | more than 2 years ago | (#38484336)

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:foreign banks? (2)

WindBourne (631190) | more than 2 years ago | (#38484374)

That really is amazing how many foreign banks AND CORPS got LOADS of money.

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:foreign banks? (1)

fafaforza (248976) | more than 2 years ago | (#38484562)

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? (3, Interesting)

pesho (843750) | more than 2 years ago | (#38484676)

All these banks have very large US operations, and their branches in US are essentially US banks. What puzzles me is that our friendly makers of luxury sports cars from Bayerische Motoren Werke AG (aka BMW), for some reason got upwards of $4B. Admittedly they have a finance branch, but I thought the idea was to save a couple of critical banks not profitable car makers.

Re:foreign banks? (2)

zill (1690130) | more than 2 years ago | (#38484718)

They received bailouts for the same reason GM and Chrysler received bailouts. "too big to fail" isn't just limited to banks.

Re:foreign banks? (1)

adolf (21054) | more than 2 years ago | (#38485490)

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 country or other, except for a random electronic module for the HVAC which was made in the US. Even the fuses and many of the bolts can be traced to their European origin.)

Re:foreign banks? (3, Informative)

Anonymous Coward | more than 2 years ago | (#38485630)

Wrong. They have a massive factory in Greenville-Spartanburg South Carolina.

Re:foreign banks? (1)

adolf (21054) | more than 2 years ago | (#38486352)

Wrong. They have a massive factory in Greenville-Spartanburg South Carolina.

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:foreign banks? (1)

Brett Buck (811747) | more than 2 years ago | (#38484548)

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? (4, Interesting)

ath1901 (1570281) | more than 2 years ago | (#38484714)

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:foreign banks? (1)

TFAFalcon (1839122) | more than 2 years ago | (#38484948)

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? (4, Interesting)

ath1901 (1570281) | more than 2 years ago | (#38485286)

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:foreign banks? (1)

Thing 1 (178996) | more than 2 years ago | (#38485946)

Yes, it was a donation to the financial industry [...]

I long for the days when the government made donations to the technology industry...

Re:foreign banks? (1)

Arker (91948) | more than 2 years ago | (#38485016)

They could have gotten dollars many other ways. They just would have had to pay market rates for them.

Re:foreign banks? (1)

Anonymous Coward | more than 2 years ago | (#38485432)

I was working for an Icelandic bank at the time. All the lines were cut. We couldn't buy or sell anything to anyone. In some cases we could make deals but we had to send our money or instruments in advance. Our counterparties would not trust us that the money/instruments would arrive next day. It's as if your house is on fire but your neighbor won't lend you water because he's afraid your house will burn down.

Turns out our counterparties were right not to trust us...

How many prosectutions ... (0)

Anonymous Coward | more than 2 years ago | (#38484384)

please remind me how many prosecutions there have been for the great heist carried out by these crooks at the banks ?

Freddie and Fannie losses much more... (3, Informative)

Anonymous Coward | more than 2 years ago | (#38484414)

...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:Freddie and Fannie losses much more... (2, Insightful)

Anonymous Coward | more than 2 years ago | (#38484872)

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.

Bloomberg (5, Informative)

dokebi (624663) | more than 2 years ago | (#38484456)

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).

This is pretty interesting if sorted by industy (1)

Sollord (888521) | more than 2 years ago | (#38484536)

While all the banks on the list were in the crapper and unable to lend cash lots of major companies borrowed from the Fed I see BMW Toyota and Ford on the list along with GE and Caterpillar Verizon and even McDonald's this sort of implies things would of been a lot worse if these companies were unable to secure funds though other means though it is odd that Korea as in the country is on the list though its for a small amount. Ford seems to of borrowed money from the Fed for there credit arm Ford Motor Credit which is not the same as the bailout to GM and Chrysler but more likely used to allow them to finance auto loans for customers and it was paid back 100% in under a year

misleading article (1)

superwiz (655733) | more than 2 years ago | (#38484842)

It calls the money which FED lent "public money." But it wasn't money lent out of the US Treasury. It was money lent by the FED itself. The fact that the loans were branded as "emergency" just made them shorter term and lower interest loans (shorter term loans would always have to be lower interest). FED's main reason for operation is to be the underwriter of all banking. It lends money to banks which then re-lend it in smaller denominations. I am still not seeing why there is this large scale attempt to create an impression that this was tax-payer money which was lent. It was money lent out of FED's reserves. One could argue that those reserves are in-name only. But that's an argument against all the loans that FED makes rather than just these specific loans.

Re:misleading article (5, Insightful)

Arker (91948) | more than 2 years ago | (#38484976)

The thing is, the Constitution delegated to Congress the rights to "coin money" for a reason. They have interpreted that instead as a right to delegate the right to print currency, and delegated said right to the Federal Reserve so they dont have to waste time actually doing their jobs. And every time the Fed turns on the printing press, by diluting the pool of currency, it's the same effect as milling coins or flat-out counterfeiting really - it's a hidden, involuntary tax. We all pay the bill through inflation and reduction in value of our savings and retirement. That makes it the people's money just the same if it were revenue taxed openly.

Re:misleading article (1)

blue trane (110704) | more than 2 years ago | (#38485050)

Isn't the "inflation tax" lower than any flat tax that's ever been proposed?

Re:misleading article (2)

rohan972 (880586) | more than 2 years ago | (#38485202)

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:misleading article (1)

superwiz (655733) | more than 2 years ago | (#38485288)

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:misleading article (1)

blue trane (110704) | more than 2 years ago | (#38485342)

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:misleading article (1)

rohan972 (880586) | more than 2 years ago | (#38486322)

If you were guaranteed a basic income, you wouldn't need to devote so much wisdom to money matters

Guaranteed income requires guaranteed production. You can't just get everyone to have enough by passing a law that it is so.

The issue is one of population control. In my country, a previous government wanted to increase the retirement age. Their plan to do so was simply change the law so that compulsory superannuation paid out at a later age. I'd bet that all the people who supported introduction of compulsory superannuation didn't realize it would one day be used to tell them when they were allowed to stop work.

If you organize your own retirement fund, you get to decide when to retire instead of having the government tell you. If that isn't the sort of thing that bothers you, I guess that we've got very different value systems. I don't mind having a safety net for people in times of need. 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.

Re:misleading article (1)

superwiz (655733) | more than 2 years ago | (#38485184)

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:misleading article (1)

Arker (91948) | more than 2 years ago | (#38485328)

No, it's not. Most people didnt understand what the Fed is and what it does. Until they do we wont get rid of it. This - letting people see what it is they do - helps. The fact that you are one of the small minority that already knows what they do is great - it's also not the point.

Re:misleading article (1)

benjamindees (441808) | more than 2 years ago | (#38485008)

Look, the Congress is the only entity endowed with the power to coin money. The fact that they have somehow transferred this power to private interests doesn't magically make it "private money". It's public money that is controlled by private banks.

The FED doesn't have "reserves". They have a printing press. They use it to devalue the currency and to buy government bonds. And it's ultimately funded by savers and taxpayers.

Re:misleading article (1)

blue trane (110704) | more than 2 years ago | (#38485062)

Isn't there a high demand for dollars? So isn't creating more just decreasing the artificial scarcity?

Re:misleading article (1)

Arker (91948) | more than 2 years ago | (#38485090)

Isn't there a high demand for dollars? So isn't creating more just decreasing the artificial scarcity?

Which is a problem because we are talking about "currency" - something with no value at all outside of that artificial scarcity.

Re:misleading article (1)

blue trane (110704) | more than 2 years ago | (#38485322)

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 the great majority of the increase is due to private banks. So why isn't the currency devalued, psychologically, when such exponential increases take place?

Bankers claim some sort of divine, exclusive right to create money, and automatically attach debt to it, because otherwise how would they get attention? But we'll still give them attention, poor dears, while voting for the govt to empower individuals instead of institutions with a basic income, and encouraging innovation (which is what physically raises standard of living) through challenges.

Re:misleading article (1)

superwiz (655733) | more than 2 years ago | (#38485176)

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:misleading article (1)

superwiz (655733) | more than 2 years ago | (#38485210)

Well, the money which would be issued by Congress wouldn't be "public money", either. It would be "issued money". And since you don't actually expect the Congressmen to operate minting presses, I expect they have to delegate that job one way or another.

JEWS (-1)

Anonymous Coward | more than 2 years ago | (#38485400)

"an unprecented campaign to head off a depression"?

No, an illegal bail out for their JEWISH banker friends, paid for by the American people, all 300 million of you.

Watch "The Secret of Oz" and "The Money Masters" and then you'll understand.

All the scumbags responsible for this grand theft should be tried and punished with death, preferably by public hanging.

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