In a victory for both Bloomberg and the American people, the Supreme Court ruled on Monday that the Federal Reserve must disclose the borrowers' names, the amounts of the emergency loans, and the date they took place. The Federal Reserve has five days to comply, and Fed spokesman David Skidmore says they will do so. Of course, Bloomberg is ecstatic.
As a financial crisis developed in 2007, “The Federal Reserve forgot that it is the central bank for the people of the United States and not a private academy where decisions of great importance may be withheld from public scrutiny,” said Matthew Winkler, editor in chief of Bloomberg News. “The Fed must be accountable to Congress, especially in disclosing what it does with the people’s money.”
Ironically, all the arguments put forward by the Federal Reserve's counsel seemed to reinforce the decision that disclosure was necessary. Now the whole world will know which banks were the weakest and required the most help. I have a few of my own suspicions, so I can't wait to see the list.
As for the argument that disclosure will make banks more reluctant to avail themselves of emergency lending when they get in trouble, can someone explain to me why that's a bad thing?
Anyone want to bet on which bank needed the most? How about most frequent visits to the Discount Window? We could get a March Madness pool going for loser banks. Who's with me?
This is gonna turn into an absolute feeding frenzy.
unless somethign absolutely earth shattering comes out, i'm not sure that the numbers matter that much anymore. Market wise at least
Eddie, this is major implications from a legal standpoint as to what FOIA can effectively do. I'm awaiting how many companies take advantage of this ruling for their own gain.
Citi
The top borrowers aren't really going to be surprising (Citi, BofA). The numbers I really want to see are Goldman's and American Express in particular and more generally anyone that suddenly became a deposit holding bank. We've discussed it before but this is the real meat of the "bailout." Unlimited access to liquidity so institutions that colossally fucked up in underwriting or in consumer credit capital markets could continue as going concerns while saying "move along, nothing to see here."
Agreed. This is why I always laugh when someone makes the "TARP was paid back with interest" argument. It's like, no shit dumbass, there were so many mechanisms put in place to ensure that the banks would not only continue along, but essentially make risk-free profits and grow bigger. Shit was a mother fucking cheat code for the banks, while everyone else suffered and had to deal with real world consequences.
I might buy some SB's because of this post. Common sense is so rare these days it's fucking baffling.
i'm pretty sure the big names borrowed quite a bit, GS/MS/JPM whoever, rates were so low and they could take advantage of it. There was something about them borrowing and buying treasuries, effectively lending back to the govt and taking the differential...
Though we probably know most of the players, the numbers will be interesting. One thing I'm looking forward to seeing, and something that could potentially cause some backlash for the Fed, is how much money went to foreign banks.
I am making a market on how many times the phrase 'the bush economy' or 'the busy administration' or some variant is used when these numbers are released. The over under is 7 times per hour per commentator. Pay out is 3:2 on the over and 12:5 on the under.
^^ Best recap of TARP possible.
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