Clipmarks | Forbes Markets's 'federal reserve' clips

The Fed's New Balance Sheet

Tue, 31 Mar 2009 03:28:05 GMT

I would suggest first that the new Fed balance sheet represents a fundamental transformation of the role of the central bank.

The philosophy behind the pullulating new Fed facilities is precisely the opposite of that traditional concept. The whole purpose of these facilities is to redirect capital to specific perceived priorities. I am uncomfortable on a general level with the suggestion that unelected Fed officials are better able to make such decisions than private investors who put their own capital where they think it will earn the highest reward.

Tags: federal reserve

Bernanke Says AIG Tightens Grip On Perks, Pay

Wed, 11 Mar 2009 17:48:25 GMT

clipped by: Forbes Markets
clipper's remarks: Another sign of how Fed and Treasuary are slowly starting to manage their new charges...

Clip Source: www.reuters.com

Gone are the days of luxury California hotel retreats for executives of bailed-out U.S. insurance giant American International Group.

Once mighty AIG has a new employee expense handbook, a special governance committee, and strict limits on executive pay, according to a letter from Federal Reserve Chairman Ben Bernanke to Senator John Kerry that was obtained by Reuters on Tuesday.

The new expense policy was mandated by the U.S. Treasury Department and "may be materially amended only with the prior written consent of the Treasury," Bernanke said.

Tags: aig, corporate governance, perks, executive compensation

Philly Fed: Activity Declined in Every State in December

Thu, 29 Jan 2009 18:32:38 GMT

clipped by: Forbes Markets
clipper's remarks: If most of the U.S. has been in recession since December 2007, this indicator suggests all of it now is.

Clip Source: www.calculatedriskblog.com

Here is a new record that will never be broken! The Philly Fed index shows - for the first time ever - declining activity in all states in December

The Federal Reserve Bank of Philadelphia has released the coincident indexes for all 50 states for December 2008. The indexes decreased in all 50 states for the month (a one-month diffusion index of -100). For the past three months, the indexes increased in three states, Louisiana, North Dakota, and Wyoming, and remained unchanged in one state, Alaska.

Tags: u.s. economy, coincident economic indicators, federal reserve bank of philadelphia

Mortgage Rate Relief Might Not Last Long

Thu, 08 Jan 2009 23:05:00 GMT

clipped by: Forbes Markets

Clip Source: www.reuters.com

Massive efforts by the Federal Reserve to bring down mortgage rates have so far been a success, but homeowners had better act fast because analysts say record low rates could be gone as soon as this summer.

Thirty-year mortgage rates dropped to a low of 5.01 percent this week -- their lowest since 1971 -- after the Federal Reserve unveiled a plan in late November to buy as much as $500 billion of securities backed by Fannie Mae (FNM.P), Freddie Mac (FRE.P) and Ginnie Mae.

Tags: mortgages, federal reserve

Fed Has Abandoned Monetary Policy

Sun, 04 Jan 2009 12:45:25 GMT

clipped by: Forbes Markets
clipper's remarks: The Fed's balance sheet has more than doubled in size to over $1.2 trillion in recent months.

Clip Source: www.reuters.com

The Federal Reserve has embarked on a campaign of unsupervised industrial policy to end the country's financial crisis, a move that could undermine its independence, a former top U.S. official said on Saturday.

John Taylor, who was under secretary of treasury for international affairs from 2001 to 2005, said the explosive growth of the Fed's balance sheet since September was "unbelievable."

"This doesn't really seem like quantitative easing in the sense of finding a growth rate in the money supply," he told a panel discussion during the annual meeting of the American Economics Association.

"What you are looking at now is really being determined by other considerations. How much should we buy of mortgage-backed securities? How much should we loan to foreign central banks? This is really more like an industrial policy," he said.

Tags: federal reserve, monetary policy, u.s. economy

Evans Says Fed Needs To Mimic Below-Zero Rates

Sun, 04 Jan 2009 12:43:22 GMT

clipped by: Forbes Markets
clipper's remarks: One 'quantitative measure' would be for the Fed to buy large quantities of assets from banks, say, mortgage backed securities.

Clip Source: www.reuters.com

A grim economic outlook highlights the need for the Federal Reserve to step up quantitative measures to boost growth, with official interest rates already effectively at zero, Charles Evans, president of the Chicago Fed, said on Saturday.

Evans said that based on the outlook for rising unemployment, falling industrial production and a wider output gap, economic models suggest rates should be below zero.

"If it were not constrained by zero, those models would want to push it below zero, but that's not possible," Evans told reporters after a panel at the American Economic Association's meeting in San Francisco.

Quantitative easing, a way to flood the banking system with large amounts of money, "is a way to mimic below-zero rates and provide support to the economy," he said.

Tags: federal reserve, monetary policy, u.s. economy

Hedge Funds Gain Access To $200B Fed Aid

Sun, 21 Dec 2008 05:07:43 GMT

clipped by: Forbes Markets

Clip Source: www.ft.com

Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.

The asset-backed securities to be funded under the programme are pools of credit card receivables, automobile loans and student loans.

Tags: hedge funds, bailout

Fed Refuses To Disclose Recipients Of $2 Trillion Bailout

Fri, 12 Dec 2008 16:49:00 GMT

clipped by: Forbes Markets
clipper's remarks: This is one TARP you can't see through.

Clip Source: www.bloomberg.com

The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral.

Bloomberg filed suit Nov. 7 under the U.S. Freedom of Information Act requesting details about the terms of 11 Fed lending programs, most created during the deepest financial crisis since the Great Depression.

The Fed responded Dec. 8, saying it’s allowed to withhold internal memos as well as information about trade secrets and commercial information. The institution confirmed that a records search found 231 pages of documents pertaining to some of the requests.

Tags: bloomberg, federal reserve, bailout

Obama To Name Volcker To Head Markets Panel

Wed, 26 Nov 2008 13:55:53 GMT

clipped by: Forbes Markets
clipper's remarks: Yet another marquee name jumps on board.

Clip Source: www.reuters.com

Barack Obama will name former Federal Reserve Chairman Paul Volcker to chair an advisory panel to advise the U.S. president-elect on stabilizing financial markets and maneuvering the country out of a recession, sources familiar with the matter said on Wednesday.

Tags: paul volcker, global financial crisis, obama administration

Wall Street Sinks To Lowest Since 2003

Thu, 20 Nov 2008 01:10:47 GMT

clipped by: Forbes Markets
clipper's remarks: Down, down, down....

Clip Source: www.reuters.com

Stocks plunged to their lowest in five-and-a-half years on Wednesday as investors girded for a lengthy economic downturn and automotive executives predicted a far-reaching calamity without a government lifeline.

Shares of General Motors Corp plummeted to the lowest in 66 years and Ford hit a 26-year low, but the pain was spread well beyond the automotive sector. Financial shares fell by double-digit margins as a meltdown in the commercial real estate market fanned fears of another wave in the credit crisis.

Late in the day, the Federal Reserve slashed its economic growth forecasts through 2009, helping unleash a wave of selling that continued into the closing bell.

Tags: u.s. equities, global financial crisis

GMAC Cleared To Join Fed Commercial Paper Plan

Wed, 29 Oct 2008 02:51:17 GMT

clipped by: Forbes Markets
clipper's remarks: Questions are how much will it borrow and what will it use the money for.

Clip Source: www.reuters.com

GMAC LLC, the auto and mortgage finance company, on Tuesday said it had been approved to use the commercial paper funding facility created earlier this month by the U.S. Federal Reserve with the aim of easing pressure on the corporate credit market.

Approval to use the Fed funding facility comes at a time when U.S. automakers and their affiliated finance companies are asking for a range of government assistance, including the purchase of bad auto loans through the $700 billion program asset-purchase program controlled by the U.S. Treasury.

Tags: gmac, commerical paper, bailout, financial crisis

Discount Window Borrowing Soars; AIG Taps $28B Of Fed Credit

Thu, 18 Sep 2008 22:41:15 GMT

clipped by: Forbes Markets

Clip Source: blogs.wsj.com

Investment bank borrowing from the U.S. Federal Reserve’s newly expanded discount window soared in the latest week, reflecting severe strains in credit markets in the wake of the collapse of Lehman Brothers Holdings Inc.

Meanwhile the Fed’s $85 billion line of credit to troubled insurer American International Group Inc. made its first appearance on the central bank’s balance sheet, showing $28 billion in loans Wednesday. “AIG wasted no time in hitting the Fed,” said Michael Feroli, an economist with J.P. Morgan Chase.

Total borrowing at the discount window, including both depository institutions and primary dealers, jumped more than 400% to $121.29 billion Wednesday from $23.56 billion in the previous week, the Fed said in its weekly report Thursday. Total average daily borrowing swelled to record $47.97 billion, more than double the previous record of $19.89 billion in the prior week.

Tags: credit crisis, federal reserve, aig

Central Banks At Risk Just Like Wall Street's Finest

Tue, 09 Sep 2008 17:12:48 GMT

clipped by: Forbes Markets
clipper's remarks: This really is a bucket of cold water. The author is Kenneth Rogoff, professor of economics and public policy at Harvard, writing in the U.K.'s Guardian newspaper. His core point is that central banks, in shoring up national banking industries by taking on financial firms' bad debt, are only putting themselves at risk.

Clip Source: www.guardian.co.uk

A year into the global financial crisis, several key central banks remain extraordinarily exposed to their countries' shaky private financial sectors. So far, the strategy of maintaining banking systems on feeding tubes of taxpayer-guaranteed short-term credit has made sense. But eventually central banks must pull the plug. Otherwise they will end up in intensive care themselves as credit losses overwhelm their balance sheets.

The United States Federal Reserve, the European Central Bank, and the Bank of England are particularly exposed. Collectively, they have extended hundreds of billions of dollars in short-term loans to both traditional banks and complex, unregulated "investment banks". Many other central banks are nervously watching the situation, well aware that they may soon find themselves in the same position as the global economy continues to soften and default rates on all manner of debt continue to rise.

Tags: credit crisis, central banking, kenneth rogoff

Stressed Banks Borrow Record Amount From Fed

Thu, 31 Jul 2008 23:05:30 GMT

clipped by: Forbes Markets
clipper's remarks: Secondary credit nos indicate that no of inadequately capitalized banks is on the rise.

Clip Source: www.reuters.com

NEW YORK (Reuters) - Banks borrowed a record amount of funds from the Federal Reserve in the latest week as the year old credit crisis took a persistent toll, while the commercial paper market continued to contract, signaling tough conditions for short term borrowers.

Banks' primary credit borrowings averaged $17.45 billion per day in the latest week, the second straight week this had hit a record and up from $16.38 billion the previous week, Fed data showed on Thursday.

Secondary credit the Fed extended, which is usually taken out by banks in need of emergency cash, rose to $89 million in the latest week, from $34 million the week before.

Tags: credit crisis, banking

Fed Extends Window Access

Wed, 30 Jul 2008 14:58:57 GMT

clipped by: Forbes Markets
clipper's remarks: Fed is saying that financial system still looks fragile.

Clip Source: www.federalreserve.gov

The Federal Reserve today announced several steps to enhance the effectiveness of its existing liquidity facilities, including the introduction of longer terms to maturity in its Term Auction Facility. In association with this change, the European Central Bank and the Swiss National Bank are adapting the maturity of their operations.

Federal Reserve Actions
Actions taken by the Federal Reserve include:

Extension of the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) through January 30, 2009.
The introduction of auctions of options on $50 billion of draws on the TSLF.
The introduction of 84-day Term Auction Facility (TAF) loans as a complement to 28-day TAF loans.
An increase in the Federal Reserve's swap line with the European Central Bank to $55 billion from $50 billion.

Tags: federal reserve, credit crisis