The Fed’s Secret Repo Loans, another News Blackout, and a French Bank Scandal
As thousands of businesses were forced to close in the U.S. as a result of the coronavirus outbreak in March of 2020, and millions of Americans were financially struggling, the Federal Reserve was pumping what would become a cumulative $3.84 trillion in secret repo loans into the U.S. trading unit of the giant French global bank, BNP Paribas, in the first quarter of 2020.
The repo loan market is where banks, brokerage firms, mutual funds and others make loans to each other against safe collateral, typically Treasury securities. Repo stands for “repurchase agreement.” The Fed only comes to the rescue of this market when there is a liquidity crisis and Wall Street firms are backing away from lending to each other. September 17, 2019 was the first time the Fed had to intervene in the repo market since the financial crisis of 2008 and it was months before the first case of COVID-19 was discovered anywhere in the world.
BNP Paribas is not just any ole global bank. It’s the bank that the U.S. Department of Justice fined $8.8 billion in 2015 for flouting U.S. sanctions, covering its tracks, and pleading guilty to a criminal charge.
What may have led to the scramble for money by BNP Paribas Securities is – wait for it – risky derivatives, the same financial weapons of mass destruction that blew up the U.S. financial system and economy in 2008 and led to the biggest bailout of Wall Street in history by the Fed.
The BNP Paribas information comes from a repo loan data dump by the New York Fed this morning – the regional Fed bank that handled all of these secret repo loans from their inception on September 17, 2019 to July 2, 2020.
The Fed has withheld the release of the names of the banks that got these massive loans for two years but is now forced to release them under the provisions of the Dodd-Frank financial reform legislation of 2010. This morning’s data covers the first quarter of 2020. The Fed has previously released the banks’ names for its repo loan bailouts from September 17, 2019 through December 31, 2019 – also after a two-year lag.
https://wallstreetonparade.com/2022/03/the-feds-secret-repo-loans-another-news-blackout-and-a-french-bank-scandal/