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Anonymous ID: 63296c June 9, 2020, 12:27 p.m. No.9549298   🗄️.is đź”—kun   >>9396 >>9562 >>9707

Fed’s Repo Loans to Wall Street Skyrocket by 230 Percent Week Over Week

 

The Federal Reserve is desperately hoping that the pandemic, the coast-to-coast protests and the military generals’ scathing rebuke of the President’s plan to “dominate” grannies and college kids with bayonets and Black Hawk helicopters in the streets would distract the public from its money-feeding tube to Wall Street.

 

Unfortunately for the Fed, Americans can multitask.

 

Between Monday and Friday of last week, the Fed made $304.20 billion in repo loans to Wall Street’s trading houses. That was 230 percent of what it made the week before and 700 percent of what it loaned the week before that. (See chart above.) This would suggest that the liquidity crisis is heating up and/or that it’s taking ever larger amounts to levitate the stock market as sellers come back in.

 

The Fed has gone completely bonkers when it comes to its money spigot to Wall Street. On March 17, the New York Fed announced that it was going to be offering daily one-day loans of half a trillion dollars to Wall Street’s trading houses. That offer has been going on ever since but the daily amounts actually borrowed from the Fed have never gotten near that daily amount – thus far. The Wall Street banks that own the trading houses to whom the Fed is making the loans know that the Fed will likely be sued to release this information to the public. If they borrow too much from the Fed it will taint their reputation as a firm that was potentially insolvent or, at best, couldn’t get access to loans elsewhere.

 

The Fed gets the added advantage of frightening the shorts out of the market with that giant, daily, half a trillion dollars number. What short trader wants to compete against a potential daily influx of half a trillion dollars being levered up and going long.

 

Not only is the size of what the Fed is offering to trading houses nuts, but the interest rate is crazy as well. Never before in history has the Fed made emergency loans to Wall Street’s trading houses at 1/10th of one percent interest, as it is presently doing on its repo loans. Why aren’t we reading about this in mainstream newspapers? It’s an outrageous subsidy to Wall Street with no comparable subsidy to the public. Private student loans are running as high as 12 percent while interest on credit card debt is even higher.

 

The Fed can’t seriously claim to be helping families while ignoring this interest rate disparity.

 

Throughout the Fed’s history, which dates back to 1913, the concept of the Fed serving as lender-of-last-resort is that any emergency loans it makes should be at penalty rates to punish banks for getting into trouble and needing a bailout from the Fed.

 

Not only is the Fed breaking a cardinal rule by not inflicting penalty rates on banks, but it’s loaning to trading firms instead of sticking to its knitting and making loans to commercial banks that can boost the economy with business and consumer loans.

 

And the repo loans are only one of multiple bailout programs that the Fed has concocted for Wall Street.

 

While we were taking a look at the Fed’s Excel spreadsheets of its repo loans, we were curious to see what it did during the period of Monday, March 9 through Thursday, March 12. That’s when the Dow Jones Industrial Average lost 4,664 points in a four-day span. During Monday to Friday of that week, the Fed pumped $776.68 billion in repo loans to the Wall Street trading houses.

 

On March 17, the day after the Dow lost 2,997 points, the Fed pumped $199.35 billion into Wall Street. That day, March 16, was particularly notable.

 

The CBOE Volatility Index (VIX), which measures implied volatility of the Standard and Poor’s 500, soared to an intraday peak of 82.69 on March 16, which was even higher than on November 21, 2008 during the height of the financial crisis when Citigroup was unraveling. The New York Fed had allowed Citigroup to pile on derivatives, subprime debt and off-balance sheet time bombs as its President, Tim Geithner, wined and dined with Sandy Weill, the bank’s Chairman and CEO. As is so typical in the crony, unaccountable world of Washington and Wall Street, Geithner was rewarded by failing up to U.S. Treasury Secretary in the Obama administration.

moar here

https://wallstreetonparade.com/2020/06/feds-repo-loans-to-wall-street-skyrocket-by-230-percent-week-over-week/