In contrast to Europe where the ECB tries to strangle banks instead of propping them up, money is flowing in the US. The American government has made commitments until now for nearly 8.8 trln USD and spent 2 trln USD.
Yes folks, that’s 2.000.000.000.000 bucks.
Yes folks, that’s 2.000.000.000.000 bucks.
How?
As an investor (commitment: 4.6 trln - spent 1.1 trln - direct investments in financial institutions, purchases of high-grade corporate debt and purchases of mortgage-backed securities).
As a lender (commitment: 2.4 trln - spent 0.657 trln -an extension of the traditional overnight lending in order to prop up liquidity. Terms are longer and more institutions can apply on this funding).
As an insurer (commitment: 1.8 trln - spent 0.267 trln - insuring debt issued by financial institutions and guaranteeing poorly performing assets owned by banks).
Most active is the government in commercial paper (as buyer of last resort – 249 bln spent), installation of public-private fund (not operational yet but will buy nonperforming assets of banks), Troubles Asset Relief Program (TARP – the Treasury now owns stock in hundred of banks an GM, Chrysler, AIG – biggest BOA and Citigroup – 510 bln spent), Federal Home Loan Bank securities (Fannie, Freddie and Ginnie – 217 bln spent), money market funds (14 bln spent), AIG, (43 bln spent) Bear Stearns (the FED bought the portfolio with distressed assets – 29 bln spent), Reserve US Government Fund (a private fund, but the first money market fund that went down – 4 bln spent)
Compared to Europe, this is huge. The ECB leaves it to the locals to save their banks and if necessary they will give money but with a big haircut. Now: in good times there was almost no haircut and in bad times they start to take big margins. Why?
Sphere: Related Content
As an investor (commitment: 4.6 trln - spent 1.1 trln - direct investments in financial institutions, purchases of high-grade corporate debt and purchases of mortgage-backed securities).
As a lender (commitment: 2.4 trln - spent 0.657 trln -an extension of the traditional overnight lending in order to prop up liquidity. Terms are longer and more institutions can apply on this funding).
As an insurer (commitment: 1.8 trln - spent 0.267 trln - insuring debt issued by financial institutions and guaranteeing poorly performing assets owned by banks).
Most active is the government in commercial paper (as buyer of last resort – 249 bln spent), installation of public-private fund (not operational yet but will buy nonperforming assets of banks), Troubles Asset Relief Program (TARP – the Treasury now owns stock in hundred of banks an GM, Chrysler, AIG – biggest BOA and Citigroup – 510 bln spent), Federal Home Loan Bank securities (Fannie, Freddie and Ginnie – 217 bln spent), money market funds (14 bln spent), AIG, (43 bln spent) Bear Stearns (the FED bought the portfolio with distressed assets – 29 bln spent), Reserve US Government Fund (a private fund, but the first money market fund that went down – 4 bln spent)
Compared to Europe, this is huge. The ECB leaves it to the locals to save their banks and if necessary they will give money but with a big haircut. Now: in good times there was almost no haircut and in bad times they start to take big margins. Why?
No comments:
Post a Comment