Fed Auctions Another $50 Billion To Banks, Bringing Total To $360 Billion Since December

Source: Associated Press

WASHINGTON: Battling to relieve stressed credit markets, the Federal Reserve has provided a total of $360 billion (€225.97 billion) in short-term loans to squeezed banks since December to help them overcome credit problems.

The central bank on Tuesday announced the results of its most recent auction — the 10th since the program started in December, where commercial banks bid to get a slice of another $50 billion (€31.39 billion) in the short-term loans.

It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August, intensified in December and January and took another turn for the worst in March with the sudden crash of Bear Stearns, the nation's fifth-largest investment house.

The mighty blows of the housing, credit and financial crises threaten to push the country into a deep recession.

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The Fed, around the middle of December, announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and to help them over the credit hump. A global credit crisis has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.



Read more: http://www.iht.com/articles/ap/2008/04/22/business/NA-FIN-US-Fed-Credit-Crisis.php

we just need to let the whole fucking banking system fall. Yes, people will lose jobs and houses. Yes it will be hard for a while. However sometimes you just have to amputate the cancerous leg to grow healthy again.

the government will likely "forgive" the banks' debt (especially if the Repukes are running the country ...)

If the collapse of the current system, after the initial kicks and punches, isn't what is necessary. Then again, I always felt like capitalism is the biggest con job ever. When a monetary system allows so much to go to so few what else can it be called but a con?

w/2 kids live on some $200-300 a month...is enough to make one seriously ill...:(

Odd how they are not held to the "pull yourself by your bootstraps" mantra.

The banks get their BS mark-to-market price now, and the FED owns the securities and will try to sell them when this all blows over. Bernake said possibly ten years.
It's corp welfare because the FED is buying up their bad decisions, their losses. Many of these will be worthless securities, so the taxpayers will own worthlessness, the biggest finacial firms will get paid now.
Toss in the $29 billion for Bear Stearns, and this is $400 billion and counting.
Good thing we let the financial industry consolidate, because now they are all 'too important' to allow to fail.
Oh, but they've learned their lesson, right? They won't be THAT greedy ever agian. Yeah, okay. Moral hazard - big time.

The Term Auction Facility is a program in which the Federal Reserve auctions term funds to depository institutions. The creation of this facility was announced by the Federal Reserve on December 12, 2007 and was done in conjunction with the Bank of Canada, the Bank of England, the European Central Bank, and the Swiss National Bank to address elevated pressures in short-term funding markets. The reason it was created is because banks were not lending funds to one another and banks in need of funds were refusing to go to the discount window. Banks were not lending money to each other because there was a fear that the loans would not be paid back. Banks refused to go to the discount window because it is usually associated with the stigma of bank failure. Under the Term Auction Facility, the identity of the banks in need of funds is protected in order to avoid the stigma of bank failure. Foreign exchange swap lines with the European Central Bank and Swiss National Bank were opened so the banks in europe could have access to U.S. dollars. Federal Reserve Chairman Ben Bernanke briefly described this facility to the U.S. House of Representatives on January 17, 2008:

the Federal Reserve recently unveiled a term auction facility, or TAF, through which prespecified amounts of discount window credit can be auctioned to eligible borrowers. The goal of the TAF is to reduce the incentive for banks to hoard cash and increase their willingness to provide credit to households and firms...TAF auctions will continue as long as necessary to address elevated pressures in short-term funding markets, and we will continue to work closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives.

It is also described in the Term Auction Facility FAQ:

The TAF is a credit facility that allows a depository institution to place a bid for an advance from its local Federal Reserve Bank at an interest rate that is determined as the result of an auction. By allowing the Federal Reserve to inject term funds through a broader range of counterparties and against a broader range of collateral than open market operations, this facility could help ensure that liquidity provisions can be disseminated efficiently even when the unsecured interbank markets are under stress. In short, the TAF will auction term funds of approximately one-month maturity. All depository institutions that are judged to be in sound financial condition by their local Reserve Bank and that are eligible to borrow at the discount window are also eligible to participate in TAF auctions. All TAF credit must be fully collateralized. Depositories may pledge the broad range of collateral that is accepted for other Federal Reserve lending programs to secure TAF credit. The same collateral values and margins applicable for other Federal Reserve lending programs will also apply for the TAF.

this is not about the Term securities lending facility

credit outstanding?

If they rolled over daily would the headline be Fed makes = 50 billion a day times 120 days=6 trillion?

"6 TRILLION IN LOANS MADE BY FED TO BANKS IN 2008 SO FAR"?

will be worthless come labor day.