Investment firms tapping Fed for billions

March 27, 2008
Investment firms tapping Fed for billions

WASHINGTON - Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday.

Those firms averaged $32.9 billion in daily borrowing over the past week from the new lending facility, compared with $13.4 billion the previous week. The program, which began last Monday, is part of the Fed's effort to aid the financial system.

On Wednesday alone, lending reached $37 billion.

Federal Reserve offers $100 billion more to commercial banks

March 28, 2008
Federal Reserve offers $100 billion more to commercial banks

WASHINGTON: The Federal Reserve announced Friday it will auction an additional $100 billion (€63.31 billion) in April to cash-strapped banks as it continues to combat the effects of a credit crisis.

The central bank said it would make $50 billion (€31.65 billion) available at each of two auctions, on April 7 and April 21.

Through the end of March, the Fed has provided $260 billion (€164.6 billion) in short-term loans to commercial banks through the innovative auction process. It also has employed Depression-era provisions to provide money to investment banks.

Fed Broke Law When it Bailed Out Bear Stearns

March 16, 2008
Fed Broke Law When it Bailed Out Bear Stearns

At present, there are only five members on the board with two vacancies, but only four approved the measure because governor Frederic Mishkin was not present, according to the Federal Reserve.

But current law mandates that no less than five members can vote on the matter and states that members can be contacted through any electronic means, including by telephone and e-mail.

"There has been no showing that, given technology in 2008 (as opposed to the 1930s when this language was enacted), the required attempts to contact Gov. Mishkin were made," Lee wrote in the complaint.

Things Are Falling Apart As You Read This

March 17, 2008
Things Are Falling Apart As You Read This

But the Fed rode to Bear's rescue anyway, fearing that the collapse of a major investment bank would cause panic in the markets and wreak havoc with the wider economy. Fed officials knew that they were doing a bad thing, but believed that the alternative would be even worse.

As Bear goes, so will go the rest of the financial system. And if history is any guide, the coming taxpayer-financed bailout will end up costing a lot of money.

Fed to boost auction amounts to aid banks

January 4, 2008
Fed to boost auction amounts to aid banks

WASHINGTON - The Federal Reserve announced Friday that it is increasing the amount of money available to banks through the new auction process it created to ease the nation's severe credit squeeze. The Fed again pledged to continue the auctions “for as long as necessary."

The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion, a 50 percent jump. Those two auctions will be Jan. 14 and Jan. 28.

Federal Reserve chairman issues warning on social inequality

February 8, 2007
Federal Reserve chairman issues warning on social inequality

He noted that wages at the 50th percentile ("the median wage") had risen approximately 11.5
percent between 1979 and 2006, while wages at the 10th percentile ("near the bottom of the wage
distribution") had climbed just 4 percent and earnings at the 90th percentile ("close to the top
of the distribution") had jumped 34 percent. Bernanke pointed out that the worker at the 90th
percentile now earned 4.7 times as much as the worker at the 10th percentile, compared to a ratio
of 3.7 in 1979.

The federal reserve chairman went on to say that greater inequality was also evident in other
measures of financial well-being, such as real household income. Figures showed, he said, that the
share of the national income received by households in the top fifth of the income distribution
rose from 42 percent in 1979 to 50 percent in 2004 (a 19 percent increase), while the share of the
bottom 20 percent of households had declined from 7 to 5 percent (a 29 percent decline). He took
note of the fact that the wealthiest 1 percent of households had seen its share of after-tax
income increase from 8 percent in 1979 to 14 percent in 2004 (a 57 percent jump).