The FED’s collateral policies during the crisis January 21, 2014 at 7:43 pm
I can’t believe that I missed this two years ago when it came out, but I did, so herewith find Bloomberg’s carefully-researched and probably not at all conjectural expose of the FED’s collateral policies in the crisis:
Last week the Federal Reserve bravely released 894 PDF files containing 29,346 pages that detailed its heroic actions during the financial crisis.
These documents revealed how open-minded the Fed can be when it needs to be. Local governments in Belgium, Japanese fishing cooperatives, the Libyan government and many other unlikely parties received the Fed’s financial aid. Failing U.S. banks, such as Citigroup and Morgan Stanley (MS), were of course handed whatever they wanted, and permitted to post as collateral pretty much anything they could get their hands on: junk bonds, defaulted debt, volatile equities…
A team of Bloomberg investigative reporters, led by Kram Namttip, was allowed to spend a day examining what remains of the collateral collected by the Fed during the crisis. What follows is a brief summary of their findings. To wit:
— A vault in the Fed basement filled with young women, who claimed, in broken but excited English, they had been repo-ed by the Italian government.
If Italy has weathered Europe’s sovereign debt crisis so much better than its fellow deadbeats, here is why: the Fed’s nervy decision to extend credit to the Italian government against its prime minister’s social assets…