Wall Street firms reduce, banks step up Fed loans
In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The program will continue for at least six months. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.
In a new addition to the weekly report, the Fed said the portfolio of certain assets it took over from Bear Stearns is now estimated to be worth $28.9 billion. Maiden Lane LLC holds the portfolio of assets.
As part of JPMorgan's takeover of the troubled investment firm, the Fed provided a loan of $28.82 billion. JPMorgan will absorb the first $1.15 billion of any losses that could occur on the holdings.
Democrats in Congress and other critics contend the Fed's financial involvement in the deal — along with its decision to provide emergency loans to Wall Street firms — are akin to a government bailout and are putting billions of taxpayer dollars at risk.
However, Fed Chairman Ben Bernanke has defended the actions, and in appearances on Capitol Hill has said he doesn't believe taxpayers will suffer any losses.
Separately, as part of efforts to relieve credit strains, the Fed auctioned $26.1 billion in Treasury securities to investment companies Thursday.
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Member Comments
Posted By: josephjsalas @ 03/21/2008 3:51:42 PM
Comment: "Quit beating arround the BUSH! Everybody knows the little people base their decisions upon the DJI
ticker. Everyone should know by now that the DJI is based upon Banking and Oil! So between the
Iraq war and the Fed supplying the crutch needed for the big banks, eveyone should know that
Wall Street and the Dollar are both backed and produced by green ink and liquid crystal!
Posted By: tired and old @ 03/17/2008 1:25:03 PM
Comment: It is a real joy to hear that the government wants to bring calm to the stock market ?
I only wish that I had enought money to purchase a stock certificate. Unfortunately my money seems to be in short supply. I think it is important to have food to eat, taxes to pay, propane to buy, fuel to purchase.
Where has the government been as my expenses continued to grow ?
In the Bush years food has tripled, gasoline has tripled, and propane tripled.
President Bush thank you for caring about that which I can't afford. I hope you have lots of fun counting your millions after retiring from government; just, like Bill Clinton.
Posted By: C. MacLean @ 03/17/2008 11:33:47 AM
Comment: Well, well, well. I thought the republicans were the party of less government interference, but amazingly, when it comes down to money, they somehow manage to take care of their own.
And at this point, they had no choice - the alternative, to allow Bear Stearns to collapse, was unthinkable.
But by all means, let's continue to maintain tax cuts for the rich while we make paupers of the middle class. By all means, let's continue to insist we are a society based on capitalism and consumerism but send our jobs overseas. (Tough to tax the middle class if they aren't employed, huh?)
And by all means, let's continue to pour more money into the Middle East and the military, draining our coffers at home, so we can continue to prop up Big Oil - the people who brought you record profits even as gas climbs to $4/gallon and beyond.
George Bush says, "we have taken strong, decisive action." No, George. Strong decisive action would have been avoiding going to war against an oil producing nation. Strong decisive action would have been to figure out how to balance the budget. Strong decisive action would have been to show some backbone and leadership.
January 21, 2009 can't come soon enough.