The Fed’s Data Dump

I spent a good deal of yesterday browsing through the Federal Reserve’s massive data dump on the bailout. Frankly, it’s pretty boring stuff. Hatred and mistrust of the Fed is very high, so I’m not sure what some people were expecting the data to reveal; it’s largely what I assumed.

The media is full of dramatic headlines: “Fed made $9 trillion in emergency overnight loans.” This is another case of “accurate but misleading” reporting. Yes, the sum total of the overnight loans came to $9 trillion, but the Fed never had that much at stake at one time. That would be like taking the daily totals of your credit card or mortgage debt and adding them all up together.

The Fed’s Primary Dealer Credit Facility was created to keep the repo market going and thus prevent the banks from simply dumping their assets in a fire sale. This is what helped take Bear Stearns under. The Fed also relaxed its rules on what it allowed for collateral.

Posted by on December 2nd, 2010 at 10:17 am


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