cancel2 2022
Canceled
With so many people in the US in complete denial about how close the financial system came to complete collapse, this release of documents provides sombre and belated evidence of the true nature of the banking crisis.
ALEX BRUMMER: New York Fed comes clean
By Alex Brummer, City Editor
Last updated at 10:07 PM on 3rd December 2010
Amid all the hype around the fat WikiLeaks drop over the last week, an official cache of papers released by the Federal Reserve Board almost went unnoticed.
Yet in many ways this treasure trove provides the best insight into the severity of the post-Lehman financial collapse that we have seen.
The US central bank is behaving with the degree of transparency required in a modern society.
Fed papers: This treasure trove provides the best insight into the severity of the post-Lehman financial collapse that we have seen, says Alex Brummer
This is in stark contrast to the ridiculously secretive Financial Services Authority which is treating the PwC report into the failings of the Royal Bank of Scotland as if it were vital to the nation's security.
The most remarked on aspect of the Fed release so far has been the support for Britain's Barclays and RBS, both of which qualified because of their US operations.
But a real eye opener is the extent to which Goldman Sachs - with its claims of a vast liquidity buffer - was propped up by the Fed. On no less than 84 occasions, with a laser like focus on the best deal, it turned to the Fed for emergency cash. One can imagine the relief when Warren Buffett was eventually persuaded to buy-in with a $10billion lifeline. Less surprising perhaps is that its weaker rival Morgan Stanley needed Fed money on 212 occasions.
What all of this tells us is that the collapse in the share prices of these two Wall Street titans, which went on to pay out record breaking bonuses to staff in 2009, was not simply a case of bad nerves. It reflects how close they may have come to joining Bear Stearns and Lehman Brothers on the scrapheap.
But if you thought it was just the banking sector which was close to the brink, think again. While the White House was dishing out $700billion of loans through the Tarp (Troubled Asset Relief Programme) the Fed was digging far deeper doling out $3,300billion in direct loans.
The recipients included General Electric and the telecoms group Verizon. What may be more alarming to investors is the disclosure that two of the world's largest fund management groups Black Rock (an outgrowth of Merrill Lynch) and Fidelity also required temporary bail-outs.
What might have happened to the American financial system, and as importantly the savings of tens of millions of people if this emergency funding had not been provided by the New York Fed (then under the leadership of now treasury secretary, Tim Geithner) does not bear thinking about.
Remarkably, even after this humiliation the investment banks, like Goldman, are still strutting their stuff saying the crisis had little to do with their behaviour. Such a re-writing of history is self-delusion on a grand scale.
Read more: http://www.dailymail.co.uk/money/ar...R-New-York-Fed-comes-clean.html#ixzz17BugoUze
By Alex Brummer, City Editor
Last updated at 10:07 PM on 3rd December 2010
Amid all the hype around the fat WikiLeaks drop over the last week, an official cache of papers released by the Federal Reserve Board almost went unnoticed.
Yet in many ways this treasure trove provides the best insight into the severity of the post-Lehman financial collapse that we have seen.
The US central bank is behaving with the degree of transparency required in a modern society.
Fed papers: This treasure trove provides the best insight into the severity of the post-Lehman financial collapse that we have seen, says Alex Brummer
This is in stark contrast to the ridiculously secretive Financial Services Authority which is treating the PwC report into the failings of the Royal Bank of Scotland as if it were vital to the nation's security.
The most remarked on aspect of the Fed release so far has been the support for Britain's Barclays and RBS, both of which qualified because of their US operations.
But a real eye opener is the extent to which Goldman Sachs - with its claims of a vast liquidity buffer - was propped up by the Fed. On no less than 84 occasions, with a laser like focus on the best deal, it turned to the Fed for emergency cash. One can imagine the relief when Warren Buffett was eventually persuaded to buy-in with a $10billion lifeline. Less surprising perhaps is that its weaker rival Morgan Stanley needed Fed money on 212 occasions.
What all of this tells us is that the collapse in the share prices of these two Wall Street titans, which went on to pay out record breaking bonuses to staff in 2009, was not simply a case of bad nerves. It reflects how close they may have come to joining Bear Stearns and Lehman Brothers on the scrapheap.
But if you thought it was just the banking sector which was close to the brink, think again. While the White House was dishing out $700billion of loans through the Tarp (Troubled Asset Relief Programme) the Fed was digging far deeper doling out $3,300billion in direct loans.
The recipients included General Electric and the telecoms group Verizon. What may be more alarming to investors is the disclosure that two of the world's largest fund management groups Black Rock (an outgrowth of Merrill Lynch) and Fidelity also required temporary bail-outs.
What might have happened to the American financial system, and as importantly the savings of tens of millions of people if this emergency funding had not been provided by the New York Fed (then under the leadership of now treasury secretary, Tim Geithner) does not bear thinking about.
Remarkably, even after this humiliation the investment banks, like Goldman, are still strutting their stuff saying the crisis had little to do with their behaviour. Such a re-writing of history is self-delusion on a grand scale.
Read more: http://www.dailymail.co.uk/money/ar...R-New-York-Fed-comes-clean.html#ixzz17BugoUze
Last edited:
