Fed buying bad corporate debt; alt-a coming back — coincidence?

[TheBreeze]

It looks like the Fed is really going to f*@!k things up. Apparently, not only is the Fed buying bad mortgages, but now they are buying bad corporate debt as well:

“Wall Street firms may be bundling high-yield, high-risk corporate loans into securities to use as collateral to borrow from the U.S. government, according to a report by Morgan Stanley analysts. Securities firms can borrow against collateralized loan obligations at the Federal Reserve’s Primary Dealer Credit Facility, the analysts said. The Fed set up the facility last month, its first extension of credit to non-banks since the Great Depression.

…

Now we see CLOs being created for the express purpose of swapping to the Fed. The reason the CLOs are being created is there is no market for the underlying securities. Yet supposedly Moody’s, Fitch, and the S&P are supposed to rate this garbage AAA so that it can be swapped with the Fed. Amazing.

This idea is endorsed by Plaut who writes: It’s “an easy way for banks to reduce balance sheet risk, which indirectly helps reduce capital requirements, by funding the AAA through the Fed and selling the equity, which provides high yield to investors”.

Sadly, this is just the beginning of crazy ideas. I guarantee it. More are coming, and they will all gather proponents. Yet every one of them will further undermine trust. I guarantee that too.”

http://globaleconomicanalysis.blogspot.com/

Then I read on brokeroutpost today that Wachovia is brining Alt-A lending back:

http://forum.brokeroutpost.com/loans/forum/2/215160.htm

I’ve read that Alt-A is actually worse than subprime because that is where all the stated-income, stated asset loans take place.

I don’t know enough about securitization to know if Wachovia bringing Alt-A back and the Fed buying bad corporate debt are related, but it sure does seem fishy. It really looks like we are seeing the perils of ‘moral hazard’ in action. Although the Fed says they just want to bail out the mortgage market, Wall Street has already found a way to structure bad corporate debt such that it can be bailed out under the Fed’s ‘mortgage savior’ plan. If the Fed is willing to bail everyone out with taxpayer money, what is to stop Wall Street from passing all kinds of crappy debts on to the taxpayer. Nothing, as far as I can see.

[cr]

Mission
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general areas:

– conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
– supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
– maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
– providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Anyone familiar with the claim the the FED is actually owned by European banking dynasties? Their complete and utter failure to fulfill any of those 4 roles except maybe the last one may lend some credibility to that claim.

[cr]

Mission
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general areas:

– conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
– supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
– maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
– providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Anyone familiar with the claim the the FED is actually owned by European banking dynasties? Their complete and utter failure to fulfill any of those 4 roles except maybe the last one may lend some credibility to that claim.

[cr]

Mission
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general areas:

– conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
– supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
– maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
– providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Anyone familiar with the claim the the FED is actually owned by European banking dynasties? Their complete and utter failure to fulfill any of those 4 roles except maybe the last one may lend some credibility to that claim.

[cr]

Mission
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general areas:

– conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
– supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
– maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
– providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Anyone familiar with the claim the the FED is actually owned by European banking dynasties? Their complete and utter failure to fulfill any of those 4 roles except maybe the last one may lend some credibility to that claim.

[cr]

Mission
The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.

Today, the Federal Reserve’s duties fall into four general areas:

– conducting the nation’s monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates
– supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
– maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
– providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Anyone familiar with the claim the the FED is actually owned by European banking dynasties? Their complete and utter failure to fulfill any of those 4 roles except maybe the last one may lend some credibility to that claim.

[Deal Hunter]

You mean the Rothschilds, originally from Germany and established banks from London. It’s the real history of our modern banking system.

http://www.themoneymasters.com/

[Deal Hunter]

You mean the Rothschilds, originally from Germany and established banks from London. It’s the real history of our modern banking system.

http://www.themoneymasters.com/

[Deal Hunter]

You mean the Rothschilds, originally from Germany and established banks from London. It’s the real history of our modern banking system.

http://www.themoneymasters.com/

[Deal Hunter]

You mean the Rothschilds, originally from Germany and established banks from London. It’s the real history of our modern banking system.

http://www.themoneymasters.com/

[Deal Hunter]

You mean the Rothschilds, originally from Germany and established banks from London. It’s the real history of our modern banking system.

http://www.themoneymasters.com/

[Author]

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