|
Post by unlawflcombatnt on Aug 22, 2007 2:07:23 GMT -6
from Yahoo News: 8/22/07 According to a Yahoo News article titled Asian stocks mixed as global rally loses steam, the Fed injected $3.75 billion yesterday (8/21/07), making the Fed's total injection $101.25 billion since August 9th.
|
|
|
Post by Brock on Aug 22, 2007 18:01:25 GMT -6
now as that money grows over time by fractional reserve banking, it will equal 10 times as much, right?
|
|
|
Post by jeffolie on Aug 22, 2007 18:26:00 GMT -6
No. Those injections were temporary, very short term loans known as repros. On the other hand the discount window loans of about $2 B were 30 loans.
|
|
|
Post by unlawflcombatnt on Aug 22, 2007 21:20:53 GMT -6
No. Those injections were temporary, very short term loans known as repos. On the other hand the discount window loans of about $2 B were 30 loans. Are those banks truly going to pay back these short-term repos in the specified time allowed by the Fed? It appears the Fed could easily just keep extending the payback date indefinitely, or allow them to pay back these "injections" with worthless instruments, such as subprime mortgage-backed securities, instead of something of value like Treasuries. Does this seem too far-fetched?
|
|
|
Post by jeffolie on Aug 23, 2007 9:06:02 GMT -6
The Fed generally withdraws the repro money by not rolling it over.
|
|
|
Post by Brock on Aug 23, 2007 15:28:42 GMT -6
The Fed generally withdraws the repro money by not rolling it over. what do you mean by "not rolling it over".
|
|
|
Post by jeffolie on Aug 23, 2007 16:04:15 GMT -6
Repros are repurchase agreement and are very short term loans. The Fed takes collateral from the borrower, a fed primary broker dealer. If the Fed were to give a follow up loan then it would be rolling the original loan over to the next short term loan.
|
|
|
Post by unlawflcombatnt on Aug 23, 2007 16:51:21 GMT -6
Jeff,
Thanks for the clarification. But that leaves me with another question.
Could the Fed accept (and keep) some worthless collateral, like a subprime-backed MBS, while returning a Treasury note to the borrower upon repayment, instead of returning the original subprime-backed MBS?
I've heard rumors that this is exactly what the Fed is doing in many cases.
Any thoughts on that?
|
|