Via lambert at corrente who got it from Tina at The Agonist comes this little gem from the London Observer: remember when the Fed made all those $$$billions$$$ available to banks for loans that was meant to shore them up as they attempted to weather the mortgage/credit crisis they themselves created? Well, they're borrowing alright - so much that... Well, see for yourself.
Fears are mounting that Wall Street banks are relying too heavily on tens of billions of dollars in loans made available by the US Federal Reserve. Their borrowing levels have rocketed by almost 200 per cent to $38bn (£19bn) a day in just three weeks.
The latest loan data released by the Fed shows that Wall Street banks and investment firms borrowed an average of $38.4bn every day last week, a big jump from the $32.9bn borrowed the week before, but almost three times the $13.4bn borrowed when the emergency scheme was launched on 17 March.
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The Fed has capped the amount available to all banks at $50bn, although insiders said it never imagined the banks would take advantage of the entire facility. Analysts and economists now fear it is being too heavily exploited, and that banks may be using it to delay facing up to liquidity problems.
David Wyss, the chief economist at Standard & Poor's, thinks the Fed loan programme is a good idea, and perhaps the only way that government can keep the credit markets churning. Even so, he believes taking out such large short-term loans could cause problems.
'My fear is that the banks could become too dependent on this money. At some point, the Fed will have to wean them off these loans, but how it does that I do not know,' he said.
(emphasis added)
What this amounts to is nothing less than socialism for the rich or - as lambert puts it:
[W]ho would have predicted that investment bankers would start abusing socialized risk as soon as they got their snouts into the trough?
Well, me for one. Probably you, for another. Once offered, it's as good as grabbed. But there's an even nastier explanation, lambert says: What if they actually need all that loot?
To be fair, the investment bankers may not be abusing the facility; the Big Shitpile might be a bigger shitpile than anyone imagined.
(emphasis added)
Just how bad is this thing right this minute? I thought it was gonna get pretty bad, not that it already was. Maybe I'm wrong. Somebody wanna try to figure out whether we've got real desperation here or just more of the standard bottomless investor-class greed?
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