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TOPIC: Fake outrage pisses me off
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Created by:
az_couple_69
Original Starting post for this thread: |
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Pisses me off when either side of the great political divide does it.
Today it was former Clinton era Sec of Commerce Robert Reich. $1.5 trillion given to Wall Street by the Feds. No... that's not how repo's work. He fucking knows better. Banks issue loans, creating money. When people want to withdraw more money than the bank has, it sells the loans that it holds. When every bank is trying to sell loans and no one is buying, the Federal Reserve steps up as the buyer of last resort in what is knows as a Repurchase Offer. The fed "buys" the loan from the bank, overnight, with the agreement the bank will buy it back the next day. If there are still no buyers the next day, then the Fed buys the loan again, overnight. It has to be a good, performing loan, and the bank is going to buy it back tomorrow, so it is more a "loan" from a bank to a bank then "handing over taxpayer money". This purchasing loans is how the Federal Reserve solved 1 of the 2 initial flaws of banking: liquidity crisis. The other flaw of banking was solvency crisis, where the bank has too many bad loans for it to cover out of its tier 1 capital. It can't get cash from the Fed (doesn't have good loans to sell), so we created FDIC to liquidate the bank in that case... but we are a long way from that.
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Vineland NJ US
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Glendale AZ US
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Vineland NJ US
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Glendale AZ US
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Milwaukee WI US
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Glendale AZ US
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Milwaukee WI US
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TOPIC: Fake outrage pisses me off
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