How does a company pay back Trillions of dollars ( $29 Trillion! ) from Fed bailouts?

$29 trillion?... just over $91,000 for every single American citizen.

originally posted by: ausername
$29 trillion?... just over $91,000 for every single American citizen.

I could have gone all day without that thought. That would be 364,000 for a family of four. If that had been given directly to the citizens, it would changed the world. There was all those job, home, retirement losses and we propped up a bunch of rich people. I don't know how much more people can take because more of the same is coming.

originally posted by: ScepticScot
The majority of the loans were overnight or very short term. The total amount is the sum of all these short-term loans, not the total that was ever outstanding.

So for example if a bank borrowed 10 billion 10 times, paying it back each time, that would show as a hundred billion.

In normal circumstances th banks would be loaning each other to cover overnight shortfalls. (With fed lender of last resort). During the financial crisis the fed had to cover this to a much larger extent.

There is actually a law that makes that policy illegal. Someone here was writing checks from one bank to the other to cover checks and got caught and they had to go to court. The business was viable, just having some rough times financially. Now Kiting checks is illegal and it has strict penalties if we do it. Seems like you are saying it is all right for the big financial institutions can do it though. en.wikipedia.org...

Ok remember that the money was used to provide liquidity. It wasn't spent. Who would it even be paid to?

The banks were using the money to keep the balances right which is why they were "overnight loans", that is to say, they were loaned for 1 day and immediately paid back.

As an example, it's like if you're holding a paycheck at 5pm and the bank is already closed, but you're trying to buy a used car tonight. I "lend" you the value of your paycheck in cash and you pay me back in the morning.

Not like I'm saying that's exactly what they were doing, but that's an example of how these overnight loans were not "oh hey you need way more money than you have", but rather "you need way more LIQUID money than you have"

Also in the article they point out rolling loans being counted every day. Which is also an absurd way to do accounting.
If you use a credit card to pay for your daily expenses, and you pay off the balance at the end of the month, it would be insane for someone to say "well on day one your balance was $50. On day 2, your balance was $60, so that makes $110. On day 3, your balance was $65, so that makes $175." and so on. That would be insane and not at all reflective of the fact that you only actually borrowed the amount you paid back at the end of the month.

originally posted by: rickymouse

originally posted by: ScepticScot
The majority of the loans were overnight or very short term. The total amount is the sum of all these short-term loans, not the total that was ever outstanding.

So for example if a bank borrowed 10 billion 10 times, paying it back each time, that would show as a hundred billion.

In normal circumstances th banks would be loaning each other to cover overnight shortfalls. (With fed lender of last resort). During the financial crisis the fed had to cover this to a much larger extent.

There is actually a law that makes that policy illegal. Someone here was writing checks from one bank to the other to cover checks and got caught and they had to go to court. The business was viable, just having some rough times financially. Now Kiting checks is illegal and it has strict penalties if we do it. Seems like you are saying it is all right for the big financial institutions can do it though. en.wikipedia.org...

No has nothing in common with kiting cheques.

Banks with a surplus in reserve account lend to those with a deficit.

It would have been the equivalent of giving every family of four a series of loans totalling 364,000 that had to be paid back quickly with interest.

I agree that would have changed the world but probably not the way you mean.

a reply to: ScepticScot

I thought the government's money was the people's money. And citizens would have spent it here.

They would still have to pay it back.

It`s not real money it`s just numbers on a computer screen and it doesn`t matter that there isn`t any tangible items to back up those numbers and by tangible items I mean gold,or currency.
The only time that it will even matter that there is nothing backing those numbers up is when too people want to trade their numbers on the screen for tangible items,then there will be chaos.

do this,take a piece of paper and write 1+1=2 and underneath that write 1+ =2

1 plus blank doesn`t equal 2 so I`ll write the number one on a piece of paper and give it to you and you put the paper I gave you in the blank spot on your paper.
when I want my number 1 back you write the number 1 on a piece of paper and give it back to me.
get rid of the paper and put those numbers on a computer screen and it`s the same thing.

a reply to: [post=21763576]ScepticScot[/post

I'm not convinced it was paid back.

originally posted by: MOMof3
a reply to: [post=21763576]ScepticScot[/post

I'm not convinced it was paid back.

You think fed added 29 trillion to the money supply and no one noticed?

a reply to: ScepticScot

The 29 trillion wasn`t added to the money supply it was just numbers on a computer and created out of thin air, when the "money" was "payed back" it wasn`t added to the money supply it was deleted from the computer into thin air.

a reply to: Tardacus

It was a reply to the suggestion it wasn't paid back.

originally posted by: MOMof3

originally posted by: ausername
$29 trillion?... just over $91,000 for every single American citizen.

I could have gone all day without that thought. That would be 364,000 for a family of four. If that had been given directly to the citizens, it would changed the world. There was all those job, home, retirement losses and we propped up a bunch of rich people. I don't know how much more people can take because more of the same is coming.

Here is something that might make you feel a little bit better. You are not alone.

a reply to: ScepticScot

Not challenging you, but wondering if you know..

If everything was so honest, why would the Fed try to hide the the recipients of these emergency funds and the amounts that were loaned? (To the point that an audit had to be conducted?)

Also why in the world are we loaning money to European Central Bank (ECB), Swiss National Bank (SNB), Duetche Bank, Barclays, Royal Bank of Scotland, Credit Suisse, RBS securites.. etc. ?

In one group of loans, 30% of the loans went to the European Central Bank.

The largest loans and group of loans went to - Merrill Lynch, Citigroup, Morgan Stanley, Bear Stearns, and Bank of America.

----

Maybe a better question to ask is -

What in the world is going on?

Why are they moving funds around like this?

Why these particular institutions?

How are these particular institutions associated with each other?

a reply to: nOraKat

Because the fall of one or more major financial institutions would have had a major impact on world financial system and by extension the US economy.

The Fed was attempting, with various degrees of success, to maintain financial stability.

a reply to: enlightenedservant

Ughh! Just noticed something wrong in my post. Ben Bernanke, the Federal Reserve Chairman at the time, was #14 not #17 on the FCI 500 list. Paul Volcker, the man at #17, is a former Federal Reserve Chairman who served from 1979 to 1987.
(facepalm)

a reply to: ScepticScot

I know that part.

But what do think is going on?

What are they doing with the money?

For example - the European Central Bank

originally posted by: nOraKat
a reply to: ScepticScot

I know that part.

But what do think is going on?

What are they doing with the money?

For example - the European Central Bank

What they did with the money was cover short term deficits and provide liquidity in the banking system.

In the case of the ECB the money was loaned to them to loan on to European banks. The ECB could in theory have bought dollars on the open market but this would have had a major impact on exchange rate, making the position of the European banks owing dollars even worse.

The money has almost entirely been paid back.

a reply to: nOraKat

It is quite absurd when you see these numbers, but this has obviously been a panic reaction.
This could well have been to ensure that the capitalisation was sufficient in the case of more problems with the mountain of derivatives which amounts to 700 trillion.
Then, 2 trillion through emergency liquidity assistance seems rather meager.
Just as fast as it was created, it is undone.
Any losses will simply be on the plate of the taxpayers.

The real question is, why did they purposely let a systembank fail?