Fed Will Lend Directly to Corporations

Fed Will Lend Directly to Corporations

online.wsj.com

The Federal Reserve said it will bypass ailing banks and lend directly to American corporations for the first time since the Great Depression, and it hinted strongly at further interest-rate cuts -- a cocktail of unconventional and conventional remedies for an economy whose prognosis is deteriorating rapidly.

The historic and potentially risky move of lending to nonfinancial corporations, the latest in a string of extraordinary steps taken by the Fed over the past month, carries the government deeper into the role of propping up private markets.

(visit the link for the full news article)



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Emphasis mine.

The rest of the above WSJ article is behind the pay wall but this is being widely reported.

For example:

Fed Makes Boldest Move Yet

In its latest move to unlock the credit markets, the nation's central banker said Tuesday it will take the extremely unusual step of buying short-term debt directly from America's largest corporations, such as GE, ExxonMobil, and Bank of America.

The Fed effort is one of the most dramatic – and potentially riskiest – steps Ben Bernanke, the chairman of the Fed, has taken in the past month in his effort to get credit flowing again through the economy. He is effectively pushing the Fed into the middle of the private market for short-term corporate loans, known as commercial paper. If it works, companies will have the loans they need to make payrolls and pay bills. If it doesn't, taxpayers could be on the hook for loans that aren't backed by any tangible assets.

The bold measure illustrates the seriousness with which the Fed chairman views the current credit crisis.

"This move shows the Fed is pulling out all the stops to restore confidence in this market,"

"This facility should encourage investors to once again engage in term lending in the commercial paper market," the Fed said in a statement. The Fed's program will continue until April 30 of next year.

Emphasis mine.

EXXON? !!!
The poster boy of record profits? !!!
EXXON will get FED help??? !!!

I can't begin to describe the implications of this kind of move because... well... my head is spinning.

Not only is the FED trying to solve a problem caused by low interest rates by lowering interest rates (all together now! ), and bailing out their wall street buddies leaving taxpayers on the hook for the tab, but now they will be doing it for their corporate buddies in the broader economy.

We've all been punked... hard!!
.

online.wsj.com
(visit the link for the full news article)

I could use a little more help in explaining this to me. Why is it such a bad idea to give it directly to the corporations instead of the banks? I mean isn't there a risk in giving to the banks as they could just sit on it like the rest of the credit and cash they are sitting on.

Please dont jump on me for this one. I honestly am not up to date on the entire American Maret and ways of doing buissness, so if you could kinda dumb this down a bit for me so i can understand why this is so bad, i would greatly appreciate it

Its bad because the government is linked to these people. They are golf buddies. They are taking money from my pay check and paying these A$$407355 so that they can buy more mansions, jets, throw parties and rape the American public. Then these same company scum fire hard working people so that they can maintain a bottom line. There is a group of about 300 people in America that own America. The top 1% of our population in the USA, OWN the USA. The same 300 people are on the boards of numerous major corporations. There is no middle class anymore like there used to be. Only people that actually work, and the people that play with money.

Nobody makes my car payment for me when I cant. Thats what the government is doing for these elite, but with money it takes/steals from US.



[edit on 8-10-2008 by R3KR]

[edit on 8-10-2008 by R3KR]

i posted this in another thread but it applies here also.

The fed is playing from the depression play book now. the recession book didn't work so Bernanke is going to the book of last resort. If this doesn't work nothing will and the fall out will be worse than this earth has even seen economically. Everyone thinks the great depression was bad, This will make the Great Depression look like a mild recession. Hang on for the ride its going to be a roller coaster for a year or 2

[edit on 10/8/2008 by Mercenary2007]

Starred and Flagged Gools....This is sheer insanity

I Truly hate one liners, but WOW. Thats it, just wow. I simply do not know how to respond.

Forget Exxon, GE??? The Buffet-Brainchild? BofA??? Cure for the ordinary Merril Lynch??

The Federal Reserve the new Quicksand Jesus.


AB1

The Icelandic politician described it well when he said that nationalizing the banking system would bankrupt that country. The Fed/Treasury can only create hyperinflation in place of deflation. The US gov will at some point decide between itself and the financials.

OMG!!

If they play it smart than with printing enough fake money and bailing everyone out they own EVERYTHING every asset not accounted for!!!!!!

The greatest monopoly board becomes reality!

NWO is here indeed

I guess Mussolini was correct.

"Fascism should more appropriately be called Corporatism because it is a merger of State and corporate power."

The state in this case is very firmly merging corporate power with it's own.

Maybe everyone should finally wake up and realise that corporations have more power in their lobbies than a million voters have with their rights.

Ok well lets setup some Nevada corporations and put in some submissions shall we?
We might get a few million at least.
Whats the chance?

That's an interesting, future-forming news.

The government is in shock to find out that the remedies of the past are not working. The banks don't want to lend the way the government would like them to, so the government will bypass the bank propping up the economy. It's a logical step, but also an indicator that this strategy of last resort may downgrade the term "economic depression" into "moderate economic crises." The Federal Funds Rate = 1.5% as of now and may reach historic 0% shortly. Funny stuff . . .

reply to post by Gools


i wonder what the public reaction will be after the Fed. buys the short term debt of the likes of GE, Exxon-Mobile, BankofAmerica...

and then the likes of Haliburton belly up to the Fed loan-facility ??


at least the 30 Apr '09 deadline for purchasing short-term debt makes the program appear to be temporary...instead of a permanent takeover by corporate-fascisist central planners.
~but whose to say that the commercial banks will ever be able to buy those ammounts of risk from 'too-big-to-fail' corporations~
~ Maybe this is the new-normal, where only the central bank/USTreasury decide which industries are worth funding~


i have seen that Ticker:CPT, has recently secured a $140million credit facility, while others are still being turned away at banks...

also that Ticker:OTTR, has generated an additional $170million for the completion of a self financed windfarm project.


now if these corps. can keep doing business via the old rules and format...

just why must GE, Exxon, BoA, find the Fed/Treasury as their only source for capital?


something stinks !

[edit on 9-10-2008 by St Udio]

For people who kept asking where their money would be going, there you go. To some of the wealthiest companies in America; how do you feel Americans? I doubt anyone is whistling a jaunty tune. The bail out was a scam, the American people got swindled, as usual.

This seems rather desperate.

Why bypass the banks, the same banks that are being propped up, just to give money straight to business?

Where have I heard that arrangement before...

Command economy!

A few things bother me about the Fed lending directly to corporations:

1. The transnational corporations acquire loans from the Fed will have an unfair advantage and influence in the marketplace versus those transnational corporations that are not assisted directly by the Fed.

2. The Fed will be in a position where it is legally able to seize a company that it lends to at any time for any reason through the basic fact that it can call in its loans at any time.

3. Lending directly to defense corporations and oil companies; well, that's just scary for a number of reasons.

4. The Fed is in control of the US money supply. Because of that, along with lending directly to multinational corporations, it bypasses the systems of checks and balances of foreign governments. I.E., foreign banks and underwriters, the foreign laws and policies that they observe, are completely bypassed.

5. The Fed will be in the prime position to further abuse its power by pitting nations against nations through its ability to lend to directly to transnational corporations that provide vital goods and services to foreign countries and governments. In short, governments can be influenced by the aims of the Fed -- rather than by the heads of state of those governments or the people that those governments serve.

6. There is no oversight of The Federal Reserve or its board.



We should be concerned. To say the least.

Interesting... putting small business out to dry, while inflating big business.

So that leave entrepreneurs pretty much S.O.L., and lagging smaller corps left for dead.

Consolidation of corporate power???

Oh...my...god.

Remember the Corporation in Robocop???

How many times have I said that? Am I God? Is my subconscious paranoia gradually turning into reality?

I just saw some commercial today about using robots and crap for defense... "Unmanning the frontlines". I gotta stop watching Robocop.

"Financial Crisis"
Banks in trouble - they stopped giving out money with interest - credit. People and business need money to make the economy grow.
People save them giving them money - bailout
Now banks can give money again at interest to the people.

Who needs banks ? They are the middle man between the people and the people. They are allowed to create money. The state could lend money to whoever needs them, at 0% interest, this could also mean the end of taxes - state creates money and pays for his own existance. If there is economic growth these extra money will mean nothing, if not, these extra money will cause inflation - quickly solved by some taxes so there will be less money around.

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."

[edit on 9-10-2008 by pai mei]

Originally posted by pai mei
"Financial Crisis"
Banks in trouble - they stopped giving out money with interest - credit. People and business need money to make the economy grow.
People save them giving them money - bailout
Now banks can give money again at interest to the people.

Who needs banks ? They are the middle man between the people and the people. They are allowed to create money.

You stupid person. Dontcha know?

Bankers need banks!

So they can get rich off owning other people's stuff when they go into debt because of interest! It's completely honest and admireable what they do. Bravo, you brave souls! Take our stuff! They need it more than we do!

God. Have some sympathy for the poor little bankers, will ya? Cruel sadistic crazy...face!

*sarcasm*

you know I don't think it's a bad thing for the banks getting the money as long as they are paying off my loans!

I have seen many emails that contained ideas from the common people. One ATS member called it the "trickle up effect". The idea was to give the money to the people so they can pay off their loans.
I have discussed this at work and I had individuals talk to me about awarding people who are irresponsible and my reaction was ... what are we doing now!?

Look.. if the US Government paid all my loans off including my mortgage and school loans the first thing I would do is go out an buy things. This is good thing for the economy. It would have given it the kick it needs!

Sometimes I really wish the video bellow can actually happen in this so called "great" country and the so called land of the "free" and the home of the "brave"



[edit on 9-10-2008 by The_Akrion_Mask]

[edit on 9-10-2008 by The_Akrion_Mask]