Hey, Since When Is The Dirty Fed In The Loan Sharking Business?
The Dirty Fed has been forced to open its books and, not surprisingly, data reveal that money managers capitalized nicely on the Fed's intentions, as I suppose they well should have seeing as how our friends at 20th and Constitution are so fucking transparent about doing whatever it takes.
Grab the barf bag, you might need it.
HuffPo tells us that some familiar names made a quite awesome profit frontrunning the Fed, something not at all illegal but completely questionable in these troubled times. Is this the transparency you wanted?
The Fed effectively telegraphed its intentions to the Street before buying the bonds. Legendary money manager Bill Gross, who oversees more than $1.2 trillion at Pacific Investment Management Co. said last month during a television interview that part of his success over the last 18 months was due to buying securities in front of the Fed, and selling them to the Fed at a premium, allowing him to profit handsomely. Gross runs PIMCO's $252.2 billion Total Return Fund.
Morgan Stanley sold the Fed more than $205 billion in mortgage securities from January 2009 to July 2010, while it's [sic] much bigger rival, Goldman Sachs, sold $159 billion. Citigroup, the nation's third-largest bank by assets, sold the Fed nearly $185 billion in mortgage bonds. Merrill Lynch/Bank of America sold about $174 billion.
It's not clear how much these firms profited by engaging in the kind of activity that allowed Gross to profit so well, known as "front running." However, it's abundantly clear that they did turn a profit.
JPMorgan Chase, the nation's second-largest bank by assets, sold the Fed about $153 billion worth of mortgage securities.
Other foreign banks with extensive Wall Street operations also profited from the program.
Barclays, the British firm that took over failed investment bank Lehman Brothers, sold about $123 billion in mortgage bonds. UBS, a Swiss lender, sold about $94 billion. BNP Paribas, a French bank, sold about $67 billion.
That's not all. The data also reveal that the Fed shoved fake money at everyone including McDonald's, Verizon and Harley-Davidson. McDonald's still laid off 700 in an attempt to "restructure", leaving any reasonable person to wonder how many they'd have cut if they hadn't gotten a nice fat Zimbabwe Ben handout. Since when is the Fed in the business of loan sharking to anyone but the banks and why did we allow this to happen in the first place?
German Deutsche Bank sold the Fed $290 billion in MBSs while Swiss-based Credit Suisse has unloaded $287 billion on bonds on ZB and Co. Where do you think that money goes? Main Street? Your pocket?
Anyone else recall when we got incensed over Goldman Sachs taking $10 billion in TARP money? How about hearing that just four firms - Morgan Stanley, Citigroup, Goldman Sachs and Merrill Lynch - came knocking at the Fed's door to borrow $3.1 trillion from the Fed's Primary Dealer Credit Facility in the weeks following Bear Stearns' collapse? And this is the "stigma" the Fed wanted to avoid by trying to cockblock requests to get at this data in the first place? Please.
Remember, the Federal Reserve is our largest creditor. So maybe that gives them the right to do whatever they want with the future interest payments we owe them on all those fucking Treasurys.
The data may be found via the Board here. Take a Dramamine or maybe a Xanax before you go in and God speed, my friends.