Some drivetime financial radio for Friday. Click to download or stream:
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We think we’ve got this piece of artwork from the New York Fed the right way up. But we can’t be sure…
Has the Bank of England been reading Chris Giles?
With the press looking to work up a decent Fed angle to the Libor furore, Britain’s central bank has just gone ahead and published correspondence between Sir Mervyn King and Tim Geithner, then president of the NY Fed, along with Paul Tucker’s related correspondence with the BBA. Read more
William Dudley, president of the New York Federal Reserve Bank, said the Fed could potentially do more to drive down mortgage rates to support the sector, says Reuters. Mr Dudley said another round of quantitative easing, or QE3, is one possible option the US central bank has to boost the slow recovery. “I don’t think the Fed has run out of bullets,” he said. “Breaking this vicious cycle is one of the most pressing issues facing policymakers,” Mr Dudley said in a speech at Fordham University’s Gabelli School of Business. “Clearly we’ve indicated our interest in supporting the housing market in keeping mortgage rate spreads, and spreads between mortgage rates and Treasury yields, from getting too elevated,” he said. “Depending on how the world evolves, we potentially could move to do more in that direction.” The comments follow remarks supportive of purchasing mortgage securities by Fed governor Daniel Tarullo, says the WSJ.
Anyone catch this from the New York Fed on Friday? It’s hugely important:
Beginning Monday, August 15, the New York Fed intends to conduct another series of small-scale reverse repurchase (repo) transactions using all eligible collateral types. The first operation will be conducted using only the expanded reverse repo counterparties announced on July 27, 2011. Subsequent operations in this series will be open to all eligible reverse repo counterparties. Read more
More specifically, the authors scrutinise the Consumer Credit Panel report in an effort to discern how much of the deleveraging since the crisis is the result of households actually paying down debt rather than defaulting on various types of loans. More than we thought, to be honest. Read more
And so it begins. Here’s what the NY Fed will be buying and when under the $600bn QE2 programme.
The New York Federal Reserve under Tim Geithner “severely limited its ability” to extract concessions from AIG’s counterparties in talks that resulted in $27.1bn of public money being transferred to banks including Société Générale and Goldman Sachs, according to a report by Neil Barofsky, special inspector general of the government’s Tarp scheme. Despite criticism of the team led by Geithner, now Treasury secretary and last year president of the NY Fed, the report fails to find evidence that the institution was negligent in not demanding “haircuts” from the counterparties to AIG’s credit default swap contracts.
The latest data on the Talf — the US governments plan to kick-start credit by encouraging investors to borrow money from the Fed to invest in bonds backed by car loans, credit cards, etc. — is rather lacklustre. The total amount borrowed was $5.4bn in July — down from $11.5bn in June and $10.6bn in May.
The programme started in March. Read more
Stephen Friedman, chairman of the New York Federal Reserve and a former chairman of Goldman Sachs, on Thursday resigned his post following his controversial purchase of Goldman shares earlier this year. In a letter to William Dudley, president and CEO of the New York Fed, Friedman stressed he had not broken any rules but was resigning because his continuation on the Reserve Bank board was being “mischaracterised as improper”.