U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit (Update 2)

[Andre II]

The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=news

[TahitiNut]

1. See how easy it is to spend OPM (Other People's Money)???

Especially when they're merely infants right now ... or not even born yet. :puke:

Our children and grandchildren should piss on our graves and spit after mentioning our names. :grr:

[tama]

2. They will

don't worry.

[originalpckelly]

3. Psst, that's a high percentage of the GDP 59%

HOLY SHITE!

[HamdenRice]

4. Except that they aren't. Most journalists seem not to understand a credit facility

even financial journalists.

The Fed has pledged more than Treasury, but the Fed has provided a credit facility, not an appropriation.

It is simply exchanging money for commercial paper. The commercial paper comes due in as little as 30 days and the Fed gets paid back, and recycles that money to more commercial paper. IIRC, the commercial paper facility accounts for $2 trillion.

Other Fed facilities are credit facilities with other central banks in Europe and Asia.

It would be good to know exactly how much exposure the Fed and Treasury have, but this kind of reporting isn't getting us there.