Total Fed Lending to Depository Institutions

Via Ambrose Evans-Pritchard,  comes this chart:  Wow!


Total Borrowings of Depository Institutions from the Federal Reserve, Monthly, Billions of Dollars (Not Seasonally Adjusted)
click for humungo chart

Source: St Louis Fed

Pierce adds:

"This is helicopter policy already. It is what happens when the Fed
manouvres itself into such a dire position that it has to invoke the
"unusual and exigent circumstances" clause of the Federal Reserve Act
(Article 13, 3)."

Ambrose Evans-Pritchard   
29 May 2008  at 18:42

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What's been said:

Discussions found on the web:
  1. N commented on Jun 3

    On a diffrent note Bernanke said today:

    …The Fed is “attentive to the implications of changes in the value of the dollar for inflation and inflation expectations, and will continue to formulate policy to guard against risks” to price stability and sustainable growth, according to Bernanke.

    Over time, Fed policy will be a key factor “ensuring that the dollar remains a strong, stable currency,” he said. “In collaboration with our colleagues at the Treasury, we continue to carefully monitor developments in foreign-exchange markets.”

  2. bdrube commented on Jun 3

    Could someone explain what the implications of this are? It is obviously unprecendented and looks very ominous, but what effects will this likely have in the real world?

  3. Donny commented on Jun 3

    It looks like the Feds one trick pony has been taken to another level of desperation.

    The Fed would have been better off by allowing the excesses in our economy to pass through. And by the look of the chart above, it appears the music has stopped.

  4. Marcus Aurelius commented on Jun 3

    A spike like that should be followed by a really pretty explosion. Just like fireworks do.

  5. Shrek commented on Jun 3

    We’re going to have an economic collapse.

  6. michael schumacher commented on Jun 3

    Does this chart contain the aforementioned auction facility that have always been used as an excuse to explain it all away??? (many have used that as a way to debunk this chart in the past)

    Wait until actual write-offs occur as this is just the results of write-downs (that have taken far too long to occur)

    After Israel bombs Syria and Iran (so the current administration can have one last present to the arabs-and invoke the “national security interests” right around election time) it’s going to really suck being here.


  7. alan commented on Jun 3

    I assume these funds are being used to prop up weak financial institutions and other U.S. companies that have not become competitive in the global market or housing market? Maybe this is cheaper than having the FDIC’s account insurance kicking in when these banks fail?

  8. Fatty Arbuckle commented on Jun 3

    Quite the piecewise function. Can this graph be taken @ face value? Were those credit vehicles used at any points prior to their inclusion in the graph?

    “Please note breaks in data:

    Data prior to 2003-01-01 include adjustment, extended, and seasonal credit.

    Data from 2003-01-01 to 2007-11-01 include primary, secondary, and seasonal credit.

    Data from 2007-12-01 to 2008-02-01 include primary, secondary, seasonal, and term auction credit.

    Data from 2008-03-01 forward include primary, secondary, seasonal credit, primary dealer credit facility, other credit extensions, and term auction credit.”


  9. DL commented on Jun 3

    This chart shows only $130 billion borrowed. That’s not a big deal. But if you add in all of those loan facilities, the total amount is a lot more than $130 billion.

  10. michael schumacher commented on Jun 3


    The sarcasm was not evident in my prior post..
    It would look like Mt Everest if they did.
    Not that it doesn’t already……


  11. speculator commented on Jun 3

    If these companies had made so much money over the last 6 years, why do they need to borrow so much now? They made money with asset inflation, not real profits. Now they have to borrow so the weak companies will not go out of business.

  12. Alex commented on Jun 3

    obviously this is a significant chart, but at the same time banks are doing this because (unless I stand corrected) the fed took away the requirement that if a bank borrows from them, their names will be published.
    now, i don’t agree at all with what the fed has done with trying to fix a problem the way it began, but that kind of explains why banks would be so eager to borrow directly.

  13. shrek commented on Jun 3

    Ben Bernake is like the death star. Destroyer of worlds.

  14. larrybob commented on Jun 3

    fwiw, ambrose evans-pritchard made his name peddling stories that vincent foster was murdered and the OK City bombing was actually an FBI sting gone bad with. he’s a well spoken loon kept employed first by conrad black now by the Barclay Bros.
    His father, though, was a genius.

  15. Donny commented on Jun 3

    All the major averages are breaking down now. I guess bad news is suddenly no longer in vogue anymore, and is now viewed as just BAD.

    I really hate all this gloom and doom, but the markets MUST purge in order to reflect the events that the economy faces.


  16. rj commented on Jun 3

    I’m allright…nobody worry about me

  17. Pat commented on Jun 3

    I’m no expert but if the companies that have borrowed this money go under don’t they take the money with them? Won’t the sky be pretty when filled with golden parachutes for the bigshots.

  18. Steve Barry commented on Jun 3

    Not to scare anybody…but housing has to fall another 40% and there is nothing that can be done about it. Two million RE related jobs must vanish and many WS jobs as well. If the coming downturn isn’t a depression, I’ll be surprised. it’s all part of a larger credit bubble that must, must, must deflate to return to a healthy state. I expect the nasdaq 100 to get cut in half.

  19. John Borchers commented on Jun 3

    Looks like the Fed needs to set up direct bank lending facilities.

    New Lehman Fed bailout coming to a stock market near you. The LLF (lehman lending facility)

  20. scorpio commented on Jun 3

    and CNBC wonders why Chris Dodd is holding up Bush’s FRB nominations. a few more guys like Greenspan and Bernanke and you can just turn off the lights.

  21. BG commented on Jun 3

    You guys are getting pretty pessimistic, aren’t you?

    How I see today’s action is no different than a junky having a little tantrum in front of his dealer (mostly just for show) after finding out his dope will cost him more in the future.

    The market never likes it when people talk as if they are taking away the punch bowl even if they are joking. Today’s market action is code to BB, don’t even think about it.

    Cheap money is to Wall Street, what crack cocaine is to the junky.

  22. Joe Klein’s conscience commented on Jun 3

    Did you hear before when Dennis Kneale tried to blame the big drop on Obama clinching the nomination? Kneale is an even bigger loser than he already looks like.

  23. stuart commented on Jun 3

    Right! Attentive to the implications = We’re well aware of how much shit we’re in.

    More BB jawboning. Won’t last long and one can be excused if they are suspicious about intent and timing.

  24. Al Czervic commented on Jun 3

    I suspect it’s mostly for the benefit of our Middle East friends. Gotta try to keep their minds off de-pegging.

  25. rep3 commented on Jun 3

    So far we have seen what bank write-downs has done to the market. But what will happen when the Fed start its write-downs because the banks can never repay their debt?

  26. lenny commented on Jun 3

    St. Louis Fed takes its time putting these charts out…the current figure is over $200 billion.

  27. BobC commented on Jun 3

    Wow. That graph blows my mind. I’ve no PhD in economics, but I do believe it to be one of those complex systems where small changes in input values can result in widely different outputs (think butterfly effect). I can’t even begin to think what such a massive data spike portends. It’s seems to me we are in completely uncharted territory. Something fundamental will shift, and the consequence of that shift is unpredictable.

  28. Robby commented on Jun 4

    Hmm, but the graph is not in inflation-invested dollars, is it? That might make it not quite as dramatic.

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