Fed Created Conflicts in Improvising $3.3 Trillion Financial System Rescue

http://www.bloomberg.com/news/2010-12-03/fed-created-conflicts-in-improvising-3-3-trillion-financial-system-rescue.html

But, but but, they had no choice.
Bullshit, if they had tried using generic instead of name brand there wouldn't have been any unintended consequences.

No Choice

“That’s the way the system works,” said David Castillo, senior managing director at Further Lane Securities in San Francisco. “It’s problematic that they’re customers, but that shouldn’t limit their ability to participate in this process. Quite frankly, we don’t have a choice. They have the expertise.”

In compliance with the Dodd-Frank financial overhaul law, the Fed on Dec. 1 identified the institutions that used $3.3 trillion of improvised rescue programs. The 21,000 transactions in 11 initiatives included the money-market plan Cunningham helped devise, known as the AMLF, short for its 10-word formal name, the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility.

In its scramble to keep the economy from collapsing, the Fed also created the Commercial Paper Funding Facility, or CPFF, which tried to ensure that banks and industrial companies had the short-term loans they needed to fund everyday operations. General Electric Co., then the biggest issuer of commercial paper, met with Treasury and Fed officials in the days before they created the CPFF.

‘Unintended Consequences’

The Bastards of banking trying to cover their own ass

http://www.zerohedge.com/article/blackrock-ceo-seeking-partner-buy-35-bofa-stake-charlie-gasparino

George Orwell once said:
In a universe designed by deceit
To tell the truth is an act of Revolution

Rock on with your bad self Tyler, because we're all listening and spreading the word!

A few days ago, we penned The BlackRock - Bank Of America Ownership Catch 22, in which we discussed the incestuous cross-onwership relationship between the two companies. Then we said:

"It is well known that Bank of America owns 34% of BlackRock via a legacy position inherited from Merrill Lynch, arguably the most valuable part of the business. As of today, the stake is worth around $11.5 billion. Yet what may be a little less known is that BlackRock has also returned the favor, and is now the largest holder of Bank of America, owning 5.35% of the outstanding BAC shares, for a total value of $6.6 billion. Does that mean that there is a wash in there somewhere? Who cares. But one thing that certainly is involved, is a massive conflict of interest, especially in the context of litigation. And a big question mark - to claim that BlackRock is willing to impair a nearly $7 billion investment is naive. Instead, due to the incestuous nature of Wall Street, and the cross pollination of MBS holders, is today's action merely a ploy to get some of the more "impacted" parties to promptly settle and eliminate any possible future litigation? PIMCO, for one, and the FRBNY fir another, have the most to lose if the MBS crisis escalates, and if all MBS are unwound. Which means that somehow this is simply another diversion, with the real action taking place somewhere."

The action is indeed "elsewhere" - Charlie Gasparino has just reported that Larry Fink is seeking a partner to buy 35% of Bank of America. What better way to sweep all the problems underneath the rug than to just buy them all up...

More from Fox Business:

What is this and where did they get the money from?

http://market-ticker.denninger.net/archives/1927-Where-Did-They-Get-The-Money-BlackRock.html


We counted over 1,800 13Gs that Blackrock dumped on Friday, which explains why EDGAR might have been a tad bit pokey. The stream started at just after 2 p.m. est and didn’t let up until just after 4:30, when the last one, which reported a 6.5% stake in Vodafone came in. For those less familiar with the 13G, since we don’t often write about these filings, it’s a requirement when ownership exceeds 5% of the outstanding shares. With few rare exceptions, these filings represented new positions for Blackrock since we only counted 11 amended 13Gs, which in itself seems very surprising, given the long list of stocks.

Let me see if I get this right. 1,800 companies (remember, the Russell 2,000 has 2,000 companies in total in it, the S&P 500 has 500 in it, etc) would comprise a very significant chunk of the entirety of the US stock market. Indeed, the Wilshire 5,000 is widely considered to be "the entire market" (and it more-or-less is.)

Blackrock took a position in that significant chunk to the tune of 5% or more, thus triggering the filing requirement for each of those firms.

Where did Blackrock get the money?

Blackrock has just $3.96 billion in cash on hand according to the most currently numbers on Yahoo Finance. The S&P 500 alone has a market cap of some $13 trillion dollars.

To take a 5% stake in the S&P 500 alone would require $650 billion, or some one hundred and sixty-four times as much money as Blackrock possesses, and yet that would account for less than one third of the filings!

You can't margin (leverage) yourself 164 times legally in any form or fashion in The United States, and such a margin game, assuming you came up with some inventive way to do it, would make all of the firms that blew up in 2008 and 2009 look like pikers (Fannie/Freddie were 80:1 at the time they went boom, as was, roughly, AIG.)

Something "funny" is going on here folks, and it demands an inquiry - and answer.