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Wall Street profits from trades with Fed

Posted By admin On August 3, 2009 @ 3:29 am In Money Watch | Comments Disabled

Henny Sender
Financial Times [1]
Monday, August 3, 2009

Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.

The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.

However, the Fed is not a typical market player. In the interests of transparency, it often announces its intention to buy particular securities in advance. A former Fed official said this strategy enables banks to sell these securities to the Fed at an inflated price.

The resulting profits represent a relatively hidden form of support for banks, and Wall Street has geared up to take advantage. Barclays, for example, e-mails clients with news on the Fed’s balance sheet, detailing the share of the market in particular securities held by the Fed.

Full article here [1]

Wall Street profits from trades with Fed  290509banner [2]


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[1] Financial Times: http://www.ft.com/cms/s/0/e84383dc-7f8c-11de-85dc-00144feabdc0,dwp_uuid=e8477cc4-c820-11db-b0dc-000b5df10621.html

[2] Image: http://www.efoodsdirect.com/ammo-food.html?aid=14&adid=5

[3] No change: Wall Street finds loophole in financial reform: http://www.prisonplanet.com/no-change-wall-street-finds-loophole-in-financial-reform.html

[4] Big Lies, Big Banks, And Big Profits: Where 9/11 Truth & Occupy Wall Street Converge: http://www.prisonplanet.com/big-lies-big-banks-and-big-profits-where-911-truth-occupy-wall-street-converge.html

[5] Wall Street Rewards to Trigger Surge in Informants: http://www.prisonplanet.com/wall-street-rewards-to-trigger-surge-in-informants.html

[6] Wall Street Puppet Obama Sympathizes With Anti-Wall Street Protests: http://www.prisonplanet.com/wall-street-puppet-obama-sympathizes-with-anti-wall-street-protests.html

[7] Big Journalism’s Loesch on Occupy Wall Street: ‘This Is the Wall Street President’: http://www.prisonplanet.com/big-journalism%e2%80%99s-loesch-on-occupywallstreet-%e2%80%98this-is-the-wall-street-president%e2%80%99.html

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