Did The Fed Quietly Bail Out A (European) Bank On Tuesday?

Zero Hedge ^ | 12/17/2011 11:48 -0500 | Tyler Durden

[Olog-hai]

We know two things with certainty: In the week ended December 13 (14^th excluded), one or more banks, most likely European, borrowed up to $2.5 billion from the Fed's Primary Credit Discount Window. And since US banks are drowning in dollar-based liquidity, any need to approach the Discount Window now, in the context of trillions of Excess Reserves, carries with its exponentially greater stigmata than it ever did during Lehman days. Also, in the week ended December 14, the Fed did a mid-month settlement of $31 billion in MBS purchases—a transaction which allowed a Primary Dealer to source critical liquidity, based on $30 billion in buyback authorization granted for the period beginning December 13. What we do not know for fact is whether the $30 billion in MBS purchases was completed on Tuesday or Wednesday, and whether this is a delayed settlement for previous purchases, although due to the mid-month settlement process, it is possible that any transaction could have settled immediately. And for those seeking a specific "bank bailout" date, the 13^th looks quite reasonable: it was the first day when an MBS purchase was permitted and it was the last day when a bulk Discount Window loan could have been performed.

But wouldn't the market learn of even a hushed European bailout? And wouldn't there be a massive sell-off if it became clear that exactly two weeks after the Fed's coordinated broad bailout of European banks, it had to engage in another, far more politically tenuous bailout, this time via a $2.5 billion free money loan to a cash-scrambling bank? Well, if the news was leaked at 2 pm on Tuesday, it sure would explain the market reaction…

[Olog-hai]

Now why don't we just walk into Brussels and Berlin and get all that money back . . . ? This is getting well beyond absurd.

[Olog-hai]

Auditing the Fed is something that a conservative should do automatically anyhow.

[mjp]

Did The Fed Quietly Bail Out A Bank On Tuesday?

The men and women of the Fed are following a higher cause than the self interest of their country.If the public knew how they were fleecing the taxpayers and destroying America, they would be punished.