Skip to comments.Treasury Quid To Banker Pro Quo: "You Can Raise Dividends If You Buy My Toxic Mortgages"
Posted on 03/21/2011 8:39:17 AM PDT by SeekAndFind
To all those wondering why the Treserve scrambled on Friday to allow banks to resume paying dividends (even something as downright hilarious as Citi's $0.01...Is that the lowest recorded dividend yield in history?) here is your answer. The Treasury just announced it would sell its $142 billion MBS portfolio, supposedly to the same banks who are now using their cash on the books to satisfy shareholders too. The Treserve will sell $10 billion per month depending on market conditions, meaning a downtick in the market will now crash not only that given day's POMO (a UST market operation), but also have a reflexive impact on the entire MBS trading complex. As usual we can't wait for Directive #1 which will make selling any share an act of treason.
"The Treasury Department said Monday that it will begin to sell its portfolio of $142 billion in agency-guaranteed mortgage-backed securities. A senior Treasury official said the department plans to sell up to $10 billion in MBS per month subject to market conditions. The sales could generate a profit for taxpayers of about $15-$20 billion as market conditions have improved, the official said. Congress gave Treasury the power to purchase the securities guaranteed by Fannie Mae and Freddie Mac to provide stability to financial markets during the financial crisis of 2008. The official said the sales were not related to the looming debt ceiling."
As usual the only loser here is the taxpayer, as banks will very soon have dangerously low cash and capitalization levels, meaning the next downturn, which nobody will have seen coming, will result in another cool 10-20 trillion in pieces of linen thrown at it, and another 10-20% drop in the value of the former reserve currency.
It’s a way for the banks to recapitalize without congressional approval and to silence the masses while they do it.
Guess who’ll be the eventual bag holders?
It’s simply the same crap dressed up in a different disguise.
>> “The Treserve.. “
ROFL! At first I thought it was a typo, but it’s clear it’s a poke at the cozy arrangement between the two supposedly separate entities. How apropos.
Wonder if they get the same deal GS got with Indy Mac...you lose, we make you whole, you win, you keep it.
I think the banks have loads of cash in the Fed’s reserve accounts.
$0.01 is a dividend not a dividend yield. If it is a quarterly dividend of $0.01 on the current $4.54 share price then the yield is 0.9% which is nowhere close the the lowest yield.
Citibank announced a 10-1 reverse stock split, and I couldn't find out if the proposed $0.01 dividend is pre-split value or post split. If it is post split, then the yield will only be 0.09% which is extremely low.
“The sales could generate a profit for taxpayers of about...”
For taxpayers? Should I wait by the mailbox or my check? I don’t know, somehow I’m a little suspicious about this.
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After the split. Will make it the 3rd lowest dividend yield.
I’m trying to find the article I read this morning to give a link.