$16 Trillion loaned to the Banks.

[aggiesal]

Between Dec 1, 2007 and July 21, 2010
Banks were loaned $16.115 Trillion,

Based on a GAO Report GAO-11-696
Here is a link to the PDF: http://www.gao.gov/new.items/d11696.pdf

Go to Report page 131 (page numbers are at the bottom of each page),
not PDF page 131.

You will notice the table with a total of $16,115 Billion
which equals $16.115 Trillion.
Am I reading this correct?

How did this get past everyone?
Will the Main Stream Media report on this?

[TheWraith]

1. No, you're not reading it correctly.

What everyone seems to miss in this is that these are short term loans, often as short as overnight. It's not like there was $16 trillion dollars out at any given time.

If I have $100, and loan it 100 times, I've loaned $10,000. That doesn't mean I've loaned $10,000 at a time, or even that I have that much money.

[aggiesal]

2. How do you read that from this? n/t

[TheWraith]

3. Because I understand how the Federal Reserve Bank works.

It's called the "discount window."

http://en.wikipedia.org/wiki/Discount_window

[mwrguy]

4. It's in the report

Just not right there in the chart.

[unblock]

5. "not term-adjusted" means they count all loans the same, whether for 1 day or 1 year

so a $1 overnight loan that's renewed every day for a year gets counted as $365, whereas a $1 loan that's for an entire year gets counted only as $1.

i've seen elsewhere that the term-adjusted amount is around $1.1 trillion. still a bucketload, but that's the more meaningful number.

[RegieRocker]

6. More hocus pocus smoke and mirrors mumbo jumbo b.s.

Why on earth would anyone borrow a dollar, pay the dollar back daily for 365 days. Sounds like kiting to me. Either way it stinks to high heaven and I'll stock with the 16 trillion and advise those who sense this as b.s. to do the same.

[banned from Kos]

7. And you'll always wonder why no credible economic journalist

reports that bullshit number.

[RegieRocker]

9. Credible only because they think like you and promote the

mumbo jumbo. I've heard that song and credible dance before. Anyone that supports kiting by not revealing it is not credible.

[TheWraith]

13. Your belief is not automatically equal to someone else's facts.

Just because you believe it works a certain way doesn't change the way things actually work.

[toddwv]

8. I don't understand why everyone is upset about this.

Loaning money to the banks is a great investment for the fed.

I mean every 10-20 years or so, the banks find some sleazy way to suck trillions of dollars out of the economy and not only get off scott-free but are giving heaps more money by the federal government because they are "too big to fail".

Based on our history, they seem like a solid investment to me...

[RadiationTherapy]

10. I could microtrade $16 trillion in 24 hours and not have to work again for a long time.

Let's not bullshit about them being overnight loans. 16,000 billion dollars invested for 24 hours is a lotta interest.

[econoclast]

11. TheWraith is quite correct on this ...

I was curious to see just how the real data was tortured into aggregating to 16.1 trillion dollars

Found it in footnote ... To wit

If an institution borrowed 10 billion overnight, but each day, for thirty days, rolled over that 10 billion dollar loan it shows up in the aggregate "aggregate borrowing"  300 billion dollars.    If that same institution borrowed the same 10 billion dollars for the same 30 days but did the initial loan as a 30 day term loan instead, that loan shows up as "aggregate borrowing" of only 10 billion dollars.   

Cute!

This 16.1 trillion dollar figure is one of those "gee whizzz" numbers that has little bearing on what happened in reality, but is designed to elicit a particular response from the reader.

Like saying I have a 150,000 dollar mortgage.   I refinanced it  twice to get lower rates

According to this logic I  borrowed 450,000 dollars.

[Octafish]

12. Thank Moon for Bernie Sanders!

Otherwise, we'd never know about this stuff.

PS: Those who think these loans somehow don't add up or impact the rest of the nation, please ask yourself: "When was the last time your community got a dime for public housing? or public education? or public transit? or public works?"

[TheWraith]

14. When was the last time you went to the dentist?

That's about as connected a question as linking how the federal reserve works with public transit. I know people want to believe "Oh, the government gave away $16 trillion to banks instead of using it on people!" Doesn't make it the case.

[Octafish]

16. When was the last time you sided against the corporations?

I'd like to bookmark it, because...

When it comes to banking, you take Wall Street's side.

When it comes to radiation, you take TEPCO's side.

[fascisthunter]

19. nailed

thank you for that

[kentuck]

15. Why would they make loans overnight or for a very short time?

A loan is a loan, no matter how long it is for, in my opinion.

[RadiationTherapy]

17. How much interest can be 'earned' by microtrading $16,000 billion?

A fucking lot.

[exelwood]

18. To satisfy reporting requirements...

Let's say bank X is required to maintain 1 bil in reserves by the government but during the course of a day has dropped below that amount because of deposits or their own short term lending activity they can then borrow "overnight" to keep the books settled and not trigger an audit.

Not all banks can tap the fed and smaller banks will do the exact same procedure with banks that can. Little bank Y borrows from bank X at a higher rate than bank X can get it from the fed so bank X makes a tidy profit overnight and does it again the next night.

Overnight settlement loans have been going on for as long as there have been reserve requirements. It has actually turned into an early warning system to spot failing banks, it is easy to spot banks with "troublesome" borrowing patterns.