Amazing charts, Noreen. Yes, this what I was asking for and here's what it shows me -
- Unbelievable growth of debt in both charts. Why do we need to borrow almost twice what we owed in 2002?
- Some tapering down recently, which is probably sane.
- A way to evaluate the magnitude of $1.5T, which was the original aim:
See if you can follow this - total outstanding loans of our commercial banks is about $7,000B or $7T. US banks leverage 9 to 1, let's use 10 to 1 for simplicity; which requires a minimum of $700B of liquid assets at any given time. $700B is about HALF of the $1.5T that the Fed finds they have to provide in overnight loans. Doesn't this mean the ENTIRE banking system is basically worthless? I expected to find that the amount of overnight loans was smaller than the total capital required, because the banks would have some of their own money, right? Guys/Gals please tell me where I'm missing something.
Re: ONLY $1.5 Trillion
Value Hiker
12/8/2011 12:40:28 AM
Re: ONLY $1.5 Trillion
Value Hiker
12/8/2011 12:30:19 AM
Scott. it is true that many of the mortgage finally ends with either Fannie Mae or Freddie Mac, both only at secondary Market. Consumers do not have the choice to get the mortgage directly from these GSEs.
I think that Fed shall let the consumers borrow directly from the GSEs, otherwise just dissolve these GSEs all together
And this is a little more comprehensive:
@Predictable, is this what you were looking for? Fed data indicates there are $3485.4 billion in outstanding real estate loans at commercial banks.
Value Hiker - I stand corrected on the per-person amount of the "secret" Fed loans. It's about $4,000. Thanks
Scott - My loan is funded by Freddie Mac. I only know this because of a link that Noreen had at the bottom of an article about refinance initiatives.
Knowing that my bank only services my loan, means they have that much less reason to need over-night money from the Fed. And knowing that most loans (is it really most?) are like that, should mean the same for all the other banks.
Thinking about this brings to mind a question - What is the sum of all mortgage debt actually owned by US banks?
Now, we know that banks have business loans and car loans, etc. so mortages aren't the total picture. Still, answering this question will help me wrap my mind aournd the size of the $1.2 to $1.5 Billion.
Value Hiker,
Most Americans did get a loan from the Feds ... it's called Fannie Mae.
Re: ONLY $1.5 Trillion
Value Hiker
12/7/2011 5:48:38 PM
I think it is about $4k per headcount for 1.5T. If the loan was 7.7T, it means that each American loaned $20k to these banks, for a family of five, the total amount is $100k. The average mortgage amount for American family is about $170k, maybe all US taxpayers can get a mortgage from Fed for themself, instead from these banks.
Re: The Letter
AskAsa
12/7/2011 12:57:52 PM
Reading Bloomberg's point by point rebuttal to the letter gives me a headache. I feel like I'm trapped in an argument on a playground.
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