Equities?….Like those things that just crashed 30% in the 4 short weeks following what has been described as the longest bull run in history..?
Those things? Seriously?
The word “equities” would entail every single share that is currently trading on the stock market right now, so naturally you’d expect that some stocks would be excluded — right? Luckily, they did go into further detail, providing a nice little note for us at the bottom of the press release.
So let’s take a look at what it says
ETF’s, unit investment trusts, mutual funds, rights and warrants — sounds reasonable.
But that’s it? Nothing else?
What about all those POS MOMO’s and initial public offerings that were sold at the height of the stock market bubble in 2018/2019? Will Tilray be considered an acceptable form of collateral? What about Crowdstrike, or Macy’s, and all the other companies in the retail sector that have been pumped up to artificially inflated valuations from 10 years of federal reserve fueled quantitative easing programs? Are the dozens and dozens of failing, practically bankrupt companies in the oil and gas sector now considered acceptable forms of collateral in the eyes of the New York Fed? The market is in collapse, and the valuations of these companies could easily crash another 50% in the next 3 months.
They specified investment grade for the corporate bonds — that being BBB- securities and above. For the CDO’s, CLO’s, and CMBS’s, they said only AAA-rated securities are accepted. But by omission, the key takeaway seems to be that all equities which are not mutual funds, ETF’s, warrants, rights, and investments trusts ARE are in fact accepted. That’s what it says, and they did not specify otherwise.
If this is true, it would mean that TLRY, Crowdstrike, and Macy’s are all apparently acceptable forms of collateral according to the New York Fed — the private bank that allegedly is 75% owned by only two financial institutions — Citigroup, and J.P. Morgan (the largest holders of these equities) — at least according to a recent Institutional Investor article published only 3 weeks ago; an article that for some very strange reason nobody seems to be talking about.
People have been trying to gain access to the New York Fed’s stockholder ownership list for several decades now, and it’s been the favorite subject of various conspiracy theories since at least the days of Eustace Mullins back in 1983, yet other than the original Institutional Investor article that broke this story, the only other place that even mentions this historic event is buried deep within some obscure Bloomberg opinion piece by Matt Levine about Wall Street Bets.
Let’s all cross our fingers and pray that this omission was just a typo, and they are not actually accepting companies like $TLRY, $CRWD, $M, $AR, and all the other POS MOMO’s with ridiculously inflated valuations as collateral for these loans. The gap between the rich and the poor in the United States is nearly double that of every other developed country in the western world, and most average American citizens are being forced to dish out as much as 1/3rd of their monthly income towards paying off debt!…Printing money and giving it to people in exchange for equity in companies with artificially inflated valuations in the midst of the worst financial collapse since at least 2008 while the rest of the country suffers from unprecedented job losses is something you’d expect to hear about in a highly corrupt kleptocracy like Romania, not the United States of America, the supposed greatest nation in human history.
Included below are screenshots of Section 13 of the federal reserve act. It authorizes Federal Reserve branches, overseen by the Board of Governors, to issue loans to entities considered eligible for emergency lending programs. When they say, “broad-based eligibility”, they mean companies that are not considered National or State banks.
Technically the federal reserve system is meant to prevent banks from going bankrupt by acting as a Lender of Last Resort, but they’ve included this amendment to allow for businesses that are not considered banking institutions to receive discounted loans from the fed during times of crisis.
So the New York Fed (which is allegedly 75% owned by two financial institutions who at the same time happen to be the largest holders of these equities) will be assigning value to the equity collateral? How are you supposed to reasonably assign a value to shares of a public company in the midst of the worst financial crisis since 2008 while they are breaking records for volatility?
Are they just inventing their own methodology? Will we even have access to this methodology, or will it be a secret like everything else the fed does?
During the last financial crisis, the term “cash-for-trash” became a popular catch-phrase to describe Ben Bernanke’s quantitative easing program, and by the looks of things, that unfortunately seems to be a pretty good description of these bailouts so far. The market is in freefall right now, so the lendable value of an equity security is completely unknown at this time.
Is it any wonder why the average Millennial only has a net worth of $8000.
“The six biggest U.S. banks’ share of the estimated subsidy was $4.8 billion, or 23 percent of their combined net income during the time they were borrowing from the Fed. Citigroup would have taken in the most, with $1.8 billion.”
Pictured below is a list of the bailouts from the last financial crisis back in 2008.
(Wikipedia) “Millennials, popular media use the early 1980s as starting birth years and the mid-1990s to early 2000s as ending birth years, with 1981 to 1996 a widely accepted defining range for the generation.”