terça-feira, 4 de março de 2008

Excelente artigo sobre a actuação recente do FED

... e o seu novo mecanismo para "socorrer os bancos" com crédito por criação monetária ("injecção"): "Term Auction Facility"

Fed Isn't Getting Snookered by Collateral Risk: Caroline Baum2008-03-04 00:05 (New York)Commentary by Caroline Baum March 4 (Bloomberg) --

Ever since the Federal Reserve created a Term Auction Facility in December to ease the strainsin the interbank-lending market, the TAF has been a source ofagitation in certain conspiracy-prone circles. The thrust of that argument goes something like this: The Fed, which is first and foremost a counterfeiter, printing moneyat will, is now accepting low-quality collateral as security for28-day loans to banks whose anonymity is protected. In theprocess, the central bank assumes credit risk and lays it at thefeet of the U.S. taxpayer. Maybe it's time to take a look at some of the facts. The Fed had already taken steps in August to encouragebanks to borrow directly from its discount window, compressingthe spread of the discount rate over the federal funds rate to50 basis points from 100 and expanding both the type ofcollateral it would accept and the terms of the loans to 30days. No matter how nicely the Fed asked, banks were unwilling toincur the stigma associated with discount window borrowing,especially at a time when financial institutions were reportinglarge losses and any intimation of trouble could causedepositors to take flight. Fed Chairman Ben Bernanke decided to respond to theliquidity crisis with, appropriately, added liquidity. (See``Federal Reserve'' and ``lender of last resort.'') That didn'tstop the yammering about the assumption of credit risk by the central bank. The misinformation surrounding the TAF has reached suchepic proportions, at least in my small world, that I decided tocompile my own version of frequently asked questions andanswers. Most of this information is publicly available on theFed's Web site -- in excruciating detail. But hey, never let thefacts get in the way of a good conspiracy theory.

Q: What is the difference between the discount window and theTAF?
A: About 50 basis points, at least at the Feb. 25 TAF auction.The minimum bid at the auction is determined by the expected fedfunds rate over the term of the loan, which is 28 days. The Fed awarded $30 billion at 3.08 percent last week. Thediscount rate is 3.5 percent. (That rate doesn't include theimplied cost of any stigma that accrues to the borrower forgoing to the window.)

Q: What does a bank have to do to qualify for a loan from theFed?
A: Banks must be in sound financial condition to be eligiblefor so-called primary credit. They must file the necessarydocumentation, as set out in Operating Circular No. 10. And theyhave to pledge collateral in advance of a request for adiscount-window or TAF loan. Many depository institutions regularly post collateral withthe Fed in case they need backup funding when money markets aretight, loan demand spikes or depositors withdraw moneyunexpectedly. Since August, when the interbank market froze up,banks have increased the amount of collateral posted with theFed.

Q: What sort of securities and loans will be accepted ascollateral outside of the traditional U.S. Treasury and agencysecurities?
A: Corporate and municipal bonds, money-market instruments,asset-backed securities, collateralized-mortgage obligations andvarious consumer, commercial and industrial, agricultural,residential and commercial real-estate loans.

Q: How does the Fed determine how much to lend against thesecurities and loans it accepts as collateral?
A: A table of recommended margins for various types ofcollateral is posted on the Fed's Web site. The Fed lends only apercentage of the market value of the collateral, with the``haircut'' ranging from 2 percent on short-term, top-qualityTreasuries (in other words, the lendable value of a two-yearTreasury note is 98 percent) to 40 percent for certain types ofconsumer loans.

Q: Some of the collateral the Fed is accepting is exactly whatgot the banks into trouble. Why will the Fed do a better job ofmanaging risk when it missed the bad-loan problems at banks itregulates?
A: The discount-window officers at the 12 Federal ReserveDistrict Banks have discretion in determining both the fairvalue of the collateral and the required margin. If there is no market price for a given security and thediscount-window officers and/or bank-supervisory officials atthe Fed aren't confident about the value, they can impose abigger haircut. Alternatively, they can just say no. In the current environment, it's safe to say the Fed hasbeen erring on the side of too much rather than too littlecollateral.

Q: What happens if the value of the underlying collateraltakes a dive during the 28-day term of the loan?
A: The same thing that happens in the private sector: theborrower gets a margin call. If the value of the collateraldeteriorates, the Fed can consider other collateral in theborrower's pool as a backstop for the outstanding loan. Or theFed bank can immediately reduce the amount of the loan. The only thing fixed on a TAF loan is the rate. The Fedmonitors the collateral on a daily basis. Borrowers thatqualified for a loan can un-qualify quickly if the collateral is inadequate.

Q: So you're saying there's nothing to worry about?
A: There's plenty to worry about, including the collapse ofthe housing market, early signs of decay in commercial realestate, soaring commodity prices, an over-leveraged consumer,losses and potential capital impairment at financialinstitutions and an economy that's flat-lining. That's enough tokeep you up at night without tossing and turning over the Fed'sexposure to credit risk. (Caroline Baum, author of ``Just What I Said,'' is aBloomberg News columnist. The opinions expressed are her own.)

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