Wednesday, December 1, 2010

The Fed's beneficiaries list

We ’ ve been getting big interesting news today. The Fed finally made public its list of the biggest beneficiaries of its emergency program during the 2008 financial crisis. In case you didn’t know, this is the long-held secret list that Ben Bernanke and the rest of the Fed had wanted to take with them to their grave. But due to some astute legal maneouvers by media, this is now seeing the light of day.

And according to the list, among the biggest beneficiaries were, no surprise here, European banks. But surprise, surprise, we also see that non-bank non-financial firms Mcdonald’s and Harley Davidson are on the list. So it seems Mcdonald’s has found a rich new revenue source - satisfying the Fed’s Super-sized hunger for toxic assets. From Huffington Post. HT: CW

The data revealed that the Fed's aid was scattered much more widely than previously understood. Two European megabanks -- Deutsche Bank and Credit Suisse -- were the largest beneficiaries of the Fed's purchase of mortgage-backed securities. The Fed's dollars also flowed to major American companies that are not financial players, including McDonald's and Harley-Davidson, through unsecured short-term loans.

Wow. That’s $billions$ worth of two all-beef patties, subprime sauce, lettuce, cheese, pickles, onions on a CDO bun. I guess I now have to ask the question that’s probably on a lot of people’s minds right now… did that amount come with a large side of fries and coke?

UPDATE: McD's issues a correction statement: The Fed determined that McDonald’s, while not listed as a borrower under the CPFF, benefited from the program as a “parent/sponsor” of Golden Funding Corp., which sold a total of $203.5 million in commercial paper.

The designation is incorrect, McDonald’s spokeswoman Heidi Barker Sa Shekhem said in a statement. “McDonald’s Corp. was erroneously listed by the Federal Reserve Bank as a recipient of federal funds during the financial crisis of 2008,” she said. So it's not McD's, it's a subsidiary (you see a difference?), and I should clarify that the Fed assistance is in buying their paper, not mortgage bonds that they own.

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