US Bailout Pledge up from $7.4 to $11.6 trillion

joey — Fri, 25 Sep 2009 14:43:05 +0000

U.S. bailout has pledged $11.6 trillion as of September 25th 2009 compared to $7.4 trillion as of November 24th 2008. Although down from $12.8 trillion on March 31st 2009.

The Federal Reserve sharing a $5.8 trillion portion as of September 25th 2009. The following table provides details on the announced limit of the capital committed by the Federal Reserve and the current amount used.

All data provided by Bloomberg.

— Amounts (Billions)—
	Limit	Current
All Government Total	11,563.65	3,025.27
———————————————————	————	————-
Federal Reserve Total	5,870.65	1,590.11
Primary Credit Discount	110.74	28.51
Secondary Credit	1	0.58
Primary dealer and others	147	0
ABCP Liquidity	145.89	0.08
AIG Credit	60	38.81
Commercial Paper program	1,200.00	42.44
Maiden Lane (Bear Stearns assets)	29.5	26.19
Maiden Lane II (AIG assets)	22.5	14.66
Maiden Lane III (AIG assets)	30	20.55
Term Securities Lending	75	0
Term Auction Facility	375	196.02
Securities lending overnight	10.42	9.25
Term Asset-Backed Loans (TALF)	1,000.00	41.88
Currency Swaps/Other Assets	606	59.12
GSE Debt Purchases	200	129.21
GSE Mortgage-Backed Securities	1,250.00	693.6
Citigroup Bailout Fed Portion	220.4	0
Bank of America Bailout	87.2	0
Commitment to Buy Treasuries	300	289.22

Bloomberg – Fed’s Strategy Reduces U.S. Bailout Pledges to $11.6 Trillion – http://joeyconway.com/rpyqmf

Bank of America Loan Backstop

joey — Wed, 09 Sep 2009 14:51:00 +0000

On January 16^th 2009, Bank of America (BofA) disclosed with its first ever quarterly loss of $1.79 billion, a US government loan backstop for $118 billion on assets mostly from its government encouraged Merrill Lynch acquisition¹. The loan backstop is designed to cover a pool of financial instruments, assets, for up to $118 billion with maturities up to 10 years through the Treasury and FDIC with the Federal Reserve providing the actual non-recourse loan². The non-recourse loans means in the event BofA cannot repay the loan, the government is entitled to seize the risky assets being pledged by BofA as collateral, but if the loan value exceeds the value of the risky assets, it cannot go after BofA for the remaining loan amount.

There are a few strict limits imposed on BofA when using this loan facility: executive compensation must be submitted and approved by the government, dividends on common shares cannot exceed $.01 per share per quarter for three years without government approval, $4 billion of preferred stock with an 8% dividend rate along with other fees are to be paid to the government, and any material disposal of the risky assets in the pool by BofA has to be approved by the government².

As of July 2009, the overall confidence of the economy has picked up and BofA has never used the funding provided by the government loan backstop. Both sides, the government and BofA, agree the accord was never signed, but the government wants BofA to pay fees in the range of $2-4 billion for having the implicit government guarantee and potential access to the loan facility³.

1. Bloomberg – Bank of America Posts Quarterly Loss After Bailout

2. Treasury – Summary of Terms

3. Bloomberg – Bank of America Said to Balk at Paying Backstop Fee

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US Bailout Pledge up from $7.4 to $11.6 trillion

Bank of America Loan Backstop