Wall Street profits from trades with Fed

[Ann]

Wall Street profits from trades with Fed

By Henny Sender in New York

Published: August 2 2009 23:04 | Last updated: August 2 2009 23:04

Wall Street banks are reaping outsized profits by trading with the Federal Reserve, raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, officials and industry executives say.

The Fed has emerged as one of Wall Street’s biggest customers during the financial crisis, buying massive amounts of securities to help stabilise the markets. In some cases, such as the market for mortgage-backed securities, the Fed buys more bonds than any other party.

“You can make big money trading with the government,” said an executive at one leading investment management firm. “The government is a huge buyer and seller and Wall Street has all the pricing power.”

A former official of the US Treasury and the Fed said the situation had reached the point that “everyone games them. Their transparency hurts them. Everyone picks their pocket.”

http://www.ft.com/cms/s/0/e84383dc-7...nclick_check=1

Blech! :mad:

[Slimprofits]

Re: Wall Street profits from trades with Fed

This is the heart of the scam and someday volumes will be written, but right now it's a footnote. I think Congressman Frank and Brad Hintz summed it all up nicely whether they know it or not. These are their quotes from the article in the FT.

“You can’t rescue the credit system without benefiting some of the people in it.”

“They want to help Wall Street make money."