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Investment Bank Welfare? The Implicit Bank Subsidies in the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) Created by the Federal Reserve Board

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  • Dean Baker
  • Matthew Sherman

Abstract

This study produces calculations of the amount of money being dispersed by the government to the 16 primary dealers and investment banks who qualify to borrow through the special lending facilities created in the last year by the Federal Reserve Board under the assumption that each borrows in proportion to its assets. The study then uses Fed data on the interest rate charged for loans from these lending facilities to calculate the potential subsidy in this lending. The report calls attention to the fact that few details have been given about the specific loan amounts, recipients, or collateral posted.

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File URL: http://www.cepr.net/documents/publications/investment-bank-welfare-2009-03.pdf
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Bibliographic Info

Paper provided by Center for Economic and Policy Research (CEPR) in its series CEPR Reports and Issue Briefs with number 2009-09.

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Length: 16 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:epo:papers:2009-09

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Keywords: Federal Reserve; special lending facilities;

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