When the Fed lends money to banks what collateral they place?

Discussion in 'Economics' started by crgarcia, Nov 1, 2007.

  1. T-Bonds?, Mortgage backed bonds?, Defaulted loans?
  2. nothing.
  3. scary . . . huh!
  4. mortgage backs fannie freddie, tresuries, and recently I think the Fed. is accepting bags of potato chips and lotto tickets
  5. Fed will take anything....see image....autos are next!
  6. Here's one about the old native American who wanted a loan for $500.
    The banker pulled out the loan application, "What are you going
    to do with the money?"
    "Take jewelry to city and sell it," was the response.
    "What have you got for collateral?"
    "Don't know collateral."
    "Well that's something of value that would cover the cost of
    the loan.Have you got any vehicles?"
    "Yes, 1949 Chevy pickup."
    The banker shook his head, "How about livestock?"
    "Yes, I have a horse."
    "How old is it?"
    "Don't know, has no teeth."
    Finally the banker decided to make the $500 loan.
    Several weeks later the old man was back in the bank. He pulled
    out a roll of bills, "Here to pay." he said.
    He then handed the banker the money to pay his loan off
    "What are you going to do with the rest of that money?"
    "Put in teepee."
    "Why don't you deposit it in my bank," he asked.
    "Don't know deposit."
    "You put the money in our bank and we take care of it for you.
    When you want to use it you can withdraw it."
    The old Indian leaned across the desk, "What you got for
  7. Aok


    Thin air.
  8. Mortgage bonds, about the only investments backed by tangible properties; that have been unanimously rated by the most prestigious agencies as the worlds most safest investments, as safe as the Treasury Bonds and blah, blah, blah...

    99% fell for it, you know
  9. autos
  10. Oh that picture was funny, looks like the recent owners of crox and ABK. But you all have it wrong. almost. It is "the full faith and credit", not necessarily air but an idea. A promise. At least they had good intentions, right? Like an IOU. p
    #10     Nov 1, 2007