The Fed, Yellen and the FDIC Bypass Bona Fide Monetary Statutes in Favor of a Shady Entity to Bankroll Our Survival
/By Stan Szymanski
Last night, just after the futures markets opened, the Treasury, the Federal Reserve and the FDIC issued a ‘joint press release’ to inform the world of their method of salvation for the banking system:
…’the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.’…(Board of Governors of the Federal Reserve System)
In reading the other pertinent information that soon became available about this momentous intervention, one might be apt to think that they were talking about the newly minted BTFB or Bank Term Funding Program:
…’The financing will be made available through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. These assets will be valued at par. The BTFP will be an additional source of liquidity against high-quality securities, eliminating an institution’s need to quickly sell those securities in times of stress….
The Fed explains that the Department of the Treasury will make available "up to $25 billion from the Exchange Stabilization Fund as a backstop for the BTFP.”’…(Zero Hedge 3/12/23)
So as reported above, the Treasury stands ready to provide up to $25 Billion available from the Exchange Stabilization Fund as security for the new program.
Because things are moving so fast over the past few days I started and then scuttled two other stories that I didn’t write because of the evolving facts and storyline.
In my writing, trashing and then writing again, the most interesting thing that I learned in the past few days is that the FDIC does not just back deposits with the DIF (Deposit Insurance Fund) but that the FDIC deposit insurance itself is also backed by the ‘full faith and credit of the United States Government’:
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…FDIC deposit insurance is backed by the full faith and credit of the United States government. This means that the resources of the United States government stand behind FDIC-insured depositors. (FDIC)
In practice, what does this exactly mean?
Please take a look at the Federal Deposit Insurance Act and specifically Section 14 ‘Borrowing Authority’(a) Borrowing From The Treasury (1) In General:
…’The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $100,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this subsection shall not be less than an amount determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities. For such purpose the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds of the sale of any securities hereafter issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under the Second Liberty Bond Act, as amended, are extended to include such loans. Any such loan shall be used by the Corporation solely in carrying out its functions with respect to such insurance. All loans and repayments under this subsection shall be treated as public-debt transactions of the United States. The Corporation may employ any funds obtained under this section for purposes of the Deposit Insurance Fund and the borrowing shall become a liability of the Deposit Insurance Fund to the extent funds are employed therefor.’…(FDIC)
So it appears to me (I am not a legal professional and do not give any legal advice) that the FDIC is empowered to borrow from the Treasury. Then the Board of the Corporation (FDIC) work out the terms with the Secretary of the Treasury. And this is what really caught my eye:
…’not exceeding in the aggregate $100,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury’…
$100 Billion Dollars is a lot of money. And the FDIC is apparently already, by law, approved to borrow up to that amount pursuant to the approval of the Secretary of the Treasury.
So we have the news yesterday that the Department of the Treasury will make available up to $25 Billion for the new BTFB program so that banks can …’meet the needs of all their depositors’…
Why need there be the establishment of this BTFB of $25 Billion when the Federal Deposit Insurance Act already makes provision in the law for up to $100 Billion to take care of the work of the FDIC whose business is to insure the deposits of those who are covered by said insurance? Wouldn’t the FDIC just work on a plan and how much they need to borrow from the Treasury and work it out with the Treasury Secretary-especially since the amount of the BTFB was less than $100 Billion?
There is a time clock in play and we know it today as the ‘Debt Ceiling’ or the ‘Debt Limit’. On January 19, 2023 the US hit its ‘Debt Ceiling’ which prompted the Treasury Department to take ‘extraordinary measures’ in order to keep the government paying its bills. What does this have to do with the bailout of the recently failed banks and the almost for certain, more banks to come?
The ‘Debt Ceiling’ is officially known by another name. We saw it in our quote above from the Federal Deposit Insurance Act, Borrowing Authority above:
…’For such purpose the Secretary of the Treasury is authorized to use as a public-debt transaction the proceeds of the sale of any securities hereafter issued under the Second Liberty Bond Act (emphasis added), as amended, and the purposes for which securities may be issued under the Second Liberty Bond Act, as amended, are extended to include such loans. Any such loan shall be used by the Corporation solely in carrying out its functions with respect to such insurance.’…
The ‘Debt Limit’ or ‘Debt Ceiling’ was established in 1917 under the Second Liberty Bond Act.
So it seems to me that if the United States has already reached its ‘Debt Ceiling’ (Second Liberty Bond Act) in January, how on earth can they legally issue debt through the statutory mechanism outlined above; the working together of the FDIC and the Treasury Secretary?
So, if the US just hit its debt limit and the ‘Three Amigos (not Martin Short, Steve Martin and Chevy Chase) of the Treasury, the Federal Reserve and the FDIC just announced that the $25 Billion for BTFB will appear out of the thin air or as some like to call it ‘the Exchange Stabilization Fund’ (ESF).
The ESF is accountable -only- to the Secretary of the Treasury and the President of the United States. It was established under the Gold Reserve Act of 1934 for the purpose of trading in rehypothecations in the gold market (derivatives and manipulations thereof IMHO).
So the fate of the financial world is now backstopped not by a world power or conglomeration of countries at this time of peril, but by a shadowy entity, the Exchange Stabilization Fund, a monetary organism that most people who have worked in finance have never even heard of, let alone become familiar with. It’s nice that they (the ESF) have money when the rest of the government doesn’t, don’t you think (sarcasm off)?
And now that an unknown entity has come to the rescue:
…’US Treasury Secretary Janet Yellen said the actions taken Sunday will protect “all depositors,” signaling aid to those whose accounts exceed the typical $250,000 threshold for FDIC insurance.’…(Bloomberg via Yahoo)
The Three Amigos have guaranteed ‘all depositors’. The government that has run out of money to run itself has just guaranteed ‘all depositors’ and is using bodies in the shadows (ESF) to do it.
I went through the exercise of showing that the FDIC was empowered by law to borrow $100 billion to shore up bank deposits. The fact that the powers that be are not using this lawful facility but have in fact, bet the farm on a vague and chimerical creature in the body known as the ESF should tell you just how much danger that not just the US, but the world financial system is in.
Peter Conti-Brown, associate professor at the University of Pennsylvania’s Wharton School was quoted yesterday as saying:
…’The Fed’s emergency lending program is “an admission not only of systemic risk but that the risks are so unusual and exigent that failure to invoke this liquidity could create a financial crisis,”’…(Bloomberg via Yahoo)
So if you didn’t know, now you know. We are up SHTF Creek without a paddle. We do not know the true genesis of the nature of the funding that is emanating from the ESF. Is it American? If it is not American to whom would we owe our survival to? China? Klaus Schwab? To whom would we owe the country to?
The Federal Reserve is involved because the amount that will be needed is in the Trillions, far above the $100 billion approved for by law for bailouts…
…’And while the Federal Reserve - which was completely clueless about this banking crisis until Thursday - does not anticipate that it will be necessary to draw on these backstop funds, we anticipate that the final number of needed backstop liquidity be somewhere north of $2 trillion.’…(Zero Hedge-many times there is an author from another site-this time the author was just…Tyler Durden..)
Do you trust Janet Yellen (wearer of one of the sombreros as 1/3 of the 3 Amigos) with your future? Do you trust the being who occupies the same seat as Jefferson, Lincoln Trump and Obama with your well being as you watch him on TV shaking hands with his imaginary friends who aren’t there? Finally, are we to trust the ‘Three Amigos’ who have one and all led us into the ditch on behalf of their betters? Are we to put our confidence in those who want us to ‘own nothing and be happy’ and who use the fear of a virus and the enmity of a wicked pharmaceutical intervention to extinguish and rule us?
The financial movie set in which the ‘Three Amigos’ (Fed, Yellen & FDIC) is ablaze and playing out just as, in my humble opinion, they knew it would. One of the big problems I believe, is that your financial advisor, your banker and your most financially knowledgeable friend begin all of their presuppositions with the information that the Three Amigos propagandize them with. The financial scenery is flaming and the embers, I am afraid, are the savings, checking and pension accounts of the citizens of America and the world. Time to consider thinking a bit differently.
The only true money in history is gold and silver. It has never gone away. They didn’t tell you, but they, the central banks of the world, have been aggressively buying it for well over a decade. They have been preparing for a day when the dollar is gone. Have you prepared for a day when the US Dollar is no longer the world reserve currency? What will that mean for you? If you have prepared you will have an opportunity able to make it into the next episode. If not, you may be written out of the show. You also need food, water, shelter, energy and protection. But today we concern ourselves with the above monetary frames and flames of description.
People like Steve Quayle, Bill Holter and Mike Maloney can help you with your questions about Gold and Silver. People like The Federal Reserve Board, Janet Yellen and the FDIC might help you get tickets to a show that you don’t want to see and definitely don’t want to be part of.
The Exchange Stabilization Fund says ‘Hello’.
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Stan Szymanski (or Encouraging Angels) is not a medical doctor. This is not medical advice. In all matters pertaining to the health and care of a human being consult a medical doctor. This is not legal, financial or personal advice. Consult appropriate professionals in those fields for that type of advice.