Improving governance of the government safety net in financial crisis

IMPROVING GOVERNANCE OF THE GOVERNMENT SAFETY NET IN FINANCIAL CRISIS April 2012... Government Government-sponsored Enterprises GSE Private Finance Nonfinancial Nonfarm Corporate Noncor

IMPROVING GOVERNANCE OF THE

GOVERNMENT SAFETY NET IN FINANCIAL CRISIS

April 2012

IMPROVING GOVERNANCE OF THE

April 2012

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5

7

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7

21

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22

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37

38

Figure 1 Total Financial Liabilities Relative to GDP by Sector, 1916−2008

1970 (Series X 689-697); NIPA Flow of Funds (1945– )

Government

Government-sponsored Enterprises (GSE)

Private Finance

Nonfinancial Nonfarm Corporate

Noncorporate and Farm

Households and Nonprofit

Note: The government sector excludes all financial activities of the government(retirement funds, GNMA, and so on) The GSE sector includes government-sponsored enterprises and agency- and GSE-backed mortgage pools (amongthem, GNMA and FHA pools) “Private finance” excludes the GSE sector andmonetary authorities (both of which are part of the financial sector in the Flow

of Funds accounts) Before 1945, data for financial institutions is computedfrom US Census Bureau data by taking all the liabilities (excluding equity) ofcommercial banks, credit unions, savings institutions, life insurance stockcompanies, and property and life insurance companies, and by removingprivate banks notes, all deposits, and life insurance reserves From 1945, thetotal financial liabilities of the financial sector excludes net interbank liabilities

of commercial banks, liabilities of monetary authorities, private and publicpension fund reserves, money market mutual funds shares, mutual funds shares, and the items previously cited The liabilities of monetary authoritiesare not included anywhere Data for the households and noncorporate sectorsare deduced from Census Bureau data about net increase in liabilities and bycomputing backward from the 1945 level

40

53 54

55

56

policy.57

53

65

view.66

64

67

71

70

71

72

87

86

89

90

rate.92

93

94

96

95

96

98

100

99

100

102

106

operations.107

Sources: Federal Reserve H.4.1 Weekly Statistical Releases and other Fed sources

AIA/ALICO, CBLS)Conventional LOLR (discount window and repurchase agreements)

Sources: Federal Reserve H.4.1 Weekly Statistical Releases and other Fed sources

Federal Reserve Notes

Reserve Repos

Term Deposits

Other Deposits by Depository Institutions

TGA/SFAForeign Official DepositsOther Deposits/LiabilitiesTotal Capital

2

110

markets.”111

112

113

Source: Federal Reserve

Figure 4 Borrowing by Foreign Bank Counterparties, December 12, 2007 – July 13, 2010

SwissNational Bank4%

Bank of Japan 4%

All Others3%

European Central Bank 80%

Bank of England9%

114

Source: Federal Reserve

Japan >1%

Figure 5 Single Tranche Open Market Operations, by Country, March 7 – December 30, 2008

Switzerland37%

US 22.9%

UK 16.5%

Germany11.8%

France11.3%

Figure 6 TSLF Participation, by Institution, March 27, 2008 – July 16, 2009

Morgan Stanley

5%

Citigroup15%

Others14%

Credit Suisse11%

Deutsche Bank12%

Merrill8%

119

118

119

Figure 7 PDCF Borrowing, by Institution, March 17, 2008 – May 12, 2009

Source: Federal Reserve

Citigroup22.6%

Morgan Stanley21.%

Bear Stearns10.7%

120

122

123

124

Figure 8 CPFF Borrowing, by Institution, October 27, 2008 – January 25, 2010

Source: GAO

The LibertyHampshireCompany6%

Others 36%

UBS10%

Citigroup5%

Fortis Bank SA5%

Royal Bank ofScotland Group5%

Barclays PLC5%

BSN Holdings6%

Hudson Castle7%

Dexia SA 7%

AIG8%

125

125

127

128

Source: Federal Reserve

9/24/20109/24/2009

Figure 10 MBS Purchases, by Country

Source: Federal Reserve

Switzerland20%

Germany16%

US 48%

Facility Total Percent of

Cumulative Total

Central Bank Liquidity Swaps 10,057.4 33.77

(107.763)Single Tranche Open Market Operation 855.0 2.87Terms Securities Lending Facility

(3.265)Primary Dealer Credit Facility 8,950.99 30.05Asset-backed Commercial Paper Money

Market Mutual Fund Liquidity Facility 217.45 0.73Commercial Paper Funding Facility 737.07 2.47

AIG Securities Borrowing Facility 802.316 2.69

Table 2 Cumulative Facility Totals (in billions of dollars)

Note: Figures in red indicate amounts outstanding as of November 10, 2011 Source: Federal Reserve

Source: Federal Reserve

Figure 11 Total Federal Reserve Crisis Response, by Facility

ML II,

ML III,AIA/ALICO)3.39%

AMBS6.21%

AMLF 0.73%

PDCF30.05%

TALF 0.24%

CPFF 2.47%

CBLS 33.77%

TAF12.82%

TSLF/TOP 6.73%

Participant Total Percent of All Funding

Deutsche Bank Securities (Germany) 711.0 3.6

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