Wednesday, November 9, 2011
FFB’s busy month
The Federal Financing Bank (FFB) has published its September results. The US Treasury owns this bank. Tim Geithner runs it. FFB’s year-end is September, as a result, the folks at the FFB had a busy month. From the report: (Link).
FFB holdings of obligations issued, sold or guaranteed by other Federal agencies totaled $57.6 billion on September 30, 2011, posting an increase of $2,059.6 million from the level on August 31, 2011.
At $58b the FFB ranks 33rd on the list of the biggest banks in the US. This puts them about equal to Comerica and just under Discover Financial. I’m as certain as I can be that that the folks running the show want the FFB to grow bigger and bigger. Maybe next year they will move into the coveted top 20 ranking. They were booking new loans and rolling over old ones like mad. Way to go guys!
The FFB made 163 disbursements in the month of September.
The FFB also extended the maturities of 318 loans and reset the interest rate for 3 loans issued by the U.S. Postal Service during the month.
Some of the details of the monthly activity are interesting. For example, consider this snapshot of the YE balance sheet:
The good old PO got an extra $1.5B for the month. Note that the outstanding has been brought up to an even $13b. That number is the legal limit for the PO. They have maxed out the credit card at the FFB.
We’ve been hearing for years that the PO is going broke. Well, we finally reached the finish line. As the following chart shows they have no further borrowing authority and will be insolvent by summer. This means we need a bailout. A pretty big one at that.
This issue has to come onto the table pretty soon or the mail will get very slow. The liquidity problems at the PO could be “fixed” fairly easily by an increase in the debt limit, but that would require congress to act. We all know that congress is unlikely to act on anything during an election year.
If you were concerned that the PO was going broke paying its interest bill, don’t worry. The average cost of financing for the PO is a lousy 1/8th of a percent. They are borrowing under the cost of treasuries.
It’s also worth noting that the FFB continues to make loans to solar and other energy related private sector companies. This is the list of money that went out the door in September:
finish reading at source - BruceKrasting
