By Denny Gulino

WASHINGTON (MNI) – More than 20,000 Federal Reserve data entries,
and many names of crisis-era borrowers were revealed Wednesday for the
first time and although the data dump generated only a huge yawn among
market participants, precedents were set that will change the flavor of
any future crisis aid.

In establishing new crisis rules for the Fed, the Dodd-Frank Act
eliminated the Fed’s so-called Section 13-3 authority to bail out
individual firms it might feel should get emergency help and also
specified the rules for disclosure of emergency aid that were followed
for the first time Wednesday.

Starting at noon, anyone could go to the Federal Reserve Web page,
federalreserve.gov, and find out that Citigroup borrowed $2.2 trillion,
Morgan Stanley $2 trillion, Merrill Lynch a little more than $2 trillion
and Goldman Sachs more than $600 billion. Foreign banks like Barclays,
UBS, BNP Paribas and the Royal Bank of Scotland were in for hundreds of
billions. Some of the draws were highly repetitive, with single
institutions borrowing, paying back and borrowing again many times.

It was one of the largest single set of financial disclosures by
the Fed or any other federal agency.

In its announcement of the disclosures, the Fed said, however, that
discount window borrowers will still have their identities protected
for two years.

Generally, analysts found little of interest in the mountain of
historical data with most of the aid programs now wound down. Some of
the banks, like Goldman, said their crisis borrowings were urged on them
by the Fed and Treasury so therefore didn’t provide any insights into
their degree of need — if any — at the time.

Ray Stone of Stone & McCarthy Research Associates said “much of
this information had already been made public or is largely irrelevant
with regard to where we are today.”

Stone noted that Merrill Lynch Government Securities inclusive of
its London unit had daily advances totaling $2.017 trillion, much of it
“borrowed in the weeks following the Lehman failure, but prior
to the BofA acquisition of Merrill.”

Now, however, all financial institutions know that any future
crisis borrrowing will be disclosed in detail if such borrowing is
available at all. Whether that will add a stigma that will prevent or
delay needed borrowing, or exact an additional market penalty for
borrowing, the anti-bailout provisions of Dodd-Frank will be in force.

Will the new regime of allowing orderly liquidation of financial
institutions that are in trouble, and prohibiting the kind of help that
may have saved them last time, survive the next test? Can a way be found
to provide across-the-board systemic support — still permitted under
Dodd-Frank — that is more industry focused than broad measures like
QE2, that can’t be construed to be helping individual firms? Those are
the question posed — and not answered — by the day’s Fed disclosures.

** Market News International Washington Bureau: 202-371-2121 **

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