Investment Bank Welfare?

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March 2009, Dean Baker and Matt Sherman

This study produces calculations of the amount of money being dispersed by the government to the 16 primary dealers and investment banks who qualify to borrow through the special lending facilities created in the last year by the Federal Reserve Board under the assumption that each borrows in proportion to its assets. The study then uses Fed data on the interest rate charged for loans from these lending facilities to calculate the potential subsidy in this lending. The report calls attention to the fact that few details have been given about the specific loan amounts, recipients, or collateral posted.

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