Several months ago, just as the market was tumbling on the back of crashing oil prices and not only energy companies but banks exposed to them via secured loans seemed in peril, we wrote a post titled "Dallas Fed Quietly Suspends Energy Mark-To-Market On Default Contagion Fears" in which we made the following observations:
In the past three months, former Dallas Fed president (before he was replaced with a former Goldman M&A banker) and current Barclays senior advisor, has not minced his words when it comes to his ongoing criticism of the Fed.
Back in January Fisher said (what even Liesman has now suggested) that "We Frontloaded A Tremendous Market Rally" and there is "No Ammo Left", followed by a second appearance earlier this month when he said that the Fed "Injected Cocaine And Heroin Into The System To Create A Wealth Effect."
As this website exclusively reported three weeks ago, under explicit guidance by the Dallas Fed and associated regulatory pressure, US lenders have been instructed to not only not accelerate energy company counterparty defaults but to suspend energy loan book MTM entirely in distressed cases to avoid contagion concerns.
Questionable marks notwithstanding, in their fourth quarter earnings reports and conference calls banks had no choice but to reveal what their existing "publicly appropriate" exposure to oil and gas companies looks like.
Two weeks ago, Zero Hedge reported an exclusive story corroborated by at least two independent sources, in which we informed our readers that members of the Dallas Federal Reserve had met with bank lenders with distressed loan exposure to the US oil and gas sector and, after parsing through the complete bank books, had advised banks to i) not urge creditor counterparties into default, ii) urge asset sales instead, and iii) ultimately suspend mark to market in various instances.
Authored by Gerald O'Driscoll, former vice president at The Dallas Fed, posteed op-ed at The Wall Street Journal,
Are we headed for another global financial crisis? The market convulsions of the past week reflected a continuation of a market selloff that began on the first trading day of 2016. Investors have reasons to be fearful—but not terrified.