Can't you just earn that collateral back by waging a war against another national economy, thereby raising your bank's collateral by taking it from someone else?

I mean, that would be a lot easier.

Ok how about you "Glenn" showing us-- anyone including Ron Pauls --explaining this chart.....do you even know what this is about, do you have a clue if so I would like to hear it.

Fed's Direct Loans to Banks Climb to Highest Level on Record

By Christopher Anstey

May 15 (Bloomberg) -- The Federal Reserve's direct loans of cash to commercial banks climbed to the highest level on record in the past week, a sign of continued stress in financial markets that threatens to curtail credit for households and companies.

Funds provided through the so-called discount window for banks rose by $2.8 billion to a daily average of $14.4 billion in the week to May 14, the central bank said today in Washington. Separately, the Fed's loans to Wall Street bond dealers rose by $75 million to $16.6 billion.

The increase indicates financial firms' emergency needs for cash haven't receded. Fed Chairman Ben S. Bernanke said two days ago that while markets have improved, they remain ''far from normal,'' adding that the central bank is prepared to increase its twice monthly auctions of funds to banks.

Fed policy makers in March created the Primary Dealer Credit Facility to offer direct loans to the 20 brokers that trade Treasury securities directly with the New York Fed. The central bank also provided $29 billion of financing to secure Bear Stearns Cos.' takeover by JPMorgan Chase & Co. to stave off bankruptcy.

The central bank's primary dealer resource allows Wall Street banks to borrow money overnight at a 2.25 percent interest rate, the same so-called discount rate charged to commercial banks.

As of May 14, there was $14.5 billion of loans outstanding in the primary-dealer program, while commercial banks had $13.4 billion of discount-window loans, the Fed reported.

Bear Borrowings

Bear Stearns had borrowed $32.5 billion from the Fed as of March 21, according to a JPMorgan regulatory filing on April 11. The central bank doesn't disclose who is borrowing from the discount window or other facilities.

The Fed's holdings of U.S. Treasury securities fell $22.3 billion for a daily average of $520.1 billion. The central bank had about $713 billion of Treasuries two months ago.

There was one net miss, on May 14, the Fed said. A net miss occurs when the actual reserve level in the banking system diverges from the Fed's projections for a day by $2 billion or more. If the level is outside expectations, the federal funds rate can deviate from target.

To contact the reporter on this story: Chris Anstey at canstey@bloomberg.net
Last Updated: May 15, 2008 16:30 EDT