No.NickB wrote:.
The 600bn was wrong by a factor of 10 - mea culpa, not sure how that number crept in. Thanks for pointing it out. Nonetheless, the US Federal Reserve did help bail out RBS, and calling it an 'emergency liquidity facility ' doesn't really change that fact.
This is why I said that it would be much better not to quote from Yes camp and No camp propaganda websites and blogs.
This myth about The Fed bailing out, or helping to bail out RBoS, came originally from the Yes Scotland website and is now spreading insiduously into the debate mainly in the form of justification for the mistruth that "Existing banking conventions mean that debts incurred by failed financial institutions fall proportionately on the jurisdictions within which those institutions trade".
A bail out is an injection of capital.
The Fed injected NO capital into RBoS.
It provided a correctly named 'emergency liquidity facility ' on U.S. soil only to ensure, mainly, that Citizens (owned by RBoS and the 15th largest bank in America) and Charter One could continue trading as normal.
A Liquidity Facility is, in simple or layman's terms, an overdraft facility. It is not an injection of capital. It is not a bail out.
A Liquidity Facility only becomes a bailout when equity is handed over in exchange. The Fed took no warrants for RBoS equity. It was not a bail out.
End of.
Lets put this myth ""Existing banking conventions mean that debts incurred by failed financial institutions fall proportionately on the jurisdictions within which those institutions trade" to bed:
AIG were bailed out to the tune of $122 billion through the issue of warrants for 80% of its equity to the Fed and a Liquidity Facility was then created. That was a bail out.
The failure of AIG was largely caused by the $89billion toxic liabilities of its London division.
Did the bail out "fall proportionately on the jurisdictions within which those institutions trade"?
No. The UK contributed nothing to the AIG bailout.
So.......no more quoting from biased Yes camp and No camp websites and blogs please. Doing so merely spreads disinformation, myths, half truths, and propaganda. Hardly the basis for a mature debate here.
