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Thread: Federal Reserve is considering charging an exit fee for treasuries!

  1. #1

    Federal Reserve is considering charging an exit fee for treasuries!

    If this doesn't worry you nothing will. The Fed is considering charging a fee to sell your US treasuries because they are worried about a run collapsing bond prices. Even if they don't implement it the fact that they are considering it should be a major cause for alarm. That would be a huge breach of contract.

    http://www.ft.com/cms/s/0/290ed010-f...#axzz350x2tHWF



    Fed looks at exit fees on bond funds

    Tom Braithwaite, Tracy Alloway and Michael Mackenzie in New York and Gina Chon in Washington
    Monday, 16 Jun 2014 | 9:03 PM ET

    Federal Reserve officials have discussed whether regulators should impose exit fees on bond funds to avert a potential run by investors, underlining concern about the vulnerability of the $10 trillion corporate bond market.

    Officials are concerned that bond funds are becoming "shadow banks", because investors can withdraw their money on demand, even though the assets held by the funds can be hard to sell in a crisis. The Fed discussions have taken place at a senior level but have not yet developed into formal policy, according to people familiar with the matter.

    ...

    Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely.

    Introducing exit fees would require a rule change by the Securities and Exchange Commission, which some commissioners would be expected to resist, according to others familiar with the matter.

    ...
    read more:
    http://www.cnbc.com/id/101764134
    Last edited by jct74; 06-18-2014 at 03:29 PM.



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  3. #2
    Quote Originally Posted by Madison320 View Post
    If this doesn't worry you nothing will. The Fed is considering charging a fee to sell your US treasuries because they are worried about a run collapsing bond prices. Even if they don't implement it the fact that they are considering it should be a major cause for alarm. That would be a huge breach of contract.

    http://www.ft.com/cms/s/0/290ed010-f...#axzz350x2tHWF
    Not good.

    And the article seems to be behind a pay wall or something.
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  4. #3
    you can find the pertinent details on Zero Hedge

  5. #4
    Prepare to see the law of unintended(?) consequences unfold...
    "The journalist is one who separates the wheat from the chaff, and then prints the chaff." - Adlai Stevenson

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  6. #5
    Fed looks at exit fees on bond funds

    Tom Braithwaite, Tracy Alloway and Michael Mackenzie in New York and Gina Chon in Washington
    Monday, 16 Jun 2014 | 9:03 PM ET

    Federal Reserve officials have discussed whether regulators should impose exit fees on bond funds to avert a potential run by investors, underlining concern about the vulnerability of the $10 trillion corporate bond market.

    Officials are concerned that bond funds are becoming "shadow banks", because investors can withdraw their money on demand, even though the assets held by the funds can be hard to sell in a crisis. The Fed discussions have taken place at a senior level but have not yet developed into formal policy, according to people familiar with the matter.

    ...

    Exit fees would seek to discourage retail investors from withdrawing funds, thereby making their claims less liquid and making a fire sale of the assets more unlikely.

    Introducing exit fees would require a rule change by the Securities and Exchange Commission, which some commissioners would be expected to resist, according to others familiar with the matter.

    ...
    read more:
    http://www.cnbc.com/id/101764134


    ZeroHedge link:
    http://www.zerohedge.com/news/2014-0...xit-fees-gates

  7. #6
    Quote Originally Posted by Madison320 View Post
    If this doesn't worry you nothing will. The Fed is considering charging a fee to sell your US treasuries because they are worried about a run collapsing bond prices. Even if they don't implement it the fact that they are considering it should be a major cause for alarm. That would be a huge breach of contract.

    http://www.ft.com/cms/s/0/290ed010-f...#axzz350x2tHWF





    read more:
    http://www.cnbc.com/id/101764134
    Looks like this is aimed at funds holding corporate bonds, although it might include treasuries as well.
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  8. #7
    I have no pity for people who lose money because of this.

    You invested in one of the largest criminal gangs in the history of the world. This move (and anything like it in the coming few years) should not surprise anyone. Cry me a river.
    "Like an army falling, one by one by one" - Linkin Park

  9. #8
    Quote Originally Posted by Seraphim View Post
    I have no pity for people who lose money because of this.

    You invested in one of the largest criminal gangs in the history of the world. This move (and anything like it in the coming few years) should not surprise anyone. Cry me a river.
    I agree, anyone invested in fiat paper is going to get burned. What bothers me more about this is the total lack of regard for the rule of law.



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  11. #9
    Financial rule of law went out the window in 1971 when the USD was officially taken off the gold standard. Obviously it goes back further than that, but that move flagrantly burnt the US Constitution to ashes.

    Anyone invested in anything tied to the US Federal Gov't from that point on was/is COMPLICIT in the breakdown of the rule of law in the USA, especially in regards to matters of government finance.

    $#@! em all. $#@! em all to hell.

    Quote Originally Posted by Madison320 View Post
    I agree, anyone invested in fiat paper is going to get burned. What bothers me more about this is the total lack of regard for the rule of law.
    "Like an army falling, one by one by one" - Linkin Park

  12. #10
    So is this action/policy an act of incompetence or malice?

    http://www.zerohedge.com/news/2014-0...-its-own-words

    The NY Fed states:

    "Our paper is the first to show that the possibility of suspending convertibility, including the imposition of gates or fees for redemptions, can create runs that would not otherwise occur. This contrasts with the existing literature, which focuses on whether suspension of convertibility can prevent runs. In other words, we show that rather than being part of the solution, redemption fees and gates can be part of the problem."
    "Like an army falling, one by one by one" - Linkin Park



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