Super-Conduit or Super-Bailout Shell Game?

"So the US banks - sarting with Citi - already obtained – via regulatory forbearance - a significant partial bailout of their SIV mess. So, for the Fed to now pretend that it is not part and parcel of the bailout of U.S. banks in their SIVs operations is totally disingenuous. And since the Fed is in touch with market participants, and since this super-conduit shell game cannot work without the grease of extra liquidity provision by the Fed, the central bank’s claim that it is not involved in this rescue plan is unbelievable. Indeed, in spite of the waving of Section 23A the amounts that banks can relend to their affiliates are still too small to resolve the SIV mess and the illiquidity of their affiliates given the size of these affiliates illiquid assets and liabilities being rolled off. Thus, more regulatory fudging and effective Fed bailout will be necessary to grease this super-conduit scheme."