This was my question - “What are the impacts of the TSLF haircuts on the mark-to-market requirements for the collateral that is being offered, especially as it relates to the first quarter accounting period that will end within the first 28-day window?”

This was the NY Fed’s reply - “We do not disclose this information as it is a term of trade between the counterparties. Standard Value-at-Risk methodology is used. We follow industry practice as we do for all haircuts on Fed programs.”

I do appreciate that I got a response. However, it wasn’t too insightful. Since I was not a counterparty, I am not entitled to know what the “term of trade” is. Furthermore, I have no idea what “standard” means. There aren’t too many standard things going on in this business right now. As for “value-at-risk” - two of those three words are challenging for the banks lately. I think they can handle “at.” Can they value anything? Do they understand the measurement of risk? The last line was the best though - “industry practice”? Given the questionable practices that got us into this mess, having the Fed following what the industry is doing should tell you why we are where we are and where we are probably going.

I shouldn’t be surprised really. In today’s testimony before Congress, Chairman Bernanke didn’t seem concerned that the Fed took the word of Bear Stearns when it valued the “collateral” the Fed was backstopping with $30 billion, now $29 billion. I am confident that “standard value-at-risk methodology” was used and the Fed followed Bear’s industry practice.

My question still stands. I’ll look for answers elsewhere. I doubt I will ever ask them another question. I learned my lesson, if nothing else.