A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006. Now a Popeyes fast food restaurant on Google Maps.

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Entry from October 22, 2011

To “backstop” (or “back stop”) something is to support or back up or bolster it. A monetary “backstop” is financial support against bankruptcy or other financial calamities. The financial use of “backstop” has been cited in print since at least January 1933.
Free Merriam-Webster Dictionary
backstop verb
Definition of BACKSTOP
transitive verb
1: support, bolster
2: to serve as a backstop to
3: to play the position of goalkeeper for

What Does Back Stop Mean?
The act of providing last-resort support or security in a securities offering for the unsubscribed portion of shares. A company will try and raise capital through an issuance and to guarantee the amount received through the issue, the company will get a back stop from an underwriter or major shareholder to buy any of the unsubscribed shares.
(Oxford English Dictionary)
backstop v. trans., to support, back up; to supply with necessary additional resources. colloq. (orig. and chiefly U.S.).
1956 B. Holiday Lady sings Blues xiv. 138   Tony kept my job open. He offered to backstop me with the money I needed.
1967 Electronics 6 Mar. 29 (advt.)  We’ll backstop your control procedures in our analytical labs.
1968 P. Tamony Americanisms (typescript) No. 21. 2   An invasion of unsavory schmucks‥was thrown back and frustrated by Mayor Daley’s phalanx of police and National Guardsmen, backstopped by the United States Army.
30 January 1933, Dallas (TX) Morning News, “Wall Street Seeks Way Out Muddle in Movie Industry,” sec. 1, pg. 3:
In the case of the Paramount Corporation, the banking firm of Kuhn, Loeb & Co. has been the principal financial backstop, although at the present moment nine of the largest New York banks are interested in a short-term loan of some $13,000,000 to the film company.
Google News Archive
8 March 1933, Pittsburgh (PA) Press, “Scrip Issue Banned; Rigid Expansion of Currency Approved,” pg. 4, col. 1:
A third important backstop in the expansion of Federal Bank notes may be resorted to under the Glass-Steagall Act. This provides that any group of five banks, which have exhausted normal collateral and rediscount paper may, with approval of the Federal Reserve Board, pool resources and obstain advances from Federal Reserve Banks on promissory notes which are secured to the satisfaction of the Federal Reserve Banks.
Google News Archive
29 October 1933, Reading (PA) Eagle, “Gold Supplies Worry Nations,” pg. 13, col. 5:
The French, especially, were interested, for one of their number, Georges Bonnet, is possibly the A-No-1 believer that gold in the treasury, and lots of it, is the best thing in the world to backstop the currency.
OCLC WorldCat record
Staving off the backstop: dynamic limit pricing with a kinked demand curve
Author: Stephen W Salant
Publisher: [Washington : Board of Governors of the Federal Reserve System], 1977.
Series: Board of Governors of the Federal Reserve System (U.S.).; International finance discussion paper
Edition/Format:  Book : State or province government publication : English
Zero Hedge
Don’t Be Fooled, The German Backstop Ends Soon
Submitted by Phoenix Capital Research on 08/17/2011 10:54 -0400
According to French President Nicolas Sarkozy, he and Angela Merkel share an “absolute determination” to defend the Euro. I find that hard to believe as: ...
Zero Hedge
ECB Tells Belgium Not To Backstop Dexia Interbank Deposits, Says Bailout Plan May Be Against The Euro Charter
Submitted by Tyler Durden on 10/14/2011 14:49 -0400
If anyone is surprised that things in Europe will get massively surreal before this is all over, we suggest finding another thread. In the meantime, for the latest example of the utter chaos and “make it up as we go along” we go to the ECB which has just, in very polite terms, warned Belgium that its bailout-cum-nationalization plan may not be quite feasible. From Bloomberg: “The European Central Bank advised Belgium not to backstop Dexia SA’s interbank deposits and to avoid providing guarantees on debt maturing within three months because it risks interfering with the central bank’s monetary policy.”
Zero Hedge
Bank Of America Forces Depositors To Backstop Its $53 Trillion Derivative Book To Prevent A Few Clients From Departing The Bank
Submitted by Tyler Durden on 10/18/2011 15:02 -0400
Bank of America, which today reported a big bottom line loss net of one-time beneficial items, did something quite tricky and extremely devious last month: it shifted anywhere up to the total of $53 trillion of the total derivatives it held as of June 30 (as Zero Hedge previously reported) on its books at Q2 from the Holding Company, which was downgraded last by Moody’s from A2 to Baa1 (the third-lowest investment grade rating) to its retail bank, which was downgraded to the far more palatable A2 (from Aa3).
The Blaze
Shock Report: Federal Reserve to Backstop Bank of America’s European Derivatives
Posted on October 22, 2011 at 5:08am by Becket Adams
Bank of America (BofA) is shifting derivatives in its Merrill investment-banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC, reports the Daily Bail.
What does this mean?
It means that the BofA’s European derivatives are now going to be “backstopped” (i.e. supported) by U.S. taxpayers. What is even more shocking is that, according to the same Daily report, Bank of America did not even seek or receive regulatory approval for this; they “just did it at the request of frightened counterparties.”

Posted by Barry Popik
New York CityBanking/Finance/Insurance • Saturday, October 22, 2011 • Permalink

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