personally i did not view this as particularly good news. the system is still stretched and in the process of de-leveraging. the credit crunch is over comments and the now famously touted cnbc led ' the bottom is in' mentioned again yesterday for the 20th time just add and support my view we aint out the woods yet. A Fed Lifeline: $75B Auctioned to Banks With 70 institutions joining in, the Term Auction Facility is oversubscribed. With banks' credit difficulties expanding rapidly, the Federal Reserve auctioned another $75 billion in 28-day credit to financial institutions through its Term Auction Facility. The over-subscribed Monday offering received more than $90 billion in bids from 70 institutions, according to results announced today. The Associated Press noted that the program was created last December to help commercial banks receive short-term loans, with an eye to easing the financial crisis. Because of the credit crunch, banks have been much more reluctant to lend to one another. In the most recent auction, commercial banks paid an interest rate of 2.350 percent, according to the wire service. http://www.cfo.com/article.cfm/11831503/c_11832402?f=home_todayinfinance
This news is very simple. It simply means banks need to raise this much money in the form of dilution and/or buy time as they recapitalize. If housing miraculously recovers in between now and before they stop doing these facilities, then banks win.
It's a revolving credit line service for banks,expect the credit line keeps having to be raised as banks get deeper in the crapper.
The Fed is acting like a bad trader ....'doubling down" and expecting ( praying) for a rise in price later.....how much more $$ are you going to throw out at this bad situation????
The Fed has decided to open the discount window, and term auction facility to ALL TRADERS, not just the I Banks. *** From now on everyone that has an open position, can seek unlimited funds from the FED, (especially if they are levered 30-1 and above!) And, if 28 days turnover terms is not long duration enough, they will now offer 'new-extended-term' loans. The Fed Chair was heard to say, 'We wil sell our children if need be to keep these balls in the air, for at least the term of our appointments', (or the close of this Administration, whichever expires first). Anyone looking for next-to-free capital, just call 1 800 Heli Ben *** Minimun tranches of $50,000,000.00 **** Coming Soon, a 'two-fer one sale', er, loan...(get two dollars loan amount where currently we would lend one!) psst, keep this under your hat!
Maybe we dont need a fed window, I'm seeing IB more and more as a kinda lender of last resort given that they let your margin requirements be set by wide(wider than the fed) range to securities and the interest rate is not that high. anytime I need quick cash I just run down on IB