"any bank in a liquidity jam will be able to go directly to the Feds discount window"

Discussion in 'Trading' started by S2007S, Mar 21, 2008.

  1. S2007S

    S2007S

    From now on, any bank in a liquidity jam will be able to go directly to the Fed's discount window and trade in its hard-to-sell assets, such as mortgage bonds, as collateral for highly liquid government bonds or cash, which it can in turn use to fund its short-term liabilities and keep trading.
    "The big news this week was not the Fed's 75 basis points on Tuesday," Doll said. "It was what they did with opening the discount window .... that's a huge change."
    This week, the Fed cut the discount rate twice -- in an emergency move on Sunday night, when it unveiled JPMorgan's deal to buy Bear Stearns at the almost unthinkable price of $2 a share and again on Tuesday at its regular meeting.
    On Wednesday, the federal government came up with another tonic for troubled times. The regulator of Fannie Mae and Freddie Mac, the two biggest U.S. home financing arrangement, relaxed their capital rules and gave them permission to pump $200 billion more into the struggling U.S. mortgage market.
     
  2. Bowgett

    Bowgett

    This is what "lender of last resort" supposed to do. Isn't it?
     
  3. That's right, that's the function of the Fed.

    You don't want the Fed?
    Go to a third world country that has an impoverished, corrupt central bank and see how is their economy going.
     
  4. the banks are taking out second, third, fourth mortgages on the fed at just over 2% and leaving feces as collateral. crazy not to
     
  5. i dont think it's any bank?

    so can etrade dump it's billions of mortgage paper to the fed :D
     
  6. aiki14

    aiki14

    I wouldn't be surprised if the actions of the FOMC to accept alternative collateral and open the discount window to primaries, goes down as the move that solved the liquidity crisis and subsequently turned the economy around.
    Of course the economy has to actually turn around, but I am liking the chances a whole lot better than 2 weeks ago.
     
  7. imbiber

    imbiber Guest

    I sure wish I could hit up that discount window.
     
  8. so i guess banks who loaned to anyone that could write there name should be bailed out by the taxpayers? bullshit. if a banks insolvent wether its citi are bac they should take it over and control all assets and wipe the shareholder and bond equity out. only protect the innocent depositors. BOTTOM LINE ALL BANKS SHOULD BE NATIONALIZED AS IF THEY HAVE A GUARANTEE FROM THE GOV'T TO NOT BE ALLOWED TO GO UNDER WHY SHOULD THEY BE A FREE ENTERPRISE BUSINESS?capitalism requires failures and successes
     
  9. what time exactly did this news hit the wires?
     
  10. Yes, but who ultimately ends up holding the bag and paying the bill?.... The US citizen through inflation and currency destruction.

    As always... take the easy way out and FU*K everybody along the way. :mad:
     
    #10     Mar 21, 2008