Discussion in 'Wall St. News' started by PAPA ROACH, Mar 27, 2008.
I believe that somehow before this is all over, the Fed, if and when it may run out of ammo to supply banks, etc, may also allow banks to lower their reserves requirements.
If, for example,the Fed has extended itself, and banks may still not be able to meet their reserves, due to having to write down the values of the assets they are carrying as collateral, as banks start to fail as a result, (an irony here may be that 'honest banks' may go first, in that they comply in writing down assets and falling below reserve requirements as a result, and go insolvent, while those that forestall doing the same by not 'playing fair', may actually avoid the guillotine, and benefit from a possible lowering of reserve requirements), that the Fed may institute a policy of 'lowered reserves', in an effort to slow down the rate of bank failures, etc.
Other than rate cuts, and this other move of providing the banks with virtually 'free temporary money', it may be the only other thing left a their 'disposal', if indeed it comes to that....amazing, as if the banks weren't levered enough already...maybe they'll just abolish reserve requirements altogether...free money for all!
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