Fed to Offer Emergency Loans to Banks for as “Long as Necessary”
December 22nd, 2007Via: Bloomberg:
The Federal Reserve will conduct biweekly emergency auctions of loans as “long as necessary” as part of a global attempt by central bankers to restore faith in the money markets.
The Fed and European Central Bank loaned $30 billion in 35- day funds today at an interest rate of 4.67 percent, 2 basis points more than the initial special auctions four days ago. The rates are less than the 4.75 percent banks are charged to borrow directly at the Fed’s discount window, suggesting the central bank is making progress in alleviating the credit crunch.
“The Fed finally gets it,” said Andrew Brenner, co-head of structured products in New York at MF Global Ltd. “This allows the Fed to postpone easing, which they prefer due to inflation.”
The U.S. central bank had scheduled four special auctions, with the final two slated for Jan. 14 and Jan. 18. The central banks, along with those in Canada, Switzerland and the U.K., announced plans on Dec. 12 to move in concert to alleviate the credit squeeze threatening global growth, in the biggest act of international economic cooperation since the Sept. 11 terrorist attacks.
Ever hear the song, “Don’t Cry for Me Argentina?”
I think of it re what the banks are doing here.
The gig is up re global growth.
Any banks borrowing on this?
Think not.