Friday, Mar 28, 2008
Fed now allowing investment banks to borrow from it directly (previously only possible for commercial banks)
BBC: $100bn Fed move over credit fears
The US Federal Reserve will make a further $100bn (£50bn) available to major banks in April, trying to ease concerns about a global credit crunch. The sum, offered across two auctions, is in addition to $260bn provided in short-term loans to the end of March.
Posted by jack c @ 06:21 PM (548 views) Add Comment
8 Comments
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1. layers said...
In my opinion there'll probably be a small rally and then further announcements will cause another big dip in the markets. Hopefully gold will fall which will become another buying opportunity. Bottom line, this action by the Fed will have no real effect on the US market because bailing out the investment banks wont holt the lack of confidence and it looks likely that there's a lot more debt yet to be written off across multiple lines of business. And the Dow is currently down 36pts.
I just wonder how much debt the Fed is willing to write a private IOU?? And who really benefits from all of this?
2. str 2007 said...
This is a post I put on earlier in response to a comment Uncle Tom made about Icelandic banks - sorry it's not very closely linked to this topic but I'm trying to catch up with him.
@ Uncle Tom
You say it would be foolhardy to put faith in deposit protection schemes.
I'm in the process of of opening a few deposit accounts to put my 'house' money in. I've identified the links between banks (ie not having deposits in excess of 35k with eg halifax and BOS as their protection is under the group not individually).
But can you elaborate on you statement as to why the FSA scheme would not payout in the event of a collapse of a bank covered by it ie Kaupthing or Icesave.
And if you do know much on the subject can you or anyone else recommend the safest banks with best rates.
Many Thanks
Friday, March 28, 2008 05:47PM
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3. tyrellcorporation said...
str 2007... I'll give you my thoughts on this.
NR was bailed out so quickly because it is a major employer in the Labour heartlands (just like Rover was). I will generalise massively by reckoning a large deposit in these Icelandic banks are from affluent Southern Englanders. The scenario is set then for the situation where Labour has to bailout a foreign bank with UK tax-payers money for people who wouldn't really be voting labour at the next GE. Even though the FSA scheme would mean some compensation, I just couldn't see NuLabour trying to bail out this demographic with quite the same vigour. To sum up, I wouldn't feel comfortable right now having £35k of hard earned savings in a foreign account held by an over-leveraged bank which is only tenuously linked to British Government finance schemes. Imagine the uproar by the papers if £100bn or so was spent again but saving an Icelandic bank? At the vary least it would be extremely messy and time consuming getting your cash back.
4. yoyo1 said...
This might seem absurd but NR has now become a place of refuge, underpinned by the BOE and government, no other bank can claim such protection if they were to fall! But right now safe is better than sorry.
5. str 2007 said...
Thanks for your advise tc and yoyo, just looked it up and it appears any amount of money is safe (not limited to 35k) and if they withdraw this unlimited guarantee they'll give 3 months notice and you get 6% which is only 0.5% less than the best you can get.
Just hope UK PLC doesn't go bust !
6. p. doff said...
str 2007
I've just opened a N'Rock account and put £30K in. Rates at 6.25% seem ok to me and Government's promised backing seems as good as NS&I (where I have just put another £15K into a 3 year bond with CPI + 1.35% tax free as an inflation hedge)
Halifax rates on cash ISA is not too good at the mo', so I'm moving that to Lloyds for 6.25%.
I'm still thinking about the Icelandic situation - rates are good but I haven't seen any articles to convince me it's100% safe - and I want to avoid undue risk at the moment.
7. Ijjhall said...
@tyrellcorporation
Come off it...Even if New Labour had let NR go bust they would clean up in the Northeast. They don't say put a monkey up with a Labour rosette and it would win for nothing. This is conspiracy theory stuff gone mad.Think we have to accept they intervened to preserve some kind of stability with a bank run going on. Neither Vince Cable nor Cameron has an answer when Brown asks them if they would have let NR go bust because neither would have..
8. titaniccaptain said...
Yeah funny isnt it how Northern Rock could be the safe haven for the brunt of the upcoming Credit storm.