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Us Fed May Extend Funding For Hard-hit Banks

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http://business.timesonline.co.uk/tol/busi...icle4294628.ece

Ben Bernanke, chairman of the Federal Reserve, said the US central bank may continue to offer cheap financing to Wall Street institutions into 2009 if the credit crunch "continues to prevail".

Speaking at a conference in Arlington, Virginia, Mr Bernanke said the Fed is "strongly committed" to maintaining financial stability as credit costs have been driven higher and the economy hit by the US housing crisis.

He said: "We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year end, should the current unusual and exigent circumstances continue to prevail in dealer funding markets".

The Fed set up the Primary Dealer Credit Facility, or PDCF – known as the discount window – in March following the near collapse of Bear Stearns under the weight of sub-prime investment losses.

Perhaps if the Fed had monitored developments more closely in the first place we wouldn't be in this mess. Just a little thought I'm sure Bernanke is a great central banker and knows what he's doing.

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http://www.guardian.co.uk/business/2008/ju...y.marketturmoil

US Federal Reserve chairman Ben Bernanke underlined the extent of his concerns about the credit crunch today when he suggested that struggling Wall Street banks may be able to continue borrowing emergency cash into next year. His comments boosted US stock markets which had been falling before his speech.

Bernanke is considering whether to extend the Primary Dealer Credit Facility, which was set up in March and comes to an end in September. The Facility offers all the large US investment banks access to funding at the discounted interest rate of 2.5%.

Bernanke, who was giving a speech in Virginia, said: "We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end, should the current and exigent circumstances continue to prevail in dealer funding markets."

Bernanke's words show that the Fed is determined to stop the sub-prime crisis from engulfing any more investment banks as it approaches its first anniversary.

Bernanke also said that Congress "may wish to consider" whether new tools were needed to liquidate a "systemically important" investment bank on the verge of bankruptcy, as was the case with Bear Stearns, which the Fed helped bail out with $29bn (£14.5bn).

He added that the Treasury department should take a lead in this process. He suggested that federal regulators set up a "bridge bank" to liquidate a firm along the same lines used for commercial banks.

"A bridge bank authority is an important mechanism for minimising public losses from government intervention while imposing losses on shareholders and unsecured creditors, thereby limiting moral hazard and mitigating any adverse impact of government intervention on market discipline," Bernanke said.

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total borrowings of banks from the fed appears to be declining. armageddon averted?

The $50 billion peak does not seem to represent the reported $400 billion (no link so correct me if wrong) dolled out by the fed in "exchange" for the banks high quality assets they can't sell to anyone else.

It may just represent the initial demand for funding until they came up with new scheme (Scam) where they would except the toxic waste in exchange for treasuries.

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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