$70b facility - what's the reason?

[dhpar]

i was puzzled by this but thinking about it a bit more it looks like a defense mechanism against shorting banks. for instance if a bank is in trouble and shorters start to work it down other banks can buy shares of that bank, deposit it at fed for a temporary loan which offset the lending into the $70b facility (which the troubled bank can use on top of that).
if it works this way it is a big positive for shares of remaining financials.

opinions welcomed.....

 

[The Kin]

This will fail. It reminds me of Paulson's Super SIV proposal from earlier this year.

 

[drsteph]

Brief notice on CNBC last night as well that the FED would accept equity now in exchange for treasuries. Assume it was correct but haven't researched it since.

Implication is that larger banks can issue equity for capitalization in exchange for treasuries? Am I understanding this right or did I miss something?

Well, bernanke's helicopter speech did imply 'other means' to forestall deflation. Guess we're seeing them now!

Interesting times. As an aside, my old man always was waiting for this. I just regret that he wasn't here to see or trade this - it would have been his finest moment.

 

[jaytrader100]

thats too bad yor dad is not here.. we are witnessing such a historical moment.. the long side of trading will be easier and easier in the future... the gov will step in and make our markets less free and at first it will suck and take prices..lower.. then the market will be in an even stronger upward bias.. so if you know how to trade then in a year from now.. I think it will be easier to make money trading. If you are trading and survive this then you can survive almost anything.

p.s. Your dad's finest moment is not quite here yet.. be patient and wait for the bottom.. try catching a falling scalpel and you will get cut!!!!!!

 

[m22au]

equities up = good
equities down = bad

Quote from dhpar:

i was puzzled by this but thinking about it a bit more it looks like a defense mechanism against shorting banks. for instance if a bank is in trouble and shorters start to work it down other banks can buy shares of that bank, deposit it at fed for a temporary loan which offset the lending into the $70b facility (which the troubled bank can use on top of that).
if it works this way it is a big positive for shares of remaining financials.

opinions welcomed.....

 

[dhpar]

Quote from m22au:

equities up = good
equities down = bad

thanks for your insight....

 

[alientrader]

70 billion?? it will be gone in 2 seconds