Federal Reserve Raises Next Two Emergency Sales to $30 Billion in Bid to Add Liquidity

[Purveyor]

Source: Bloomberg News

Jan. 4 (Bloomberg) -- The Federal Reserve said it will increase the size of two scheduled auctions of emergency loans by 50 percent to $30 billion beginning with the next offering, scheduled for Jan. 14.

The Fed will continue the loan auctions, designed to increase the amount of cash available in the banking system, ``for as long as necessary,'' it said in a statement released today.

The second auction will be held on Jan. 28. Results will be announced the day following each auction and the sales will settle three days after. The Fed will announce its plans for February by Feb. 1, the statement said.

The Board of Governors of the Federal Reserve System established the temporary Term Auction Facility, dubbed TAF, in December to provide cash after interest rate cuts failed to break banks' reluctance to lend amid concern about losses related to subprime mortgage securities. The program will make funding from the Fed available beyond the 20 authorized primary dealers that trade directly with central bank.



Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=alMtMqbMgitY&refer=us

[ixion]

1. fire sale at the fed...who the hell would want to buy that loan?

Sounds like a bad investment to me.

[rodeodance]

2. gawd--and they also pumped Billions into banks prior to christmas!!

[old guy]

3. Bigger shovel, deeper hole.

[lutefisk]

4. The Bush Gang just wants to prop things up until their getaway

It'll be a race to the finish, but I think they'll just barely keep the economy afloat until they leave. Then, all hell will break loose. Mission accomplished.

In 2009, Chimpy, the elder statesman, will be pontificating on how the Democrats went wrong and destroyed the US economy so quickly.

[Purveyor]

5. I'm not sure they can't keep this up for that long. This recession is snowballing and it seems like

the perfect 'economic storm'.

I don't have a good feeling about this at all.

It may very well help us come the Nov election but there could be a lot of pain suffered by many.

[TrogL]

8. Don't you get it

They want to keep everything propped up until the election, let the whole house of cards collapse, then blame Democrats for everything. If we attempt to blame Reaganomics/trickle-down/whatever-they're-calling-it-this-week they'll pull a No True Scotsman and say that Democrats interfered with the perfection of its implementation.

[City Lights]

9. We have a winner!

:thumbsup:

[DLnyc]

10. Yes they want to, you are right I think. But can they?

My impression is that the whole process is starting to move beyond their control:

o Dollar is no longer king: Saudi's, Chinese, others have made it clear they won't drop rates to keep up with US cuts
o Russia called the US military bluff in Iran--they said "Hit Iran you hit us".
o US big bucks has abandoned the RNC--they're betting on the Dems.
o The way to keep it "propped up" would be to take back the high-bracket tax cuts (Estate tax on large estates, raise the top rate) and invest in public works projects--but that would be "socialist", My guess is any other tinkering, such as lowering rates, injecting cash, more tax cuts to rich people will only increase inflation, damage the dollar and/or make treasury bonds less attractive.

So we're "socialist" or fucked. In BushCo neocon world, that equals fucked.

Just my opinion, though.

[whistle]

6. Helicopter Ben

[gasperc]

7. emergency, what emergency

corporate America can do no wrong, there is too much God Damn oversight

[bahrbearian]

11. Printing more Money ,will fix everything.

[TexasLawyer]

12. Bad collateral-- and worries that borrowers in the loan auction will default

The Fed is Knowingly Taking Suspect Collateral in TAF Program

posted on: December 17, 2007

http://seekingalpha.com/article/57584-the-fed-is-knowingly-taking-suspect-collateral-in-taf-program