Post by jeffolie on Aug 22, 2007 16:26:12 GMT -6
Banks' bold face lie
The Herald Tribune is reporting JPMorgan Chase, Bank of America and Wachovia join Citi in borrowing $500M each from Fed.
Four major banks said Wednesday they each borrowed $500 million (€370.5 million) from the Federal Reserve's discount window, lending weight to its efforts to restore liquidity to tight markets.
Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Wachovia Corp. (WB) each stressed they themselves have "substantial liquidity" and the ability to borrow money elsewhere.
In a joint statement, the latter three said they decided to borrow directly from the central bank to demonstrate "the potential value of the Fed's primary credit facility" and encourage its use by other banks. It was not clear if other banks had also decided to borrow from the Fed.
Citigroup was the first to announce its decision to borrow the money, "on behalf of its clients" at Citibank.
"Citi is pleased to inject liquidity into the financial system during times of market stress and to support creditworthy clients," the company said. "Citibank stands ready to continue to access the discount window as client needs and market conditions warrant."
It was followed minutes later by the three other banks.
"The companies believe it is important at this time to take a leadership role in demonstrating the potential value of the Fed's primary credit facility and to encourage its use by other financial institutions," their statement said. The three added that they hoped their actions would "promote broad acceptance of the use of the facility."
This is either blatant stupidity or a bold face lie. I believe the latter. How can one "restore liquidity" by borrowing money that one supposedly does not need? The statement makes no sense.
Why are you borrowing money for clients at 5.75% when the Fed Fund's rate hit 4.5% today and in theory you could have got it close to that?
Exactly how is paying 1.25% too much for money benefiting either you or your clients
globaleconomicanalysis.blogspot.com/2007/08/brave-face-masks-bold-lie.html
The Herald Tribune is reporting JPMorgan Chase, Bank of America and Wachovia join Citi in borrowing $500M each from Fed.
Four major banks said Wednesday they each borrowed $500 million (€370.5 million) from the Federal Reserve's discount window, lending weight to its efforts to restore liquidity to tight markets.
Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC) and Wachovia Corp. (WB) each stressed they themselves have "substantial liquidity" and the ability to borrow money elsewhere.
In a joint statement, the latter three said they decided to borrow directly from the central bank to demonstrate "the potential value of the Fed's primary credit facility" and encourage its use by other banks. It was not clear if other banks had also decided to borrow from the Fed.
Citigroup was the first to announce its decision to borrow the money, "on behalf of its clients" at Citibank.
"Citi is pleased to inject liquidity into the financial system during times of market stress and to support creditworthy clients," the company said. "Citibank stands ready to continue to access the discount window as client needs and market conditions warrant."
It was followed minutes later by the three other banks.
"The companies believe it is important at this time to take a leadership role in demonstrating the potential value of the Fed's primary credit facility and to encourage its use by other financial institutions," their statement said. The three added that they hoped their actions would "promote broad acceptance of the use of the facility."
This is either blatant stupidity or a bold face lie. I believe the latter. How can one "restore liquidity" by borrowing money that one supposedly does not need? The statement makes no sense.
Why are you borrowing money for clients at 5.75% when the Fed Fund's rate hit 4.5% today and in theory you could have got it close to that?
Exactly how is paying 1.25% too much for money benefiting either you or your clients
globaleconomicanalysis.blogspot.com/2007/08/brave-face-masks-bold-lie.html