|
Post by jeffolie on Sept 9, 2007 15:05:00 GMT -6
LEADING bankers are warning of the worst crisis in the money markets for 20 years, which will come to a head this week when $113 billion (£57 billion) of commercial paper – market IOUs – comes up for refinancing. This huge refinancing, mainly through London, exceeds the $100 billion that became due in mid-August, and which sparked the most serious phase in the money-market crisis, which has seen banks scrambling for funds and market interest rates rising sharply. “This is a serious pressure point,” said one leading banker. Another senior executive of one of Britain’s top five retail banks said: “These are the worst conditions I have seen in money markets for 20 years”. business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2412740.ece
|
|
|
Post by unlawflcombatnt on Sept 10, 2007 1:09:49 GMT -6
The article also makes the point that some of off-balance-sheet debt is backed by subprime mortgages--though how much is not known.
Banks may be forced to put off-balance-sheet subprime mortgages back on their balance sheet, resulting in unexpected losses.
Subprime mortgages are like the "gift that keeps on giving." Except their "gift" is more debt, and more profit losses for banks.
|
|
|
Post by jeffolie on Sept 12, 2007 17:43:01 GMT -6
The Bank of England refused to trade the rotten asset backed commercial paper(ABCP) for good long term loans to the overextended banks.
Now the banks are going to have to make good their promises to fund the ABCP via their lines of credit out of their reserves. That is going to hurt the banks badly.
|
|