An emergency credit pool set up to ease a possible credit shortage in the wake of the collapse of Lehman Brothers was announced by a consortium of ten banks. The pool will be a $70 billion loan program, with each of the the ten banks involved contributing $7 billion. Here's the Associated Press, which has been leading on this story.
The ten banks, which include JPMorgan Chase & Co. and Goldman Sachs Group Inc., said they were committing $7 billion each for the pool. The pool would act as a signal to the marketplace that banks, brokerages, and other financial companies can lean on the fund to take care of borrowing needs.The banks said the program will be available to participating banks which can get a cash infusion up to a maximum of one-third of the total size of the pool. The size of the loan program might increase as "other banks are permitted to join."
All participating banks intend to use this facility beginning this week, the statement said.
The banks also include Bank of America Corp., Barclays PLC, Citigroup Inc., Credit Suisse Group, Deutsche Bank AG, Merrill Lynch & Co., Morgan Stanley and UBS.
Posted by guest , Sep 14, 2008 10:48PM
So much for that bozo from NYU who said "GS will have to seek a merger."
Moron of the year, that guy.
Posted by guest , Sep 14, 2008 10:48PM
just 70 bucks? man things are worse than we thought
Posted by guest , Sep 14, 2008 10:51PM
actual press release:
http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20080914005082&newsLang=en
Posted by guest , Sep 14, 2008 10:52PM
it's to provide credit for who?
Posted by guest , Sep 14, 2008 10:55PM
@4 - each other as a back stop to provide money in the event there is a run on one of them...they can then draw from the 70B pool...
Posted by guest , Sep 14, 2008 10:56PM
So the banks are kicking in capital, then borrowing it right back?
Or will there be some kind of criteria for who is allowed to borrow?
It seems like only participating banks will be allowed to borrow:
"The facility will be available to these participating institutions for liquidity up to a maximum of one third of the facility for any one bank."
Posted by guest , Sep 14, 2008 10:56PM
Press release drafted before announcement of BAC/MER ?
Posted by guest , Sep 14, 2008 10:56PM
This is just window dressing for media/general public to prevent panic. No substance.
Posted by guest , Sep 14, 2008 10:57PM
"All participating banks intend to use this facility beginning this week, the statement said."
Seems to just be shuffling of capital and window dressing to me too...
Posted by daytraitor , Sep 14, 2008 11:03PM
Perhaps I don't understand, but this sounds like some kind of pyramid scheme.
?
Posted by guest , Sep 14, 2008 11:03PM
i disagree. we've been watching a game of 10 little indians. it will take the street working together to fix this. that has not happened yet. is this the start? who knows...but it is better than the alternative. if it is the start of a street wide "bad bank" then it isn't such a bad outcome.
Posted by guest , Sep 14, 2008 11:03PM
Is Mandy's dress doing wierd things to everyone's TV, or just mine?
Posted by guest , Sep 14, 2008 11:05PM
AIG closed around $12 tomorrow.
Does it more likely open at $17, or $7?
Posted by guest , Sep 14, 2008 11:06PM
I repeat,
Providing liquidity to insolvent institutions is insane.
(doesn't matter if it's FED, Treas, or some co-op.)
Posted by guest , Sep 14, 2008 11:07PM
What a day, what a day....
Posted by guest , Sep 14, 2008 11:09PM
reading DB comments is proof that "mushroom management" is alive and well.
Posted by guest , Sep 14, 2008 11:09PM
@ 12 - is that velvet?
@ 15 - thanks, jim nantz
Posted by guest , Sep 14, 2008 11:11PM
It's doing it to my TV too. I feel like if I stare at it long enough, I'll see a unicorn or something.
Posted by guest , Sep 14, 2008 11:11PM
$70 B?
God damn.
Posted by guest , Sep 14, 2008 11:16PM
OK
Since no one seems to understand, its time for 5th grade math.
I have $4, I borrow $96.
I take the $100 and invest it.
My investment falls to $85.
I lose all my money and can't pay my debts, and file 7.
Or, fed loans my acquirer $11 no recourse.
Jimmy looks smart.
Posted by guest , Sep 14, 2008 11:19PM
what a shame, as they all borrow from themselves to shore up their own books nothing will really be there for when they need it. WINDOW DRESSING!!!
borrowing $7 from your left pocket does not make your right pocket $7 richer.
circle jerks leave no one better off, well maybe lacrosse players...
Posted by guest , Sep 14, 2008 11:19PM
Ratings agencies threaten to downgrade AIG's credit rating by Monday morning; AIG downgrade would allow counterparties to withdraw capital from contracts with the company; AIG may survive for only 48 to 72 hours if counterparties withdraw capital: NYT
Posted by guest , Sep 14, 2008 11:22PM
These ten banks are like ten passengers on the Titanic making a last minute deal with each other to use the last remaining lifeboat to stay alive.
Posted by guest , Sep 14, 2008 11:24PM
1. they buy leh.
2. barclays buys leh.
pick your poison.
Posted by guest , Sep 14, 2008 11:28PM
Like I said on Friday
Big Pay is over for Wall St.
It will be like Big 6, or Law Firms, processor pay with only the very, very senior making $$$
The days of the $250-400K Assoc & $500-750K VP will be looked back with same folly as .com
Posted by guest , Sep 14, 2008 11:30PM
now i hear barclays is back. wtf?
Posted by guest , Sep 14, 2008 11:33PM
why isn't warren buffett out trying to buy/help aig. i thought he rarely sleeps. he can't be sleeping now. does that mean he's in hiding?
Posted by guest , Sep 14, 2008 11:35PM
@26 source?
Posted by guest , Sep 14, 2008 11:35PM
@25
Guess that means NYC real estate is done.
How long until Union Square is a drug den? o/u here 2 years.
Posted by guest , Sep 14, 2008 11:37PM
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&ssPageName=STRK:MESELX:IT&item=320299692197
WWW.FALLOFLEHMAN.COM FOR SALE ON EBAY
LOL
Posted by guest , Sep 14, 2008 11:39PM
These domain names are becoming lame.
Posted by guest , Sep 14, 2008 11:42PM
just wanted to use this opportunity to thank the two pillars of capitalism, hank&ben (or is it ben&hank) for having my e/$ filled at 1.4450. 20% in one week. not too shabby. rentech here i come baby!
Posted by guest , Sep 14, 2008 11:46PM
@25 - not good for it, but not the end. NYC is 75% co ops, which require big down payments and also want to see real assets (i.e. something other than stock in your financial services industry employer) behind the mortgage.
somewhat unrelated question: did anyone who bought a freaking house in this country in the last 7 years have the wherewithal to pay for it? good lord. how many dud mortgages can there be???
Posted by guest , Sep 14, 2008 11:54PM
@ 32. people who talk like that always vaporize. probabaly within their next 3 trades.
Posted by guest , Sep 14, 2008 11:54PM
25 - Law firm pay is gonna get slammed with Ibanks and hedgies out of the talent picture. I don't know who has the stones to actually cut bloated lawyer pay, but eliminating bonuses, summer program garbage (Here's $36K and all the expensive food and alcohol you can handle, please come to work for us) and lockstep sure seem viable enough.
Posted by guest , Sep 14, 2008 11:54PM
lets see
WS troubles are leverage
so
create an association
deposit $7
withdraw up to $23
duh?
just like you can't borrow your way out of debt; Wall Street can't leverage its way out of leverage
Posted by guest , Sep 14, 2008 11:54PM
@ 33 re mortgages: not as many as everyone thinks.
Posted by Joseph di Jersey City , Sep 14, 2008 11:58PM
#1: An interview with Roubini has essentially been on tape loop on Bloomberg radio tonight. Whether his prognostications are based on insight or luck is unknowable but he will (continue to) be seen as genius of the year. See the NY Times Magazine article from last weekend below.
I'm skeptical that his take on current accounts balances is such a predictor of calamity. His critics call him a perma-bear and his background as the child of Iranian Jews may have disposed him to such a stance. Still, there is no denying that he has called things accurately since 2006.
http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html
Posted by guest , Sep 15, 2008 12:16AM
@35 I think what 25 was trying to point out is that law firm pay, for equivalent amount of schooling/talent as bankers, is considerably lower. 5 years out of law school is all-in something like $270k, whereas 5 years total (pre- and post-BS) for us is double, triple that.
Posted by guest , Sep 15, 2008 12:18AM
temasek to make a quick $5/share on the MER flip? what makes them as blessed as pimco?
does anyone know if a swf having a material interest in a us bank is some sort of reg issue? the saudi prince wears citi, surely swf ownsership is not a big deal?
Posted by guest , Sep 15, 2008 12:47AM
how the f is merrill participating?
Posted by guest , Sep 15, 2008 12:50AM
My ex wife left me for a Lehman banker, met him in the Hamptons, Serves you right Dianne, this is just what you deserved. Do you think he's hot shit now? I think not!!!!
Posted by guest , Sep 15, 2008 1:34AM
@ 42 he's still got that house and she still bangs there
Posted by diablo , Sep 15, 2008 7:20AM
The excerpt above is too short. Here's the full write up. Notice the next to last paragraph:
NEW YORK – (BUSINESS WIRE) – A group of global commercial and investment banks, including Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley, and UBS, today initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets. Specifically, the banks are working together to do the following:
* First, to assist in maximizing market liquidity through their mutual commitment to their ongoing trading relationships, dealer credit terms and capital committed to markets.
* Second, to establish a collateralized borrowing facility, which ten banks (Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan, Merrill Lynch, Morgan Stanley, and UBS) have committed to fund for $7 billion each ($70 billion in total). The facility will be available to these participating institutions for liquidity up to a maximum of one third of the facility for any one bank. It is anticipated that the size of the facility may increase as other banks are permitted to join the facility.
* Third, to help facilitate an orderly resolution of OTC derivatives exposures between Lehman Brothers and its counterparties. This effort included opening the OTC derivatives market for trading this Sunday afternoon.
These cooperative efforts will be enhanced by the Federal Reserve Board's decision to accept expanded classes of collateral under the Primary Dealers Credit Facility, including equities. All participating banks intend to utilize this facility beginning this week.
These actions reflect the extraordinary market environment. The banks are committed to continuing to work closely with one another as well as the U.S. Treasury Department, the Federal Reserve, the Securities and Exchange Commission, governments and regulators around the world, and other market participants, to ensure the industry is doing everything it can to provide additional liquidity and assurance to our capital markets and banking system.
Posted by guest , Sep 15, 2008 7:21AM
Is Bernanke still employed after all this?
Posted by guest , Sep 15, 2008 9:16AM
45,
ben bernanke was dealt a 3 of clubs, a 2 of diamonds, a 5 of spades, a 6 of hearts, and a 7 of hearts, in a game of 5 card stud.