When you need more and more money from an ever-larger group of lenders, you can’t let a little thing like the LIBOR scandal stop you. And the Treasury Department (soon to be under new management?) isn’t, insisting that it will offer its first-ever floating-rate bonds within the next year.
But first, it’s got to figure out exactly what they will float on. And none of the options seem like good ones. The first new Treasury product since TIPS is likely to be a big deal, so we can’t have people like those guys on top of the giant Deutsche Bank logo in the North Sea messing around with it. Which leaves us with the two real bad options: Rely on the increasingly unreliable repo rates, or have the Treasury set them itself. Read more »