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Re: Nuclear Containment by The Fed
Posted by: CYBERBA
Date: 04/27/2008 08:34PM
RECAP OF PUBLISHED REPORTS:
http://en.wikipedia.org/wiki/Bear_Stearns
Bear Stearns
From Wikipedia, the free encyclopedia
On March 16, 2008, under the supervision of the Federal Reserve, the company signed a merger agreement with JP Morgan Chase under which JPMorgan Chase would assume the counterparty risk and exercise management control over Bear Stearns pending shareholder approval. The Federal Reserve issued a non-recourse loan of $30 billion which would cover any losses in Bear Stearns' investments in mortgage-backed securities and exotic investment paper,[2] with collateral to be managed by BlackRock.[3]One week later, JP Morgan Chase increased the value of its purchase stock swap from $2.00/share to $10.00/share and reduced the loan from the Fed by $1 billion.
http://www.kansascity.com/438/story/580248.html
Investment firms pull back on borrowing
By JEANNINE AVERSA
AP Economics Writer
Thu, Apr. 17, 2008 04:54 PM
The program, which began March 17, is one of several extraordinary actions the Fed has taken recently to limit damage from a trio of crises - housing, credit and financial.
After the sudden crash of Bear Stearns, the nation's fifth-largest investment bank, fears grew that others might be in jeopardy, given major stresses in credit and financial markets.
The Fed's No. 2 official, Donald Kohn, said in a speech Thursday that Wall Street investment firms should be subject to greater regulatory oversight because any severe problems they might encounter can endanger the entire financial system.
Investment houses have key roles in the financial system. If one fails or is having difficulty, it could put the whole financial system in jeopardy. That's because they have complex relationships with many players in the system, including hedge funds, commercial banks and others.
In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities, as collateral.
The program is intended to help financial institutions and the troubled mortgage market. The Fed said it would make as much as $200 billion worth of Treasuries available through weekly auctions.
The goal is to make investment houses more inclined to lend to each other. It also is aimed at providing relief to the distressed market for mortgage-linked securities.
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-001...
Fed's Kohn hints at need for permanent liquidity backstop for primary dealers
April 17, 2008: 10:11 AM EST
In remarks delivered in North Carolina today, Kohn said the Fed in March decided that it made sense to allow primary dealers to borrow from the discount window in order to ensure they had the funds they need to continue operating. Extending discount window borrowing to non-depository banks was aimed at avoiding 'substantial damage to the financial markets and the economy,' he said.
http://en.wikipedia.org/wiki/Bear_Stearns
Bear Stearns
From Wikipedia, the free encyclopedia
On March 16, 2008, under the supervision of the Federal Reserve, the company signed a merger agreement with JP Morgan Chase under which JPMorgan Chase would assume the counterparty risk and exercise management control over Bear Stearns pending shareholder approval. The Federal Reserve issued a non-recourse loan of $30 billion which would cover any losses in Bear Stearns' investments in mortgage-backed securities and exotic investment paper,[2] with collateral to be managed by BlackRock.[3]One week later, JP Morgan Chase increased the value of its purchase stock swap from $2.00/share to $10.00/share and reduced the loan from the Fed by $1 billion.
http://www.kansascity.com/438/story/580248.html
Investment firms pull back on borrowing
By JEANNINE AVERSA
AP Economics Writer
Thu, Apr. 17, 2008 04:54 PM
The program, which began March 17, is one of several extraordinary actions the Fed has taken recently to limit damage from a trio of crises - housing, credit and financial.
After the sudden crash of Bear Stearns, the nation's fifth-largest investment bank, fears grew that others might be in jeopardy, given major stresses in credit and financial markets.
The Fed's No. 2 official, Donald Kohn, said in a speech Thursday that Wall Street investment firms should be subject to greater regulatory oversight because any severe problems they might encounter can endanger the entire financial system.
Investment houses have key roles in the financial system. If one fails or is having difficulty, it could put the whole financial system in jeopardy. That's because they have complex relationships with many players in the system, including hedge funds, commercial banks and others.
In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities, as collateral.
The program is intended to help financial institutions and the troubled mortgage market. The Fed said it would make as much as $200 billion worth of Treasuries available through weekly auctions.
The goal is to make investment houses more inclined to lend to each other. It also is aimed at providing relief to the distressed market for mortgage-linked securities.
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-001...
Fed's Kohn hints at need for permanent liquidity backstop for primary dealers
April 17, 2008: 10:11 AM EST
In remarks delivered in North Carolina today, Kohn said the Fed in March decided that it made sense to allow primary dealers to borrow from the discount window in order to ensure they had the funds they need to continue operating. Extending discount window borrowing to non-depository banks was aimed at avoiding 'substantial damage to the financial markets and the economy,' he said.
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