Sunday, March 16, 2008

Does that include a price of zero?

In what is shaping up as the weirdest Sunday night of financial news in a long time, the New York Fed has announced that it --

has been granted the authority to establish a Primary Dealer Credit Facility (PDCF). This facility is intended to improve the ability of primary dealers to provide financing to participants in securitization markets and promote the orderly functioning of financial markets more generally.

The PDCF will provide overnight funding to primary dealers in exchange for a specified range of collateral, including all collateral eligible for tri-party repurchase agreements arranged by the Federal Reserve Bank of New York, as well as all investment-grade corporate securities, municipal securities, mortgage-backed securities and asset-backed securities for which a price is available.

In other worlds, they'll take just about any old shite as collateral (and lend at an even lower rate against it), as long as someone can put a number on its value. But don't worry -- George Bush has his eye on the horizon.

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