In another attempt to ease the liquidity problems, the fed says it will lend upto $200 billion directly to primary dealers.
The $200 billion of Treasury securities to primary dealers will be secured for a term of 28 days rather than overnight as in the existing program by a pledge of other securities, including federal agency debt, federal agency residential -mortgage backed securities and nonagency AAA/Aaa-rated private-label residential mortgage backed securities, the Fed said.
Just bring any garbage as collateral. We'll take the risk off your balance sheet. Hey Countrywide, you got $20 billion (Marked-to-model) junk loans? No problem, we'll take it.
Other banks around the world are also adding liquidity.
As in December, three European central banks cooperated with the Fed in a coordinated global effort to calm markets. The European Central Bank offered up to $15 billion in U.S. dollars through a renewed currency swap agreement with the Fed, following similar moves in December and January. The Bank of England renewed expanded loan terms it announced in December, widening the range of collateral that U.K. financial institutions can submit for £10 billion ($20 billion) in three-month funds. The Swiss National Bank boosted the amount of dollar funds it announced with its December swap from to $6 billion from $4 billion.
Ahead of the announcement, the Reserve Bank of Australia injected a net 721 million Australian dollars (US$661.6 million) into the financial system, its largest net injection since mid-December.
Fiat-money at it's finest.
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