One word: 'pawnbroker'
From the gloomiest of the Doom and Gloom crowd...
"Gu****ng and hype aside, the real news is this: Today the Fed
announced that it would loan Treasury securities to primary dealers
for a period of 28 days, in exchange for AAA-rated mortgage
securities, at a discount. The first weekly auction will not take
place until March 27th."
"What does it mean? It means the Fed is expanding its role as a
pawnbroker. Banks can bring their crappy loans in to the Fed and
exchange them for risk-free Treasuries for a few weeks until they (the
banks) can hopefully get back on their feet. But like with all
pawnbrokers, there are a few caveats: The exchange won't be one-for-
one; banks will have to take a haircut (discount) on their crappy
loans. How much? That part hasn't been worked out yet. Oh, and the
loans can't be that crappy. They've got to be AAA-rated paper. The
banks will have to leave the super crappy toxic stuff at home. The Fed
doesn't want that and that window isn't open, yet. Every 28 days the
loan will have to be renewed, and seeing that the Fed is a bank, fees
will most certainly apply."
"So what's the big deal?"
- more -
http://www.safehaven.com/article-9673.htm
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