Fed Pumps Further $630 Billion Into Financial System

Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

Comments

[fuel4thefire]

I posted this info earlier today on these blogs: While the Congress is foot-dragging, the FED is taking action......

http://www.bloomberg.com/apps/news?pid=20601087&sid=aP5hzUWla7Jg&refer=home

Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, comes as Congress prepares to vote on a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

``Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, ``the Fed's balance sheet is about to explode.''

[fuel4thefire]

Just a side note: Mitsubishi UFJ Ltd.owns UBOC, my bank here in SoCal..... they had NO exposure to the sub-prime as they did no sub-prime lending...... i would recommend asking your own bank what exposure they have to the sub-prime lending fallout;

[KillTheMessenger]

And what good would that do? First of all they won't tell you. Second of all, your savings account is safe, anyway. Lastly, if you are invested in "instruments" or "derivatives" and you don't know what's in them, your dad has a sucker for a sun or daughter.

[susie1776]

Can someone explain to me where all this money is coming from???

[fuel4thefire]

Currency swaps with foreign countries... read the Bloomberg article i posted....

[JohnFromCensornati]

Thin air.

[KillTheMessenger]

Just what I thought. In the end it does not matter if our legislators authorize a bailout or not, we will have to pump the money in, anyway, and we will have to take the hit against the dollar. And that is probably the only way America will learn that one can not live on credit forever.

[fuel4thefire]

What's interesting, is DID Bernanke get a whiff at the Republican blowback vote before the vote today? We gotta get liquid and soon..... banks need capital to make loans.... all kinds of loans.... and the sooner we provide a "floor" to the housing values, THAT"S when we will stop the bleeding;

[KillTheMessenger]

I would think that there are communication channels which have told the fed to come up with "alternatives" way before the vote happened. These people are not fools (even though some of their actions seem rather foolish...).

BOA's CEO last week predicted the floor of the housing market not earlier than next summer, I believe, so we can probably assume that in reality it's about two years away. Unless we hit a serious economic downturn with mass unemployment, of course, in which case it is five years to a decade away.

I don't think this is so much a bleeding thing. It's more one of over0indulgance. And now everything that we ate has to be paid for while coming back the wrong way...