Did we just dodge a bazooka?


Today’s action by the Fed gave a much needed shot of confidence to investors, reeling after a steady drop in the market since the 3rdQ 07 high water mark.  Is it sustainable?  Will it work?

I don’t know about y’all, but I’m feeling like we just dodged a bullet.  IBD has the day’s recap, and a look forward…

Tuesday’s powerful market rally underscored the relief felt after the Fed unveiled its new $200 billion Term Securities Lending Facility. The name may sound ungainly, but it will let the central bank make short-term loans to those who need it most — lenders with lots of impaired mortgage-backed securities on their balance sheets, a result of the housing market’s yearlong collapse.

Those impaired securities have made it, at times, impossible for banks to get funds on the open market. Who would make a loan to a bank with an unknown amount of damaged collateral on its books?

That’s why this new lending program can work. It lets troubled mortgage lenders swap some of their shakier debts for AAA-rated U.S. government securities. This fills a lot of holes in bank balance sheets, and puts them back in the business of lending again.

More to come, as Ben Bernanke earns his spurs.

3 Responses

  1. Well, all I can say is…..WHeeeeeeeee!

  2. That was FUN!

  3. Henh!
    It were, weren’t it?

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