NEW YORK—In response to heightened pressures in money markets for funding through the year-end, the Federal Reserve Bank of New York’s Open Market Trading Desk plans to conduct a series of term repurchase agreements that will extend into the new year.
The first such operation will be arranged and settle on Wednesday, November 28, and mature on January 10, 2008, for an amount of about $8 billion. The timing and amounts of subsequent term operations spanning the year-end will be influenced by market and reserve developments.
In addition, the Desk plans to provide sufficient reserves to resist upward pressures on the federal funds rate above the FOMC’s target rate around year-end.
Kohn said the Fed "should not hold the economy hostage" to teach a lesson to financial market speculators and must remain nimble in the face of a rapidly shifting economic picture.
I bet someone a week ago the Fed may have to go 50 basis points to save Xmas. The NY Fed statement and Kohn's is basically saying they'll lend liquidity to the market but that won't stave off the writedowns.
Citi needed cash in a hurry and they paid 11% to get it. If your balance sheet is so damn strong why pay 200 basis points over corporate junk to get cash?
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