Bank-Implode! » DISCOUNT WINDOWS

European Central Bank – Discount Window

GRonson — Mon, 21 Jan 2008 14:52:46 +0000

The Marginal Credit Facility is the ECB’s version of the discount window.

Federal Reserve Discount Window

GRonson — Mon, 21 Jan 2008 14:51:59 +0000

The Federal Reserve Discount Window is an instrument of monetary policy that allows
eligible institutions to borrow money, usually on a short-term basis, to meet temporary shortages of liquidity caused by internal or external disruptions.

The Federal Reserve will not publish information regarding institutions’ eligibility for primary or secondary credit.

Indeed, at the Fed’s Primary discount windows the list of eligible counterparties is, in principle, not restricted to banks. If the Board of Governors of the Federal Reserve System determines that there are “unusual and exigent circumstances” and at least five out of seven governors vote to authorize lending under Section 13(3) of the Federal Reserve Act, the Federal Reserve can discount for individuals, partnerships and corporations “notes, drafts and bills of exchange … indorsed or otherwise secured to the satisfaction of the Federal Reserve bank…”. This means that, should it decide to do so, the Fed can accepts cats and dogs as collateral at its discount window, and from any US-based
individual, partnership or corporate entity. I would hurry to register my UK-based or Eurozone-based SIV or conduit in the US, to take advantage of this unique (discount) window of opportunity for liquifying the illiquid.

Bank of England – Liquidity Support Facility

GRonson — Sat, 19 Jan 2008 23:33:16 +0000

The BofE’s version of the discount window is the Liquidity Support Facility. So far, Northern Rock is the only bank to have used this facility, 8 Billion @ 6.75% Penalty Rate.

National Credit Union Administration – Central Liquidity Facility

GRonson — Sat, 19 Jan 2008 23:33:10 +0000

The NCUA Central Liquidity Facility is a mixed ownership government corporation
created to improve the general financial stability of credit unions by serving as a liquidity lender to credit unions experiencing unusual or unexpected liquidity shortfalls. Member credit unions own the CLF which exists within the NCUA. The President of the CLF manages the facility under the oversight of the NCUA Board.

Membership is voluntary and open to all credit unions that purchase a prescribed amount of CLF stock. There are two types of membership, regular (natural person credit unions) and agent (corporate credit unions).

Natural person credit unions may borrow from the CLF either directly as a regular member or indirectly through an agent member.

MONTHLY REPORTS