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Fed cuts interest rate to banks...

Engineer

Elite Member
Oct 9, 1999
39,255
699
126
Click me!

I mean is it really that bad to cut on a Sunday? Have the subprime and generally bad credit given out over the last 6 years really killed the credit market as much as the FED seems to be indicating?

I'm just puzzled by this whole mess.
 

bamacre

Lifer
Jul 1, 2004
21,034
1
61
This just in: Obama drops out of race, responding only with, "damn, fuck this shit, I'm out."
 

bbdub333

Senior member
Aug 21, 2007
686
0
0
No need to worry. I'm still offering short-term financing for high risk borrowers. Certain conditions apply.
 

ponyo

Lifer
Feb 14, 2002
18,779
2,158
126
I hate to be doom and gloom but this Bear news scares the crap out of me. I knew Bear was toast but now it's reality and I see how swift it was and the terms, I'm actually very nervous. I think a crash like 1987 isn't out of the question now. I was too young to trade then as I started trading in 1993 but this is way worse than when Long Term Capital went under and Russia was going under and the entire Asia was under IMF crisis in 1998.
 

OfficeLinebacker

Senior member
Mar 2, 2005
799
0
0
Absolutely. Now, the specific action today is mostly symbolic: the rate they dropped is the discount rate, which is the rate offered to member banks for short-term loans. The discount window has long had a strong stigma attached to it, and I doubt that a 1/4 point change is going to make or break the next desperate bank that needs a discrete "little something to get us over the hump" from the Fed.

The big news is the Bear Buyout. What the Fed is actually signalling to us is that "yep, we saw that, too, and yeah, it's a big deal." They hope that we're also getting a "don't worry, we're on it" signal, but that rings as hollow as the "just enough to get us over the hump" line addicts throw at their relatives.
 

rchiu

Diamond Member
Jun 8, 2002
3,850
0
0
IMO, this rate cut is the by product of Bear Stearns news. To have Bear Stearns bought out at $2 (it's Friday closing price was ~$30), signals how bad the credit market and MBS crisis was and still is. Fed wanna do something before the market starts on Monday to head off the possible panic and sell off. I think the quarter point drop is too little do do anything. We will see what's gonna happen tomorrow.
 

ponyo

Lifer
Feb 14, 2002
18,779
2,158
126
Originally posted by: rchiu
IMO, this rate cut is the by product of Bear Stearns news. To have Bear Stearns bought out at $2 (it's Friday closing price was ~$30), signals how bad the credit market and MBS crisis was and still is. Fed wanna do something before the market starts on Monday to head off the possible panic and sell off. I think the quarter point drop is too little do do anything. We will see what's gonna happen tomorrow.
What do you think all last week's $200 billion Fed action was? It was for Bear Sterns and Lehman. They still couldn't save Bear. Maybe they can save Lehman but I doubt it.
 

nergee

Senior member
Jan 25, 2000
843
0
0
The Fed can flood the market with dollars to provide liquidity...up to a point....
but the issue is not liquidity but solvency issues due to credit quality. the fed has a harder time dealing with that.....
 

GrGr

Diamond Member
Sep 25, 2003
3,204
0
76
Originally posted by: Naustica
Originally posted by: rchiu
IMO, this rate cut is the by product of Bear Stearns news. To have Bear Stearns bought out at $2 (it's Friday closing price was ~$30), signals how bad the credit market and MBS crisis was and still is. Fed wanna do something before the market starts on Monday to head off the possible panic and sell off. I think the quarter point drop is too little do do anything. We will see what's gonna happen tomorrow.
What do you think all last week's $200 billion Fed action was? It was for Bear Sterns and Lehman. They still couldn't save Bear. Maybe they can save Lehman but I doubt it.
Wasn't it $480 billion? First $200 billion and then $280 billion on top of that?
 

FoBoT

No Lifer
Apr 30, 2001
63,091
12
76
fobot.com
i am getting afeared

need to buy some guns/ammo/food this week


and TP , you can never have enough TP stored up
 

rchiu

Diamond Member
Jun 8, 2002
3,850
0
0
Originally posted by: GrGr
Originally posted by: Naustica
Originally posted by: rchiu
IMO, this rate cut is the by product of Bear Stearns news. To have Bear Stearns bought out at $2 (it's Friday closing price was ~$30), signals how bad the credit market and MBS crisis was and still is. Fed wanna do something before the market starts on Monday to head off the possible panic and sell off. I think the quarter point drop is too little do do anything. We will see what's gonna happen tomorrow.
What do you think all last week's $200 billion Fed action was? It was for Bear Sterns and Lehman. They still couldn't save Bear. Maybe they can save Lehman but I doubt it.
Wasn't it $480 billion? First $200 billion and then $280 billion on top of that?
Well, Fed injected the money so banks can borrow it. This make it easier for bank to operate in today's environment where cash is hard/expensive to come by. The problem with Bear and Lehman is more then liquidity. They probably put too much one sided bet on MBS or other security with no risk management measures and lost too much money. And I dunno what kind of system they have, they seems to unable to tell exactly how much their loses will be. Unless Fed offers free money to those bank or the MBS market turns around in a hurry, which I highly doubt, to make up for their losses, it will be hard for them to recover.
 

WHAMPOM

Diamond Member
Feb 28, 2006
7,630
181
106
Fed Fears Monday Crash, Cuts Rate! Sounds likely to me. Golden Parachutes Soften The Fall For Those Responsible! How much is the Bear CEO getting?
 

rudder

Lifer
Nov 9, 2000
19,435
84
91
Originally posted by: bamacre
This just in: Obama drops out of race, responding only with, "damn, fuck this shit, I'm out."
and Bush said... "no I wasn't aware of the fed rate cut."
 

ericlp

Diamond Member
Dec 24, 2000
6,079
186
106
I just wish I could have bought some of that stock at 2 dollars. How the hell do you buy and sell on weekends when the stock market is closed?

I don't get it...

I guess if you want to see some really cool stuff run down to wall street with your camera tomorrow ... Sigh, I hope it's not that bad tho...
 

IGBT

Lifer
Jul 16, 2001
17,706
49
91
Originally posted by: bamacre
This just in: Obama drops out of race, responding only with, "damn, fuck this shit, I'm out."

..ya. as he runs back to the "wright" church.
 

Dissipate

Diamond Member
Jan 17, 2004
6,829
0
0
Originally posted by: ericlp
I just wish I could have bought some of that stock at 2 dollars. How the hell do you buy and sell on weekends when the stock market is closed?

I don't get it...
There is after hours trading outside of the major exchanges.

Text
 

Kelemvor

Lifer
May 23, 2002
16,930
7
81
When they drop the rate like they talk about, does that have any effect on Mortgage rates and such or is that really just the behind the scenes rates that banks use?
 

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