Hyperinflation About to Hit England
Increasing concern is being expressed about the huge mortgage bailout which the Fed has proposed to pay off mortgage debt for British banks.
IntelDaily Speculates:
On Oct. 12, the U.S. Federal Reserve Board of Governors agreed to extend Federal Reserve contingency lines of credit to two {British} banks–$10 billion to the Royal Bank of Scotland (RBS), and $20 billion to Barclays, two of Britain’s Big 4 banks. The Federal Reserve would open these $30 billion facilities to the two banks, should the banks, in turn, need them to extend credit to their clients “in need of short-term liquidity to finance their holdings of securities and certain other assets,” the Federal Reserve said in a letter to the banks.
With respect to the Royal Bank of Scotland, the Fed said that the coverable assets could include “residential and commercial mortgage loans and mortgage-backed securities, asset-backed securities, commercial paper and structured products.” At the same time, the Fed lifted the limit on how much credit the RBS and Barclays could extend to their “affiliated broker-dealers,” to $10 billion for RBS, and $20 billion for Barclays, matching the size of the contingency lines of credit that the Fed would extend to them. RBS’ and Barclays’ affiliated broker-dealers would be the vehicles, which would then extend the funds to the two banks’ collapsing clients.
With such large amounts heading towards banks, it seems somewhat ironic that many of these banks will use these funds to issue more loans. A somewhat illogical solution to the problems caused by making too many bad loans.
Comments
Leave a Reply
You must be logged in to post a comment.