Hot off the presses: Federal Reserve will offer $30 billion in 28-day credit

[Bradley in DC]

Federal Reserve will offer $30 billion in 28-day credit through its term auction facility on January 14, 2008

http://www.federalreserve.gov/newsev.../20080111a.htm

Press Release

Release Date: January 11, 2008
For release at 12:00 p.m. EST

On January 14, 2008, the Federal Reserve will offer $30 billion in 28-day credit through its Term Auction Facility. Additional information regarding the auction is listed below; the auction will be conducted as specified in this Announcement, Regulation A, and the terms and conditions of the Term Auction Facility (www.federalreserve.gov/monetarypolicy/taf.htm).

Description of Offering and Auction ParametersOffering Amount: $30 billion
Term: 28-day loan
Bid Submission Date: January 14, 2008
Opening Time: 10 a.m. EST
Closing Time: 1 p.m. EST
Notification Date: January 15, 2008
Settlement Date: January 17, 2008
Maturity Date: February 14, 2008
Minimum Bid Amount (per bid): $10 million
Bid Increment $100,000
Maximum Bid Amount (per institution): $3 billion (10% of Offering Amount)
Minimum Bid Rate: 3.88 percent
Incremental Bid Rate: 0.001 percent
Minimum Award: $10,000
Maximum Award: $3 billion (10% of Offering Amount)


Submission of Bids
Participants must submit bids by phone to their local Reserve Bank between the Opening Time and Closing Time on the Bid Submission Date.

Notification
Summary auction results will be published on the website of the Board of Governors of the Federal Reserve System (www.federalreserve.gov/monetarypolicy/taf.htm) at approximately 10:00 a.m. EST on the Notification Date. Between 10:00 a.m. and noon EST on the Notification Date, Reserve Banks will notify individual institutions in their districts that have submitted winning bids of their awards. Participants have until 3:00 p.m. EST on the Notification Date to inform their local Reserve Bank of any error.

Rounding Convention
Pro rata awards will be rounded to multiples of $10,000. Normal rounding convention will be used, except that awards under $10,000 will be rounded to $10,000.

[integrity]

desperation

[slantedview]

fire up the printing presses! $#@!s.

[weatherbill]

LOL - bring it on! I have gold n silver

[IMG][/IMG]

the new dollar. It's a pink sheet stock! LOL

[jonahtrainer]

the new dollar. It's a pink sheet stock! LOL

Truth to that from the Financial Times article about Moody's warning about downgrading the US debt's AAA rating.

We should all RunToGold and also be able to transact in it by opening a free account.

[slantedview]

well... most of us probably have gold and silver, but i have even more dollars, so i'm still not happy.

[diesirae]

well... most of us probably have gold and silver, but i have even more dollars, so i'm still not happy.

Well, you should be un-moved by this. The Federal Reserve offering 28-day credit does not increase the money supply; inflation is the persistent increase in the money supply. Short term (i.e. 28-day) injections of cash, like this, do not generally affect the prices in the general economy, and in terms longer than 28 days, cause no change whatsoever.

The only people this will effect are money market speculators -- it is designed to provide liquidity for short-term transactions and movement of money. It does not, however, cause inflation.

[slantedview]

Well, you should be un-moved by this. The Federal Reserve offering 28-day credit does not increase the money supply; inflation is the persistent increase in the money supply.

i know i know, it's just the act of screwing with interest rates, encouraging the expansion of debt/credit for the purpose of bailing out banks to the detriment to the rest of us that is offensive.

[WilliamC]

Gee I wonder if they'd toss a million my way? I promise I'll spend/invest it all here in the USA and not give it to China.

[Itzsoez]

can anyone get this money?

[diesirae]

i know i know, it's just the act of screwing with interest rates, encouraging the expansion of debt/credit for the purpose of bailing out banks to the detriment to the rest of us that is offensive.

First of all, I'm not sure how this is "to the detriment of the rest of us" considering that this does not increase the money supply in terms longer than one month, and that the average (indeed, nearly all) American will not see any impact from this.

Moreover, it's false to characterize this as a "bail out" or "screwing with interest rates" since it does neither. It's a liquidity measure, which is not a "bail out" in the economic or business sense of the term, nor should it affect interest very much, since the prime lending rate is unaffected by this.

Gee I wonder if they'd toss a million my way? I promise I'll spend/invest it all here in the USA and not give it to China.

Well, even if you invest it in China, the maturity period is less than one month, so you'd have little impact. In addition, as the listed links shows, there are conditions are foreign deposit of this.

can anyone get this money?

Do you have a really compelling need for 10,000$ with a 28-day maturity period? I mean, most people can't do anything with a loan in that period. In any case, you have to be an authorized by your local reserve bank before you can submit bids.

[slantedview]

First of all, I'm not sure how this is "to the detriment of the rest of us" considering that this does not increase the money supply in terms longer than one month, and that the average (indeed, nearly all) American will not see any impact from this.

Moreover, it's false to characterize this as a "bail out" or "screwing with interest rates" since it does neither. It's a liquidity measure, which is not a "bail out" in the economic or business sense of the term, nor should it affect interest very much, since the prime lending rate is unaffected by this.

The auction is screwing with interest rates, in a roundabout way, insofar as the winning bidders will most likely be getting loans at below market rates. Why should anyone be able to receive rates different from anyone else?

My comments that this is to the detriment of the rest of us can probably be applied to just about anything and everything the Fed does. Instead of "bailout" though how about "favoritism"? Why can't I get a below market rate? I could probably even demonstrate I'm more solvent than a lot of these chump banks.

[Johnnybags]

lol, first time in history, bankrupt.

[diesirae]

The auction is screwing with interest rates, in a roundabout way, insofar as the winning bidders will most likely be getting loans at below market rates. Why should anyone be able to receive rates different from anyone else?

My comments that this is to the detriment of the rest of us can probably be applied to just about anything and everything the Fed does. Instead of "bailout" though how about "favoritism"? Why can't I get a below market rate? I could probably even demonstrate I'm more solvent than a lot of these chump banks.

Actually, no, they won't. The lowest anyone will pay for these loans will be the central bank's lending rate, so it won't be lower than the deal that banks and large borrowers already get. It's not really below "market rates" -- only in the sense of prime lending rates.

[ArchPaul]

desperation

word!

[slantedview]

Actually, no, they won't. The lowest anyone will pay for these loans will be the central bank's lending rate, so it won't be lower than the deal that banks and large borrowers already get. It's not really below "market rates" -- only in the sense of prime lending rates.

clearly i'm misinformed about the purpose of these auctions then. wtf is the point of auctioning off money at the same rate it can be borrowed regularly from the fed? i'm assuming then the auction allows access to people other than the regular key banks (or whatever they're called)?

[diesirae]

clearly i'm misinformed about the purpose of these auctions then. wtf is the point of auctioning off money at the same rate it can be borrowed regularly from the fed? i'm assuming then the auction allows access to people other than the regular key banks (or whatever they're called)?

Basically, it's liquidity. Banks can only borrow so much from their local Reserve banks, and it's usually determined according to a complicated asset weighing mechanism (at least, IIRC). The same is true of other large creditors, such as financial funds etc. Most of these people will be looking for credit, and they will not have ready sources available -- this auction allows the liquidity in the system to increase, because it provides lots of credit available. To clarify, though, it's not being sold at the same rate as it could be borrowed -- that's the lowest possible bound, though, since otherwise banks would bid it up to that rate, since they could use the credit. It's likely to go for above it, but it's an auction, so you can't really tell until it's done.

[Vancouverite90210]

hahahahahaha beaut!

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