But it is not only the direct loans to these countries that could do severe damage to our banks.
So what we've said is let's make all these direct loans, as opposed to having bank intermediaries or -- and not just banks -- financial services organizations.
Instead, the EFSF will provide guarantees either to a new fund, that could lend to eurozone governments unable to borrow elsewhere, or could guarantee direct loans to such governments.
The Fed's decision means that the discount rate, the interest rate that the Fed charges to make direct loans to banks will be lowered to 5.75 percent from 6.25 percent.
In addition to cutting the funds rate, the Fed announced it was reducing its discount rate, the interest it charges to make direct loans to banks, by a quarter-point, as well, to 4.75 percent.
From Italy to Japan there is a host of evidence that state-controlled banks come under pressure to direct loans to favoured constituencies and to keep uncompetitive companies alive with subsidised credit (see article).
So just to give you one example, right now a lot of the student loan programs run through banks, but a lot of them go directly to students from the government -- so-called direct loans.
One of the provisions of a major education bill passed Friday would forgive the balance on Federal Direct Loans for public service employees who have made at least 10 years worth of payments on those loans.
America's Student Loan Providers (ASLP), a group that represents loan providers under the federally guaranteed program, estimates that the bill will cut funding for guaranteed loans by about 80%, forcing borrowers into Direct Loans, which typically have slightly higher interest rates.
But critics of the bill passed Friday are concerned that it will quash the lending industry by steering colleges in the direction of Direct Loans administered by the Department of Education instead of federally guaranteed loans, which account for about 80% federal student loans.
The Federal Reserve announced Sunday that it would make discount-window borrowing available to Fannie Mae and Freddie Mac, reminiscent of its decision in March to provide direct loans to brokerage houses that are primary Treasury bond dealers as the Bear Stearns crisis came to a head.
In recent years this program, which provides direct loans, loan guarantees, and lines of credit to regionally or nationally significant transportation projects, has helped mayors leverage four times the money invested in it by the federal government, helping construction workers get on the job quicker, and repaying taxpayers their hard-earned money faster.
Some of these debt instruments are: consumer loans, micro loans, factoring, direct real estate loans and mortgage backed securities.
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The government also offered support to fledging firms via direct investments and guaranteed loans.
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Some of it is in the form of loans, SBA long term low interest loans but there are also direct grants that you do not have to repay if you qualify, unemployment compensation, rents as you try to find a new place to live.
Beginning in 2010-2011, all new student loans will be originated through the direct student loan program.
It would apply to Direct, Stafford, Grad Plus and consolidation loans but would not be available for private student loans.
Interestingly, in further research in Brazil, Musacchio and Lazzarini found that companies that received direct government investment, as opposed to subsidized loans, tended to have better performance overall, a phenomenon they attribute to increased accountability and oversight.
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Ideally it should come from the European Stability Mechanism (ESM), Europe's new bail-out fund, as a direct capital injection into banks rather than as loans to governments, which then use the money to recapitalise their ailing lenders.
The plan would direct the federal government to buy up bad mortgage loans from banks and homeowners.
In most of Asia's maturing economies, planners are forsaking such direct measures as favoritism, tax breaks and concessionary loans to promote development.
While SNS Reaal has been trying to direct its own trajectory, an attempt to unload its property loans into a so-called bad bank, with other Dutch banks as shareholders, was shot down by the European Commission earlier this month because of competition concerns.
"Any discussion needs to address both direct support, as granted by European governments to Airbus in the form of loans, and indirect support, as provided by the US government to Boeing, " an EC spokeswoman said.
An even more market-friendly approach would be to fund these loans into an administered fund in the IMF, which would provide more flexibility for the loans, but would not guarantee that countries are willing to accept direct credit risk from recipient countries.
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Money might not be flowing into Brazilian equity ( outflows registered again in March, according to EPFR Global in Cambridge), but money is flowing into bonds, in foreign direct investment, and in credit as local companies and banks opt for dollar loans instead of local loans, bringing more money to Brazil.
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Since this would have amounted to direct losses to the banks that lent the money, the difference was smoothed over by "securitizing" the new loans against US Treasury bonds, which carry a zero interest rate and are totally safe.
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