He has just introduced "emergency" legislation to give federal funds to any jurisdiction that changes to a paper-backed system by November.
Recreating its backstops for money-market funds, commercial paper and asset-backed securities might require such stringent conditions that no one would participate.
In America, capital markets matter more, so the Fed had to get its hands dirtier by buying commercial paper and mortgage-backed securities.
The Greek problem is also a euro problem, and the euro problem is a paper-money-backed-by-nothing problem coupled with high levels of debt.
One should not sloppily confuse fiat with paper or non-backed.
Known as conduits, these special-purpose vehicles borrow in the short-term, commercial-paper market to make acquisitions of highly rated paper in American asset-backed securities, and have been walloped by the plunging value of those assets since the frailty of subprime loans were exposed.
Turns out that the Primary Fund, like many other money market funds, made significant investments in asset-backed commercial paper (ABCP), which offered juicy yields, but did so because they were backed by things like mortgages, auto loans, credit card receivables and other risky assets that, despite their risk, came with investment-grade ratings.
With mortgage-backed paper, in contrast, you are making a lopsided bet.
The facility will buy unsecured and asset-backed three-month commerical paper directly from eligible issuers, and the Fed will lend funds to the vehicle at the the target Fed funds rate.
Today the Treasury and the Federal Reserve are announcing a facility to finance the issuance of non-mortgage asset-backed paper in order to support lending to consumers and small businesses that is vital to our economy.
But perhaps the most worrying thing for financial institutions holding mortgage-backed paper is not the subprime market itself, but the unnerving parallels with an even bigger one to which they are also exposed: leveraged loans to companies.
But it is too soon to tell whether the vehicle will ever be restored to its former pre-credit-crunch glory, when it was able to issue short-term commercial paper to fund its investments in asset-backed securities.
The template is its September 19th announcement that it would finance banks' purchases of asset-backed commercial paper from money-market funds.
The hope is that investors will buy into this fund, and it will unfreeze the short-term asset-backed commercial paper market.
The Federal Reserve responded with several programs, including a facility to finance bank purchases of high-quality asset-backed commercial paper from money market mutual funds.
No. 12, "speculative areas beyond housing may suffer in 2007, " has commenced with the evaporation of the asset-backed commercial paper market last summer and the drying up of private equity financing.
For this reason, ad hoc responses will still be critical, such as last week's federal guarantees for money-market funds, Fed loans to banks to buy asset-backed commercial paper and, on Sunday, approval of the remaining two big independent investment banks, Morgan Stanley and Goldman Sachs, to become Fed-regulated bank holding-companies whose investment bank units can now borrow from the Fed on the same terms as other banks.
For some banks, the combined issuance of asset-backed securities and commercial paper (short-dated securities) amounted to about half of all their loans.
Some were tempted by promises of land, others by the fact that the king's armies paid in a gold-backed currency, not paper dollars.
Moreover, providing liquidity to financial institutions does not address directly instability or declining credit availability in critical nonbank markets, such as the commercial paper market or the market for asset-backed securities, both of which normally play major roles in the extension of credit in the United States.
Convinced ratings agencies were assigning triple-A marks to junky paper, he wrote a business plan in 1994 to rate mortgage-backed securities.
The facility will buy unsecured and asset-backed three-month commerical paper directly from eligible issuers.
The Fed will buy unsecured and asset-backed three-month commerical paper directly from eligible issuers.
The paper's endorsements, strangely enough for Democratic union-backed candidates, failed in the recent mayoral campaign and the last gubernatorial election.
The paper aimed to improve public transport by better co-ordination, backed by investment.
Namely, the purchasing of government sponsored mortgaged-backed securities, such as Fannie Mae and Freddie Mac paper, rather than its previous approach of simply buying U.S. Treasury securities.
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That's because the three men who created Blue Man a trippy cabaret act that features three mute men in blue face paint backed by high-tech special effects and lots of toilet paper, food and other props did appear on Leno and they do shill (silently) for Intel.
But then, in 1971, Richard Nixon replaced a more-or-less solid dollar, vaguely backed by gold, with a pure paper dollar, backed by nothing but the good intentions of government employees.
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