Wow!

The Fed just announced a re-launched the Primary Dealer Credit Facility, AFTER having opened the discount window to the dealers in a separate action.

Holy Cow! The Fed will be taking anything not nailed down as collateral. That includes equities! Read the announcement carefully to understand the full terms. Let’s hope ‘the market’ likes this. In my view though, it goes to the point that there is a high quality collateral shortage. That’s why despite the Fed’s large headline repo offers, they aren’t being taken up on the full amount. Hence, the need to expand the qualifications on collateral.

I’ll update on repo in a separate post.

The use of the discount window by multiple large banks (8) is a smoke screen to cover for any of those with a problem plus all the numerous non-dealer and shadow banking entities out there now insolvent.

All one has to do is go back to the Fed’s historical data, which they don’t release until multi-year lag to look at who bull-rushed the window in 2008-2009 and you’ll get the picture. Everyone, and their mom.