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A review on joint actions plan Federal Reserve, central bank, bank of england and Swiss National Bank

By Amarendra Bhushan for CEOWORLD Magazine Updated:September 26, 2008

Now that the entire global financial community is saying that a global collapse is possible, maybe the conspiracy theorists and ideologists will realize that a bailout is simply not optional. Slowing down the Bail Out process and WaMu failure will not bring the country to it’s knees and the sky is not falling. WaMu played fast and loose with depositors money and the market delt with them. If the banks don’t trust each other then why should we as the tax payer either. If they want a deal so bad then they should pay for it either as a loan or with equity. I still think they should get the bailout easily.

The U.S. Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank announced joint efforts to pump dollars into money markets through one-week loans aimed at easing funding tensions through the end of the quarter. “Central banks continue to work together closely and are prepared to take further steps as needed to address the ongoing pressures in funding markets,” the central banks said. The Fed increased its existing swap line with the European Central Bank by $10 billion, and boosted its line with the Swiss National Bank by $3 billion. The move brings total dollars available to be loaned to commercial banks by foreign central banks to $290 billion. The Bank of England said it would lend $30 billion in funds for one week Friday alongside ongoing overnight dollar-lending operations.

The agreement allows the Fed to make another $13 billion available to the two central banks. In return, the Fed will receive the reciprocal amount of foreign currency from each country. Under these types of arrangements, the currency ’swaps’ get unwound at a later date. The U.S. central bank’s move to increase liquidity by reaching out to other countries is part of a larger effort to restore some level of confidence to Wall Street.

Central bankers are stepping in as a source of dollars as $522 billion in writedowns and losses tied to the U.S. mortgage market and questions about the credit-worth of counterparties prompt bankers to hoard cash to meet their own funding needs. Banks in the euro region deposited more than 1 billion euros with the ECB for a sixth day running yesterday, the longest such stretch since the introduction of the euro in 1999.

“Central banks have been employing coordinated measures designed to address the pressures in global money markets,” the Fed said in a joint statement with the European Central Bank, the Bank of England and the Swiss National Bank.

In addition to the swap lines with ECB and the Swiss National Bank, temporary swap lines previously have been authorised with: the Bank of Japan ($60 billion), the Bank of England ($40 billion), the Reserve Bank of Australia ($10 billion), the Bank of Ca nada ($10 billion), the Bank of Sweden ($10 billion), the National Bank of Denmark ($5 billion) and the Bank of Norway ($5 billion).

That idea of a two week break is a good one. US Govt need to take a time out. Two weeks, nothing moves. Shut it down. Let’s take some time and think about this before we make a really bad decision based on fear.

So what if nothing is done…

A real game of chicken…

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