Check out this interesting bit of news:
The Federal Reserve on Tuesday announced yet another measure to pump more liquidity into the jittery financial markets.
The program will lend up to $200 billion of Treasurys to primary dealers, a group of 20 big investment firms, for a 28-day term. The firms can put up as collateral mortgage-backed securities issued by Fannie Mae and Freddie Mac, which generally are seen as safe because of an implicit government guarantee.
Still though, the outlook is not so rosy.
Banks are still shying away from offering credit because they fear the rising defaults, and they aren’t buying securities backed by loans because they are unsure of the quality of the underlying assets. Even high-quality borrowers could run into trouble if the economy continues to tank.
“The Fed can’t make banks lend,” Ritholtz said.