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Politics : Welcome to Slider's Dugout
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To: RonMerks who wrote (6008)8/16/2007 12:16:00 PM
From: jim_p   of 50291
 
"Jim, no argument with what you're saying. How do you view this consortium of 40 banks being willing to extend 'UNSECURED' lines of credit to the tune of 11 Billion dollars to CFC here? - a positive, a negative; or just more of the same recklessness?"

It's good and bad news for CFC. The bad news is the cost of funds is a lot higher than CP, but the good news is they have the liquidity. It's a sign of how bad things real are. The commercial paper line of credit is never expected to be funded, but CFC needed to have it in place just in case the CP market dried up. The banks had no choice because the line of credit was committed to a long time ago when CFC was a much stronger credit.

It's bad news for the banks and the economy because it further reduces the credit that's available for the banks other customers which hurts the economy and if CFC goes belly up it's probably a huge loss for the banks.

Jim
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