2000: Y2K Civilized Discussion Message Board

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Technology Stocks : 2000: Y2K Civilized Discussion

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To: flatsville who wrote (493)	9/1/1999 10:58:00 AM
From: C.K. Houston	Read Replies (1) of 662

NYFed raises Treasuries lending limits for dealers NEW YORK, Aug 31 (Reuters) - The Federal Reserve Bank of New York said on Tuesday it will allow U.S. primary dealers to borrow a much bigger chunk of the central bank's portfolio of U.S. Treasuries, starting after the Labor Day weekend. Although the Fed did not specifically cite concern over financial markets' potential funding problems related to the Year 2000, traders said the near-doubling of the amount of Treasuries dealers can borrow daily under the Fed's System Open-Market Account (SOMA) program was likely related to Y2K fears. ``The limit per Treasury issue will be raised to 45 percent of the total (Fed's $490-billion Treasury portfolio) holdings from 25 percent, effective September 7,' a New York Fed spokesman said. The New York Fed created the SOMA program in 1969 to allow U.S. primary dealers -- the brokerage firms that deal directly with the Fed and are market-makers in U.S. government securities -- to borrow U.S. Treasuries from the central bank's portfolio overnight through bidding at daily auctions with a noon deadline. The SOMA program helps alleviate market disruptions such as the ones that may be related to scarce Treasury issues trading ``on special' or at a premium in the repo market [...] The Fed has already beefed up its cash coffers to meet any unusual surge in demand for paper money ahead of the year-end and also opened a special "don't-ask-don't-tell" discount window operation where banks will be able to borrow large amounts of funds at 150 points above the 5.25 percent Federal funds rate [...] biz.yahoo.com [Fair Use: For Educational/Research Purposes Only]

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