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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Les H who wrote (84918)8/13/2007 9:45:26 AM
From: Les HRead Replies (1) of 306849
 
The Federal Reserve may be politically hampered in requesting a currency swap with the European Central Bank even if such a move could help relieve a squeeze in money markets, said analysts at Wrightson ICAP in a note to clients on Monday.

"The Fed would have a hard time explaining to Congress why it is reasonable to provide financing to support foreign investors caught in the subprime problem when the Fed is not willing to underwrite dicey real estate loans at home," said Lou Crandall, chief economist at Wrightson ICAP.

Crandall, a well-known money market economist on Wall Street, said that the dollar-funding needs of European banks was at the root of the cash crunch in money markets that prompted hefty injections of funds by the ECB and Fed on Thursday and Friday.

Worries about the exposure of some European banks to credit instruments backed by U.S. subprime mortgage loans unleashed the turbulence in money markets late last week.

earthtimes.org
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