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Strategies & Market Trends : John Pitera's Market Laboratory
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To: John Pitera who wrote (8564)12/12/2007 12:58:21 PM
From: ahhaha  Read Replies (1) of 33421
 
Bank's can submit there more opaque collateral and use it to Borrow State of the art,

Not quite. Collateral must be transparent and the poster must be registered and "okayed" by their local fed reserve bank. The collateral will be opaque to the open market, but it must pass muster wrt local fed reserve bank.

And then the banks get these sterling CDO's and other exotic securitization products back, very hopefully to resubmit to the TAF, a few days later at the next auction to get back that high octane Central Bank credit.

You bring up a good point and why the TAF must emphasize its "T". Beyond a doubt this weak point will be raised during the submission for public comment. Sterilization of non-marketable loans could develop into a rollover problem, and that could become a bigger problem especially since the places of loan origination have substantially different risk/return profiles.
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