As Bloomberg reports:
The change suggests the government doesn’t intend to apply compensation limits beyond firms that receive direct investments from the Treasury’s $700 billion bailout fund. Officials have yet to announce whether such requirements will be imposed on firms participating in a separate effort to remove as much as $1 trillion of distressed assets from banks’ balance sheets.Seeing how pretty much any security will be eligibile for TALF purchase, this revision in terms, will make rampant risk taking even more pervasive.
"Just like salesmen toward the end of the month get kind of worried if they’re not meeting their quota, the Federal Reserve has got to worry,” former Fed monetary-affairs director Vincent Reinhart said. Today’s moves are “an attempt to make the facility more accommodating,” said Reinhart, now a scholar at the American Enterprise Institute in Washington.
The revised terms and conditions of the TALF, posted on the New York Fed’s Web site, omitted a previous section on compensation requirements. The limits were previously instituted because the program is being seeded with funds from the $700 billion financial-stability plan, which has provided capital injections to banks with compensation rules attached.
The Fed and Treasury “currently anticipate that ABS backed by rental, commercial, and government vehicle fleet leases, and ABS backed by small-ticket equipment, heavy equipment, and agricultural equipment loans and leases will be eligible for the April funding of the TALF,” which is scheduled for April 14, the agencies said. Small-ticket equipment may include office gear such as telephone systems, computers and printers, while heavy equipment includes construction vehicles.The wholesale government panic to prevent the impending market collapse is becoming ridiculous, and is only just postponing the ultimate crash, while likely making it even more acute when it eventually happens. Sphere: Related Content Print this post