Today, the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve, and the Swiss National Bank announced a joint agreement under what is being called the Term Auction Facility (TAF) program.

Stripped of the mumbo-jumbo, here is what the Fed seems to be saying:

--The Fed will hold a series of auctions and will seek to lend to institutions who need liquidity.
--The Fed will take a "wide variety of collateral;" implying they may take more types of collateral than before.
--They will lengthen the maturities of loans through auctions.
--Borrowers can now go to any of the participating central banks to get money.

Essentially, they are saying, "If you need money, come to us, we will lend." One trader described this as "making the discount window sexier."

This is specifically targeting the freezeup in LIBOR. LIBOR has been rising fast, and the hope is that with easier access to credit, LIBOR rates will drop.

They seem to be trying to avoid the stigma of using the discount window. Would any borrowing have to be disclosed in a 10-Q, since it is a material event? Not clear.

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