Fed's Discount Window: No Long Term Fix For Freddie And Fannie
To give you an idea of how much trading went on today, Freddie Mac traded nearly 400 million shares--nearly two-thirds of the entire 646 million share float.
Markets rose briefly in the middle of the day asReuters reported that Fed Chairman Bernanke would open the Fed's discount window to Fannieand Freddie, but Dow Jones later said that there were no discussions with the agencies on opening the discount window.
If it did happen, what would this do? The disount window allows eligible institutions to borrow money from the Fed on a short-term basis. This would allow the two agenices to put their own paper to the Fed as collateral and borrow money against it, for short-term needs.
Would this help? It might, short term. But it is not a long term solution.
Elsewhere, we saw another merger deal in the chemicals industry, after yesterday's Dow Chemical: Ashlandbuying Hercules for $2.6 billion, $18.60 in cash and 0.093 of a share of Ashland for each Hercules. That values the deal at about $23 for Hercules, it went out yesterday at $16.60. Both are specialty chemicals manufacturers.
For the week, the Dow down 1.7 percent, S&P down 1.8 percent, NASDAQ down 0.3 percent.
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