View Full Version : And the Libor says...you were supposed to collect the toxic waste

11-14-2008, 05:44 AM
U-turn on toxic assets increases Libor

By Michael Mackenzie in New York
Financial Times
Published: November 14 2008 01:05 | Last updated: November 14 2008 01:05

The key benchmark lending rate between banks rose on Thursday, ending a 23-day decline as traders reacted to the US government's decision to abandon its plan to buy toxic assets.
The London Interbank Offered Rate (Libor) has been a key barometer of stress since the credit crisis began last year, rising to record levels above Treasury bills in a sign of risk aversion on the part of banks and money market funds.
Three-month dollar Libor edged up 2 basis points to 2.15 on Thursday and was set to continue its ascent. Brokers indicated that they expect an increase to 2.23 per cent on Friday when the benchmark rate for floating rate loans, mortgages and interest rate derivatives is set in London.
Some analysts linked the rise to the Treasury’s announcement on Wednesday that it will not buy impaired mortgage assets under its Troubled Asset Relief Program.........

More on TARP's inability to price mortgage assets here