``The Fed's commercial paper programs avoided a mid-air collision,'' said Josh Rosner, managing director of New York- based research firm Graham Fisher & Co. Having to deliver on the loan commitments ``would have caused a liquidity crunch'' for the banks that made them, he said.
So there broke.
The 30 biggest U.S. banks hold about $1 of capital for every $11 of ``risk-weighted assets,'' a figure that encompasses assets both on and off the balance sheet, Scott said. Off-books assets get about half the risk-weighting as those on the books, which means banks are required to hold about half the capital.
The assest are crumbling fast.
Some banks already are so burdened with faulty mortgage investments that they might have become ``toast'' with the stress of additional capital requirements, Rosner said.
They are dead man walking
Jeffrey Previdi, a senior director in the public finance unit of Standard & Poor's, said the Fed's actions have brought ``a little bit of return to normalcy'' in the tender-option bond market. ``But there are still some real issues concerning credit or liquidity providers and their strength.''
How long before we know that it is not going back to normal till we purge the bad debt.
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