Regional Banks Will have More Issues

Earlier this week, deposit-taking banks paid 2.82% to borrow at the Federal Reserve's Term Auction Facility for 28 days, far above the one-month Libor rate of 2.722% on the day of the auction. Analysts said that indicates that money wasn't readily available at the rate at which Libor was trading. Term Auction Facility is only open to depository insitutions, like FDIC banks and collateral has to be rgulatory standards. Most of their assets are loans and they can not sell them easily and do not have SPE to securitize these loans. But Temp Securities Lending Facility only attracted limited order from investment banks, ~40 bil util last week. Most importantly, Investment's assets are securities. They can even securitized loans using their SPE.