White House, Fed: We Are Out of Time

Crisis in credit markets makes action necessary.

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Did you notice what the Libor did overnight? The benchmark rate shot up to 6.87 percent overnight from 2.57 percent the day before. But as one debt trader told Bloomberg, "Funding markets are in complete disarray. With no interbank lending taking place, the daily Libor fixings are no more than a flimsy theoretical construct." One deeply concerned White House source told me that they are quite aware of what Libor and other key credit measures are doing right now and that they, and Federal Reserve Chairman Ben Bernanke, believe "we are out of time and passing the Paulson plan must be done this week—the sooner the better. At least, that's their perspective.

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