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 Does leverage apply in Fed Intervention? View next topic
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Kid Clu
Dud?


Joined: 14 Mar 2007
Posts: 2
Location: Atlanta, GA

Does leverage apply in Fed Intervention?
PostPosted: Sat Aug 11, 2007 6:58 pm Reply with quoteBack to top

It's my understanding when a member bank borrows from the Fed, the bank is doing so to cover its reserve requirements. So if I am thinking correctly, the $38B the Fed lent yesterday would go into the bank(s)' reserves & then these funds would either be lent out, cover losses on loans that we due but not paid, or cover withdrawals from that bank---at a MULTIPLE of this amount.
1. Am I correct here ?
2. If so does anyone know what the multiplier amount is ?
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