Tuesday, June 1, 2010

European bank stress Tests Are going to result in the closing of a major bank $DB $RBS $CS

European bank stress - Some of the traditional large lenders to European banks are becoming increasingly
reluctant to extend credit. As a result, to avoid such an outcome, the Fed may consider reducing the interest
rate it charges on U.S. dollar loans it extends to the European Central Bank. The ECB in turn could ease
terms on its loans to European banks. European banks are paying CP rates ~3-4x wider than usual. New
money market rules that go into effect this Fri could exacerbate the problem (starting Fri, money funds have
to hold more-liquid and higher-quality assets). WSJ

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