Oh what a relief it is Mr. Bernanke!  Big Deal today.  Huge day for financial institutions.  Basically, the new federal reserve plan provides more liquidity in loans and most importantly allows borrowers to hold the loan for 28 days, instead of 24 hours.  This is huge.  HUGE.  They are calling it Term Securities Lending Facility (TSLF).

It gets better.  The major financial institutions that will be using the facility can use their mortgage securities as collateral.  Those securities which cannot be sold or valued.  Yeh, nice.  This effectively takes those securities off of their balance sheets if the loans keep revolving every 28 days.

This plan has a real chance at stabilizing intra-financial institution lending/trading/liquidity.  What does it not do?

It does not fix inflation.  It does not fix the housing market.  It does not fix this consumer.  It gives us a chance we did not have before though.  If we could ever unfreeze the credit markets, and all financial institutions would get at least 50% of the way back of lending to each other, then the wheels that move the global financial markets would start turning, panic would ease, and most importantly financial institutions would start trusting each other again.  Then, and only then, could they start to trust the consumer.

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