Credit market ready to take another jolt as US Legislators stop Federal Reserve and SEC exchange of information to make discount window permanent – a Monday crash in stock market?
Fred Day
Jun. 28, 2008

Connecticut Democrat Christopher Dodd and Alabama Republican Richard Shelby, the Senate Banking Committee's top lawmakers have intervened in the plans of SEC and Fed to exchange information to make the discount window permanent.

Federal Reserve Chairman Ben S. Bernanke and Securities and Exchange Commission Chairman Christopher Cox met today to finalize a plan in which Fed will share data with the SEC on repurchase agreements, which are short-term loans provided by commercial banks that clear trades and hold collateral for securities firms. The plan is supported by the Treasury Secretary Henry Paulson. The plan could have made the discount window permanent for the lenders and the investment banks.

The Senators are reluctant to allow Federal Regulatory Oversight without deliberating in the Senate and the Congress. They believe an appropriate legislation is required to make sure appropriate discipline is in place and at the same time over regulation is not applied.

The immediate reaction will be a sharp decline in banking and financial stocks. It can lead to severe drop in the US stocks killed by the financial services and banking sector.

Credit market ready to take another jolt as US Legislators stop Federal Reserve and SEC exchange of information to make discount window permanent – a Monday crash in stock market?
Fred Day
Connecticut Democrat Christopher Dodd and Alabama Republican Richard Shelby, the Senate Banking Committee's top lawmakers have intervened in the plans of SEC
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