Monday, August 27, 2007

Fed bends the rules to help two of the largest US banks

The regulations in question effectively limit a bank's funding exposure to one of its affiliates to 10% of the bank's capital. The Fed has allowed Citibank and Bank of America to blow through that level - allowing them to lend up to 25 Billion to their subsidiaries. (approx 30% of capital) The move shows that the crunch is sapping even the big boys

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