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2004: The FED Reserve creates NEWBANK in event of banking failure (for IP)
From: David Farber <dave () farber net>
Date: Sat, 4 Oct 2008 04:10:29 -0400
Begin forwarded message: From: Date: October 4, 2008 3:44:59 AM EDT To: dave () farber netSubject: 2004: The FED Reserve creates NEWBANK in event of banking failure (for IP)
Dave: Please anonymize again based on my employer. I was thinking about this crisis that we are currently experiencing and recalled a Federal Reserve press release I read from 2004 that caused my hair to stand up: http://www.federalreserve.gov/boarddocs/Press/other/2004/20040130/ Release Date: January 30, 2004The Federal Reserve Board announced Friday that it has established a private-sector Working Group on NewBank Implementation to further develop the concept of a dormant bank that would be available for activation, if necessary, to clear and settle U.S. government securities.
In a report released January 7, a previous private-sector panel, the Working Group on Government Securities Clearance and Settlement, recommended nine steps to mitigate risks to the financial system from the interruption or termination of the services of a clearing bank as the result of either operational or non-operational problems.
_____________________________________ This release was followed-up by another in 2005: http://www.federalreserve.gov/BoardDocs/Press/other/2005/20051215/ Release Date: December 15, 2005The Federal Reserve Board on Thursday released the report of the private-sector Working Group on NewBank Implementation and endorsed its recommendations for the creation of a dormant bank (NewBank) that would be available for activation to clear and settle U.S. government securities. Such activation would occur if a credit or legal problem caused the market to lose confidence in an existing clearing bank, and no well-qualified bank stepped forward to purchase the exiting bank's clearing business.
The Working Group was established by the Board in January 2004 to further develop the concept of NewBank that a previous panel (the Working Group on Government Securities Clearance and Settlement) had identified as a promising private-sector contingency plan for the sudden involuntary exit of one of the two clearing banks for non- operational reasons.
_____________________________________I passed this around to some reporters at the time -- none of them could understand what type of event might create the need for The Fed to implement the "Newbank" plan.
I think we are starting to understand why the need may arise now.Makes one wonder how long The Fed may have known we may get into this recent crisis --
and how much worse it might actually get. ------------------------------------------- Archives: https://www.listbox.com/member/archive/247/=now RSS Feed: https://www.listbox.com/member/archive/rss/247/ Powered by Listbox: http://www.listbox.com
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- 2004: The FED Reserve creates NEWBANK in event of banking failure (for IP) David Farber (Oct 04)
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- Re: 2004: The FED Reserve creates NEWBANK in event of banking failure (for IP) David Farber (Oct 04)