07.30.08, 1:45 PM ET Forbes
So it seems, says the Federal Reserve. On Wednesday, the central bank gave Wall Street's biggest investment houses, the so-called primary dealers, another four months of access to its emergency borrowing window. It wasn't entirely unexpected, and it gives firms like Merrill Lynch (nyse: MER - news - people ) and Lehman Brothers (nyse: LEH - news - people ) extra breathing room to work toxic assets off their balance sheets and raise capital.Mr Bernanke sounds a lot like ECB's Trichet and Mervin King in June of 2011, except that they go on to admit that adding liquidity to the situation will not solve anything, it will only buy time...
Both Jean-Claude Trichet and Mervyn King gave voice to their growing unease, with the latter contributing his own 2 cents, or pennies as it were, to the Greek bailout question when he noted:Right now the European banks are doing exactly what the US banks were doing during the summer of 2008. They are desperately trying to rid their balances sheets of risky assets, while at the same time raising capital to be able to asborb some kind of shock in the near future."Right through this episode, from the very start,” said King, “an awful lot of people wanted to believe it was a crisis of liquidity. It wasn’t and it isn’t. It was a crisis based on solvency, not liquidity. And until we accept that, we will never solve it .... Providing liquidity, can only be used to buy time,”
Priceless Quotes from Summer 2008..
BEN BERNANKE, US FEDERAL RESERVE CHAIRMAN: Our banking system is well capitalised, it came in with strong capital. We are watching the situation very carefully.
BEN BERNANKE: The economy continues to face numerous difficulties, including ongoing strains of financial markets, declining house prices, a softening labour market, and rising price of oil, food, and some other commodities. (sounds familiar)
Even better quotes from summer 2011...
Italian Prime Minister Silvio Berlusconi: "The country’s banks are “well capitalized.”" Speaking at a summit of European leaders in Brussels, Berlusconi said he wasn’t worried about Moody’s comments about the country’s banks.
..I think we'll look back on that comment and laugh
