To keep the markets from melting down today in the wake of the Lehman Bros. bankruptcy filing and the sale of Merrill Lynch, ten of the world’s largest banks have created a $70 billion pool of money, the Financial Times says.
Banks can borrow from the fund, using the kind of collateral the Fed doesn’t usually accept. The move is aimed at providing some liquidity and preventing a total credit squeeze as Wall Street absorbs the financial shocks of the weekend’s events.
At Portfolio, Felix Salmon translates this and explainswhat the move really means:
When Wall Street’s alpha males stop competing and start cooperating like this, you know you’re living in historic times.