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The Washington Independent
The Washington Independent

The Unfortunate Timing of the Bailout Failure

William Willis
News
Last updated: Jul 31, 2020 | Sep 30, 2008

One small detail that might have been overlooked as lawmakers failed to pass that $700-billion bailout bill: Today is Sept. 30.

That means it’s the end of the third quarter. And that means - if you want to know what a credit crunch might look like, today could be the day.

Already, in Europe, banks are hoarding cash and settling trades, to bulk up their balance sheets for the quarter’s end. Money market rates in Europe jumped to new records after the bailout failure, and lending is frozen, Bloomberg reports.

From Bloomberg:

“The money markets have completely broken down, with no trading taking place at all,” said Christoph Rieger, a fixed- income strategist at Dresdner Kleinwort in Frankfurt. “There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.”

Credit markets have seized up, tipping banks toward insolvency and forcing U.S. and European governments to rescue five banks in the past two days, including Dexia SA, the world’s biggest lender to local governments, and Wachovia Corp. Money- market rates climbed even after the Federal Reserve yesterday more than doubled the size of its dollar-swap line with foreign central banks to $620 billion.

Well, that’s all just a bit unfortunate, isn’t it? Just imagine what will happen in the U.S. today.

But at least the House Republicans who voted against the plan got their way and really showed House Speaker Nancy Pelosi she can’t go around hurting their feelings. And that’s what’s important.

Maybe instead of soothing their wounds they should have paid just a little more attention to the calendar.

William Willis | William Willis is a freelance writer and social media manager who specializes in assisting finance professionals and Fintech entrepreneurs in growing their online audience and attracting more paying customers. William worked as a bank teller and virtual assistant for financial firms in the United States and the United Kingdom for six years before beginning her writing career. William is a strong force in the workplace, inspiring others to work hard and excel with her optimistic attitude and boundless energy. He enjoys hiking, crocheting, and playing video games with her grandchildren in her spare time.

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