Cornerstone Worldwide – Banks Borrow Record Sums From Fed.

Oct. 27, 2008 - PRLog -- Sources close to Asian-based asset management firm, Cornerstone Worldwide, suggest that stresses in the credit market are worsening despite the unveiling of several unprecedented measures by central banks aimed at alleviating pressures.

The data showed that financial institutions borrowed a staggering $437bn a day through the Fed’s discount window.

Cornerstone Worldwide are thought to believe that the financial institutions have become emboldened by recent assurances from the world’s central banks that they would not be permitted to fail. The central banks have effectively replaced the interbank money markets and are lending at far cheaper rates than those available in the marketplace.

One of the Cornerstone Worldwide sources asserted that banks would find it difficult to unwind trades with the central banks until interbank rates, which have responded agonizingly slowly to liquidity injections and government guarantees, came down to historically average levels above base rates.