Fed, Dealers to Meet on Default Swaps Clearinghouse (Update1)

[gopbuster]

Source: Bloomberg

Fed, Dealers to Meet on Default Swaps Clearinghouse (Update1)

By Shannon D. Harrington and Scott Lanman

Oct. 6 (Bloomberg) -- The Federal Reserve Bank of New York will meet tomorrow with banks and investors in credit-default swaps to gauge progress on an initiative to create a clearinghouse to curb risks in the market, a spokesman said.

The group in July set an end-of-year deadline to have a central system in place to absorb a failure in the $54.6 trillion market in which banks and investors privately negotiate contracts that protect against losses on fixed-income securities.

The Fed will hold a meeting with ``a small number of banks and buy-side firms'' to discuss progress being made on creating a central counterparty, said a New York Fed spokesman who declined to be identified.

New York Fed President Timothy Geithner has stepped up pressure to create a central counterparty since the near-collapse of Bear Stearns Cos. in March raised concern the market could fail if a major market-maker couldn't make good on its trades. The bankruptcy last month of Lehman Brothers Holdings Inc., among the top 10 counterparties to credit swap trades, intensified concern that market stability is in jeopardy amid the worst financial crisis since the Great Depression.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aggIxIogKZjg&refer=home

[ixion]

1. bring all your bad paper to the Fed

they'll buy it up and stick the taxpayer with the bill! :sarcasm:

[al bupp]

2. I.E. Print more money to pay for it.

Rev up those presses me boys, papa's got some gambling losses to cover!