US banks abandon credit fund plan
Monday, 24 December 2007 13:16Leading US banks have abandoned a joint plan to create a massive fund aimed at easing the global liquidity squeeze due to lack of interest in the market. The announcement came over the weekend.
Bank of America, Citigroup and JPMorgan Chase had announced in October a plan to create a single 'master-enhanced liquidity conduit' to buy up troubled debt.
The banks reportedly wanted to pump in between $75 billion and $100 billion into the fund, which would buy assets from 'structured investment vehicles' (SIVs), which have been hit by the credit squeeze. But the banks, in a joint statement, said the plan would not go forward.
The plan, which was backed by US Treasury Secretary Henry Paulson, was seen as a major effort by the private banking sector to help restore normal credit conditions after turmoil earlier this year sparked by losses and a lack of confidence in sub-prime mortgage assets.
