We have TALF, TARP, and a whole bunch of other acronyms. Now we have TOP. What is TOP?
TOP offers options on a short-term fixed rate Term Securities Lending Facility (TSLF) bond-for-bond loan of general Treasury collateral against a pledge of eligible collateral. The term of the loan typically spans a short period of traditional collateral market dislocation, such as a quarter-end dates. While the price of the loan is fixed, the price of the option is determined by competitive bidding.
You read that right. The Federal Reserve has now jumped into that wonderful black hole that is sucking down the world's financial system - the derivatives market.
Happy days are here!
You may have noticed that this program is already a couple weeks old, but I haven't seen anyone writing anything about it and I just noticed myself.