LONDON (MarketWatch) -- The European Central Bank on Friday said it had taken further steps to "improve the access of the banking sector" to certain European funding operations by widening the eligible collateral. "The [ECB's] Governing Council has reduced the rating threshold and amended the eligibility requirements for certain asset-backed securities," the central bank said, in a statement. Some assets, depending on their credit rating, backed by car as well as consumer and commercial mortgages would now be eligible, the ECB said.

What defines the "collateral?"

The ECB now determines the rating of all collateral.

This is the same as me saying this napkin on my desk is rated AAA+ investment grade wonderous investment of the gods.

Car loans?!!!

Ahahahahahahaaa

This is the European version of "buymy****pile".

Just run the same **** through the ringer washer, I'm sure they could squeeze more out of the already pledged turd covered pulp fiction, Re-re-hypothocate.

In late 2010, the ECB publicly announced that they didn't know the value of the collateral they were taking for loans.

At least 3 times since then, they've PUBLICLY announced that they were LOWERING their standards for collateral. [Edit: And this is number FOUR.]

You do the math.

They've been taking any piece of paper with dog**** smeared on it as collateral for *YEARS*!!!!

Maybe they no longer require collateral. A simple handshake will suffice.

Very simply, there is NO GOOD COLLATERAL REMAINING in all of Europe for those who must borrow.
The rating agencies should mark all of 'em "junk".

The Bundesbank has the last word on the collateral, and they have no interest in eating a **** sandwich. They have already said they have the right to reject whatever they determine is bad.

Bear, thats interesting. The markets will figure this lout eventually, but until then, its Rally Time.....

Quote:

The Bundesbank has the last word on the collateral, and they have no interest in eating a **** sandwich. They have already said they have the right to reject whatever they determine is bad.

Can they legally do that? My impression is that the only way Buba can stop it is to threaten to have Germany leave the EU and hope that the ECB flinches. Ball now in Buba's court. From a recent John Mauldin newsletter (sorry I don't have a link, it credits David Kotok)

Quote:

It is quite easy to write about the ECB as if it is the mechanism by which money is printed in Europe, but that is only partially true. The ECB is governed by a board. In reality, the ECB is more like the FOMC (Federal Open Market Committee) of the US Federal Reserve. The ECB meets and sets policy, and then that policy is acted upon by the various central banks of the member nations.

Likewise, while it is convenient to think about "the Fed" printing money and buying and selling bonds in its daily operations, in actuality it is the New York branch of the Federal Reserve that does the open-market transactions, carrying out the policies of the FOMC.

So when the ECB decides to authorize one trillion euros to be made available to banks in Europe, such as in the recent LTRO (long-term refinancing operation), it is actually the various national central banks that do the transactions for their in-country banks. Under the LTRO, the ECB sets the policy and the nature of what qualifies as collateral for the loan, what type of "haircut" is set for the collateral, and so on. The ECB takes the risk of any loans it authorizes, rather than the national central banks. For the recent LTRO, the interest rate was set very low, and the recipient banks could then turn around and lend the money to customers or buy government bonds.

The implication here is that while Buba talks a good story the reality is that they have likely facilitated every POS ECB "tool" to date - otherwise we would've heard about it in spades. I expect this time will be no different. The reality is that it doesn't even matter what Buba thinks, this new ****tier-than-dog**** program will be directly executed by the NCBs whose insolvent banks are in dire straits - the PIIGS NCBs - bypassing Buba altogther.