US Fed and UK Treasury provide more aid

There were two more major interventions in global capital markets through financial regulators overnight, one confirmed (in the US) and one simply reported (in the UK).

The US Federal Reserve said it will directly invest in three-month commercial paper. US-based issuers, including subsidiaries of foreign-owned entities, are all eligible.

Borrowers may sell company paper, including bank paper, in their own name as well as asset-backed securities rated A1 or equivalent.

There will be limits for issuers, defined as the average amount of commercial paper the issuer had outstanding in August 2008 less outstanding CP help by investors other than the Fed.

Meanwhile in Britain BBC reported (though two of the affected banks denied) that Lloyds TSB, Royal Bank of Scotland and Barclays are in discussions with the British Treasury over a capital injection.

According to the BCC the three banks estimate that they may need around £15 billion of new capital each, with £7.5 billion paid up front and a further £7.5 billion guaranteed by the Treasury that would be delivered if it became necessary.

Bloomberg, citing its own source, confirmed the report.