RTC solution hinted by Henry Paulson

Henry Paulson said they might use a similar entity like the Resolution Trust Corporation (RTC). The RTC was a U.S. government-owned asset manager established in 1989 in answer to the savings and loan crisis, this could hold the bad debt that has polluted financial institutions for 12 months. Reported on CBNC.

Investors frantically trying to keep funds out of anything that might nosedive in value have been pouring money into Treasury bills. T-bills indicated extreme tightness in other markets that hedge funds and banks use to stash cash for short periods of time, particularly the repurchased markets, which are temporary loan markets. But as these have all seized up one of the only places available for short-term fixed income assets is T-bills.

It was announced on Thursday that the main global central banks would inject the world’s financial markets with as much as $180 billion. When Putnam Investments suddenly liquidated $15 billion money-market fund after institutional investors pulled out their cash the T-bill buyer picked up.

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