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Minyan Mailbag: The State of State Street


State Street has no retail franchise to draw deposits from if it needs to fund liquidity line draws.


We encourage Minyans to read this morning's mailbag, A Bird's-Eye View of the Credit Conundrum, from a very astute and tremendously informed member of our community. This is the beauty of the 'Ville---intelligent folks with skill-sets that complement our own that watch each other's back. Minyan Peter, for his part, was the treasurer of one of the largest banks in the Midwest. Noice indeed.

As a follow-up, we'll air the following fare which he shared with us this morning after we noodled the overnight situations at Carlyle, State Street (STT), Barclays (BCS) and DBS (Singapore's largest bank). His additional thoughts? Glad you asked!

"I have been watching Europe more than the US, because that is where the liquidity problems will first appear - remember the European banks are the big back up lines for all of these CP conduits, not the US banks. It is why I have not been at all surprised that the ECB has had to be so aggressive.

The news on State Street, however, is very troubling. State Street has no retail franchise to draw deposits from if it needs to fund liquidity line draws. If the chatter on State Street is true, State Street's ability to fund through the interbank market may be the first real tell in the US as to how big a liquidity problem we have."
-Minyan Peter

On behalf of the Minyanship, we salute you.

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