Banks Pool On $70 Billion Crisis Fund

A lot of junk will enter the market with Lehman (LEH) going down in flames.  While Lehman couldn’t be saved, major banks around the world are trying to protect the financial markets from completely combusting.

AFP: A consortium of 10 global commercial and investment banks announced plans Sunday to provide 70 billion dollars to help offset a credit squeeze amid an anticipated collapse of Wall Street giant Lehman Brothers.

Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, and UBS, said in a joint statement they “initiated a series of actions to help enhance liquidity and mitigate the unprecedented volatility and other challenges affecting global equity and debt markets.”

They agreed to create a “collateralized borrowing facility” of 70 billion dollars, with each bank contributing seven billion dollars, to help ease access to credit.

They also said they would work together “to help facilitate an orderly resolution” of the derivatives exposures between Lehman Brothers and its counterparties.

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