Flashback ( on ECB’s Mario Draghi):
– ECB’s Mario Draghi: We Need Fiscal Union (= EUSSR), Not Bank Intervention
– Former Goldman Sachs Managing Director Mario Draghi Appointed European Central Bank President!
– Mario Draghi (Wikipedia):
Draghi was then vice chairman and managing director of Goldman Sachs International and a member of the firm-wide management committee (2002–2005). A controversy existed on his duties while employed at Goldman Sachs. Pascal Canfin (MEP) asserted Draghi was involved in swaps for European governments, namely Greece, trying to disguise their countries’ economic status.
– French banks downgraded by Moody’s (Telegraph, Dec. 9, 2011):
Moody’s has downgraded BNP Paribas, Societe Generale, and Credit Agricole warning their creditworthiness is being damaged by the fragile operating environment for European banks.
The agency cut its ratings on the long-term debt of BNP and Credit Agicole by one notch to Aa3, concluding reviews that began in June and were continued in September. Societe Generale’s long-term debt was cut by one notch to A1.
The downgrades were driven by the increasing difficulties the banks were having in raising funding and the worsening economic outlook, Moody’s said.
The news comes a day after the European Banking Authority (EBA), warned the region’s banks must find €114.7bn of extra capital in order to withstand the euro zone debt crisis and restore investor confidence.
Moody’s said its ratings did take into account the fact that all three French banks were likely to benefit from state support if the crisis deepened.
“Liquidity and funding conditions have deteriorated significantly,” said Moody’s, adding that the banks have historically relied on wholesale funding markets.
“The probability that the will face further funding pressures has risen in line with the worsening European debt crisis.”
– Eurozone banking system on the edge of collapse (Telegraph, Dec. 9, 2011):
Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.
The European Central Bank admitted it had held meetings about providing emergency funding to the region’s struggling banks, however City figures said a “collateral crunch” was looming.
“If anyone thinks things are getting better then they simply don’t understand how severe the problems are. I think a major bank could fail within weeks,” said one London-based executive at a major global bank.
Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding.
“The system is creaking. There is a large amount of stress,” said Anthony Peters, a strategist at Swissinvest, pointing to soaring interbank lending rates.
Read moreMoody’s Downgrades French Banks (Telegraph) – Eurozone Banking System On The Edge Of Collapse (Telegraph) – EU Summit: This Emergency Plan Is Great News – If You’re A Bank (Guardian)