Fed confirms there is more than one cockroach.

Sunday night press release from Fed (have they slept at all in the last week??).

First, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility to improve the ability of primary dealers to provide financing to participants in securitization markets. This facility will be available for business on Monday, March 17. It will be in place for at least six months and may be extended as conditions warrant. Credit extended to primary dealers under this facility may be collateralized by a broad range of investment-grade debt securities. The interest rate charged on such credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.

Second, the Federal Reserve Board unanimously approved a request by the Federal Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent to 3-1/4 percent, effective immediately. This step lowers the spread of the primary credit rate over the Federal Open Market Committee’s target federal funds rate to 1/4 percentage point. The Board also approved an increase in the maximum maturity of primary credit loans to 90 days from 30 days.

This one is easy to read. Like old saying goes, 'there is never only one cockroach'. With yet another never-before-seen facility Fed confirms that Bear Sterns was not the only Wall Street firm that is about to go belly up. This also makes it clear that those unnamed firms are unable to even wait a week for TSLF (which will allow them to temporarily off-load some of their mortgage-backed securities to Fed at inflated prices). Sheesh.

So, on one hand this will provide liquidity to these endangered firms. On the other hand, it screams nice and loud to the investors: 'time to panic now!' which removes liquidity from these endangered firms. I think I know who will win.

Monday will be a long day...