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Many people know that the Federal Reserve sets interest rates in order to loan money to other banks so they can keep cash flowing throughout the U.S. financial system. Mostly, this works great for everyone involved. But, sometimes, banks and thrifts need a little extra cash, mostly so they can meet the reserve requirement (the minimum amount of deposits banks need to be considered in good financial shape).
To meet the reserve, the Fed has what's known as the discount window, which allows banks to borrow money for a short period of time at a higher interest rate (called the discount rate) than the official Federal Funds rate.
It's called a window because it used to be an actual teller window, where banks would go to borrow from the federal government. Now, it's used more as a lender of last resort. In fact, banks prefer to borrow from one another than directly from the discount window, since the interest owed can be cheaper and going to the discount window tends to imply that the bank is in a spot of trouble.
The Fed, too, doesn't like banks borrowing this way, which is why the discount rate is always higher than the target rate. It also requires banks to collateralize the loans, meaning they have to turn over liquid assets, such as loans or CDs, to the Fed in order to get the money. As with any loan, the banks get the underlying collateral back when they pay off the balance.
Home / Markets / Industries / Retail
Thursday, July 03, 2008
Bunge Limited and Corn Products International in $4.8 Billion Merger Talks, an Industrial Info News Alert
Comtex
SUGAR LAND, TX, Jul 03, 2008 (MARKET WIRE via COMTEX) ----Researched by Industrial Info Resources (Sugar Land, Texas) -- Bunge Limited (NYSE:BG) (White Plains, New York) and Corn Products International Inc. (NYSE:CPO) (Westchester, Illinois) have announced merger talks valued at $4.8 billion to combine the companies. Under the terms of the agreement, which has been approved by the boards of directors of both companies, Corn Products stockholders will receive common shares of Bunge with a market value of $56 for each share of Corn Products common stock that they own.
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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services. For more information send inquiries to alternativefuelsgroup@industrialinfo.com or visit us at www.industrialinfo.com.
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Contact: Joe Govreau 713-783-5147
SOURCE: Industrial Info Resources
Copyright 2008 Market Wire, All rights reserved. ********************************************************************** As of Sunday, 06-29-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated a DOWNTREND on 06-25-2008 for BG @ $108.92. As of Sunday, 06-29-2008 23:59, the latest Comtex SmarTrend Alert, an automated pattern recognition system, indicated an UPTREND on 06-23-2008 for CPO @ $52.14. For more information on SmarTrend, contact your market data provider or go to www.mysmartrend.com SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright � 2004-2008 Comtex News Network, Inc. All rights reserved.
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