Now, we like to think that the Fed knows the bigger picture – which us mere mortals in the blogsphere don’t have. But what if that bigger picture is not aiding the money markets at all. Perhaps it is to provide much needed cash-flow for JPM to ease its way through the systemic stresses wreaking havoc everywhere else. JPM has the largest portfolio of derivatives on planet Earth (in the tens of trillions of dollars). Are we witnessing preventative measures against another LEH-like disaster – but 10x bigger.

Over the same period MM Funds shifted 360bn out of prime funds and into Govt and Treasury funds.

600bn seems to exceed the reductions in financial CP by a large amount, with at least the potential to support issuance up to 1.4Trn a 60& % increase over the peak.

It seems as if some speculators would be ruined, and some financial institutions that used CDS to insure their assets would end up with less capital than they were supposed to have.

But maybe simply nullifying the CDS altogether would produce cleaner, more predictable results than trying to keep them in force for 30 years.

JPMorgan Chase & Co. will run five special units that will buy up to $600 billion of certificates of deposit, bank notes and commercial paper with a remaining maturity of 90 days or less. The Fed will provide up to $540 billion, with the remaining $60 billion coming from commercial paper issued by the five units to the money-market funds selling their assets, central bank officials told reporters on a conference call…

“The age of innocence — when banks lent to each other unsecured for three months or longer at only a small premium to expected policy rates — will not quickly, if ever, return,” King said. “I hope it is now understood that the provision of central bank liquidity, while essential to buy time, is not, and never could be, the solution to the banking crisis, nor to the problems of individual banks.”

If the limit of issuers per SPV is 10 and there are 5 SPVs, the maximum number of names that can be invested across the 5 SPVs is 50. The minimum number of names, given a 15% issuer maximum, will be 35.

Plenty of room for the top 12-15 European Banks. And GE Capital.

“The MMIFF is intended to help restore liquidity to the money markets.The MMIFF will be a credit facility provided by the Federal Reserve to a series of special purpose vehicles” That old liquidity schtick again..

“Each PSPV will only purchase debt instruments issued by ten financial institutions designated in its operational documents. Each of these financial institutions will have a short-term debt rating of at least A-1/P-1/F1…the debt instruments of (a single) financial institution may not constitute more than 15 percent of the assets”

Is that the 9 + 1? Does several make 30-70?

“Eligible investors will include U.S. money market mutual funds and over time may include other money market investors.”

“Each PSPV will finance its purchase of an eligible asset by selling ABCP and by borrowing under the MMIFF. The PSPV will issue to the seller of the eligible asset ABCP equal to 10 percent of the asset’s purchase price. The ABCP will have a maturity equal to the maturity of the asset and will be rated at least A-1/P-1/F1 by two or more major NRSROs. The Federal Reserve Bank of New York (FRBNY) will commit to lend to each PSPV 90 percent of the purchase price of each eligible asset until the maturity of the asset. The FRBNY loans will be on an overnight basis and at the primary credit rate. The loans will be senior to the ABCP, with recourse to the PSPV, and secured by all the assets of the PSPV.”

Do not see any foreign (though not excluded)

Structure very SIV/MLEC-like and seems to be designed to (re)finance/guarantee CP issuance of 10+ major financial institutions.