From John Carney at NetNet (link):
[T]he need to keep borrowing under what are supposed to be short term facilities shows just how badly financial institutions were faring during the financial crisis.
“The amount of overnight lending reflects how broken our financial system really is. A well capitalized, moderately leveraged system does not require this massive liquidity from a central bank — interbank lending should be sufficient. What the data reveals is that the financial sector remains dangerously under-capitalized and overleveraged,” Barry Ritholz writes at the Big Picture.
