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Previously, loans were made in exchange for collateral; now investments were made in exchange for equity.
The British plan would provide banks with funds below market rates in exchange for collateral and a commitment to lend to businesses, Mervyn King, the governor of the Bank of England, said in a speech.
In late 2007 and early 2008, as the authorities struggled to prevent financial markets from freezing up, banks were invited to bid to borrow funds from the Bank of England in exchange for collateral in a series of so-called "auctions".
The TALF, which goes into effect in the middle of February, will give non-recourse loans in exchange for collateral backed by consumer loans and other assets.
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In exchange for what collateral?
Under that program, the organization's securities were lent to short-sellers in exchange for cash collateral, which the bank then invested.
Hans-Joachim Hans-Joachim Dübeln banks at Finpolconsult in Bexpert said the central bank's pronision of loans in exchange for risky collateral was hampering the needed revamping of banks by propping up weat ones.
Yet Mr Warsh had no trouble when the Fed was providing unlimited liquidity to troubled financial firms at concessional rates in exchange for dubious collateral during the teeth of the crisis.David Malpass, the former chief economist of Bear Stearns who unsuccessfully ran for the Senate in 2010, had a very different perspective.
The dissenters also argued that the Fed's other efforts to restore confidence among lenders — including its decision to provide cheap loans to investment banks in exchange for relatively risky collateral — were a more effective and time-sensitive approach to improving the economy.
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We will hold monthly repo auctions to provide predictable and regular access to high-quality collateral in exchange for a very broad range of collateral.
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