Credit Markets Take Time To Thaw

Thomas S. Corona (left) and Will Aston-Reese look at the white board on their trading floor. i i

Thomas S. Corona (left) and Will Aston-Reese of Tradition Asiel Securities in New York City look at the white board on their company's trading floor on Oct. 20, 2008. Art Silverman/ NPR hide caption

itoggle caption Art Silverman/ NPR
Thomas S. Corona (left) and Will Aston-Reese look at the white board on their trading floor.

Thomas S. Corona (left) and Will Aston-Reese of Tradition Asiel Securities in New York City look at the white board on their company's trading floor on Oct. 20, 2008.

Art Silverman/ NPR

A hallmark of the credit crunch is that lending among banks has come to a virtual standstill. When transactions do happen, they typically involve relatively small amounts of money. Interbank lending has picked up only a little in the past few days.

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ROBERT SIEGEL, host:

Shortly after Fed Chairman Bernanke testified this morning, I went with NPR economics correspondent, Adam Davidson, to a place where they spend all day watching to see who's borrowing and who's lending, and who can match a borrower with a lender. It's the trading room at Tradition Asiel Securities in New York City's financial district. And Adam introduced me to two of the people who work here, two vice presidents who've seen and survived past financial crises, Will Aston-Reese and Tom Corona.

ADAM DAVIDSON: We are looking right now at the front lines of the credit crisis. This is it. These are the guys who are seeing, moment by moment, what this financial crisis is, what is happening. These are the guys who are actually supposed to be, and normally are, facilitating trades between banks, when one bank wants to borrow a billion dollars, $500 million from another bank. These are the guys who do it. Until a month ago, everything was working fine. Now, nothing is trading.

SIEGEL: Yeah, we're looking now at perhaps 250 people at computer screens, who are watching, trying to follow different phases of the markets. Tom Corona, this compared to a typical day last year?

Mr. TOM CORONA (Senior Vice President, Tradition Asiel Securities): Very, very quiet. The normal flows on a day for us in - just in institutional money markets, a slow day. We would, you know, transact three to four billion in fixed - you know, fixed-date securities. Today, for example, we've transacted, I think, a total of 300 million, and that's extremely busy, compared to the way it's been the last four weeks.

SIEGEL: Yeah, Will Aston-Reese, about 10 days ago, you described being at work here as watching paint dry. It looks a little bit more active than that right now.

Mr. WILL ASTON-REESE (Vice President, Money-Market Sales, Tradition Asiel Securities): Yeah, it is. But it's almost as if the investing is forced. What we're seeing is the anticipation of the capital infusion to certain banks, and they in turn, going out and putting it to work on the term market. The people we're not seeing are the people who continually have a turnover of money, that being the money-market funds, we've yet to see them return to this market. The big problem is if you're a money manager and you're looking at these yields, these yields are just totally out of sight. They're salivating. They wish they could invest. The problem with the money funds though, is that while they can buy it, their fears that they can't turn around and sell it if another crisis hits.

SIEGEL: Hey, Adam's going to walk me around your trading room here. Let's see if what he says is right.

DAVIDSON: So this, right here, this is the financial crisis.

SIEGEL: This whiteboard with...

DAVIDSON: This whiteboard, we're looking at it.

SIEGEL: Board marker all over it.

DAVIDSON: This right here, we won't mention any names, but every five-letter code you see is another bank that wants to borrow money for three months.

SIEGEL: Mm-hmm.

DAVIDSON: Normally, this would be the simplest thing in the world. They would call Tom or Will, and get the trade in seconds. Now there's - one, two, three, four, five, six, seven, eight, nine, ten, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, a hundred? I mean, how many -

SIEGEL: They all want money?

DAVIDSON: All of these banks want money, and how many are giving them money?

Mr. CORONA: Today, we had the opportunity to have two actual different monies in the banks. One, a domestic bank, and one, an international banks lend - I think, we did a total of about $300 million total, which is busy as of late. But I mean minuscule.

SIEGEL: This is how much money is moving between banks. How much money some banks are lending to other banks? And the answer is, not much.

Mr. CORONA: This is how - I mean, this probably represents over a trillion dollars in need.

Mr. ASTON-REESE: Absolutely. Absolutely.

Mr. CORONA: A lot of the real lenders just have handcuffs on right now, and they will not lend to the banks, simply because they're unsure that if there's another run, another crash, another credit crisis, that they can't raise the money if they had to.

SIEGEL: So, Will, how much does a day of work take out of you here physically?

Mr. ASTON-REESE: It's - well, the - you know, it starts more emotionally and mentally, because I've - believe it or not, my senses are much more heightened now, because I'm glued to those screens, looking for any blip that might show, what Adam always asks me, a crack in the ice, to show that we're going to get moving again.

SIEGEL: You're a tri-athlete?

Mr. ASTON-REESE: Yes, sir.

SIEGEL: Compare during a triathlon with doing a week here in the trading room nowadays.

Mr. ASTON-REESE: Well, you know, they both have their toll on - later this way, I've never gone home, and stretched anything other than out on the couch from a day's work here.

SIEGEL: So physically, you're holding up OK.

Mr. ASTON-REESE: Yeah, physically I'm fine.

SIEGEL: Tom Corona, how do you put up with it? What do you do?

Mr. CORONA: You know, I started it out at Drexel-Burner, which is no longer in business, on a trading floor, and I was there for the 87 crash as a young kid. And you know, that was - I thought I'd never see anything like that again. And that really hails in comparison to what's happened over the last six months. So, you know, has - if you told people a year ago that we were not going to have as independent firms anymore, Bear Stearns, Lehman Brothers, Fannie Mae, Freddie Mac, and the list goes on and on, Wachovia bank, nobody would ever believe that. It was just too many and too big.

Mr. ASTON-REESE: I might also add that if you're resourceful, you can put, you know, what you know together and survive.

SIEGEL: Well, Will Aston-Reese and Tom Corona, thanks a lot for talking with us today.

Mr. CORONA: Thanks very much.

Mr. ASTON-REESE: It was a pleasure.

Mr. CORONA: Thank you very much for coming.

SIEGEL: And, Adam, thanks for introducing me to your friends.

DAVIDSON: Yeah, thank you, Robert. I'm really glad to bring you here.

SIEGEL: It's NPR's Adam Davidson. We also heard from Will Aston-Reese and Tom Corona of Tradition Asiel Securities in New York City.

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