Pride goeth

30 November 2007 By Edward Hadas Follow @edwardhadas

Stuckup bankers who thought they knew it all are to blame for the current credit squeeze, according to German finance minister Steinbrück. He may have a case. But the market has a way of teaching the proud a lesson or two. Meek bankers are now begging for yearend help.

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The European Central Bank said on Friday that it would add excess liquidity for as long as needed and at least until after the end of the year.

It will extend the maturity of its main refinancing operation on 19 December by two weeks so that the maturity date falls on 4 January rather than 28 December. In this operation, the ECB will aim to satisfy the banking sector's liquidity needs for the entire twoweek period, covering both the Christmas holidays and the end of the year, the central bank said in a statement.

The onemonth euro Libor rate rose 64 basis points to 4.81 percent at on 29 November, the highest since May 2001. The ECB's benchmark rate is 4%. Onemonth Libor for dollars jumped 41 basis points to 5.23%, the largest increase in more than a decade.

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