Sept. 28, 2007 (LPAC)--On Sept. 27, the European Central Bank (ECB) emergency lending fund of overnight money was tapped for 3.9 billion euro, at a penalty rate of 5.0% interest--a full point above the interbank lending rate, the Financial Crimes reported today. This was the highest such sum ever lent since 2004, according to the Italian daily Il Sole 24 Ore, which noted that "during the worse days in August, the ECB overnight loans in emergency situations were, at most, 2 billion euros."

The borrowing shows that "we are still in a situation where interbank lending is not getting anywhere near back to normal, and banks are holding onto cash... It is a big number, and it does make you wonder if someone out there is still in trouble," a nervous economist at one of the European banks acknowledged to the Crimes.

At the same time, the U.S. Federal Reserve pumped $38 billion into the money market as the effective Fed funds rate went higher than 5%, far above the 4.75% target. The Fed then announced on Friday that it received almost $24 billion in bids for the $4.75 billion in 3-day repurchase agreements it had offered to try to bail out the banks.