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U.S. Treasury asks lenders to come clean about short-term financing woes

Apr 26, 2011 Todd Milner

Due to increasing legislative pressure and a lack of budget options, the U.S. Treasury Department is asking lenders for updates on the state of the short-term financing market. Usually, when supply tightens, the Treasury is able to adjust its short-term debt sales, an official told BusinessWeek in an anonymous statement. At the moment, the debt limit - which the Treasury has said could be reached as soon as May 16 - prevents it from expanding bill sales, the official added. The Treasury has urged Congress to lift the debt ceiling, but it has not requested a specific amount of increase, the official said, adding that the size was up to lawmakers. In its quarterly refunding survey, the Treasury asked its primary bond dealers to comment on conditions in the money markets, another official told Reuters. Demand for short-term securities has increased since the Federal Deposit Insurance Corp took steps to force banks to bring back into these markets the cash that had been held as excess reserves at Federal Reserve banks. The 20 primary dealers will meet to discuss debt markets with Treasury officials on April 29 in Washington, according to BusinessWeek. The Treasury is scheduled to reveal its quarterly borrowing estimates on May 2 and will announce refunding plans for three-, 10- and 30-year debt securities on May 4.