The problem of course, arrives when the dealers need to bid to meet the demand.
June 26 (Bloomberg) -- Dresdner Kleinwort Securities LLC dropped from the ranks of securities firms that trade Treasuries with the Federal Reserve, bringing the dealer network back to the smallest in the 49-year history of the system.
Dresdner is the second dealer this year to resign from the network of firms which was formalized by the Fed in 1960. The dealers are mandated to bid at Treasury auctions and that act as counterparties for the central bank as it conducts open-market operations. At 16 firms, the number of dealers is less than the original 18.