Something odd happened today when the ECB disclosed the number of banks using the Fed's USD swap facility - it increased by 100%. And granted it was an increase from one bank to two banks, but still. As we have been highlighting for over a month, one bank had for five weeks in a row been responsible for borrowing $60 million from the Fed using the ECB as an intermediary, paying roughly 1.19% for the privilege, implying it had been constantly locked out of the USD interbank market. Today, bank #2 joins in, this time for a much more substantial amount of half a billion dollars. The most likely reason for this (absent some major behind the scenes front-end deterioration in a PIIGS bank, which in Europe tends to be given), is that as we highlighted yesterday, European liquidity conditions have recently gotten far more tight, courtesy of the massive liquidity extraction following the latest LTRO expiration. And whether one looks at it as a 100% increase in the number of banks, or almost 1,000% increase in the amount of borrowings, the development is certainly not good. Which, the cynics out there may say, is why stocks are up: it is most certainly not due to JPM missing revenues estimates, and booking and projecting a hilarious drop in charge-offs in light of the foreclosure freeze which will do precisely the opposite. But who cares about reality.