uscitizen
Villified User
Fed takes steps to break through credit clogs
Jul 30, 5:44 PM (ET)
By JEANNINE AVERSA
WASHINGTON (AP) - Focused on getting the nation's credit gears smoothly working again, the Federal Reserve is letting Wall Street firms draw emergency loans into next year and giving financial companies more options to help them overcome credit problems.
The Fed's announcement on Wednesday marks its latest effort to get credit - the economy's oxygen - flowing more freely. A global credit crisis that erupted last August has hobbled the U.S. economy, already reeling from a housing meltdown.
As financial companies have racked up multibillion dollar losses on soured mortgage investments and credit problems spread to other areas, firms have hoarded cash and clamped down on lending. That has crimped spending by people and businesses, which in turn has weighed on the national economy - a vicious cycle the Fed wants desperately to break.
To that end, the Fed announced that investment houses can now tap the central bank for a quick source of cash through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.
Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said. And, it also will let commercial banks, in a separate program, bid on cash loans that last longer - for 84 days, besides the 28-day loans now available.
http://apnews.myway.com/article/20080730/D928E2TG0.html
Jul 30, 5:44 PM (ET)
By JEANNINE AVERSA
WASHINGTON (AP) - Focused on getting the nation's credit gears smoothly working again, the Federal Reserve is letting Wall Street firms draw emergency loans into next year and giving financial companies more options to help them overcome credit problems.
The Fed's announcement on Wednesday marks its latest effort to get credit - the economy's oxygen - flowing more freely. A global credit crisis that erupted last August has hobbled the U.S. economy, already reeling from a housing meltdown.
As financial companies have racked up multibillion dollar losses on soured mortgage investments and credit problems spread to other areas, firms have hoarded cash and clamped down on lending. That has crimped spending by people and businesses, which in turn has weighed on the national economy - a vicious cycle the Fed wants desperately to break.
To that end, the Fed announced that investment houses can now tap the central bank for a quick source of cash through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.
Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said. And, it also will let commercial banks, in a separate program, bid on cash loans that last longer - for 84 days, besides the 28-day loans now available.
http://apnews.myway.com/article/20080730/D928E2TG0.html