Fed acts to stem credit turmoil |
|
|
|
Published
:
Fri, 10 Aug 2007 14:50
|
WASHINGTON (AP) - The Federal Reserve, trying to calm financial turmoil on Wall Street, announced Friday that it will provide liquidity to help bolster U.S. financial markets.The Fed, in a short statement, said it will provide are serves as necessary' to help the markets safely make their way. The central bank did not provide details but said it would do all it can to 'facilitate the orderly functioning of financial markets.'The Fed's action comes one day after a financial panic about a credit crunch swept through Europe. That prompted the Europeans to pump $130 billion into their financial system. The Fed moved Thursday to add an extra $24 billion in temporary reserves to the U.S. banking system.The Fed chose not to cut a key interest rate, called the federal funds rate, to address the problem. That interest rate still stands at 5.25 percent. The funds rate is interest banks charge each other on overnight loans.Instead, the Fed is seeking to provide reassurance to investors that the central bank will pump extra money into the U.S. financial system to make sure the credit crunch doesn't worsen.'In current circumstances, depository institutions may experience unusual funding needs because of dislocations in money and credit markets,' the Fed said.It told banks that the Fed's discount window -- where banks can turn in an emergency for short-term loans -- is available as a source of funding.After the Sept. 11, 2001, terror attacks, the Fed used the discount window to extend billions of dollars worth of emergency loans to banks to keep the financial system functioning.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|
|
Print this Story
Genzyme lymphoma trial meets main goal 