EFFORTS TO UNFREEZE MARKETS CONTINUE
The Federal Reserve and Treasury Department today announced $800 billion in credit and mortgage programs intended to keep the country from slipping further into recession.
Through its consumer debt program, the Fed will lend up to $200 billion to the holders of securities backed by various types of consumer loans such as credit cards, auto and student loans.
Through a separate mortgage program, the Fed will buy up to $600 billion in mortgage-backed assets.
Up to $100 billion of that will go toward direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. The remaining $500 billion will be used to purchase mortgage-backed securities.
Source: Associated Press
Read MoreFEDS CUT FUNDS RATE TO 3 PERCENT
The Federal Reserve earlier this week cut a key interest rate for the second time in just over a week, reducing the fed funds rate by a half point.
The Fed action pushed the funds rate to 3 percent. In a brief statement explaining their decision, Fed Chairman Ben Bernanke and his colleagues said that “financial markets remain under considerable stress.”
The rate cut marked the fifth time that the Fed has cut the funds rate since September.
Source: Associated Press
Read MoreFED CUTS KEY INTEREST RATE
The Federal Reserve Board’s Federal Open Market Committee cut its short-term interest rate by a half of a percentage point today to 4.75 percent.
According to the committee, the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally.
The committee said today’s rate cut is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.
The cut to the federal funds rate is the first since June 2003.
In a related action, the Board of Governors also unanimously approved a 50-basis-point decrease in the discount rate to 5.25 percent. The discount rate is the rate banks pay to borrow directly from the Federal Reserve.
Source: federalreserve.gov
Read MoreBernanke: Fed Will Act As Needed to Limit Economic Fallout From Credit Mess
Federal Reserve Chairman Ben Bernanke pledged Friday that the central bank will “act as needed” to keep the credit fallout that has unhinged Wall Street from hurting the national economy.
In anxiously awaited remarks, Bernanke didn’t specify what the Fed’s next move will be but made clear policymakers are keeping close tabs on the problem, which has roiled markets in the United States and around the globe.
Even as Bernanke vowed Fed action, he sought to temper expectations.
“It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions,” Bernanke said. “But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.”
Many believe the odds are growing that the Fed will cut its most important interest rate, now at 5.25 percent, by at least one-quarter percentage point on or before Sept. 18, its next regularly scheduled meeting. The Fed hasn’t lowered this rate in four years.
The Fed “will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets,” Bernanke told an economics conference here.
To guide the Fed in terms of what its next move will be, Bernanke said policymakers will pay especially close attention to the “timeliest indicators” as well as information gleaned from businesses and banks around the country. Economic data that was taken before the credit markets really seized up in August will be much less useful to policymakers to assess the country’s economic health, he explained.
It was his first speech — and his most extensive comments — since the credit crunch took a turn for the worst in August. The carnage in credit markets and the turmoil on Wall Street pose the biggest test of Bernanke’s skills since taking the Fed helm 19 months ago.
President Bush was announcing steps Friday to aide homeowners who are having trouble making the payments on risky mortgages.
Source: FoxNews.com
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