Fed joins three other central banks with $200 billion more in lending

By The Associated Press
via Yahoo News
Tuesday, March 11, 2008

http://news.yahoo.com/s/ap/20080311/ap_on_bi_ge/fed_credit_crisis;_ylt=A...

WASHINGTON -- Trying to pump more cash into a tight credit market, the Federal Reserve and other central banks on Tuesday jointly announced a new $200 billion expansion of its lending program.

The Fed acted in conjunction with the European Central Bank, the Bank of Canada, and the Swiss National Bank.

In its announcement, the Fed noted that "G-10 central banks have continued to work together closely and to consult regularly on liquidity pressures in funding markets. Pressures in some of these markets have recently increased again. We all continue to work together and will take appropriate steps to address those liquidity pressures."

A Fed statement released Tuesday said that loans to dealers under the new initiative will be secured for 28 days instead of overnight, as is currently the case, by a pledge of other securities, including federal agency debt and residential mortgage-backed securities.

The lending facility "is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally," the Fed said.

The announcement said that securities will be made available through an auction process on a weekly basis beginning March 27.

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