socialize_me
10-06-2008, 08:45 AM
WASHINGTON (MarketWatch) -- The Bush Administration and the Federal Reserve said Monday they are moving "with substantial force on a number of fronts" to shore up confidence in, and protect, the financial system.
The aggressive posture comes as global stock markets suffered fresh losses amid fear that the turmoil in financial markets and the squeeze on credit will spread to the broader economy.
In an overall statement, the President's Working Group on Financial Markets ;), which includes the top officials of all regulatory agencies and the Fed, said that it was working with the industry and regulators around the world to address the current challenges.
The Fed said it would double the size of its emergency loan program to banks to a potential $900 billion by the end of the year.
The announcement came as the central bank announced that it will begin to pay interest on bank reserves. This will give the Fed "greater scope" to address conditions in credit market.
The Treasury announced steps to clarify to the market how it plans to coordinate the massive borrowing needs that will be required to fund the new emergency mortgage financing plan approved by Congress last week.
Treasury said it will make adjustments to its auction calendar by increasing the size of bill and note auctions and continuing to issue cash management bills, some of longer-duration.
In addition, the department said it was considering bringing back the three-year note in November and taking other steps.
The Fed and Treasury said that they are consulting with market participants on ways to support term unsecured funding markets.
"Together these actions should encourage term lending across a range of financial markets in a manner that eases pressures and promotes the ability of firms and households to obtain credit," the Fed said.
"The Federal Reserve stands ready to take additional measures as necessary to foster liquid money market conditions," the statement said.
The Fed will increase the size of its term auction facility auctions to $150 billion beginning later Monday.
Anthony Ryan, the acting under secretary for domestic finance, went on television to stress that top-level officials are working rapidly to implement the mortgage rescue plan hatched by Treasury Secretary Henry Paulson.
"We're moving as quickly as we can," Ryan said in an interview on CNBC.
But Marc Chandler, currency analyst with Brown Brothers Harriman, said he was worried that the markets were moving much more rapidly than regulators and that Washington's efforts ultimately may be too small to stem the crisis.
http://www.marketwatch.com/news/story/fed-treasury-announce-new-steps/story.aspx?guid=80A62574-3F24-471C-8AD0-499AE370245A&dist=SecEditorsPicks
The aggressive posture comes as global stock markets suffered fresh losses amid fear that the turmoil in financial markets and the squeeze on credit will spread to the broader economy.
In an overall statement, the President's Working Group on Financial Markets ;), which includes the top officials of all regulatory agencies and the Fed, said that it was working with the industry and regulators around the world to address the current challenges.
The Fed said it would double the size of its emergency loan program to banks to a potential $900 billion by the end of the year.
The announcement came as the central bank announced that it will begin to pay interest on bank reserves. This will give the Fed "greater scope" to address conditions in credit market.
The Treasury announced steps to clarify to the market how it plans to coordinate the massive borrowing needs that will be required to fund the new emergency mortgage financing plan approved by Congress last week.
Treasury said it will make adjustments to its auction calendar by increasing the size of bill and note auctions and continuing to issue cash management bills, some of longer-duration.
In addition, the department said it was considering bringing back the three-year note in November and taking other steps.
The Fed and Treasury said that they are consulting with market participants on ways to support term unsecured funding markets.
"Together these actions should encourage term lending across a range of financial markets in a manner that eases pressures and promotes the ability of firms and households to obtain credit," the Fed said.
"The Federal Reserve stands ready to take additional measures as necessary to foster liquid money market conditions," the statement said.
The Fed will increase the size of its term auction facility auctions to $150 billion beginning later Monday.
Anthony Ryan, the acting under secretary for domestic finance, went on television to stress that top-level officials are working rapidly to implement the mortgage rescue plan hatched by Treasury Secretary Henry Paulson.
"We're moving as quickly as we can," Ryan said in an interview on CNBC.
But Marc Chandler, currency analyst with Brown Brothers Harriman, said he was worried that the markets were moving much more rapidly than regulators and that Washington's efforts ultimately may be too small to stem the crisis.
http://www.marketwatch.com/news/story/fed-treasury-announce-new-steps/story.aspx?guid=80A62574-3F24-471C-8AD0-499AE370245A&dist=SecEditorsPicks