Posted on 03/28/2008 10:24:39 AM PDT by BGHater
The Federal Reserve announced Friday it will auction another $100 billion in April to cash-strapped banks as it continues to combat the effects of a credit crisis.
The central bank said it would make $50 billion available at each of two auctions, on April 7 and April 21.
Through the end of March, the Fed has provided $260 billion in short-term loans to commercial banks through the innovative auction process. It also has employed Depression-era provisions to provide money to investment banks.
All the moves have been designed to cope with a serious financial crisis that has roiled U.S. and global markets and caused the near-collapse of Bear Stearns Cos., the nation's fifth largest investment bank.
The Fed has been holding auctions every two seeks since December to provide short-term loans to commercial banks. It started with auctions of $20 billion, then pushed the level to $30 billion, and in early March raised the auction amount to $50 billion as the credit shortage grew more severe.
In announcing the move to $50 billion last month, the Fed said it would continue the auctions for at least the next six months, unless credit conditions show they are no longer needed.
The auctions are just one of a series of unorthodox steps the Fed has taken to battle the current crisis. The biggest of those moves was an announcement that it was allowing investment banks to borrow directly from the Fed. Previously, only commercial banks, which face tighter regulations, had that privilege.
The Fed also said it would make available $30 billion in financing to support the sale of troubled Bear Stearns to JP Morgan Chase & Co., hoping to prevent a bankruptcy that could have rocked Wall Street.
The Fed's auctions have drawn criticism from some that the central bank, and ultimately U.S. taxpayers, could be financing a bailout for big Wall Street firms that had engaged in risky lending practices.
Fed Chairman Ben Bernanke will fact questions about the Fed's recent moves when he testifies on Wednesday before the congressional Joint Economic Committee.
Time for a run on the banks.
Printing Press Ping.
What a country!
I wish I owned a bank.
They haven’t just crossed the Rubicon, they are laying siege to the city.
Where are Brutus, Cassius and Casca when we need them?
You probably do.
Since the presses are already running, why not $100 TRILLION?
I guess we don’t have a free market economy.
How can I make a bid?
How can I make a bid?
This is what, $300B injected into the economy in just 2 months? Hello, inflation! (I have a mortgage, might as well embrace it!)
My take on all this is that the Wall Street masters of the universe all had their multi-million dollar paydays during the party and now the Fed is stepping up to pay the bar tab. Somebody is getting screwed here - and my instincts say it is us!
Well the government’s answer to everything is to throw more money at it...even apparently if the problem is too much money.
Allot of assets have simply “disappeared” over the past several months. This action of the Fed is not going to have an impact on inflation. We should be grateful we have Bernake as Fed Chairman. Greenspan would do anything until wew were in a deep recession. Greenspan was way over-rated.
Gotta allow them replanted tree's to grow!!!
Monetizing a “problem” just papers over it..
Not at all.
That is a myth.
Your instincts are deadly accurate.
But, but, but, but.... this is impossible. The Federal reserve does not create money and give it to wall street. You said so, and here they are doing another $100B of it. What’s up? Was the Fed lying or were you lying?
Wow. Another pay cut for the rest of us. What is this, Zimbabwe?
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