WASHINGTON (AP) - The Federal Reserve announced a series of new steps
Sunday to help provide relief to a spreading credit crisis that threatens to
plunge the economy into recession.
The central bank approved a cut to its lending rate to financial
institutions to 3.25 percent from 3.50 percent, effective immediately, and
created another lending facility for big investment banks to secure short-term
loans.
The steps are "designed to bolster market liquidity and promote orderly
market functioning," the Fed said in a statement. "Liquid well-functioning
markets are essential for the promotion of economic growth."
The new lending facility will be available to financial institutions on
Monday.
It will be in place for at least six months and "may be extended as
conditions warrant," the Fed said. The interest rate will be 3.25 percent and a
range of collateral will be accepted to back the loans.
The Fed also approved the financing arrangement announced Sunday by JPMorgan
Chase & Co. and the Bear Stearns Cos.
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