Sunday night 2148 Eastern Time
WASHINGTON – The
The central bank approved a cut in 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 new lending facility will be available to big Wall Street firms on Monday.
“These steps will provide financial institutions with greater assurance of access to funds,”told reporters in a brief conference call Sunday evening.
The Fed acted just after. agreed to buy rival for $236.2 million in a deal that represents a stunning collapse for one of the world’s largest and most venerable investment banks. Just on Friday the Fed had raced to provide emergency financing to cash-strapped through JP Morgan. Days earlier the Fed announced a set of other unconventional steps to thaw out a credit market in danger of freezing shut.
The new lending facility — described as a cousin to the Fed’s emergency lending “discount window” for banks — is geared to give investment houses a source of short-term cash on a regular basis — if they need it.
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 — including investment-grade mortgage backed securities — will be accepted to back the overnight loans.
said he was pleased by Sunday’s developments.
“Last Friday, I said that market participants are addressing challenges and I am pleased with recent developments. I appreciate the additional actions taken this evening by the
Queen Victoria (front) and Queen Elizabeth 2 (back) depart for a Royal Rendezvous at Sydney Harbour in February 2008. The global cruise industry is putting on a brave face as it sails into seas darkened by a faltering US economy, a weak dollar and record oil prices, major cruise ship operators said at their annual convention.(AFP/File/Anoek de Groot)