Fed auctions $75 billion to ease credit stresses

[maddezmom]

Source: AP

WASHINGTON - The Federal Reserve has auctioned another $75 billion in loans to squeezed banks to help them overcome credit problems.

The central bank on Tuesday announced the results of its most recent auction — the 14th since the program began in December. It's part of an ongoing effort to ease financial turmoil and credit stresses.

In the latest auction, commercial banks paid an interest rate of 2.360 percent for the short-term loans. There were 76 bidders for the slice of $75 billion in 28-day loans. The Fed received bids for $89.38 billion worth of the loans. The auction was conducted on Monday with the results released on Tuesday.

In mid-December the Fed announced it was creating an auction program that would give banks a new way to get short-term loans from the central bank and to help them over the credit hump. A global credit crunch has made banks reluctant to lend to each other, which has crimped lending to individuals and businesses.



Read more: http://news.yahoo.com/s/ap/20080617/ap_on_go_ot/fed_credit_crisis;_ylt=AmtwzDBt1hm3cE85aJcxlNINJ_wE

[Ian David]

1. This should help Bush run out the clock and stave-off the collapse until after November. n/t

[flashl]

2. In Dec, the Feds excerised its emergency 'bypass' powers to conduct these auctions

Dec. 12 (Bloomberg) -- The Federal Reserve took advantage of emergency powers to authorize the auctions that officials felt were necessary to ease a credit squeeze, concluding it otherwise lacked legal permission to do so.

The Fed bypassed requirements for prior notice and public comment when writing the regulations to implement today's agreement with the European Central Bank and three other central banks. The Fed's official notice today said any delay caused by following standard procedures would have been "contrary to the public interest."

Bloomberg