Fed Cuts Discount Rate, Lends More to Avert Meltdown (Update4)
By Scott Lanman and Craig Torres
March 17 (Bloomberg) -- The Federal Reserve, struggling to prevent a meltdown in financial markets, cut the rate on direct loans to banks and became
lender of last resort to the biggest dealers in U.S. government bonds.
In its first weekend emergency action in almost three decades, the central bank lowered the so-called discount rate by a quarter of a percentage point
to 3.25 percent. The Fed also will lend to the 20 firms that buy Treasury securities directly from it. In a further step, the Fed will provide up to
$30 billion to JPMorgan Chase & Co. to help it finance the purchase of Bear Stearns Cos. after a run on Wall Street's fifth-largest securities firm.
``It is a serious extension of putting the Federal Reserve's balance sheet in harm's way,'' said Vincent Reinhart, former director of the Division
of Monetary Affairs at the Fed and now a scholar at the American Enterprise Institute in Washington. ``That's got to tell you the economy is in a
pretty precarious state.''
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The Second Great Depression
By Mike Whitney
www.informationclearinghouse.info...
www.apfn.org...
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