- WASHINGTON (AP) -- The Federal
Reserve is taking bigger steps to ease the nation's credit crisis, including
increasing the amount of loans it plans to make available to banks this
month to $100 billion.
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- The Federal Reserve announced Friday that it will boost
the size of auctions planned for March 10 and March 24 to $50 billion each.
That is up from the $30 billion limits it had previously announced. The
auctions serve as short-term loans to get banks the cash they need to keep
lending to their customers.
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- The Fed, in a statement, said it planned to continue
the auctions for at least six months, and would move to even larger auction
amounts if needed.
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- In a second step, the Fed said it will make $100 billion
available to a broad range of financial players through a series of separate
transactions starting on Friday.
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- The Fed has been working to pump billions of dollars
into the banking system to aid an economy rocked by the subprime mortgage
crisis and the severe tightening of credit. The central bank started its
new type of auction in December to provide short-term loans to cash-strapped
banks in hopes of keeping them lending. So far, the Fed has made available
a total of $160 billion in short-term loans to banks through six auctions.
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- Fears are growing that the country is teetering on the
edge of a recession, if one has not already begun.
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- The picture worsened just after the Fed's announcement
Friday when the Labor Department released a report showing employers slashed
another 63,000 jobs in February, the most in five years.
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- Senior Federal Reserve officials said the steps announced
Friday were geared to providing relief to credit markets, which have deteriorated
further in recent days, and not related to the weak employment figures.
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- A meltdown in the housing and credit markets has made
banks and other financial institutions reluctant to lend to each other,
causing a cash crunch. Financial companies wracked up multibillion-dollar
losses as investments in mortgage-backed securities soured with the housing
market's bust. Problems started in the market for subprime mortgages --
those made to people with blemished credit histories. However, troubles
have spread to other areas.
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