Fed widens door for banks to obtain emergency loans
WASHINGTON - The Federal Reserve announced late yesterday several steps to cope with the worst credit crisis in decades, including broadening the types of assets that investment banks can put up to get emergency loans from the Fed.
US and foreign commercial banks yesterday were seeking a way to inoculate the global financial system against a bankruptcy filing by Lehman Brothers.
Federal Reserve Chairman Ben Bernanke announced the actions in a statement, saying they were being taken after a weekend of discussions with officials from the Treasury Department and the Securities and Exchange Commission and top executives of financial firms. Those talks were aimed at seeing whether another financial institution would be willing to take over venerable investment bank Lehman Brothers and failing that, how other institutions could pool resources to protect the global financial system.
Bernanke said the discussions had been aimed at identifying "potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses."
He said the steps "are intended to mitigate the potential risks and disruptions to markets."