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Archive for Wednesday, March 12, 2008

Fed announces further steps to ease credit

March 12, 2008

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— The Federal Reserve on Tuesday ramped up efforts to provide more relief to squeezed financial institutions, a coordinated action with other central banks aimed at easing a global credit crisis that threatens to push the U.S. economy into its first recession since 2001.

The Fed said it will make up to $200 billion in Treasury securities available to big Wall Street investment houses and banks. The action is designed to ensure that there is an ample supply of Treasury securities. With strains in financial markets, demand has grown for Treasury securities, considered the safest investment in the world because they are backed by the U.S. government.

On Wall Street, the Fed's action propelled stocks upward. The Dow Jones industrials jumped more than 180 points in afternoon trading - rising more than 416 points for the day - the biggest single-day point gain since July 2002.

The move comes as banks and other financial institutions face cash crunches.

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