• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Fed Joins Other Central Banks in Loan Plan

Posted on: Wednesday, 12 December 2007, 12:00 CST

The U.S. Federal Reserve and four other central banks Wednesday announced coordinated measures to inject money into global markets to improve their economies.

The move sent Wall Street stocks soaring nearly 2 percent.

The Fed -- coordinating with the European Central Bank, Bank of England, Bank of Canada and Swiss National Bank -- said it would create a temporary Term Auction Facility to make at least $40 billion available to banks in four separate auctions starting next week.

The funding, at rates far below the discount window the Fed normally charges on direct loans, would help banks make loans to businesses and consumers.

The Fed said it was also setting up lines of credit with the European Central Bank and the Swiss Central Bank for additional resources.

All U.S. banks judged by their Fed regional bank to be in generally sound financial condition would be eligible to participate in the auctions for funds, the Fed said.

The first auction of $20 billion is scheduled for Monday, followed by another auction of $20 billion Dec. 20, the Fed said. The third and fourth auctions will be Jan. 14 and 28.

The Fed's announcement, a day after it cut a key interest rate for the third time this year, prompted the Dow Jones industrial average to soar more than 200 points within minutes of the opening bell. The Dow eased back to about a 130-point gain by late morning.

Source: United Press International

More News in this Category