November 18, 2008

Bernanke says credit is improving

U.S. Federal Reserve Chairman Ben Bernanke told members of Congress Tuesday the federal equity purchase plan has begun to take hold.

The value of the TARP (the Treasury's Troubled Asset Relief Program) has already been demonstrated "¦ and spread to many countries, Bernanke told members of the House Financial Services Committee.

Bernanke said combined efforts including the Federal Deposit Insurance Corp.'s guarantee of non-interest bearing bank accounts and expanded Federal Reserve facilities appeared to stabilize the situation and to improve investor confidence in financial firms.

Echoing statements made by Treasury Secretary Henry Paulson Jr., Bernanke said the focus of federal interventions is to stabilize credit markets and to improve the access to credit of businesses and households.

There are some signs that credit markets, while still quite strained, are improving, he said. Interbank short-term funding rates have fallen notably since mid-October, and we are seeing greater stability in money market mutual funds and in the commercial paper market," he said.