Fed Takes Broad Action to Avert Financial Crisis
The Federal Reserve took dramatic action on multiple fronts last night to avert a crisis of the global financial system, backing the acquisition of wounded investment firm Bear Stearns and increasing the flow of money to other banks squeezed for credit.
XX This Washington Post story reads like a freaking financial horror story — the kind of thing Wall Street bankers tell their children to give them goosebumps. And it’s happening now! Check out some of these lines …
- The Fed’s moves were meant to reverse a rising tide of panic…
- The extraordinary measures were made necessary, in the view of the policymakers, by the most dire threat facing world financial markets in years….
- It took 85 years to build Bear Stearns and four days for it to dissolve….
- Starting today, and lasting for at least six months, this new operation will allow “primary dealers,” which are 20 major Wall Street firms, access to cash in exchange for assets in which the market is not currently functioning.
XX P.S. The Fed also approved a cut in its benchmark interest rate to 3.25 percent from 3.50 percent. The Washington Post now calls this the Fed’s “emergency lending rate”.
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