Fed Announces More Steps to Halt Credit Crisis

In an effort to stabilize the market, the Fed announced additional measures to help hard pressed banks and financial institutions. The Central Bank slashed rates to 3.25 percent from 3.5 percent. It also announced a new lending facility to offer short term loans to large investment firms which will accept investment grade mortgage securities as collateral.

Federal Reserve Chairman Ben Bernanke said, “These steps will provide financial institutions with greater assurance of access to funds.” According to the Fed, these steps should “bolster market liquidity and promote orderly market functioning.”

This discount rate cut only effects short term loans that financial institutions get from the Federal Reserve.

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