Loans - US Federal Reserve releases more money to ailing banks - 31/03/2008

The US Federal Reserve is to release another $100 billion (£50 billion) to major US banks in April in an effort to release some of the pressure the global credit crunch has put on the economy.

The Fed has offered short-term loans to banks through auctions every two weeks since December and it is thought the auctions will continue until this coming September. The amounts offered started at $20 billion, then rose to $30 billion before reaching the current peak of $50 billion in early March as the adverse effects of the credit crunch continued to cause concern.

The latest sum is to be offered in addition to the $260 billion short-term loans auctioned at the end of March. This move is accompanied by other unusual activity; the Fed is also allowing investment banks to borrow money from it directly, something that only commercial banks were allowed to do previously.

The aim of releasing the cash is to make banks less fearful about lending to each other, as their current unwillingness to do so has meant short term interest rates have rocketed.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPATMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT
MISSING PAYMENTS WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE.


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