Time is GMT + 8 hours Posted: 15-Sep-2008 10:14 hrs
Federal Reserve Chairman Ben Bernanke in Washington, DC on September 9. The key US financial body has announced new steps to ease access to emergency credit for struggling financial companies, by broadening the collateral to be used for central bank loans.
The Federal Reserve has announced new steps to ease access to emergency credit for struggling financial companies, by broadening the collateral to be used for central bank loans.
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The unusual Sunday move came as financial markets braced for a possible collapse of Lehman Brothers, a Wall Street giant whose failure could have wide-ranging implicatins for the financial system.
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"In close collaboration with the Treasury and the Securities and Exchange Commission, we have been in ongoing discussions with market participants, including through the weekend, to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses," said Fed chairman Ben Bernanke.
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"The steps we are announcing today, along with significant commitments from the private sector, are intended to mitigate the potential risks and disruptions to markets."
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The collateral for the special emergency loans will be expanded to all investment-grade debt securities, the central bank said.
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Previously, only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged. — AFP
