U.S. Fed auctions $75-billion to ease credit stresses
The Associated Press
May 20, 2008 at 10:16 AM EDT
WASHINGTON � Working to relieve stressed credit markets, the U.S. Federal Reserve has auctioned another $75-billion in loans to squeezed banks, bringing the total to $510-billion since December.
The central bank on Tuesday announced the results of its most recent auction � the 12th � since the program to help banks overcome credit problems started in December.
It's part of an ongoing effort by the Fed to help ease the credit crunch, which erupted last August and hit a crisis point in March with the near collapse and forced sale of Bear Stearns, the nation's fifth-largest investment house, to JP Morgan Chase & Co.
Housing, credit and financial problems have weighed heavily on the economy, sharply slowing its growth.
In the latest auction, commercial bank paid an interest rate of 2.100 per cent for the short-term loans. There were 75 bidders for the slice of the $75-billion in 28-day loans. The Fed received bids for $84.4-billion worth of the loans. The auction was conducted on Monday with the results released on Tuesday.