Fed Pumps Further $630 Billion Into Financial System (Update2)

[balantz]

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahwz_k5JvuB8&refer=home



Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, comes as Congress prepares to vote on a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone.

``Today's blast of term liquidity will settle the funding markets down, and allow trust to slowly be restored between borrowers and lenders,'' said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. On the other hand, ``the Fed's balance sheet is about to explode.''

Stocks around the world plunged the most since 1997 today and credit markets deteriorated further as authorities scrambled to save more financial institutions from collapse.

-snip-

[AndyTiedye]

1. This is Almost as Big as the "Bailout" Now

(image originally appeared in Business Week, can be seen here:
http://images.google.com/imgres?imgurl=&imgrefurl=http://www.businessweek.com/the_thread/hotproperty/archives/2007/08/should_the_fed.html%3Fcampaign_id%3Drss_blog_hotproperty&h=480&w=586&sz=68&hl=en&start=2&um=1&usg=__PAOxMizhRNnh7ySRZhdBI9IOdNA=&tbnid=ZM5Pe0W2G1h0WM:&tbnh=111&tbnw=135&prev=/images%3Fq%3Dhelicopter%2Bben%26um%3D1%26hl%3Den%26client%3Dsafari%26rls%3Den-us%26sa%3DN )

[trthnd4jstc]

2. This is big news. How low will the value of the dollar go? n/t

[sinkingfeeling]

3. Alright, $630 billion plus the previous $900 billion equals over $1.5 trillion already spent on this

pig.... the lipstick isn't helping.

[Dr.Phool]

4. And the lipstick costs extra!

[CAcyclist]

5. Maybe the Fed needs to lend directly to the people

and bypass the banking system.