Mar 7, 2008 6:30 am US/Pacific
Fed Takes Bigger Step To Ease Credit Crunch
WASHINGTON (AP) ―
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Federal Reserve Chairman Ben Bernanke testifies before the House Financial Services Committee on Capitol Hill Feb. 27, 2008 in Washington, DC.
Win McNamee/Getty Images
The Federal Reserve said Friday it is taking bigger steps to ease the nation's credit crisis, including increasing the amount of money it will auction to banks this month to $100 billion.
The Federal Reserve said it will raise its planned March 10 and March 24 auctions to $50 billion each, up from the $30 billion limits it had previously announced. The auctions serve as short-term loans to get banks the cash they need to keep lending to their customers.
Fed officials said in a statement they planned to continue the auctions for at least six months, and would move to even larger auction amounts if needed.
The Fed also said that starting Friday it will enlarge another series of transactions, called repurchase agreements, so that they will pump a net total of $100 billion into the financial system at any one time.
The Fed has been working to pump billions of dollars into the banking system to aid an economy rocked by the subprime mortgage crisis and the severe tightening of credit. The central bank started its new type of auction in December to provide short-term loans to banks in hopes of keeping them lending.
Economists say the nation is teetering on the edge of a recession, if one has not already begun.
The picture worsened just after the Fed's announcement Friday when the Labor Department released a report showing employers slashed another 63,000 jobs in February, the most in five years.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
CBS News Timeline: Credit Crunch
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