TIMELINE: Fed actions to boost liquidity

CHICAGO (Reuters) - The U.S. Federal Reserve on Friday announced measures to support stressed financial markets, including a step to bolster money market funds, ultra-safe investments that have been hit by a wave of redemptions from panicked investors.

The step was the latest in a series of extraordinary actions by the Fed to try to thaw frozen credit markets.

Following is a chronology of the Fed's actions since the market crisis erupted in August 2007:

August 10, 2007: In a rare statement, the Fed notes banks are experiencing unusual funding needs because of dislocations in money and credit markets and says it would provide funds as needed.

August 17: The Fed cuts the discount rate by a half percentage point and says it will act as needed to offset adverse effects on the economy arising from disruptions in financial markets.

November 26: The Fed promises more than the usual year-end liquidity and says it will lift limits on how much can be lent to any one bank.

December 12: As part of a global coordinated central bank effort, the Fed establishes the Term Auction Facility (TAF) to provide funds over a longer period to a wider range of banks to meet temporary shortages of funds. It also establishes foreign exchange swap lines with the European Central Bank and the Swiss National Bank. The arrangements provide up to $20 billion for the ECB and $4 billion for the SNB.

January 3, 2008: The Fed raises TAF auction amounts to $30 billion from $20 billion for each of the two auctions in January. The ECB and the SNB also offer dollar funds in conjunction with the Fed auctions.

February 1: Fed announces it will continue biweekly TAF auctions in February, holding the amount in each auction steady at $30 billion.

February 29: Fed announces two TAF auctions of $30 billion each in March. It says it intends to conduct auctions for as long as necessary to ease pressures in short-term funding markets.

March 7: The Fed says it will inject $100 billion into the banking system by increasing the size of its two term auctions of short-term funding and start a series of term repurchase transactions with primary dealers expected to be worth another $100 billion.

March 11: The Fed says it will accept a broader range of collateral, including home mortgages, in a new Treasury securities lending program, the Term Securities Lending Facility (TSLF). It says it would lend up to $200 billion to primary dealers, secured for 28 days, and accept federal agency home mortgage-backed securities and highly rated private mortgage-backed securities as collateral.

The action was coordinated with steps by the Bank of Canada, Bank of England, European Central Bank and Swiss National Bank. The Fed also says it increased existing currency swap lines with the ECB and SNB to up to $30 billion and $6 billion, respectively, and extended the term of those lines through September to help those central banks provide dollar liquidity in their markets.

March 14: The Fed says it authorized JPMorgan Chase to borrow at the discount window on behalf of Bear Stearns, an emergency move last used in the Great Depression.

March 16: The Fed in a surprise move cuts the discount rate it charges on direct loans to banks and announces new lending program to provide credit to other big Wall Street firms, the Primary Dealer Credit Facility (PDCF). In addition, it increases the maximum maturity of discount rate loans to 90 days from 30 days. The actions are taken in concert with a decision to approve special financing to facilitate the purchase of Bear Stearns by JPMorgan Chase.

March 24: Fed details its role in amended JPMorgan planned purchase of ailing investment bank Bear Stearns. It says it will assume control of a portfolio of Bear Stearns assets valued at $30 billion, pledged as security. Any profit from the assets will accrue to the Fed, while JPMorgan will bear the first $1 billion of any losses. The Fed will finance the remaining $29 billion on a non-recourse basis to JPMorgan.

April 9: The Fed says it is considering a plan in which the Treasury Department would borrow in excess of its requirements and deposit the surplus at the Fed. The central bank is also considering whether to issue debt under the Fed's name and seek authority to immediately pay interest on commercial bank reserves.

May 13: The Fed writes to Congress seeking immediate authority to pay interest on reserves held by banks at the Fed. The central bank says this move will contribute to the efficiency of the financial system.

July 13: The Fed authorizes government-sponsored enterprises Fannie Mae and Freddie Mac to borrow from its discount window as necessary for emergency funding. Any lending would be collateralized by U.S. government and agency securities. The Fed also agrees to take on a consultative role in setting capital requirements and financial safety and soundness standards for the two companies.

July 30: The Fed extends the PDCF and TSLF through January 30. It also says it will introduce 84-day TAF loans to complement its existing 28-day TAF loans. In addition, the Fed increased its swap line with the European Central Bank to $55 billion from $50 billion.

September 14: The Fed expands the type of collateral it will accept for emergency loans, allowing equities for the first time, under its PDCF. Previously the PDCF collateral had been limited to investment-grade debt securities. The Fed also expanded the TSLF program to $200 billion from $175 billion and will hold more frequent auctions for these Treasury securities loans. In a third step, the Fed agreed to temporarily allow insured depository institutions to extend liquid funds to their affiliates for assets that would normally be accepted in tri-party repurchase agreements. This provision would expire on January 30, 2009, reflecting the Fed's hope that stressed repo markets would be functioning more normally by then.

September 16: The Fed agrees to lend up to $85 billion to embattled insurer American International Group in a plan aimed at preventing a disorderly failure. Under a two-year facility, the U.S. government will receive 79.9 percent equity interest in AIG and has the right to veto payment of dividends.

September 18: The Fed expands its currency swap lines to $247 billion, increasing the line with the ECB to $110 billion and the line with the SNB to $27 billion, while opening new swap facilities with the Bank of Japan of $60 billion, the Bank of England of $40 billion, and the Bank of Canada of $10 billion.

September 19: The Fed opened its discount window to financial institutions to finance purchases of asset-backed commercial paper (ABCP) from money market mutual funds. The move should assist the funds to meet demand for redemptions by investors and boost liquidity in ABCP and broader money markets.

The Fed also said it would buy agency notes -- short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks -- from primary dealers.