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Fed looking at how to beef up lending power: report
NEW YORK (Reuters) - The Federal Reserve is looking at contingency plans for bolstering its lending power in case recent measures it has taken to unfreeze the credit markets fail, the Wall Street Journal reported on Wednesday.
Nothing is imminent, since the Federal Reserve still has room on its balance sheet for additional lending, the report said, adding that the internal discussions were part of efforts to identify options in case the credit crunch got worse.
One option would be to have the Treasury borrow more money than it needs to fund the government and keep the proceeds on deposit at the Federal Reserve, the report said.
Other options include issuing debt in the Federal Reserve's name, with the proceeds used to make loans or purchase other assets; and asking Congress for immediate authority for the Fed
to pay interest on commercial bank reserves rather than wait until a 2006 law permits it in 2011, the Journal said.
The Federal Reserve was not immediately available for comment.
(Reporting by Aarthi Sivaraman; Editing by Alan Raybould)
