FACTBOX-Fed actions to boost liquidity

Tue Mar 11, 2008 9:53am EDT
 
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WASHINGTON (Reuters) - The Federal Reserve said on Tuesday it would accept a broader range of collateral, including home mortgages, in an expanded securities lending program meant to foster greater liquidity in financial markets.

The U.S. central bank said it would lend up to $200 billion to primary dealers, secured for 28 days. It agreed to accept collateral including federal agency home mortgage-backed securities and highly rated private mortgage-backed securities.

The move was one of a number of steps by the Fed and other central banks aimed at easing tight credit market conditions. Following are previous steps the Fed has taken since August:

March 7: The Fed says it will boost funding for its Term Auction Facility auctions of short-term cash to $100 billion in March from $60 billion and launch a series of repurchase agreements expected to be worth $100 billion.

The central bank also says it will continue to conduct TAF auctions for at least the next six months unless market conditions render them unnecessary, and would increase auction sizes further if conditions warrant.

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 address elevated pressures in short-term funding markets.

February 1: Fed announces it will continue biweekly TAF auctions in February, holding the amount in each auction steady at $30 billion. The central bank lowers the minimum bid size to $5 million from $10 million to include smaller institutions.

January 3: The Fed raises TAF auction amounts to $30 billion from $20 billion for each of the two auctions in January. The European Central Bank and the Swiss National Bank also offer dollar funds in conjunction with the Fed auctions.

December 12, 2007: As part of a global coordinated central bank effort, the Fed establishes the TAF to provide funds over a longer period to all depository institutions that are able to borrow under the discount window.  Continued...

 

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