Fed To Boost Lending Ahead of Lehman Bankruptcy
The US Federal Reserve announced that it would boost the Term Securities Lending Facility and the Primary Dealer Credit Facility. The move is designed to create access to liquidity ahead of tomorrow's expected announcement that investment bank Lehman Brothers has filed for bankruptcy after authorities failed to line up buyers for the troubled firm. The Fed said in a statement they have been working closely with the SEC and the Treasury department "to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses." Alluding to the recently announced $70 billion liquidity pool created by 10 top banks, the Fed also said that "the steps we are announcing today, along with significant commitments from the private sector, are intended to mitigate the potential risks and disruptions to markets."
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