Fed Scales Back 2 Emergency Lending Programs

[interestrateripoff]

http://www.nytimes.com/2009/09/25/business...ml?ref=business

The Federal Reserve said on Thursday that it was further scaling back two emergency lending programs as the economy improved.

The Fed will reduce the amount of money available to banks in short-term loans under a program called the Term Auction Facility.

For 84-day loans, the Fed will provide a total of $50 billion in loans in October, and $25 billion each in November and December. For 28-day loans, the Fed will continue to make $75 billion available monthly through January.

The Fed also is cutting back on a program in which investment firms can temporarily swap risky securities for super-safe Treasury securities.

The Fed said $50 billion worth of Treasury securities would be made available for October, down from the current $75 billion. Operations in November and December will be trimmed to $25 billion each.

The actions respond to “continued improvements in financial market conditions,†the Fed said in a statement. The Fed announced earlier steps in late June to pare down the two programs.

With the economy moving from recession into recovery, the Fed is pulling back on some of the extraordinary support it has provided to banks and other companies to cope with the worst financial crisis since the 1930s.

The Fed said Wednesday that it would slow the pace of a $1.45 trillion program intended to force down mortgage rates and shore up the housing market. And in August, the Fed signaled that it would wind down a $300 billion government debt-buying program aimed at lowering rates on all kinds of consumer debt.

The Fed’s support has caused its balance sheet to jump to just over $2 trillion, more than double the level before the crisis struck.

Weaning companies and the economy off the support will be a high-wire act for the central bank. Fed policy makers need to leave the special programs intact long enough to support the recovery — but not so long as to fuel inflation later.

So once the option arm resets kick in etc.... can we expect the Fed to panic once more?

At least they aren't wanting to fuel inflation.

And don't forget to thank the jobless recovery for stabilising the economic situation. It appears surreal but this is reality.

[lowrentyieldmakessense(honest!)]

http://www.nytimes.com/2009/09/25/business...ml?ref=business

So once the option arm resets kick in etc.... can we expect the Fed to panic once more?

At least they aren't wanting to fuel inflation.

And don't forget to thank the jobless recovery for stabilising the economic situation. It appears surreal but this is reality.

getting worried about an audit are they