The Federal Reserve took a courageous decision by accepting 200 million of housing debts as collateral to promote liquidity in the housing market and give some relief to the banks brokerages. The banks and other financial institutes are facing cash crunch and even after five rate cuts within the last few months experts believe that this is not much effective. So FED came up with this program to eliminate the credit crisis.
This is the first time when FED is accepting the housing debts as collaterals. Fed has assured to offer 200 billion dollars in a new Term Securities Lending Facility (TSLF) with a term of 28 days. The loans will be given with an auction process and it will start from 27th of March 2008. Fed has also declared that they may raise the amount of loan that they make available to the banks to 100 billion. FED has been injecting billions of dollars into the banking system to help the economy to get out of this credit crisis.
[tags]credit crisis, housing debt collateral, fed move[/tags]