Fed Mulls Further Action

WASHINGTON -- The Federal Reserve is mulling further steps to address liquidity problems in financial markets should measures taken to date fail to gain traction, a Fed official confirmed on Wednesday, according to Reuters.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed's name rather than the Treasury's; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011, the Wall Street Journal reported.

No moves are imminent because the Fed still has plenty of balance sheet room for additional lending now. The internal discussions are part of a continuing effort at the Fed, similar to what is under way at foreign central banks, to determine its options if the credit crunch becomes even more severe, the Journal reported.

-- NYSSCPA.org News Staff

Posted on 4/9/08