Fed Extends Emergency Loan Program for Wall Street
July 30th, 2008Via: AP:
The Federal Reserve said Wednesday it is extending its emergency borrowing program to Wall Street firms and is taking other steps to ease a severe credit crunch that has hobbled the national economy.
The Fed said the program, where investment houses can tap the central bank for a quick source of cash, will now be available through Jan 30. Originally the program, started on March 17, was supposed to last until mid-September.
Another program, where investment firms can temporarily swap more risky investments for super-safe Treasury securities also will continue through Jan. 30, the Fed said. And, it also will let commercial banks, in a separate program, bid on cash loans that last longer — for 84 days, besides the 28-day loans now available.
The Fed said it was taking these steps “in light of continued fragile circumstances in financial markets.” The Fed said that the emergency borrowing program for investment houses and the program that lets investment firms temporarily borrow Treasury securities would be withdrawn should the Fed determine that conditions in financial markets are “no longer unusual and exigent.”
The smooth flow of credit is the economy’s oxygen. It permits people to finance big-ticket purchases, such as homes and cars, and help businesses expand operations and hire workers. Fallout from a trio of crises — housing, credit and financial — have badly bruised the economy. Growth has slowed and companies have cut hundreds of thousands of jobs.
Investment houses were given similar, emergency loan privileges as commercial banks after a run on Bear Stearns pushed the nation’s fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy.
We the People are turned into a simple commodity more and more every day. Perhaps one day, Science will be able to genetically engineer us to have a new appendage which, when stroked not unlike a cows teet, will produce money. Then they can keep us in stalls, and, along with “pork belly futures” and “live cattle futures”, they can trade “human money-maker futures”.
Oops, not an original idea. That’s pretty much “The Matrix”. The one flaw of that movie was that it made the machines the bad guys. If the tippy-top of our socio-economic pyramid could pull it off, they would. But we’re getting there.