Fed mulls further market soothing steps


The US 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.

Among steps under review would be for the Treasury to borrow in excess of requirements and deposit the overage at the Fed, according to the central bank official.

Other potential actions include issuing debt under the Fed's name and seeking authority to immediately pay interest on commercial bank reserves, the official said.

The options under consideration by the Fed were first reported by the Wall Street Journal on Wednesday.

No such moves are imminent because the Fed's balance sheet is currently sufficient to accommodate further lending. The central bank has announced in recent months several new facilities to extend credit to banks and Wall Street firms in an effort to restore liquidity and credit to markets seized up by the subprime mortgage debacle. (Reuters)


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