Fed To Pay Interest on Reserve Balances

Oct. 6 — The Federal Reserve announced that it will begin to pay interest on depository institutions' required and excess reserve balances. The payment of interest on excess reserve balances will give the Federal Reserve greater scope to use its lending programs to address conditions in credit markets while also maintaining the federal funds rate close to the target established by the Federal Open Market Committee. Consistent with this increased scope, the Fed also announced additional actions to strengthen its support of term lending markets. (Read more.)

Central Banks Take Measures To Address Funding Pressures over Quarter End

Sept. 26 — The Fed and other central banks have been employing coordinated measures designed to address the pressures in global money markets. Most recently, central banks have acted together to inject dollars into the overnight markets. Using their reciprocal currency arrangements with the Federal Reserve, several central banks are announcing the introduction of operations to provide U.S. dollar liquidity with a one-week maturity. These operations are designed to address funding pressures over quarter end. (Read more.)

Additional Central Banks Join Fed in Reciprocal Currency Arrangements

Sept. 24 — The Federal Reserve, the Reserve Bank of Australia, the Danmarks Nationalbank, the Norges Bank and the Sveriges Riksbank announced the establishment of temporary reciprocal currency arrangements (swap lines) to address elevated pressures in U.S. dollar short-term funding markets.  These facilities, like those already in place with other central banks, are designed to improve liquidity conditions in global financial markets.  (Read more.)

Stay Up-to-Date on Fed Actions with New Web Page

To get the latest on steps the Federal Reserve is taking to stabilize the economy and improve liquidity in the market, bookmark "Information Regarding Recent Federal Reserve Actions," a new web page on the Board of Governors web site.

Fed Board Approves Bank Holding Company Status for Goldman Sachs, Morgan Stanley

Sept. 21 — The Federal Reserve Board approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies. To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Board authorized the New York Fed to extend credit to the two companies against all types of collateral that may be pledged at the Fed's primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility; the Fed has also made these collateral arrangements available to Merrill Lynch. (Read the press release.) In a related statement, the Board said that, based on consultation with the Department of Justice, the transactions may be consummated immediately without the application of the five-day antitrust waiting period.

Fed, Central Banks Announce Measures to Improve Market Liquidity

Sept. 19 — The Federal Reserve announced two enhancements to its programs to provide liquidity to markets. One initiative will extend non-recourse loans at the primary credit rate to U.S. depository institutions and bank holding companies to finance purchases of high-quality asset-backed commercial paper from money market mutual funds. To further support market functioning, the Fed also plans to purchase from primary dealers federal agency discount notes, which are short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. (Read more.) That announcement followed one on Sept. 18 by the Fed and several other central banks who are undertaking coordinated measures to address continued elevated pressures in U.S. dollar short-term funding markets. These measures, together with other actions taken recently by individual central banks, are designed to improve the liquidity conditions in global financial markets. (Read more.)

Burgundy Books Show Mixed Conditions in Eighth District

The St. Louis Fed's September Burgundy Books reveal a somewhat negative economic picture in the St. Louis zone, mixed conditions in the Little Rock economy, weak activity continuing in the Louisville zone and continued softening of the Memphis regional economy. In conjunction with the release of the reports, St. Louis Fed economists Michael Pakko and Howard Wall provide audio commentary on economic conditions in each zone. Listen to St. Louis | Little Rock | Louisville | Memphis.

Fed Board Authorizes Lending to AIG

Sept. 16 — The Federal Reserve Board authorized the New York Fed to lend up to $85 billion to the American International Group (AIG). The secured loan has terms and conditions designed to protect the interests of the U.S. government and taxpayers. The Board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance.  (Read more.)

FOMC Holds Rates Steady at 2 Percent

The FOMC voted Sept. 16 to keep its target for the federal funds rate unchanged at 2 percent. Read the press release.

Fed Takes Steps To Support Financial Markets

Sept. 14 — The Federal Reserve announced several initiatives to provide additional support to financial markets, including enhancements to its existing liquidity facilities. "In close collaboration with the Treasury and the Securities and Exchange Commission, we have been in ongoing discussions with market participants ... to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses," said Fed Chairman Ben Bernanke. (Read more.)

Fed Analyzes 2007 Home Mortgage Data

The data that mortgage lending institutions reported for 2007 under the Home Mortgage Disclosure Act of 1975 (HMDA) reflect the considerable stress that housing and mortgage markets have recently experienced, particularly in the higher-priced market segment. An article from the Federal Reserve Board of Governors presents key findings from the 2007 HMDA data. (Read more.)

Bernanke Endorses Decisions on Fannie, Freddie

Sept. 7 — Fed Chairman Ben Bernanke said that he backs decisions by the U.S. Treasury to place Fannie Mae and Freddie Mac into conservatorship and ensure their financial soundness.  "These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets," Bernanke said. Also on Sept. 7, the Fed and other federal banking agencies issued a joint press release on the exposures of banks and thrifts to Fannie Mae and Freddie Mac.

Beige Book: Weakening Economic Conditions in Eighth District

The pace of economic activity slowed across the nation in late July and August, according to the latest issue of the Beige Book. In the Eighth District, conditions have softened since the previous report. Hear more in an interview with Fed Economist Howard Wall.

Elizabeth Duke Sworn in as Fed Governor

Elizabeth A. Duke took the oath of office as a member of the Board of Governors of the Federal Reserve System on Aug. 5. The oath was administered by Chairman Ben S. Bernanke in the Chairman's office. She will participate in and vote at the Aug. 5 meeting of the Federal Open Market Committee. (Read more.)

Fed Amends Home Mortgage Provisions of Regulation Z

The Federal Reserve on July 14 approved a final rule for home mortgage loans to better protect consumers and facilitate responsible lending. The rule prohibits unfair, abusive or deceptive home mortgage lending practices and restricts certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in the transaction. (Read more.)