Bernanke: Fed has taken steps to improve credit markets

While acknowledging that the economic indicators have been “dismal,” the Fed has taken steps beyond reducing short-term interest rates to improve credit markets, Chairman Ben Bernanke said yesterday at the National Press Club in Washington. “Extraordinary times call for extraordinary measures,” he said, according to a report today in The New York Times. On the global front, the Federal Reserve Bank approved some temporary liquidity agreements with 14 foreign central banks, Mr. Bernanke said. Also, the Fed created a number of domestic programs to purchase highly rated commercial paper, and another program to provide backup liquidity for money market mutual funds. Along with the Department of the Treasury, it launched the Term Asset-Backed Securities Loan Facility, which will lend against asset-backed securities that are collateralized by student, auto and credit card loans, as well as loans guaranteed by the Small Business Administration in Washington. In addition, the Fed is purchasing up to $100 billion in the debt of government-sponsored enterprises and up to $500 billion in mortgage-backed securities guaranteed by federal agencies.