From Page 2C of the Thursday April 24, 2008 issue of the St. Paul Pioneer Press, courtesy of the Associated Press.
The Federal Reserve said Wednesday it will auction an additional $75 billion in super-safe Treasury securities to big investment firms, part of an ongoing effort to help strained credit markets.
The auction - the fifth of its kind - will be held today.
In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including certain shunned mortgage-backed securities, as collateral.
In the four auctions held so far, the Fed has provided close to $158.95 billion worth of the Treasury securities to investment firms.
The auction program is intended to help financial institutions and the troubled mortgage market.
The goal is to make investment houses more inclined to lend to each other. It is also aimed at providing relief to the distressed market for mortgage-linked securities. Questions about their value and dumping of these securities had driven up mortgage rates, aggravating the housing slump.
The lending program is one of several unconventional steps the Fed has taken to deal with a credit crisis.