The Federal Reserve will lend more money to banks in March in a bid to ease the worsening credit crisis, Bloomberg reports. By dramatically increasing the funds available in two upcoming auctions—from $30 billion to $50 billion—the Fed hopes to convince banks to loosen up and lend more.
“Given what we have seen in terms of illiquidity in the financial markets, this came right in time,” said one strategist. The Fed stressed that the move had nothing to do with today’s low job data and was instead focused on the credit market. Credit standards and rates have been daunting lately, as banks recoil from the $181 billion they’ve lost this year. (Read more credit market stories.)