Fed Signals Support for Paulson Plan to Help Commercial Paper

Discussion in 'Wall St. News' started by ASusilovic, Oct 23, 2007.

  1. The Federal Reserve indicated it supports the plan brokered by Treasury Secretary Henry Paulson to increase liquidity in the market for asset-backed commercial paper.

    The agreement reached by Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. is well-enough designed that it may help credit markets, a Fed official, who declined to be identified, said late yesterday in Washington. The plan also may help investors establish prices for complex securities that funds purchased with the proceeds of commercial-paper sales, the official said.

    The Fed's endorsement comes as some banks, analysts and international officials question whether the planned $80 billion fund will help. Deutsche Bank AG Chief Executive Officer Josef Ackermann said yesterday that it is ``premature to make a firm judgment'' because details of the plan haven't been established.

    Fed officials' silence since the agreement was announced Oct. 15 has been misinterpreted as criticism, the Fed official said.

    Central bank policy makers have lowered their benchmark interest rate by half a percentage point and the charge for direct loans to banks by 1 percentage point since access to credit slumped in April. The New York Fed has also injected reserves into money markets to help provide liquidity.


    Seems uncle Ben and uncle Hank are "cooperating"...:D