The Federal Reserve today said it will maintain an array of new programs to ease the credit crunch and jump-start lending crushed by the fallout of the housing debacle.
In a statement, the Fed said it will extend until April 30, 2009, the Primary Dealer Credit Facility and the Term Securities Lending Facility, set up in March as Bear Stearns Cos. Inc. collapsed; and the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, created in September when Lehman Brothers Holdings Inc. filed for Chapter 11 bankruptcy protection. These programs had been set to expire Jan. 31, 2009.
The extension through April 30 is consistent with the term authorized for several other liquidity-related facilities: the Commercial Paper Funding Facility, the Money Market Investor Funding Facility, and the temporary reciprocal currency arrangements or swap lines with 14 other central banks, the Fed said, commenting on other lending programs it introduced this fall.
On Monday, the Fed made $150 billion available to depository institutions for 84 days at a low rate of 0.42% via its Term Auction Facility, another program helped at supporting bank lending. The New York Fed also offered another $50 billion through its Term Securities Lending Facility Options Program.
Stocks, which began strong in trading this morning, overcame a sluggish early afternoon decline to close higher on the news. The Dow Jones industrial average closed up 270.00, or 3.31%, at 8,419.09; the S&P 500 rose 32.60, or 3.99%, closing at 848.81; and the Nasdaq composite was up 51.73, or 3.7%, to close at 1,449.80. All numbers are preliminary.