Federal Reserve Chairman Ben Bernanke told lawmakers today a series of Fed programs aimed at easing the credit crisis appear to be helping.
In testimony before the House Financial Services Committee, Mr. Bernanke said measuring the impact of the Fed programs is hard because market conditions are affected by many factors. “Nevertheless, we have been encouraged by the responses to these programs, including the reports and evaluations offered by market participants and analysts,” Mr. Bernanke said.
“Notably, our lending to financial institutions, together with actions taken by other agencies, has helped to relax the severe liquidity strains experienced by many firms and has been associated with considerable improvements in interbank lending markets,” Mr. Bernanke said.
As one example of progress, he said that the provision of “aggressive liquidity” by the Fed and other central banks had contributed to declines in the LIBOR. In addition, he said there was widespread agreement that the Fed’s commercial paper funding facility helped stabilize the commercial paper market, “lowering rates significantly and allowing firms access to financing at terms longer than a few days.”
“All of these improvements have occurred over a period in which the economic news has generally been worse than expected and conditions in many financial markets, including the equity markets, have worsened,” Mr. Bernanke added.
