Fed to Add $140B in More Liquidity

The Federal Reserve on Friday morning moved to increase liquidity in an ever-tightening credit market, pledging to inject an additional $140 billion in short-term credit and to take on hard-to-sell asset-backed paper as collateral.

The Fed's term auction facility, created in December as a measure to provide direct lending to banks that have been reluctant to lend to each other in the credit crunch, will inject $50 billion into the banking system through auctions Monday and March 24. The two 28-day auctions were originally planned to be $30 billion, up from the original $20 billion offered in December.

The Fed also said it would initiate on Friday what is expected to be $100 million in 28-day term repurchase agreements in which it will accept as collateral any type of securities used in conventional open-market operations, including Treasuries and debt or mortgage-backed paper backed by government-sponsored mortgage buyers Fannie Mae(FNM Quote) and Freddie Mac(FRE Quote). ...