Getting your player ready...
WASHINGTON — The Federal Reserve on Wednesday announced a novel approach to injecting money into the banking system as it struggles to combat a severe credit crunch that threatens to drag the country into a recession.
The Fed said it would conduct two auctions next week where banks can bid for up to $40 billion in loans, money that they will have to bolster their own reserves. It marked the Fed’s biggest concentrated effort to inject liquidity into the banking system since the Sept. 11, 2001, terrorist attacks.
The hope is that the extra funds will spur increased lending by the banks and combat a credit crunch that has made loans harder to obtain for many businesses and consumers.
