Bernanke Considers Extending Bank Lending Program to Stem Further Credit Crisis
Today Federal Reserve Chairman Ben Bernanke said the U.S. central bank may extend its emergency-loan program for investment banks into next year.
Investors have lived in constant fear of yet another eruption of credit turmoil, which started last year when it became clear that the bursting of the U.S. housing bubble was causing severe losses in a wide range of financial markets.
"The Federal Reserve is strongly committed'' to financial stability and is "considering several options, including extending the duration of our facilities for primary dealers beyond year-end,'' Bernanke said in a speech to a conference in Arlington, Virginia.
The Fed chairman's comments, the first time he has indicated how long he'll extend the lending programs, come a day after an index of bank shares reached its lowest level since 1996.
On Wall Street, Bernanke's comments helped stabilize stocks after Monday's losses and the dollar rebounded. U.S. government bonds, the market's preferred safe haven during credit turmoil, were lower in price.
Published on July 8, 2008
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