Subprime CC debt, auto loans, & student loans

Fed Takes Steps to Add Liquidity

Excerpt:

The Federal Reserve announced new steps on Friday to help ease tight global credit markets by increasing the size of its cash auctions to banks and allowing financial institutions to put up credit card debt, student loans and car loans as collateral for Fed loans.

The Fed also acted in coordination with central banks in Europe to make it easier for European banks to obtain dollars in currency swaps.

In a terse statement Friday morning, announced just before the government reported that 20,000 jobs were lost in April, the Fed said that it was acting to counter “persistent liquidity pressures” in credit markets in Europe and the United States.

The Fed’s action came as some analysts are saying that a measure of stability has returned to American financial markets after months of turbulence. Nevertheless, the Fed has made clear that it remains concerned about the risk from credit markets seizing up because of losses from bad loans, particularly in the housing sector.



Comment: More federal guarantees of risky loans. See my previous post about risk management!