Fed to extend emergency cash funds

9 July 2008

The Federal Reserve is considering plans to extend a project which grants emergency funds to struggling investment banks for six months.

Originally launched in March to help stabilize Bear Sterns, the lending facility could be extended into next year, said chairman Ben Bernanke.

Mr Bernanke also said the Fed should be granted more powers from Congress to supervise markets in a bid to improve current conditions, the BBC reports.

Previously, the Federal Reserve could only offer support to commercial banks and not investment banks.

However, commenting on the fund, Mr Bernanke said: "Allowing Bear Stearns to fail so abruptly at a time when the financial markets were already under considerable pressure would likely have had extremely adverse implications for the financial system and the broader economy."

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