AMERICA'S central bank last night made a further $100 billion (£50bn) available to cash-strapped banks in April as it continues to try and combat the effects of the credit crunch.
The Federal Reserve said it would make $50bn available at each of two auctions, on 7 April and 21 April. The money is in addition to $260bn provided in short-term loans to commercial banks to the end of March.
Market reaction was muted, with t
he Dow Jones falling back slightly following the news, before closing down 86 points. The Fed will also allow investment banks to borrow from it directly – something previously only possible for commercial lenders.
It has been holding auctions every two seeks since December to provide short-term loans to commercial banks. It started with auctions of $20bn, then pushed the level to $30bn, and in early March raised the auction amount to $50bn as the credit shortage grew more severe.
However, the auctions have drawn criticism from some that the central bank, and ultimately US taxpayers, could be financing a bailout for big Wall Street firms that had engaged in risky lending practices.
Fed chairman Ben Bernanke will face questions about his attempts to ease the credit crisis when he testifies on Wednesday before a congressional committee.
Meanwhile, City whistleblowers could soon be offered immunity from prosecution under plans to beef up the UK's financial watchdog, Chancellor Alistair Darling has indicated. The UK government was urged to grant the Financial Services Authority (FSA) US-style powers in the wake of last week's slump in HBOS's share price amid claims of market manipulation.
Amid global financial turmoil, Darling wants to see a crackdown on such activity, providing the authorities with "the tools to do the job".
FSA investigators are set to be given "specified prosecutor" status already enjoyed by tax officials, the Serious Fraud Office and the director of public prosecutions.
The full article contains 323 words and appears in The Scotsman newspaper.
