Fed Cuts Discount Rate to Ease Crisis (Marketwatch) (17-03-2008)

WASHINGTON -- Over the weekend the Fed cut in the rate to financial institutions to 3.25 percent from 3.50 percent, effective immediately, and created a lending facility for big investment banks to secure short-term loans. It also extended the maximum term of discount-window loans to 90 days from 30 days. Analysts view it as an all out attempt to avoid a serious financial market meltdown.

The Fed acted just after JPMorgan Chase & Co. agreed to buy rival Bear Stearns Cos. for $236.2 million in a deal that represents a stunning collapse for one of the world's largest and most venerable investment banks. Just on Friday the Fed had raced to provide emergency financing to cash-strapped Bear Stearns through JPMorgan. Days earlier the Fed announced a set of other unconventional steps to thaw out a credit market in danger of freezing shut.

Source: MarketWatch