Federal Reserve Extends Assistance to Investment Banks To Jan 2009 - Credit Crisis Continues

Lest we all think that we were out of the woods with the credit crisis, the Fed announced today that it was extending several pieces of the assistance it has provided to investment banks. This includes:

• Extension of the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) through January 30, 2009.
• The introduction of auctions of options on $50 billion of draws on the TSLF.
• The introduction of 84-day Term Auction Facility (TAF) loans as a complement to 28-day TAF loans.
• An increase in the Federal Reserve's swap line with the European Central Bank to $55 billion from $50 billion.

The support of the Fed to prop up these investment banks was unprecedented. The fact that the Fed is keeping this support open, and even expanding it demonstrates their concern that we are not through the woods yet.