The central bank's unusual cash infusion aims to keep banks lending.
The Federal Reserve is becoming increasingly creative in its efforts to keep the world's credit markets from shutting down.
The central bank's latest effort is to show the world's lenders it has faith in the highest quality debt – whether it's issued by such institutions as Fannie Mae or a highly rated company.
The move, which was met with wide approval on Wall Street, is essential to keep liquidity flowing at a time when some lenders are growing wary even of debt with the implicit guarantee of the US government. Without the Fed's actions, there could have been a further deterioration of the nation's housing market.
"This indicates the Fed is the true lender of last resort," says Doug Roberts, chief investment strategist for Channel Capital Research, based in Shrewsbury, N.J. "It's not bailing people out but it is providing a sandbag."
Page 1 of 4