Without naming the reeling Lehman Brothers Holdings Inc., the Federal Reserve Board said it was moving Sunday to bolster financial markets by significantly broadening the types of collateral it will accept for both its Primary Dealer Credit Facility and its Term Securities Lending Facility.
The Fed also said it would waive until Jan. 30 some restrictions in section 23A of the Federal Reserve Act that will allow insured depository institutions to provide liquidity "to their affiliates for assets typically funded in the tri-party repo market."
"The steps we are announcing today, along with significant commitments from the private sector, are intended to mitigate the potential risks and disruptions to markets," Fed Chairman Ben S. Bernanke said in a statement posted on the Fed's Web site.
The statement said the Fed worked closely through the weekend with the Treasury Department, the Securities and Exchange Commission, and market participants to "identify potential market vulnerabilities in the wake of an unwinding of a major financial institution and to consider appropriate official sector and private sector responses."
