WASHINGTON — With the Federal Reserve Board poised to expand its consumer lending program to accept many of the bad assets held by financial institutions as collateral, the central bank is crossing into a new — and risky — era.

Since the onset of the financial crisis, the Fed generally has been reluctant to accept big risks. Though it took on some of the worst holdings from Bear Stearns Cos. and American International Group Inc., its other liquidity programs accepted only highly rated securities as collateral.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.