Economics: Fed Papers Show Breadth of Emergency Measures

A reminder ...

The Federal Reserve released documents Wednesday showing that its efforts to help stabilize the markets at the height of the financial crisis reached far beyond Wall Street and deep into the economy.

The crisis in the market for commercial paper, for example, the lifeblood of daily business, was more extensive and lasted longer than was previously known.

Even bedrock corporations like Caterpillar, General Electric, Harley Davidson, McDonald's, Verizon and Toyota relied on a Fed program that supported the market for commercial paper — the short-term i.o.u.'s that corporations rely upon to make payroll and pay their suppliers. During the worst moments of the crisis, in the fall of 2008, even creditworthy corporate borrowers found this source of financing had dried up, and had to turn to the Fed for help.

The documents show that during the financial crisis, the central bank extended nearly $9 trillion in short-term loans — an amount that is more than half of the national economic output of the United States — to financial institutions under a program called the Primary Dealer Credit Facility. [Emphasis added].

The Fed ... emphasized that most of the programs closed earlier this year and that taxpayers did not incur losses.

For more, see Fed Papers Show Breadth of Emergency Measures by Sewell Chan and JO Craven Mcginty, December 1, 2010 at The New York Times.