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July 14, 2008

The U.S. Federal Reserve gave the New York Fed. the green light to lend directly to Fannie Mae and Freddie Mac via the discount window.  This discount window is a lending/borrowing facility which was opened to investments banks in an attempt to alleviate pressures from the on-going credit crisis which began in September 2007.  The authorization for the opening of the lending facility was taken with to help the government sponsored entities meet their liquidity requirements if necessary at an interest rate of 2.25%, a quarter point above the Fed’s benchmark rate.  News of the Fed’s action helped calm market fears thus preventing the U.S. dollar from extending its losses through the key USD index support at 70.70.