Fed to Offer Banks $60 Billion in January Auctions

January 6 2008 CNBC.com The Federal Reserve announced Friday that it is increasing the amount of money available to banks through a new auction process, one of the main ways it is combatting a severe credit squeeze. The Fed again pledged to continue with the auctions "for as long as necessary." The Fed said that it will increase the amount offered at each of the next two auctions from $20 billion to $30 billion, a 50 percent jump. The next two auctions will take place on Jan. 14 and Jan. 28. The Fed announcement indicated that the auction process it began last month has been successful in providing a source of loans for cash-strapped banks. The Fed announced in December that it was creating an auction facility to give cash-strapped banks a new way to get short-term loans from the central bank to help them over the credit hump. A global credit crisis has made banks reluctant to lend to each other, which can crimp lending to individuals and businesses.

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