Fed extending credit facility


The bailout continues on Wall Street with the Federal Reserve’s decision to extend its lending to primary dealers.

According to the release from the Federal Reserve, they seem to think the crisis is far from over, possibly extending as far as the new year.

In light of continued fragile circumstances in financial markets, the Board has extended the PDCF through January 30, 2009, and the Board and the Federal Open Market Committee (FOMC) have extended the TSLF through that same date.  These facilities would be withdrawn should the Board determine that conditions in financial markets are no longer unusual and exigent.

This comes on the heels of the news that the SEC would extend the short sell restrictions on 19 financial stocks, including Fannie Mae [[FNM]] and Freddie Mac [[FRE]], for another 10 days. The ban requires confirmed borrowing of the securities before the trader can short the stock, curtailing some of the downward pressure on the already battered financial sector.

According to Forbes, some companies have asked to be included in the ban on short selling but have been denied.  Washington Mutual [[WM]] and National City Corp. [[NCC]] are among those firms, and coincidentally (or not) are two banks which have gotten infusions of capital from private equity firms, a trend that Medill News Service is tracking.

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