The Fed?s New Front In The Financial Crisis

The continuing foreclosure crisis worsened in October 2008, though some policy efforts appear to be taking hold. Other efforts may complicate the resolution of the crisis, however. The Federal Reserve (Fed) continued the aggressive expansion of new credit that it began in mid-September. The Fed also created two new credit facilities to add to the plethora of other facilities created since the financial crisis component of the foreclosure crisis began in August 2007. These new facilities are aimed at stabilizing the commercial paper market, most recently adversely affected by the failure of Lehman Brothers and the failures of several Money Market Mutual Funds (MMMF) in September 2008.