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U.S. Federal Reserve to provide liquidity as needed

By Martin Crutsinger, Associated Press, 09/11/2001

   
 LATEST COVERAGE

The investigation
Grand jury hearing evidence
FBI seeks to question nearly 200
Prisoner moved to NYC

Retaliation
Key allies visit Washington

New York
City marks week since attacks

Wall Street
Traders seek stability on day two

Travel
Airlines seek federal assistance

World
Afghans prepared for holy war
Pakistan ready for battle
Arafat, Israel promise ceasefire
Extradition may not be enough

Other stories
US tourism takes a hit
Bush leads moment of silence

 TODAY'S GLOBE

Dow suffers record loss
Bin Laden sought 'dead or alive'
Kabul mulls bin Laden surrender
FBI trailed suspect before hijack
Business jets vulnerable
Pilot recalled as hero, friend
More stories from today

Complete archive of stories

 PHOTO GALLERIES

Archive of photo galleries

 REALVIDEO

New England Cable News
Moment of silence in NYC
White House falls silent
Taliban warns of holy war
Baseball returns
European markets slide

Archive of RealVideo

 THE ATTACK

Sept. 11, 2001
A reconstruction of the day in graphics, photos, and text.

 THE RESCUE EFFORT

A look at the search in NY
Digging through the rubble

 THE SUSPECT

A look at Osama bin Laden The elusive Saudi militant is widely regarded as the world�s most dangerous man.
Profile of Afghanistan

PHOTO GALLERY
Bin Laden's trail of terror

 MESSAGE BOARD

Acts of patriotism
What is the most original or inspiring display of patriotism you've witnessed over the past week?
Read messages

Earlier boards
Has America changed forever?
Condolences

 FROM THE ARCHIVES

Recent US terrorist threats



WASHINGTON - The Federal Reserve, seeking to provide assurances that the nation's banking system will be protected following the terrorist attacks, said Tuesday it stood ready to provide additional money to banks if needed.

"The Federal Reserve System is open and operating. The discount window is available to meet liquidity needs," the Fed said in a two-sentence statement.

The promise to supply additional money to the banking system was similar to a pledge that the Fed issued on the morning after the October 1987 stock market crash, when the market plunged by more than 500 points in one day of trading.

That statement in 1987 was given a large amount of credit for helping to restore calm to badly shaken financial markets.

Before the statement was released, Fed officials had said that Greenspan was out of the country attending a banking conference in Switzerland but was being kept apprised of developments.

Federal Reserve Vice Chairman Roger Ferguson, the No. 2 official at the Fed, was monitoring banking and financial market developments along with a team of top Fed officials.

The 1987 crash occurred only two months after Greenspan was sworn in as Fed chairman. He received a large amount of praise for his handling of that financial crisis.

His quick response in letting banks know that they should keep lending despite the huge loses investors had suffered on Wall Street was credited with helping spur a stock market rebound.

While the October 1929 stock market crash in which the Fed cut back on lending to banks ushered in the Great Depression of the 1930s, Greenspan's quick response in 1987 helped to stabilize the stock market and keep the country out of a recession. Fed spokesman Dave Skidmore said Greenspan was taking part in a regularly scheduled meeting of the Bank for International Settlements in Basel, Switzerland. The bank serves as a coordinating body for central banks around the world.

Skidmore refused to discuss whether extra security measures were being deployed to protect Greenspan in light of the attacks or when he would return to Washington.

"We don't discuss or provide details of his travel plans at any time for security reasons," said Skidmore. Greenspan travels with a security detail supplied by the Fed.

As the Fed sought to reassure the country that the nation's banking system was safe, officials at the Securities and Exchange Commission issued a statement saying that they supported the decision by stock exchanges to halt trading Tuesday.

SEC Chairman Harvey Pitt said his agency had been "in constant communications with each of our organized security markets and exchanges. As a safety precaution while the tragic events of today are sorted out, the securities markets have decided not to open for trading today."

Pitt said regulators strongly support this decision.

"It is a responsible course of action in light of the current situation. We are continuing to monitor the situation, along with the securities markets, and investors should be assured that the disruption to normal trading patterns is a temporary phenomenon; trading will resume as soon as it is practicable to do so. We will keep the public advised," Pitt said.

At the Treasury Department, officials announced that the regular weekly auction of four-week bills that was scheduled for Tuesday would be delayed until Wednesday. The Treasury Department, next to the White House, was evacuated after the report of a plane crashing into the Pentagon.

 
 


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