Fed pumps cash into commercial paper - Fox29 WFLX TV, West Palm Beach, FL-news & weather

Fed pumps cash into commercial paper

Posted by Rachel Leigh email

WASHINGTON (AP) - The Federal Reserve isn't saying how much it will be spending on short-term debt to ease a situation that is clogging the nation's credit system.

About $100 billion in such "commercial paper" IOU's are outstanding at any given time, and most of those are sold to buyers that include pension funds and money market mutual funds. But, now those investors are too jittery to commit for longer than overnight or a couple of days.

The Fed's plan is to act as a backstop that would provide another option for companies to make short term loans to cover their day-to-day operations.

Officials say they will buy as much of the debt as necessary to get the market functioning again. While not saying how much that could be, the Federal Reserve estimates that $1.3 trillion worth of commercial paper would qualify for the program.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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