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Urgently trying to keep cash flowing amid a
Wall Street meltdown, the Federal Reserve on Tuesday pumped another
$70 billion into the nation's financial system to help ease credit
stresses.

The Federal Reserve Bank of New York's action came in two
operations in which $50 billion and then another regularly
scheduled $20 billion were injected in temporary reserves.

The maneuver takes place as Federal Reserve Chairman Ben
Bernanke and his central bank colleagues prepare to meet to decide
their next move on interest rates and conduct a fresh assessment of
the country's financial and economic troubles.

Some believe the financial system turmoil raises the odds the
Fed will cut rates. Others still predict the Fed will hold its key
rate steady at 2 percent.

In the last few days, the American financial system has been
badly shaken as bad bets on dodgy mortgage-backed securities
claimed more Wall Street giants.

Lehman Brothers, the country's fourth-largest investment bank,
filed for bankruptcy protection. A weakened Merrill Lynch, deciding
it couldn't go it alone anymore, found help in the arms of Bank of
America. Now, the insurance giant American International Group is
dangerously wobbling. Against this backdrop, Wall Street on Monday
plunged 500 points, the most since the September 2001 terror
attacks.

The cash infusion Tuesday was designed to help ease a spike in
the overnight lending rate between banks. A sharp rise in such
borrowing costs makes banks reluctant to lend to each other and to
hoard cash, worsening already tight credit conditions.
Harder-to-get credit has crimped spending by consumers and
business, a factor in the slowing economy.

To help grease the financial plumbing Monday, the Fed pumped a
total of $70 billion into the system through open market
operations.

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Business and Economic News

Urgently trying to keep cash flowing amid a
Wall Street meltdown, the Federal Reserve on Tuesday pumped another
$70 billion into the nation's financial system to help ease credit
stresses.


Fed pumps $70 billion into nation's financial system

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