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In an effort to ease the pain caused by the latest mess with credit, the Fed (Federal Reserve Bank) is increasing the amount of loans available to banks. Banks and lending institutions are feeling the crunch of the failure to pay back loans including the foreclosures which are currently at an all time high. Foreclosures continue to plague the homeowners, banks and loan companies.
The fear is that we are falling into a recession. With jobless rates up due to large numbers of layoffs all over the country, 65000 in February alone, and people unable to pay off their mortgages because of incredibly ridiculous subprime loans made on mortgages a couple of years ago, recession does appear to be on the horizon.
The Fed is trying to stop the bleeding with boosting the size of the auctions to lending institutions by $50 billion. The auctions are a form of short term loans to the banks to make sure they have money to lend out. The Fed has plans to keep the auctions going for the next six months and beyond that if necessary.
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