The Fed desperately tries to save the housing market
-->The Economy, Real Estate March 11th, 2008
The Fed keeps trying new ways to stop the collapse in the housing market. Lowering interest rates didn’t work. Injecting billions into the economy didn’t work either.
According to USA Today:
WASHINGTON — The Federal Reserve on Tuesday dramatically stepped up its efforts to ease a widespread credit crsis that threatens the economy, announcing it will swap up to $200 billion of ultra-safe Treasury securities for a range of currently less desirable products, including mortgage-backed securities.
The move is the latest in a series of aggressive Fed efforts since last summer seeking to calm financial markets and stabilize the economy. Despite the central bank’s moves — including lower-cost loans, steep interest rate cuts and special funding auctions — credit markets have continued to tighten and the economy has veered toward recessionA severe slump in both the housing and credit markets has made banks and other financial institutions hesitant to lend to each other, and this has caused a cash shortage. Financial companies racked up multibillion-dollar losses as investments in mortgage-backed securities soured with the housing market’s bust. Problems started in the market for subprime mortgages — those made to people with blemished credit histories. But trouble has spread to other areas.
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