Fed to Lend $200 Billion, Take on Mortgage Securities

Bloomberg reports:

The Federal Reserve plans to lend up to $200 billion of Treasury securities in exchange for debt including private mortgage-backed securities that have slumped in value as homeowners defaulted on their payments.

The Fed set up a new tool, the Term Securities Lending Facility, to lend Treasuries to primary dealers for 28-day periods, through weekly auctions. The Fed also said in a statement in Washington that it's increasing the amount of dollars available to European central banks through swap lines.

Today's steps are the latest in Chairman Ben S. Bernanke's effort to alleviate increasing strains in financial markets that are curtailing credit available to homeowners and companies. The Fed last week said it will make up to $200 billion available to banks through other tools to help boost liquidity.

Another dumb move by the Fed.