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Jan 15, 2008 6:00 am US/Pacific

Fed Auctions $30B To Battle Credit Crunch

 CBS News Interactive: Inside The Federal Reserve

WASHINGTON (AP) ― The Federal Reserve, working to combat the effects of a serious credit crisis, said Tuesday it had auctioned $30 billion in money to commercial banks at an interest rate of 3.95 percent.

It marked the third in a series of innovative auctions the Fed began last month as a way to provide cash-strapped banks with the reserves they need. The hope is that the increase in resources will keep banks lending to consumers and businesses and prevent the credit turmoil that hit in August from pushing the country into a recession.

There are indications the Fed's efforts are having an impact. The 3.95 percent interest rate was the lowest of any of the three auctions it has held. The other two auctions saw rates of 4.65 percent and 4.67 percent.

(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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