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When will the banker say no?

Texan

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Money
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Feb 24, 2010
Treasury expands borrowing

WASHINGTON - NOW that the government's debt ceiling has been increased, the Treasury Department said on Tuesday it will once again expand an emergency programme created at the height of the financial crisis to help the Federal Reserve manage its books.

The Treasury said it will expand borrowing in the Supplementary Financing Programme from US$5 billion (S$7 billion) to US$200 billion. During the financial crisis, the borrowing programme hit a peak of US$560 billion in 2008 but it was trimmed last fall to keep the government from breaching the debt limit.

The increase planned over the next two months will be accomplished by selling US$25 billion in 56-day bills at weekly auctions which will be held every Wednesday.

Treasury officials said that they are resuming the debt sales to make sure that the Federal Reserve has the flexibility it needs to manage its balance sheet.

The money Treasury raises through the special debt sales is deposited in accounts at the Federal Reserve, providing the central bank with expanded assets on its books.

Treasury officials said they expected to keep the special debt programme at a level of US$200 billion for as long as the programme is needed. That will be accomplished by auctioning further debt to replace the 56-day bills as they mature. -- AP



http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_494321.html
 
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