Today the Federal Open Market Committee adjourned their meeting without a change in interest rates. The primary focus of Chairman Ben Bernanke was on the need to resuscitate our private credit markets. The Feds announced that they are prepared to buy long term treasuries if the credit trend continues to be tight in the market.
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The Federal Reserve released the statement regarding the Citigroup intervention. Notice the guidelines by which the Fed states they will preserve the strength of our banking system and promote recovery. Joint Statement by Treasury, Federal Reserve, and the FIDC on Citigroup.
More on Federal Reserve, FDIC, and The Treasury On The Citi Bailout
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Today Federal Reserve Chairman Ben Bernanke share with Congress his concerns for the economy that continues to see a slow down. Despite the recent movements by the Bush Administration and the global efforts of the world's central banks, the US Economy is still continuing retract. The financial and credit markets continue to show daily uncertainty.
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I had an interesting conversation with one of my family members today regarding current state of available mortgages. Dino Venti owner of Venti's Cafe in downtown Salem has been building his loyal clientel for nearly 13 years. When you step into Venti's you feel a sense of community among the regulars – it definitely has that "Cheers" type of atmosphere. Having the face to face contact with customers nearly every day for the past 13 years, Dino has established many friends and acquaintances in the Willamette Valley.
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Today the Federal Reserve, the European Central Bank, the Bank of England, and the Swiss national bank announced they will lend an unlimited amount of funds to commercial banks in an effort to revive the financial markets worldwide. The Feds lead the way in the unprecedented event that backs the governments recent intervention.
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Today the Federal Open Market Committee unexpectedly lowered the federal funds rate by 50 basis points (.5%) to 1.5%. Several central banks from around the globe also reduced funds rates by 50 basis points in an effort to restore some confidence in the markets. The prime interest rate will be reduced to 4.5%.
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The daily media focus on the economy has brought the "banking crisis" to the forefront of everybody's mind. The failure of several large players in the banking system including 158 year old Lehman Brothers and the largest savings and loan bank Washington Mutual, has undoubtedly proven struggles in our banking system. The congressional decision to pass the bailout plan will provide the much needed relief to the banks with a manageable recovery in sight.
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Today the Federal government announced a rescue plan after a historic week in our financial markets. Earlier in the week Lehman Brothers declared bankruptcy, Merrill Lynch was sold, and AIG was bailed out by the government. Central banks from around the world poured hundreds of billions of dollars into the banking system in hopes to calm the storm. Despite the surge of news and volatility in the financial markets this week, mortgage rates had little change.
Tuesday the Federal Reserve Board met and left the federal funds rate unchanged despite the news of Lehman Brothers' bankruptcy and the buy-out of Merrill Lynch. The federal funds rate, which banks charge each other for over-night deposits, will remain at 2%. The prime interest rate will follow suit, remaining at 5%. Consumers are more familiar with the prime interest rate because the rates for home equity loans/lines of credit and credit cards are tied to the prime rate.
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2008 has brought a large amount of attention to the real estate, mortgage, and financial industries. The media throws information at consumers at a rate that is very difficult to comprehend. Education about the changes we hear from a day to day basis is important as we are all affected by these sectors of our economy. A major topic in the media is the government sponsored FHA home loan. Understanding the basics of the FHA home loan is important as it has become one of the most valuable programs for new and existing homeowners.
More on FHA Goverment Home Loans – Just For First-Time Homebuyers?
