MW: Fed, Treasury announce new steps to help financial markets
By Greg Robb
WASHINGTON (MarketWatch) -- The Federal Reserve and Treasury Department separately announced Monday new steps to deal with the continuing financial market turmoil. The Fed said it would increase the size of its loans to banks to a potential $900 billion. The central bank announced that it will begin to pay interest on bank reserves. This will give the Fed "greater scope" to address conditions in credit market. The Treasury actions were aimed at the massive borrowing needs required under the new mortgage financing plan approved by Congress last week. Treasury said it will make adjustments to its auction calendar by increasing the size of bill and note auctions and continuing to issue cash management bills, some of longer-duration. In addition, the department said it was considering bringing back the 3-year note in November and taking other steps. The Fed said it would work with Treasury "on ways to provide additional support for term unsecured funding markets."