WASHINGTON --- The Federal Reserve and foreign central banks moved Monday to pump billions to cash-strapped banks at home and abroad in a bid to break through a credit clog and spur lending.
The Fed said the action is intended to "expand significantly" the cash available to financial institutions, its latest effort to relieve the worst credit crisis since the Great Depression.
The goal is to boost the amount of quick cash available to banks and other financial institutions so they'll feel more confident and inclined to lend to each other and to people and businesses.
It is unclear whether the Fed's move will break through the credit bottlenecks. Its previous actions have provided relief but haven't halted the crisis.
Against this backdrop, central banks will continue to work closely and are prepared to take "appropriate steps as needed" to ease the crisis and get banks lending again, the Fed said.
Under one new step, the Fed will boost the amount of 84-day cash loans available to U.S. banks. The Fed is increasing the amount from $25 billion to $75 billion starting Oct. 6. Banks bid on a slice of the loans at an auction.
That move will triple the supply of 84-day loans to $225 billion, from $75 billion, the Fed said.
The total amount of cash loans -- 84-day and 28-day -- available to banks will double to $300 billion from $150 billion, the Fed said.