Feds Act to Solve the Credit Crisis WASHINGTON D.C. (Associated Press) -

The Treasury Department and the Federal Reserve have come up with separate actions designed to shore up the nation's 2 trillion dollars of assets in money market funds.

The Treasury plans to tap a Depression-era fund to provide guarantees for the money market mutual funds.

The Fed, meanwhile, says it will expand its emergency lending efforts to let commercial banks finance purchases of asset-backed paper from money market funds. That should help the funds meet
demands for redemptions.

The central bank also says it plans to buy short-term debt obligations issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks, which provide low-cost funding for mortgages, small businesses and farms. The aim is to pump money into the financial system and persuade banks to begin lending again and stop hoarding cash. © Copyright 2009, Associated Press