Fed Extends Emergency-Loan Programs, Currency Swaps to Oct. 30

By Scott Lanman and Simon Kennedy

Feb. 3 (Bloomberg) -- The Federal Reserve extended its emergency-lending programs and foreign currency-swap lines by six months through Oct. 30, citing “continuing substantial strains in many financial markets.”

The decision applies to five emergency-lending programs that provide funds or Treasury securities to securities brokers, money-market funds and companies that issue commercial paper, along with swap lines with 13 other central banks, the Fed said today in a statement in Washington. The programs had been previously authorized through April 30.

The move signals Fed officials see credit markets in the U.S. and around the world taking longer to repair than previously thought. The lending programs are authorized under a provision allowing loans to non-banks under “unusual and exigent circumstances.” Outstanding loans and swaps under the programs totaled $884 billion as of Jan. 28.

The Fed’s decision applies to the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Money Market Investor Funding Facility, the Primary Dealer Credit Facility and the Term Securities Lending Facility.

The Fed extended currency-swap programs with the central banks of Australia, Brazil, Canada, Denmark, the U.K., the euro region, South Korea, Mexico, New Zealand, Norway, Singapore, Sweden and Switzerland. The Bank of Japan will consider an extension when its policy makers next convene, the Fed said.

The dollar value of outstanding swaps has risen more than sevenfold since the Lehman Brothers Holdings Inc. bankruptcy in September, to $465.7 billion as of Jan. 28.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net; Simon Kennedy in Paris at skennedy4@bloomberg.net.