March 7
Fed increases the term auction facility (TAF) by $40 billion. TAF was first unveiled as a temporary 28-day borrowing facility for depository banks in December to avoid the stigma of using the Discount Window.
March 11
Fed creates $200 billion new lending facility for primary dealers called term securities lending facility (TSLF). This emergency measure gives brokers liquidity for 28 days rather than overnight and is the first time non-deposit taking financial institutions have been able to borrow from the Fed since the Great Depression.
March 14
Fed bails out Bear Stearns via JPMorgan Chase. Fed also agrees to provide $30 billion of funding.
March 18
Citing a weak economic outlook, slowing consumer spending, labour markets and stress in financial markets, the Federal Open Market Committee cut the federal funds rate by 75 basis points to 2.25%. Fed funds was 5.25% in the summer. Discount rate was simultaneously reduced by 75bp to 2.5%. The gap between the discount and funds rates was 100 basis points before the crunch took hold.
March 19
The rehabilitation of the US government sponsored enterprises (GSEs) is now complete. Office of Federal Housing Enterprise Oversight cut capital requirements of Fannie Mae and Freddie Mac from 30% to 20%, thus boosting their capacity to buy mortgages by some $200 billion. They also are forecast to raise more preferred capital that Deutsche Bank estimates will increase the GSEs’ mortgage purchasing power by another $200 billion.
March 24
Federal Home Loan Banks allowed to increase purchases of agency (Freddie and Fannie) mortgage backed securities. FHLBs’ MBS investment authority rises from 300% to 600%, boosting purchasing power by over $100 billion.