The 2007 Credit Crunch What will its Impact be on Construction?

摘要

In August, the fears of a credit crunch picked up substantially, and the Federal Reserve took quick action to shore up liquidity - first by injecting billions of dollars into the U.S. financial system to keep the effective federal funds rate at 5.25 percent. The federal funds rate is the rate on overnight loans between banks. The Fed then lowered the discount rate from 6.25 percent to 5.75 percent. The discount rate is the rate at which banks can borrow directly from the Fed, which under more normal conditions they do rarely, since it may be viewed as a sign that a bank is struggling to raise funds from other sources. This reluctance seems to have been put aside for the moment, as the four largest U.S. banks (Citigroup, Bank of America, J.P. Morgan Chase, and Wachovia) borrowed 2 billion dollars from the Fed, in a move to help encourage other banks to use the discount rate window.