Editing Federal Reserve (section)

==== Temporary policy tools during the 2008 financial crisis ====
In order to address problems related to the [[subprime mortgage crisis]] and [[United States housing bubble]], several new tools were created. The first new tool, called the [[Term auction facility]], was added on December 12, 2007. It was announced as a temporary tool,<ref name="taffaq"/> but remained in place for a prolonged period of time.<ref>{{Cite web |date=December 21, 2007 |title=Federal Reserve intends to continue term TAF auctions as necessary |url=http://www.federalreserve.gov/newsevents/press/monetary/20071221b.htm |access-date=August 29, 2011 |publisher=Federalreserve.gov}}</ref> Creation of the second new tool, called the [[Term Securities Lending Facility]], was announced on March 11, 2008.<ref name="tslfannounce">{{Cite web |date=March 11, 2008 |title=Announcement of the creation of the Term Securities Lending Facility |url=http://federalreserve.gov/newsevents/press/monetary/20080311a.htm |access-date=August 29, 2011 |publisher=Federal Reserve}}</ref> The main difference between these two facilities was that the Term auction Facility was used to inject cash into the banking system whereas the Term securities Lending Facility was used to inject [[treasury securities]] into the banking system.<ref>{{Cite news |date=March 12, 2008 |title=Fed Seeks to Limit Slump by Taking Mortgage Debt |publisher=bloomberg.com |url=https://www.bloomberg.com/apps/news?pid=20601103&sid=a6aFI7RKVhEA&refer=news}} "The step goes beyond past initiatives because the Fed can now inject liquidity without flooding the banking system with cash...Unlike the newest tool, the past steps added cash to the banking system, which affects the Fed's benchmark interest rate...By contrast, the TSLF injects liquidity by lending Treasuries, which doesn't affect the federal funds rate. That leaves the Fed free to address the mortgage crisis directly without concern about adding more cash to the system than it wants"</ref> Creation of the third tool, called the [[Primary Dealer Credit Facility]] (PDCF), was announced on March 16, 2008.<ref>{{Cite web |date=March 16, 2008 |title=Federal Reserve Announces Establishment of Primary Dealer Credit Facility – Federal Reserve Bank of New York |url=http://www.newyorkfed.org/newsevents/news/markets/2008/rp080316.html |access-date=August 29, 2011 |publisher=Newyorkfed.org}}</ref> The PDCF was a fundamental change in Federal Reserve policy because it enabled the Fed to lend directly to [[primary dealer]]s, which was previously against Fed policy.<ref>{{Cite news |last=Lanman |first=Scott |date=March 20, 2008 |title=Fed Says Securities Firms Borrow $28.8 Bln With New Financing |publisher=Bloomberg.com |url=https://www.bloomberg.com/apps/news?pid=20601068&sid=a7VHAq.o6kwU |access-date=August 29, 2011}}</ref> The differences between these three facilities was described by the Federal Reserve:<ref name="pdcffaq">{{Cite web |date=February 3, 2009 |title=Primary Dealer Credit Facility: Frequently Asked Questions – Federal Reserve Bank of New York |url=http://www.newyorkfed.org/markets/pdcf_faq.html |access-date=August 29, 2011 |publisher=Newyorkfed.org}}</ref>

{{Blockquote|The Term  auction Facility program offers term funding to depository institutions via a bi-weekly auction, for fixed amounts of credit. The Term  securities Lending Facility will be an auction for a fixed amount of lending of Treasury general collateral in exchange for OMO-eligible and AAA/Aaa rated private-label residential mortgage-backed securities. The Primary Dealer Credit Facility now allows eligible primary dealers to borrow at the existing Discount Rate for up to 120 days.}}

Some measures taken by the Federal Reserve to address the [[2008 financial crisis]] had not been used since the [[Great Depression]].<ref>{{Cite news |date=March 17, 2008 |title=Fed Announces Emergency Steps to Ease Credit Crisis – Economy |publisher=[[CNBC]] |agency=Reuters |url=https://www.cnbc.com/2008/03/17/fed-announces-emergency-steps-to-ease-credit-crisis.html |access-date=August 29, 2011}}</ref>