Federal Reserve System

Treasury Secretary Henry M. Paulson Jr.'s blueprint for regulatory reform, officially unveiled Monday, sets the stage for a confrontation with Congress by offering no relief for troubled homeowners and in many instances advocating less, not more, federal supervision of the nation's financial system.

The Federal Reserve said Tuesday that it would become a lender of last resort to corporate America and signaled a possible interest rate cut, but the stock market nose-dived again as the financial crisis continued to defy the best efforts of policymakers.

The economy deteriorated throughout the nation last month and pessimism spread, the Federal Reserve said in its regional economic survey Wednesday. "Economic activity weakened in September across all 12 Federal Reserve districts," the Fed said in its "beige book" report, published two weeks before officials meet to set interest rates. "Consumer spending decreased in most districts, with declines reported in retailing, auto sales and tourism."

Directors at 11 of the 12 regional Federal Reserve banks voted to leave the discount lending rate unchanged ahead of the central banks December policy meeting, the same as the previous session in October.

Federal Reserve Bank of Chicago President Michael H. Moskow, whose inflation warnings have raised bond yields, confirmed Monday that he would retire Aug. 31, leaving a fourth high-level opening at the central bank. The Chicago Fed will begin a nationwide search for a successor, the bank said in a statement, reiterating a 2002 resolution extending Moskow's retirement date until this year. Moskow took office in 1994 and has never dissented from the majority in a vote on interest rates.

As the Federal Reserve becomes more aggressive in its approach to credit problems stemming from the sub-prime mortgage meltdown, speculation is growing that the central bank will cut its target benchmark interest rate this month. On Friday, stepping up its efforts to calm the fears sweeping the debt markets, the Fed pumped an additional $38 billion into the U.S. banking system and made a rare announcement promising more action if necessary. The move followed a $24-billion injection Thursday.

The Federal Reserve on Friday pumped $38 billion into the U.S. financial system in response to fears that too little money was available for lending. The move followed a similar $24-billion injection Thursday. What is the Federal Reserve? The Fed is a quasi-governmental network of 12 Federal Reserve banks across the country. It is run by a seven-member board of governors (there are currently two vacancies), now headed by Chairman Ben S. Bernanke.

washington -- In the current credit crisis, Federal Reserve Chairman Ben S. Bernanke has carved a careful path, ensuring there is sufficient money to encourage lending but not enough to stoke an inflationary boom. Bernanke has managed this balancing act by temporarily opening the central bank's credit spigots at a time when nervous investors have been closing theirs. The Fed added $2 billion in credit to the economy Monday atop the $62 billion it added last Thursday and Friday.

Citigroup, Bank of America and other top banks took the rare step of borrowing $2 billion from the Federal Reserve on Wednesday in a bid to reassure markets and remove the stigma associated with getting financing from the central bank. U.S. stock indexes rose as the banks' moves signaled that battered credit markets may start to heal, though bank stocks were mixed amid lingering concern about mortgages.

Banks increased their borrowing from the Federal Reserve this week, pushing the one-day level to the highest point since the day following the 2001 terrorist attacks. The Fed reported Thursday that direct borrowing by commercial banks from the Fed totaled $7.15 billion in primary credit Wednesday. That was the highest one-day total since the Fed lent $45.5 billion on Sept. 12, 2001, the day after the terrorist attacks on New York and the Pentagon.