Emergency cash available to US investment banks

Investment banks in the US are being given access to emergency funds from the Federal Reserve if the current financial turmoil continues.

The Fed’s chairman, Ben Bernanke, announced the decision yesterday and hopes it will allay the banking giant’s fears on Wall Street who are facing a challenging time currently due to the credit crisis.

Mr Bernanke added that the central bank is considering extending its lending facility, which will allow investment banks such as Lehman Brothers, to access cash for six-months, beyond the end of the year.

In the past, emergency cash was only allowed for commercial banks like JP Morgan.

The lending facility was set up back in March to stabilise the financial system after the collapse of investment banking giant, Bear Stearns.

Mr Bernanke is requesting Congress provide the central bank with more authority to oversee markets.

The fact that emergency lending facilities are to be extended indicates that policymakers expect the financial turmoil to persist for some time, according to analysts.

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