Tom Raum
Associated Press
October 10, 2008

WASHINGTON – Dusting off Depression-era emergency powers, the Federal Reserve is extending its reach over the economy as never before, pushing the limits of its authority, if not exceeding them.

  • A d v e r t i s e m e n t

Now the nation’s central bank is even becoming a source of loans for companies other than banks.

Radical steps by the Fed under Chairman Ben S. Bernanke – all in the name of seeking to halt the panic sweeping financial markets – are turning it into a financial colossus. They are also putting the government deeper into debt and taxpayers further at risk if the various moves fail.

And it is being done with little direct interaction with Capitol Hill. The Fed does not depend on Congress for its budget, including its payroll, and is as much a creature of the nation’s banking system as part of the federal government.

On Tuesday, the Fed announced that it would buy vast amounts of corporate debt, some of it unsecured, in hopes of renewing the flow of money in so-called commercial-paper markets. That is where many companies turn for short-term loans to finance their most basic operations, such as purchasing supplies or making payrolls.

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