Sub-prime collapse ‘beyond the US Federal Reserve’
FEARS are growing that the US Federal Reserve may soon find itself short of the funds needed to continue propping up the nation’s financial system.
The central bank yesterday used its financial muscle to back the bail-out of the stricken Wall Street investment banking giant Bear Stearns, which will be taken over by rival JPMorgan Chase at a fraction of its worth last week.
But analysts believe the threat to the financial system, which continues to flow from the collapse of the sub-prime mortage market last year, is getting too big for the Federal Reserve.
“This is now beyond the Fed,” ANZ international economist Amy Auster said.
“It is not going to be able to deal with this situation on its own.”
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