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Fed, Treasury Announce Measures On Financial Stability

The Federal Reserve should play a "central role" in preventing future financial crises like the one now gripping the country.

The conclusion is contained in a joint statement released by the Treasury Department and the Fed, agencies leading the United States' efforts to end the crisis and lift the country out of recession.

It comes as the Obama administration and Congress are considering the best way to overhaul the nation's financial structure to better protect the country from future crises.

The Fed will work closely with Treasury and other agencies to improve the functioning of credit market and help prevent the failure of huge financial institutions that could cause major damage to the economy, the statement says.

  • Click here for full Treasury, Fed Statement

The measures announced in the agreement include:

  • Treasury agrees to take over or liquidate Fed's AIG and Bear Stearns assets in longer-term
  • Fed agrees to use all tools in markets while exigent circumstances exist
  • Fed will avoid credit risk and credit allocation
  • Fed and Treasury to pursue new tools for Fed to sterilize effects of its lending
  • Fed and Treasury to work with congress to develop resolution regime

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