The FED has extended financing to non-banks

For the first timie since the Great Depression, the Federal Reserve has extended financing to non-banks - specifically, primary dealers such as securities broker-dealers - as part of its ongoing attempt to inject liquidity into the struggling credit markets. The Primary Dealer Credit Facility(PDCF) established in March, allows the Federal Reserve Bank of New York to provide overnight cash reserves to primay dealers in exchange for a broad range of collateral. The new credit facilty aims to help primary dealers in providing financing to participants in capital markets and to promote an overall orderly functioning of the markets. The PDCF will remain in effect for 6 months and may be extended if the Fed deems it necessary.

Francis Shieh a.k.a. Xie Shihao, a watcher of economic happenings for learning the deals. July 28, 2008