Fed Adds Most Reserves Since 9/11 as Banks Hoard Cash

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Fed Adds Most Reserves Since 9/11 as Banks Hoard Cash (Update1)

By Liz Capo McCormick

Sept. 15 (Bloomberg) -- The Federal Reserve added $70 billion in reserves to the banking system, the most since the September 2001 terrorist attacks, to reverse a surge in borrowing costs sparked by the collapse of Lehman Brothers Holdings Inc.

Fed funds traded as high as 6 percent, or 4 percentage points above the central bank's target rate for overnight loans between banks, according to ICAP Plc, the world's largest inter- dealer broker. The margin was the greatest since Bloomberg began tracking the data in 1998. The rate dropped to as low as 0.5 percent after the Fed added the temporary reserves.

The central bank uses repurchase agreements, or repos, to buy or sell Treasury, mortgage-backed and so-called agency debt for a set period, to help maintain enough money in the system to keep overnight interest rates close to the target. They don't signal a policy shift. Futures show traders boosted odds to 68 percent that the Fed will cut rates when policy makers meet tomorrow to offset financial market turmoil.

Fraud, conspiracy and extortion does pay.

Taxpayers were thrown deeper in debt today as the private bank known as the Federal Reserve printed more money which they hope will delay the inevitable financial meltdown of the country until after Jan. 2009, also known as The Day Bush Flees Office.

:applause: