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The U.S. Federal Reserve on Sunday announced emergency measures to stem a fast-spreading global financial crisis, tapping tools last used in the Great Depression to pour funds into cash-starved Wall Street firms.
The Fed cut the discount rate it charges on direct loans to banks to 3.25 percent from 3.50 percent and set up a new program to provide cash to a wider range of big financial firms previously unable to borrow directly from the central bank.
It took the steps in concert with a decision to approve special financing to facilitate the purchase of ailing investment bank Bear Stearns [ BSC 11.69 
-0.0615 (-0.52%) ] by JPMorgan Chase. [ JPM 43.45 -0.19 (-0.44%) ]. Under the deal, the Fed agreed to fund up to $30 billion of Bear Stearns' less liquid assets.
Senior Fed officials said the extraordinary measures, which extend a series of emergency steps taken over the last 10 days, were needed to ensure a broad spectrum of financial firms had access to funds after problems at Bear Stearns late last week.
"The Federal Reserve, in close consultation with the Treasury, is working to promote liquid, well-functioning financial markets, which are essential for economic growth," Fed Chairman Ben Bernanke said in a rare conference call with reporters. "These steps will provide financial institutions with greater assurance of access to funds."
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