Fed Takes Drastic Step To Unfreeze Credit Market

The Federal Reserve announced Tuesday a dramatic plan to buy massive amounts of short-term debts in an effort to break through the country's credit clog. Officials say the Fed will buy "commercial paper," a short-term financing mechanism that many companies rely on to finance their day-to-day operations, such as purchasing supplies or making payrolls.

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ARI SHAPIRO, Host:

NPR's business news starts with another new fix from the Fed.

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SHAPIRO: The Federal Reserve has announced a new emergency plan to channel money to businesses that need cash to pay their bills. This morning, the Fed said it will start buying commercial paper. That's a kind of short-term bond that companies issue to fund their daily operations. The Fed says it's become harder for companies to raise money using commercial paper, so it's stepping in to prevent what it calls substantial disruption to financial markets and the economy.

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