How far will the Fed go? It looks like the Fed is going to take whatever it takes to rescue the U.S. Financial System. Today's report shows that the Fed is prepared to lend $7.4 trillion on behalf of U.S. taxpayers to rescue the troubled financial system that started last year.

U.S Fed chairman Ben Bernanke and the Fed have to be miffed over their lack of traction in addressing the credit bubble.

The Fed has released a statement announcing significant efforts to boost liquidity in the credit markets. The Fed will begin to pay interest on required reserve balances and excess reserve balances. Additionally, the Fed will increase the amount outstanding in the Term Auction Facility (TAF) to a potential amount of $900 billion over year end.

The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies.

Treasury Department announced today that it is auctioning a total of $100 billion in bills to boost the Fed's liquidity programs. This is IN ADDITION to the $100 billion it announced yesterday. See the update.

Greenspan warns Bernanke and the US people not to use the magical piggy bank which is the Federal Reserve's ability to make up money out of thin air. Only Greenspan denies that the magical piggy bank is real. HAHAHA. He accidentally told the truth! The Federal Reserve can and will and does make money out of thin air.

Banks have dialed up the lending requirements in the face of the nearly half-trillion dollars lost in the mortgage mess to-date. The Federal Reserve reported that banks and lending institutions have tightened credit standards across all loan-types as losses mount and liquidity remains a key issue.

Thomas Montag just received $40 million to start work today as Merrill Lynch's new head of sales. Mr. Montag is clearly a brilliant salesman, having negotiated such a rich deal from Merrill.

In a speech delivered at the Boston Fed yesterday, Bernake hinted that he may be finished bailing out the US banking system, and would like to refocus on his actual job: preventing rampant inflation from destroying the US economy.

The Federal Reserve has approved the purchase of Countrywide by Bank of America. Not surprising really - at this point the Fed will probably approve the purchase of any bank by another just to save the public from “BANK FAILURE” headlines. While the acquisition is approved there has been some rumblings that Bank of America is not quite sure whether they’ll complete the transaction; but so far all signs and sounds coming from BofA point to moving forward.

In a speech delivered in San Francisco, Dallas Fed President Richard Fisher said the "I" word several times. Mr. Fisher said "If inflationary developments and, more important, inflation expectations continue to worsen, I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic" economy.

The Fed has finally decided that they need to look at their policies regarding potential bubbles. Here is Fed Governor Frederic Mishkin in a recent speech: