Fed Cuts Lending Rate in Move to Stem Market Slide

The Federal Reserve Sunday cut the rate on direct loans to banks and became lender of last resort to the biggest dealers in U.S. government bonds, Bloomberg reported.

The Fed’s first weekend emergency action in almost three decades came as the body tried to prevent a meltdown in financial markets, Bloomberg said.

The central bank lowered the so-called discount rate by a quarter of a percentage point to 3.25%, and will make loans to 20 firms that buy Treasury securities directly from it, Bloomberg said.

In a further step, the Fed will provide up to $30 billion to JPMorgan Chase & Co. to help it finance the purchase of Bear Stearns Cos. after a run on Wall Street's fifth-largest securities firm, Bloomberg reported.

The move is the latest step by the Fed and Chairman Ben Bernanke to alleviate a seven-month credit squeeze that may have pushed the U.S. economy into recession, Bloomberg reported.