Fed moves on Sunday to help banks

WASHINGTON, March 17 (UPI) -- The U.S. Federal Reserve cut the primary credit rate from 3 1/2 percent to 3 1/4 percent on Sunday to provide some breathing room for troubled banks.

The action lowers the spread of the primary credit rate over the Fed's target fund rate by 1/4 percent and allows banks to borrow from each other at more favorable rates over loans until the loan rates begin to react.

It was an unusual, weekend response to trouble in the financial district.

The Fed also announced Sunday it would provide $30 billion in financing for Bear Stearns assets as J.P. Morgan and Co., purchased the investment bank, which was facing bankruptcy, for $2 a share.

And, in a second policy shift Sunday, the Fed moved to provide assistance to foundering financial concerns by extending an invitation to securities firms to borrow from the central bank on the same terms as regulated banks.

The new terms will be available for six months, a Fed statement issued Sunday said.