WASHINGTON (AFP) — The US Treasury Wednesday announced it would sell 40 billion dollars in 35-day bonds to help the Federal Reserve as it battles to shore up the struggling economy.
The announcement came on the heels of the Federal Reserve's decision late Tuesday to provide American International Group (AIG) with an 85-billion-dollar loan in return for a 79.9 percent stake in the company.
In a statement the treasury said it was launching "a temporary supplementary financing program" at the request of the Fed, as it pumps money into the US economy.
"The program will consist of a series of treasury bills, apart from the treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives," the statement said.
The Fed has announced a series of spectacular moves to help the country's economy, including bailing out AIG.
Last weekend, the government took over mortgage finance companies Fannie May and Freddie Mac, and in March it helped salvage investment bank Bear Stearns.
On Tuesday it injected 70 billion dollars of liquidity into the US economy to help stressed financial markets, to keep credit flowing for banks amid the credit squeeze.
The US central bank also had injected 70 billion dollars into financial markets amid turmoil Monday following the bankruptcy of Wall Street giant Lehman Brothers.
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