Federal Reserve, Banks | featured news

The central bank affirmed that it would keep up its existing efforts to stimulate the economy, even though it expected a return to moderate growth.

Federal Reserve Chairman Ben Bernanke has told close friends he probably will not stand for a third term at the central bank even if President Barack Obama wins the November 6 election, the New York Times reported.

The Federal Reserve, hoping to give another shot in the arm to the pallid recovery, announced it would launch a new round of a controversial bond-buying stimulus program. The central bank also further extended its pledge to keep short-term interest rates near zero, now through the middle of 2015.

A growing number of small and medium-sized banks are merging as shrinking profit margins, tepid loan demand and low interest rates place pressure on their operations. Conditions are unlikely to improve as the Federal Reserve contemplates another round of stimulus that could push rates even lower.

Citigroup Inc may be a surprise winner when the Federal Reserve reveals the results of bank stress tests designed to gauge the health of the biggest U.S. banks.

The United States has not seen a balanced budget since 2001. Although private banks in the U.S. hold the majority of the country’s debt, over 52% according to MSNBC, the Treasury Department and the Federal Reserve Board estimate that foreign governments hold 4.4 trillion of the country’s $14 trillion debt in Treasury securities.

Central bank bumps up cost for emergency loans to banks, but says move on benchmark rate is not imminent.

The increase in the discount rate is seen as a first step by the Fed to normalize lending after more than two years of extraordinary actions to prop up the economy.

Bernanke detailed the Fed's strategy to tighten credit, indicating the rate paid to banks on excess reserves may for a time replace the fed funds rate as the main policy tool.

The U.S. Federal Reserve this month asked banks that were part of "stress tests" conducted earlier this year that have not yet repaid money injected under the Troubled Asset Relief Program (TARP) to submit plans to do so, a person familiar with the situation said on Tuesday.