Fed pumps billions more into banks

Fed pumps billions more into banks

Central bank doubles to $300 billion the amount it will loan banks. Loans could reach $900 billion by end of year. more

NEW YORK (CNNMoney.com) -- The Federal Reserve announced Monday it will double to $300 billion the amount of money it will make available to the nation's banks in return for a wide range of damaged collateral.

The central bank said that its so-called term auction facility, which accepts financial instruments such as mortgage-backed securities as a collateral, will be raised to $300 billion immediately. The amount available to banks is set to rise to $600 billion under the moves announced Monday.

In addition, the Fed signaled it could increase the amount available through those loans to $900 billion by the end of the year.

The moves come in the wake of the passage on Friday of a $700 billion bailout bill that will allow Treasury to buy damaged assets directly from banks and Wall Street firms.

The crisis in financial markets was spreading around the globe, sending overseas stocks sharply lower Monday while U.S. stock futures also fell.