The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still too weak to go without a backstop from the central bank.

The Fed also plans to give securities dealers options for tapping one of the loan programs to ensure financing through the ends of quarters, when funding needs can jump. Commercial lenders will be able to borrow from the central bank for a longer period, and the Fed boosted its swap line with the European Central Bank.

Today's announcement reflects continued turmoil in financial markets, after three U.S. banks failed in as many weeks. It's the latest step in officials' efforts to combat the yearlong credit crisis, after the Fed's rescue of Bear Stearns Cos. in March and the Treasury's backstop plan for Fannie Mae and Freddie Mac this month.

"The U.S. is pulling out all the stops here to make sure we don't have a terrible downturn or a collapse in the financial system," said Allen Sinai, chief global economist at Decision Economics in Boston. "There isn't anything else the Federal Reserve can do but to keep pumping liquidity into the system."

Continued at Bloomberg.com