alternative sources of funds became available. this news raised difficult questions of public policy. normally, the market sorts out which companies survive and which fail, and that is as it should be. however, the issues raised here extended well beyond the fate of one company. our financial system is extremely complex and interconnected, and bear stearns participated extensively in a range of critical markets. with financial conditions fragile, the sudden failure of bear stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence. the company ’ s failure could also have cast doubt on the financial positions of some of bear stearns ’ thousands of counterparties and perhaps of companies with similar businesses. given the current exceptional pressures on the global economy and financial system, the damage caused by a default by bear stearns could have been severe and extremely difficult to contain. moreover, the adverse effects would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability. to prevent a disorderly failure of bear stearns and the unpredictable but likely severe consequences of such a failure for market functioning and the broader economy, the federal reserve, in close consultation with the treasury department, agreed to provide funding to bear stearns through jpmorgan chase. over the following weekend, jpmorgan chase agreed to purchase bear stearns and assumed bear ’ s financial obligations. the federal reserve has taken additional measures to improve market liquidity. we have initiated a series of twenty - eight - day single - tranche term repurchase transactions with primary dealers, expected to cumulate to $ 100 billion outstanding, in which dealers may offer any of the types of collateral that are eligible for conventional open market operations. we have also expanded and extended reciprocal currency arrangements ( “ swap lines ” ) with the european central bank and the swiss national bank. using these swap lines, the participating central banks are providing dollar liquidity to financial institutions in their jurisdictions, which should improve the functioning of the global market for dollar funding. these facilities and programs will be kept in place as long as conditions warrant their ongoing use. we are working closely with the securities exchange commission to monitor the financial conditions and funding positions of primary dealers who might seek federal reserve credit. to date, the recent liquidity measures implemented by the federal reserve seem to have been helpful in addressing some of the strains in financial markets. funding pressures on primary dealers appear to have eased somewhat, and liquid

##ity seems to have improved in several markets, including – as noted earlier – the market for agency mortgage - backed securities. to the extent that these measures improve market functioning, they will have favorable effects on the ability and willingness to make credit available to the broader economy. more - liquid markets also increase the efficacy of monetary policy, which in turn improves our ability to meet the goals set for us by the congress – namely, to promote maximum employment and price stability. as you know, in response to the further weakening of economic conditions, the federal reserve has continued to ease the stance of monetary policy. the fomc reduced its target for the federal funds rate by a total of 125 basis points in january and by an additional 75 basis points at its march meeting, leaving the current target at 2 - 1 / 4 percent – 3 percentage points below its level last summer. as the committee noted in its most recent post - meeting statement, we anticipate that these actions, together with the steps we have taken to foster market liquidity, will help to promote growth over time and to mitigate the risks to economic activity. clearly, the u. s. economy is going through a very difficult period. but among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year. i remain confident in our economy ’ s long - term prospects. thank you. i would be pleased to take your questions.