In addition to lowering the Discount Rate to unprecedented levels last week, there is an additional measure that the Fed will take to help in our economic recovery. This crucial step may end of being of more importance than the actual lowering of interest rates. They are considering expanding a recently announced program to buy up debt and Mortgage Backed Securities (MBS) from Fannie Mae and Freddie Mac. This is a move that can be felt all the way down to the borrowers applying for mortgages. The reason is that the banks issuing the loans now have more confidence in the fact that they will be able to sell them later down the road. It is the old risk vs. reward theory. If the banks know that they have a source to sell their paper, they will be more apt to lend. In addition they will be more apt to lend at aggressive interest rates. The Fed also announced that they were looking at the possibility of buying long term Treasury Bonds. Both of these announcements have helped to lower rates and return some stability to the markets. As usual, we will keep you posted every step of the way.