Bank-to-bank lending rates jump after House rejects bailout - KLTV.com - Tyler, Longview, Jacksonville |ETX News

NEW YORK (AP)

Bank-to-bank lending rates jump after House rejects bailout

Banks are moving into miser mode today, charging each other more to borrow.

After Congress' rejection yesterday of the administration's $700-billion financial rescue plan, a key bank-to-bank lending rate known as the London Interbank Offered Rate jumped to 4.05% from 3.88% for 3-month dollar loans. The rate for overnight loans rose to 6.88%.

Central banks around the world have been boosting their lending in an effort to keep the markets functional. Yesterday, the Federal Reserve said it was doubling the amount of cash loans to banks and making more available to central banks in other nations. But it's had little effect.

Meanwhile, the demand for Treasury bills remains high. As stocks plummeted yesterday, investors funneled their money into the short-term debt instruments issued by the government. Treasury bills are considered the safest investment available.

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