Fed cuts key rate to 1.5 percent

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The Federal Reserve ordered an emergency interest rate cut Wednesday morning in coordination with other global central banking authorities.

The Fed dropped its federal funds rate - the overnight interest rate on loans between banks - by 0.5 percentage points to 1.5 percent to stimulate a faltering economy. On Tuesday, the Fed had injected liquidity into the market to free up credit, but the move failed to soothe investors. The Dow dropped more than 500 points.

Banks around the world cut key interest rates, including the Bank of England, European Central Bank and banks in Canada, Sweden and Switzerland.

The Fed also cut its interest rate on emergency loans to banks by a 0.5 percentage point to 1.75 percent. (The Washington Post)

The current credit crisis is preventing some colleges in Western Virginia from receiving payments on time. Lenders expect to pay colleges in full within a month. (The Roanoke Times

Virginia Beach-based Gateway Financial Holdings expects to recoup $12.7 million in federal tax benefits from losses it incurred on investments in Freddie Mac and Fannie Mae. The bank, which has since announced it will merge with the Bank of Hampton Roads, saw its holdings in the mortgage companies fall $37.4 million to $3 million when the Treasury Department took over.

Part of the bailout plan passed last week allows financial institutions to convert losses on Freddie and Fannie from capital losses to ordinary losses, making them eligible for a federal tax break. (The Virginian-Pilot)

-When Gov. Timothy M. Kaine announces his third round of state budget cuts this week, two items that will not be touched are Virginia’s historic and conservation tax credit programs.

“Tax credits are not on the table,” Kaine told a luncheon crowd Tuesday at the 23rd Annual Virginia Preservation Conference at the Greater Richmond Convention Center.

The programs are designed to encourage the rehabilitation of historic buildings and the preservation of open spaces by offering tax credits for a certain percentage of the property owner’s eligible expenses. Kaine said that the tax credit programs help “preserve things that need to be preserved.” (Virginia Business)

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