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Fed: Bear Stearns help was to avert "contagion"

By By JEANNINE AVERSA, AP Economics Writer

WASHINGTON (AP) - The Federal Reserve has released documents providing some insights into its private deliberations over the
Bears Stearns rescue package.

They indicate the Fed was scrambling to avert an "expected contagion" that risked infecting the nation's financial system when its took the unprecedented actions in March. The Fed acted to provide financial backing to the Bear Stearns rescue and provide emergency loans to big Wall Street firms.

The Fed's actions came at a time when credit and financial problems were intensifying, threatening to paralyze the entire financial system and plunge the economy into a recession.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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