Likewise, the activities permitted as part of the EESA legislation should help rebuild confidence in the financial system, increase the liquidity of financial markets, and improve the ability of a broad range of financial institutions to raise capital from private sources.
The expansion in the coverage of deposit insurance provided by the FDIC should also bolster public confidence and provide additional liquidity to FDIC-insured institutions. The FOMC's cumulative 1 percentage point reduction in the federal funds rate in October, combined with previous reductions between September 2007 and May 2008, should lower lending costs and stimulate economic activity in coming quarters.