The Fed has announced that it will make more short-term cash loans to banks to try to ease the ongoing credit crisis. This from AP:

The Fed said it will conduct three auctions in June, with each one making $75 billion available in short-term cash loans. Banks can bid for a slice of the available funds. It would mark the latest round in a program that the Fed launched in December to help banks overcome credit problems so they will keep lending to customers.

The new round of auctions will be conducted on June 2, June 16 and June 30.

Also Thursday, the Fed — in a separate program — auctioned $16.4 billion in safe Treasury securities to investment firms, another effort aimed at easing credit problems. That operation drew bids less than the $25 billion being made available, which could be viewed as a sign of some improvement in credit conditions.

In exchange for the 28-day loans of Treasury securities, bidding firms put up as collateral more risky investments, including certain shunned mortgage-backed securities and bonds backed by federally guaranteed student loans. This program began March 27.

“There’s a great wish for American finance to return to business-as-usual,” says James Howard Kunstler. “Raking in fantastic fees for innovating new modes of tradeable paper, and engineering mergers and buy-outs that generate huge fees plus $100 million kiss-offs for corporate CEOs in the noble struggle to dismantle America’s productive capacity — but apparently .

“The Federal Reserve itself has been instrumental in promoting abnormality by doing everything possible to prevent the work-out of bad debts in the system. Since money is loaned into existence, and loans are debts, the work-out of bad debt suggests the discovery that a lot of money has disappeared — which is exactly the case. The Fed has postponed the work-out by sucking up truckloads of impaired, untradeable securities in exchange for loans to giant banks who don’t have enough cash on hand to pay their janitors.