Fed Warns Consumers About Pitches on Phony U.S. Lending Program
November 6, 2008
Nov. 4 (Bloomberg) — The U.S. Federal Reserve cautioned consumers against fraudulent solicitations claiming access to a nonexistent federal consumer loan program.
Individuals are being told brokers can tap into a Fed effort providing “sizable secured loans to consumers,” the Fed said in a statement today. Consumers are then encouraged to deposit large sums of money, described as a security deposit, to get their loan, the bank said.
“The Federal Reserve is advising consumers that it has no involvement in these solicitations and does not directly sponsor consumer lending programs,” the statement said.
The central bank has done an unprecedented amount of lending in multiple attempts to stem the financial crisis since September. It extended a $122.8 billion credit line to American International Group Inc., the largest U.S. insurance company. The Fed also bought commercial paper valued at $145.7 billion in an effort to support money markets and issued a record $110.7 billion in direct loans to commercial banks as of Oct. 29.
Investors should “verify the legitimacy” of potential business partners, the Fed said. Questions can be addressed to the Federal Reserve’s help center at 1-888-851-1920 or http://www.federalreserveconsumerhelp.gov.
Bloomberg | Jeff Plungis | Tuesday, November 4, 2008
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