Federal Reserve details plans to let banks set up CDs

The Federal Reserve announced details Friday of a program that allows banks to set up the equivalent of certificates of deposit at the central bank. It's a new tool that will help the Fed drain money from the economy when it decides to tighten credit.The Fed said investors shouldn't read the announcement as a step toward higher borrowing costs. The upcoming operations are a "matter of prudent planning and have no implications for the near-term conduct of monetary policy," the Fed said. The Fed will give banks three opportunities over the next two months to try out the program. It will conduct an operation on June 14, offering $1 billion worth of deposits with 14-day maturities. A second operation will be conducted on June 28 for 28-day deposits. A third will be held on July 12, offering 84-day deposits. Amounts weren't provided for those operations. Those details will be provided at a later date, the Fed said. Now that the economy is recovering from a deep recession, the Fed is getting its tools ready to soak up the unprecedented amount of money it injected into the economy during the crisis. The Fed's balance sheet has ballooned to $2.3 trillion as the result of its efforts to nurse the economy back to health. That's more than double the pre-crisis amount.