FACTBOX - New Fed steps to settle markets

(Reuters) - The U.S. Federal Reserve on Sunday announced a series of extraordinary steps to try to calm financial markets in the wake of the apparent collapse of investment bank Lehman Brothers LEH.N.

Following are the three steps the Fed announced.

-- Accepting wider range of collateral for Fed loans

The Fed said it would start accepting as collateral for loans under its Primary Dealer Credit Facility for investment banks the same type of collateral that can be pledged in the tri-party repo system of the two major clearing banks. This means the Fed will accept equities as collateral for central bank loans for the first time ever.

In addition, it widened the acceptable collateral for loans of Treasury securities under so-called Schedule 2 auctions from the Term Securities Lending Facility to include all investment-grade debt securities. Previously, it accepted only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities.

-- More frequent and larger Schedule 2 TSLF auction

The Fed said Schedule 2 auctions would now be held every week, as opposed to every two weeks, and the amounts offered would rise to a total $150 billion (82.9 billion pounds) from $125 billion. So-called schedule 1 auctions would remain at $50 billion.

-- Banks can provide liquidity to affiliates for repo

The Fed temporarily lifted a restriction that prevented commercial banks from providing liquidity to broker affiliates for assets typically funded in the tri-party repo market. It said this would expire on January 30, 2009, unless extended.