In further efforts today to limit the growing damage from the world financial crisis, the Federal Reserve announced that it will step into a new area, buying unsecured commercial paper, and the finance ministers of the European Union appeared poised to finally coordinate their initiatives. And following the warning by Federal Reserve chairman Ben Bernanke (pictured) this afternoon at the National Association for Business Economics that “the outlook for economic growth has worsened,” expectations rose that the Fed will lower its prime rate by month’s end if not sooner. The Fed’s plan would in theory help un-stick the currently moribund market in unsecured short-term commercial debt. According to the agency, the new Commercial Paper Funding Facility “will complement the Federal Reserve’s existing credit facilities to help provide liquidity to term funding markets.” “The goal here is to increase liquidity” and ultimately to break the connection between the decline in housing prices and the balance sheets of banks across the country, Delores Conway, Ph.D., told CPN. Conway is the director of the Casden Real Estate Economics Forecast, at the University of Southern California’s Lusk Center for Real Estate. Once banks are freed from that, she said, they should be able to start lending again. Further, Conway predicted, since the housing market is currently being held back by a lack of available financing, not a lack of demand (largely because prices, especially in places like California, have fallen so much), the return of a normal lending flow should help get the housing market rolling again. Meeting in Luxembourg today, the European Union’ finance ministers agreed to raise minimum guarantees on bank deposits within the 27-nation E.U. to €50,000 (U.S.$68,000), although some member nations had pushed for a minimum guarantee of €100,000. Though by some measures a small move, the decision was the first unified action by the E.U.’s finance ministers and perhaps portends a more coordinated approach in the near term. The E.U. has plenty of its own problems to sort out. Stock markets in London, Frankfurt and Paris have been staggered by the financial crisis. Especially hard hit by the crisis, Iceland has undertaken several emergency measures to prevent a meltdown of its financial system. Though not an E.U. member, the island nation is tied to the continent by a trade agreement. The bad-boy star of the European situation is probably the Royal Bank of Scotland, which has lost about 40 percent of its market value. At latest report, the U.K. government was considering investing up to €45 billion to stabilize RBS and two other major banks. Meanwhile, earlier today the Congressional panel investigating the chain of events leading to the failure of AIG and its rescue by the federal government released documents showing that executives at the insurance giant concealed from auditors the extent of the risks the company was running, even as losses mounted. The auditor, Pricewaterhouse Coopers, warned the company last spring that a fundamental cause of its growing problems lay in the fact that internal controls were denied full access to information about the company’s financial products operation. In addition, the federal Office of Thrift Supervision warned AIG last March that corporate oversight of AIG Financial Products lacked “critical elements of independence.” Former AIG CEO Martin Sullivan is scheduled to testify before the Congressional panel later today.