WASHINGTON — Dusting off Depression-era emergency powers, the Federal Reserve is extending its reach over the economy as never before, pushing the limits of its authority, if not exceeding them.

Now the nation's central bank is even becoming a source of loans for companies other than banks.

Radical steps by the Fed under chairman Ben Bernanke — all in the name of seeking to halt the panic sweeping financial markets — are turning it into a financial colossus. They're also putting the government deeper in debt and taxpayers further at risk if the various moves fail.

And it's being done with little direct interaction with Capitol Hill. The Fed does not depend on Congress for its budget, including its payroll, and is as much a creature of the nation's banking system as part of the federal government.

On Tuesday, the Fed announced it will buy vast amounts of corporate debt, some of it unsecured, in hopes of renewing the flow of money in so-called commercial paper markets. That is where many companies turn for short-term loans to finance their most basic day-to-day operations, such as purchasing supplies or making payrolls.

That action came just a day after the Fed increased a short-term loan program to as much as $900 billion by the end of the year — exceeding even the government's $700 billion bailout plan enacted on Friday.

"Almost every day there's a new program. It's almost Rooseveltian, if that's a word," said David Jones, chief economist at DMJ Advisors in Denver and a longtime Fed watcher. He was referring to bold federal programs undertaken by President Franklin D. Roosevelt in the 1930s to battle the Great Depression.

"Certainly, the Fed is pressing against the bounds of its territory as the central bank. But we got into the Depression precisely because the Fed then stood by and watched most of the banking system fail, watched the money supply contract by a third, and did nothing about it. You cannot criticize this Fed for trying to do something about a crisis which has basically shut the flow of credit down to a trickle and poses a threat to the economy," Jones said.

The Bernanke Fed first invoked rarely used 1930s powers to intervene — with taxpayer backing — in March when it provided a $29 billion loan as part of JPMorgan Chase & Co.'s takeover of Bear Stearns. Since then, it has launched programs to extend loans to nonbank financial companies, to provide backstop insurance for money-market mutual funds and a $85 billion taxpayer-backed loan to bail out American International Group, one of the world's largest insurers.

Bernanke on Tuesday defended the Fed's steps, along with the huge separate bailout program to allow the government to take over hard-to-sell mortgage-related securities now clogging bank balance sheets.

He told a meeting of business economists that the private sector should address market upheavals when possible — but that "in those cases when financial stability is threatened ... intervention to protect the public interest may well be justified."

"So long as financial conditions warrant, we will continue to look for ways to reduce funding pressures in key markets," he said, opening the door wider to an interest rate cut on or before the Fed's Oct. 28-29 meeting.

The Fed is largely free from constraints that bog down other policymakers. Also, it is the only U.S. institution with the ability to create money out of thin air. But that can be inflationary, and the Fed must be careful to separate its powers of raising or lowering the nation's money supply from the financing of the new bailout programs.

The Treasury Department will provide the money for the loans, funneled through the New York Federal Reserve, for the programs announced by the Fed Monday and Tuesday.

Congress created the Federal Reserve in 1913 to prevent financial panics such as runs on banks. Its powers were expanded in 1933 and 1935. Although its members are nominated by the president and confirmed by the Senate, and it is subject to congressional oversight, its decisions do not have to be ratified by either the president or Congress.

While Bernanke has worked hand-in-hand with Treasury Secretary Henry Paulson, the Fed's independence was underscored on Tuesday by White House press secretary Dana Perino. Asked about the commercial-paper initiative, Perino told reporters, "That was an independent decision made by them."

"This was authority that they were able to take on their own, and it was part of a pattern that we've seen that the Fed is increasingly willing to find innovative ways to try to get the markets moving again, since that's the goal," she said.

The Bernanke Fed has its critics. Former Chairman Paul Volcker has said its been acting "at the limits" of it's legal authority. Rep. Ron Paul, R-Texas, made abolishing it a central part of his GOP presidential candidacy. And Sen. Jim Bunning, R-Ky., an opponent of Fed and Treasury bailouts, said recently, "The greed on Wall Street is only exceeded by the stupidity of the Treasury secretary and the chairman of the Federal Reserve."

Edwin M. Truman, a former Fed economist now with the Peterson Institute for International Economics in Washington, said that while some may question the Fed's recent straying from bank regulation and monetary policy, the authority it is now invoking was expressly given to it by Congress in 1935 "rather than to Treasury. And there's considerable congressional oversight."

"There aren't any magic bullets. At one level, we collectively are going to just have to work our way through this thing. We hope without too much damage," Truman said.