The Fed Throws the Kitchen Sink

Posted by: Michael Mandel on March 16

Imagine my surprise today (Sunday) when I went to the Federal Reserve site to pick up some industrial production data for my textbook. Instead, I found an emergency press release from the Fed, cutting the discount rate. What’s more, the Fed set up yet another way to lend to the big Wall Street firms, the “Primary Dealer Credit Facility.” This time, they can bring almost anything as collateral:

Primary dealers may secure loans under the PDCF with all collateral eligible for pledge in open market operations, plus investment grade corporate securities, municipal securities, mortgage-backed securities, and asset-backed securities.

The kitchen sink, indeed.

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Reader Comments

Toni

April 4, 2008 04:51 PM

How about an indepth report on the FED and just how it manages our banking system, the issuance of money for the Treasury and other tasks. So many of us think the FED is a government agency. It is not. It is owned separately. When so many refer to it as the government, it adds to the confusion. How about it?

Pat

February 24, 2009 08:26 AM

Bail Out problems do not benefit from the All-In-One Solutions approach that the current government is taking with respect to the Fed and its intervention into banks - but does have the ability to confuse the public with the perception that unanswered questions about the bank dilemmas are unimportant enough to ignore them.

The ability of government to disguise what might otherwise be revealed is one of the frustrations of trying the bank cases in the media with sound-bytes rather than in the courts or in hearings where the problems can be examined. Fixes without research and examination can only lead to poor decision making, and coverups where none are deserved.

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Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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