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BetweenFebruary2008andSummer2009 theFedsupplementeditsopenmarket operations withagreatlyexpanded programofdirectlending (bothovernight andshortterm 28...

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BetweenFebruary2008andSummer2009 theFedsupplementeditsopenmarket operations withagreatlyexpanded programofdirectlending (bothovernight andshortterm 28 and 84 day loans) to commercial banks, investment banks,brokerage andprimary dealerunitsofbankholding companies.Italsoagreedtoacceptawiderrangeof shorttermsecurities (insteadofacceptingonlyT-Bills)ascollateralontheseloansand eveninitiatedaprogramtobuycommercialpaperfrommoneymarketfunds.

A)ExplainwhytheFedcreated alltheseextraordinarydirect lendingfacilities,insteadofsimplyrelyingontraditionalopenmarketpurchases of Treasurysecurities
Answered Same Day Dec 31, 2021

Solution

Robert answered on Dec 31 2021
104 Votes
Between Fe
uary 2008 and Summer 2009 the Fed supplemented its open market operations
with a greatly expanded program of direct lending (both overnight and short term 28 and 84 day
loans) to commercial banks, investment banks,
okerage and primary dealer units of bank
holding companies. It also agreed to accept a wider range of short term securities (instead of
accepting only T-Bills) as collateral on these loans and even initiated a program to buy...
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