reed, can you please explain for us the ultimate significance of what this stimulis bill does to the Federal Reserve? TIA
Not a finance/economics guy, but as I read it the Fed can only invest in certain things that are 100% guaranteed by the federal government: treasuries, Fannie May mortgage backed securities, etc
The financial markets were starting to lock up because while liquidity was there it wasn’t being invested or allowed to flow where it was needed.
Now they are creating additional securities (not sure what the 3 letter things are) that the Fed can invest in. The treasury will OWN the security and it will be held by Black Rock as the manager of the security. The Fed will invest using those securities as the 100% backing...but the Treasury owns the security and if they pull or sale them then the Fed can’t invest in them anymore and/or I suppose could end up with a call to sell them at a loss.
That’s about what I’ve been able to figure out so far. It does appear that the Treasury has more power over the Fed then what they had before...just not sure how all the bells and whistles work inside and the devil is in the details with this stuff.