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Sorry, I'm not seein' it that way.
First of all, the New Entity (capitalized by Treasury-provided "Equity" and Fed-provided debt) will be purchasing corporate paper and Senior Debt; and not, primarily Secured Debt, There is a big difference. If they step into the equities markets this point will be even more-so. The last thing POTUS wants is for the U.S. Government to take over ownership of American corporations.
Second, the FED is not going to "OWE" anyone anything. They are providing debt capital to the new entities.
The President has made some vague allusions that U.S. taxpayers may get something back for all this analogous to equity stockholders; but, basically, interest payments to the new entity will be used to pay interest and eventually help retire the debt to the FED.
It does appear to be TRUE, however, that the FED has given up a degree of control over lending from this portion of its Balance Sheet. This was both to leverage that portion of the $2T ($500B?) in the new entities, as well as to bypass the restriction against FED money going directly into loans not backed by the U.S. Government.
I think the "Trick" here is that the FED is loaning to a Treasury "Vehicle" and this allows a multiplication effect on the taxpayers' contribution.
If someone has a different way of seeing this, please enlighten me. I admit that I am trying to interpolate from scarce information ... ALSO ... not a banker.
Thanks for an excellent explanation.
I don’t understand all of it, but it’s a big help. (I’ll reread it again a few times!)
One thing that I think is very true: The last thing POTUS wants is for the U.S. Government to take over ownership of American corporations.
That point was bothering me about the whole shebang. So I hope you’re correct. Betting you are.