Most of that $2 Trillion is to backstop the Commercial Paper market until the financial system regains its footing. Remember that no one was lending overnight to each other. The reason you can't say who it is lent to is that the lendee changes every night.
Commercial paper is how firms with financial purposes (whether a bank, broker, GE Credit, GMAC, etc) fund their operations and lending activities, instead of how commercial banks lend for longer periods of time and need to have a certain level of capital backing the lending.
Without it, many large companies would be forced into liquidation. I was at Drexel Burnham when this happened. Drexel went out of business in 48 hours because the market would not provide it with this overnight lending. Drexel was a $4 billion company that was very profitable even up to the day it went bankrupt.
That explanation makes sense.
It’s also a good way to approach the commercial paper market. The businesses get the loans they need. The banks can sit on their hands and forego profits until they decide the reward justifies the risk. Once the banks start loaning again, the fed eases out.
Ok, but why don’t they just say that?
To say they simply cannot/will not tell us, without any explanation, only serves to heighten the anxiety level, at a time when we are all supposed to be “acting naturally” : \
It makes no sense at all.