BetweenFebruary2008andSummer2009theFedsupplementeditsopenmarketoperations withagreatlyexpandedprogramofdirectlending (bothovernight andshortterm 28...

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BetweenFebruary2008andSummer2009theFedsupplementeditsopenmarketoperations withagreatlyexpandedprogramofdirectlending (bothovernight andshortterm 28 and84dayloans)tocommercialbanks,investmentbanks,brokerage andprimarydealerunitsofbankholdingcompanies.Italsoagreedtoacceptawiderrangeofshorttermsecurities (insteadofacceptingonlyT-Bills)ascollateralontheseloansandeveninitiatedaprogramtobuycommercialpaperfrommoneymarketfunds.

A)ExplainwhytheFedcreatedalltheseextraordinarydirectlendingfacilities,insteadofsimplyrelyingontraditionalopenmarketpurchasesof Treasurysecurities
Answered Same DayDec 31, 2021

Solution

Robert answered on Dec 31 2021
29 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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