The shadow bailout
Chip Somodevilla/Getty Images As the Dow drops another 508 points, Helicopter Ben rides to the rescue yet again with a radical plan to buy up short-term debt. The Financial Times‘ mysterious Lex columnist approves: On Tuesday, the US Federal Reserve announced it was bypassing the middleman and going straight to corporate America. Its commercial paper ...
Chip Somodevilla/Getty Images
As the Dow drops another 508 points, Helicopter Ben rides to the rescue yet again with a radical plan to buy up short-term debt. The Financial Times' mysterious Lex columnist approves:
On Tuesday, the US Federal Reserve announced it was bypassing the middleman and going straight to corporate America. Its commercial paper funding facility is highly unorthodox – direct lending by the central bank to non-bank borrowers – but it is the right thing to do. The $1,600bn market, which companies use to manage their working capital needs, has almost ceased to function.
As the Dow drops another 508 points, Helicopter Ben rides to the rescue yet again with a radical plan to buy up short-term debt. The Financial Times‘ mysterious Lex columnist approves:
On Tuesday, the US Federal Reserve announced it was bypassing the middleman and going straight to corporate America. Its commercial paper funding facility is highly unorthodox – direct lending by the central bank to non-bank borrowers – but it is the right thing to do. The $1,600bn market, which companies use to manage their working capital needs, has almost ceased to function.
A lot of attention was paid to the $700 billion bailout package over the past few weeks, but it is the Fed’s technical, less-heralded moves that may mean the difference between financial life and death for many banks and other firms in the days ahead.
I just hope Ben Bernanke has enough Maalox on hand.
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