The $700 billion answer

Congress is being asked to provide $700 billion by allowing the Treasury Department to sell debt and using the proceeds to purchase illiquid mortgage debt. This is similar to what the Federal Reserve does every day with two exceptions: 1) normally the Fed makes, in essence, short-term loans to members to give them liquidity and reserves. The present situation is not a loan but an outright purchase of assets; and 2) the extraordinary events of the past few months have depleted the reserves the Fed can use to perform market operations.

All rights reserved. This content may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this content without permission is a violation of federal copyright law.