FED Looking For Money??? Wild Stuff.

Posted on April 8th, 2008 in Daily Stock Market / Economic News - The Real Story

of these ideas sound like double-digit Bond yields could be in our
immediate future. Oh my.  By the way, fellow futures watcher…futures
gave it all up and fast. Now crashing red from very very green. 7:15pm PST  – Mr Mortgage

April 9, 2008

WASHINGTON — The Federal Reserve is considering
contingency plans for expanding its lending power in the event its
recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more
money than it needs to fund the government and leave the proceeds on
deposit at the Fed, which would issue debt under its own name rather
than the Treasury’s; and asking Congress for immediate authority for
the Fed to pay interest on commercial-bank reserves instead of waiting
until a previously enacted law permits it in 2011.

The Issue: The Fed has
sold or committed a lot of its Treasury portfolio to support markets.
Some worry it will soon run out of room to do more.
The News: The Fed is considering several contingency plans for getting more lending capacity so that won’t happen.
The Bottom Line: The Fed has lots of firepower left before it has to turn to these contingencies.

No moves are imminent because the Fed has plenty of
maneuvering room. The internal discussions are part of a continuing
effort at the Fed, similar to what is under way at foreign central
banks, to determine its options if the credit crunch becomes even more
severe. Fed officials believe the plans largely eliminate the risk that
the Fed will exhaust its stockpile of Treasury bonds and thus lose its
ability to backstop the financial system, as some on Wall Street fear.

British and Swiss central banks also are contemplating
contingency plans. For now, the European Central Bank is reluctant to
consider options that require substantial modifications of its standard



2 Responses to “FED Looking For Money??? Wild Stuff.”

  1. Mr Mortgage,

    I really enjoy your blog and videos. I have a second mortgage with one of the banks in the hurt locker, can I buy it back at a deep discount? Know of anyone that has every succesfully done this at an individual level?

  2. shoot me your email address and I will get you some info.


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