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The $700 billion answer

Perspective: Get the plan done
Published on Sep 25, 2008

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by CareyBot

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.

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