Fed Reinstates Commercial Paper Facility to Relieve Market Strains

The video discusses the Federal Reserve's actions in response to market expectations, similar to steps taken in 2009. It explains the setup of a commercial paper funding facility by the New York Fed, backed by a $10 billion Treasury backstop. The Fed's actions are under the 13(3) section of the Federal Reserve Act, requiring Treasury's permission. The video also explores the potential for expanding the Fed's QE program, though current legal constraints and lack of Congressional movement make this unlikely.

What is the primary purpose of the special purpose vehicle set up by the Federal Reserve?

• To buy stocks from the stock market

• To invest in foreign currencies

• To purchase commercial paper from companies

• To provide loans to small businesses

What is the role of the Treasury in the Federal Reserve's new facility?

• To set interest rates for the facility

• To manage the commercial paper purchases

• To oversee the maturity of the commercial paper

• To provide a $10 billion backstop

Under which section of the Federal Reserve Act is the new facility being set up?

• Section 14

• Section 13(3)

• Section 12

• Section 15

What is required for the Federal Reserve to buy private paper under its QE program?

• A unanimous vote by the Federal Reserve Board

• Permission from the Treasury

• Amendment of the Federal Reserve Act by Congress

• Approval from the President

What is Jay Powell's stance on the need for the Federal Reserve to buy private paper?

• He is undecided on the matter

• He believes it is urgently needed

• He has not commented on the issue

• He feels it is not necessary at the moment