Who ultimately pays when the 'Treasury' provides funding?
*The Wall Street Journal, by Jeff Bater & Maya Jackson Randall, September 17, 2008:
Treasury to Provide Fed Funding
"The Treasury Department Wednesday announced a financing program designed to provide cash for the Federal Reserve to use in the attempt to address liquidity pressures in the financial market.
The Treasury Department announced the initiation of a temporary Supplementary Financing Program at the request of the Fed. 'The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives,' Treasury said.
The Fed has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week.
'To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio,' the Treasury said.
Treasury said announcements of and participation in auctions conducted under the SFP will be governed by existing Treasury auction rules.
'Treasury will provide as much advance notification as possible regarding the timing, size and maturity of any bills auctioned for Supplementary Financing program purposes,' Treasury said.
The proceeds of a new program will be held in an account at the Federal Reserve Reserve Bank of New York. The New York Fed said the government's supplemental financial program would make available fresh funding to the central bank's efforts to stabilize markets."
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