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."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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