"Begin buying a broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers."
"Fears about the rising number of reopening coronavirus hotspots and economic threats were superseded by unbounded joy as the Fed announced it will buy secondary market corporate bonds direct[ly] rather than through ETFs, without any need for companies to certify their eligibility. That pressed the risk-on button – and markets recovered."
"As if the Fed hasn't done enough to destroy honest markets, now it plans to start buying individual corporate bonds. It's just another step closer to the Fed deciding the winners and losers in the market."
"While there exists such an entity as the classical lender of last resort (LLR) – the traditional, standard LLR model, to be exact – the Fed has rarely adhered to it...The Fed has deviated from the classical model in so many ways as to make a mockery of the notion that it is an LLR. In short, the Fed may be many things, crisis manager included. But it is not an LLR in the traditional sense of that term."
- protect the money stock instead of saving individual institutions;
- rescue solvent institutions only;
- let insolvent institutions default;
- charge penalty rates;
- require good collateral; and
- announce the conditions before a crisis so that the market knows exactly what to expect.
- "Emphasis on credit (loans) as opposed to money...
- "taking junk collateral...
- "charging subsidy rates...
- "rescuing insolvent firms too big and interconnected to fail...
- "extension of loan repayment deadlines
- "no pre-announced commitment."