Breaking report
The WSJ reports:
The Federal Reserve and Treasury Department are planning to launch a new program to buy loans that financial firms make through the government's emergency small-business lending program, according to people familiar with the matter.
The Fed buying the loans would free up banks balance sheets to originate more loans. That begs the question: Why not cut out the middle-man? Banks are getting 5% to originate the loans and who knows what they will be marking them at to sell to the Fed.
The program is worth $350B and Kudlow today said about $38 had been loaned already. It's a free-money giveaway so it will be tapped out in short order and will have to go to Congress for more money, unless the Treasury can work some magic.
As for the Fed, even if they buy it all, that's only another 7% on the balance sheet.
