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Politics : Politics for Pros- moderated

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To: Steve Lokness who wrote (215374)	8/11/2007 2:35:53 PM
From: Snowshoe	Read Replies (1) of 794159

>>the huge margined hedge funds. That is who was bailed out Thursday and Friday<< The Fed acted to help the banks, not the hedge funds. They used "repos", which in effect are temporary 3-day loans to keep the banking system from freezing up. It's sort of like buying a drunk a sandwich, to help stabilize his blood sugar long enough to admit him to a detox center... Federal Reserve use of repos en.wikipedia.org Repurchase agreements when transacted by the Federal Open Market Committee of the Federal Reserve in open market operations adds reserves to the banking system and then after a specified period of time withdraws them; reverse repos initially drain reserves and later add them back. Under a repurchase agreement ("RP" or "repo"), the Federal Reserve (Fed) buys US Treasury securities, U.S. agency securities, or mortgage backed securities from a primary dealer who agrees to buy them back, typically within one to seven days; a reverse repo is the opposite. Thus the Fed describes these transactions from the counterparty's viewpoint rather than from their own viewpoint.

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