Re-visiting the issue of the Troubled Assets Relief Programme (https://www.thebalance.com/tarp-bailout-program-3305895), both the Treasury and the Federal Reserve had a role to play in the "bailout".

The first part of TARP involved the Treasury buying preferred shares in troubled banks. In November 2008, it went on to loan the Fed $20 billion in TARP funds, which was then loaned on to troubled banks.

My question is about the roles of the Treasury and the Fed. Why is the Fed not allowed to buy shares? Why did the Treasury have to lend money to the Fed at all, rather than the Fed or the Treasury doing the lending to banks directly? In general, is there a good primer on why the two are and aren't allowed to do certain things?


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