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Fed Officials Ponder Funding Hedge Funds and Private Brokers Directly

Fed Officials Ponder Funding Hedge Funds and Private Brokers Directly

On January 13, the New York Federal Reserve gave $60.7 billion to eligible private financial institutions by leveraging U.S. Treasurys and agency securities. With all the stimulus given to financial institutions since September, it hasn’t relieved the stress of economic uncertainty. Now the Fed is pondering giving money directly to hedge funds and private brokers in order to ease the current pressure and lack of liquidity within U.S. repo markets. Moreover, two Federal Reserve branch presidents have voiced concerns in regards to the American economy in 2020.

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The Fed Wants to Ease Pressure Within Repo Markets by Directly Funding Hedge Funds and Private Brokers

The U.S. Federal Reserve has slashed interest rates three times since September 2019 and has pumped massive amounts of fiat into the hands of financial institutions by leveraging overnight repos and other monetary easing tactics. On Monday, the New York Fed provided eligible banks with $60.7 billion, with $30.2 billion toward agency securities and $30.5 billion in U.S. Treasurys. A few times a week since September, the Fed has been stimulating private banks in this fashion, giving them trillions of dollars.

The New York Fed reported that it gave $60.7 billion to eligible banks on Monday, January 13, 2020.

Now the Fed is talking about giving cash directly to eligible hedge funds in order to help ease the demand within U.S. repo markets. Last week, Fed officials discussed a similar idea by creating a “standing repo facility” so private banks can access fiat reserves any time they want. Officials on Tuesday brought up the idea of hedge funds, smaller banks, and securities brokers borrowing funds from the Fed through the repo ...

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