It is smart to reassure the markets that cash market funds can be secure, though it does elevate the query of whether or not the funds ought to pa
It is smart to reassure the markets that cash market funds can be secure, though it does elevate the query of whether or not the funds ought to pay the federal government for insurance coverage in the event that they’re going to get backstopped at any time when occasions get powerful. It additionally feels a bit like a backdoor financial institution bailout, since one impact can be to reassure skittish corporations which have been drawing down traces of credit score from banks that they will depend on company paper as an alternative.
However probably the most urgent query it raises is: Are these funds in additional bother than we understand? The final time Treasury did this was on the top of the worst panic for the reason that Despair. Slipping this monetary provision into an financial stimulus invoice could also be a far-sighted transfer to offer Treasury the instruments it could have to cope with a possible banking panic, however it may additionally ship a message that Treasury is apprehensive a few banking panic, and people sorts of messages can panic bankers.
Pardon the Interruption
The ultimate piece of the Trump proposal is a $300 billion mortgage assure program to assist small companies maintain their whole workforce on their payroll for eight weeks. This concept appears each unimaginably massive—it’s seven occasions the annual finances for the State Division—and absurdly small, since there are 28 million small companies in America, and it’s onerous to see how eating places or gyms or…