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https://bloomberg.com/news/articles/2020-04-09/powell-pushed-to-edge-of-fed-s-boundaries-in-fight-for-economyBy pushing the Federal Reserve into corners of financial markets it has mostly shunned in its 106-year history, Chairman Jerome Powell is running into some thorny questions.
Like, for instance, how to maintain independence from the U.S. Treasury when the economic-support package Congress passed says they should work together? Or whether the same guidelines for companies receiving federal aid, which range from compensation limits to off-shoring restrictions, apply to the Fed if it gets more money from Treasury? And how about which companies -- and perhaps eventually, municipalities and states -- are invited to borrow and at what cost?
The Fed’s steps into credit allocation are tantamount to “a complete redesign of central banking on the fly.”
The CARES Act “forces the Fed into this almost intimate relationship with Treasury,” said Mark Spindel, co-author of a book about the relationship with Congress. “This is fiscal policy, picking winners and losers.”
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