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During the 2008 recession, the Federal Reserve implemented a $29 trillion bailout that primarily benefitted large banks on Wall Street, according to a study conducted by the Levy Economic Institute at Bard College. The study highlights a series of unprecedented tactics used to increase liquidity to major banks. An amalgamation of different funding facilities were started during the financial crisis to make cash more easily accessible to large borrowers. Of the tactics highlighted in the study, two are being used in direct response to the economic distress wrought on by the coronavirus pandemic.

The Federal Reserve acts as the lender of last resort and in that role has the ability to lower the rate at which capital can be borrowed from the central bank to major banks on Wall Street. $454 billion allocated to the Federal Reserve from the CARES Act will help leverage 4.54 trillion dollars in short-term loans to major banks at low rates through the discount window.

However, the Federal Reserve has yet to restart a recession era funding facility called the Term Auction Facility. Through the TAF, large banks borrow from the Federal Reserve as a cohort. They are able to group together assets that normally wouldn’t be accepted as collateral if they were to borrow through the discount window and the rate at which capital is borrowed is determined through an auction. This lending mechanism was widely popular during the 2008 recession, with 416 banks borrowing through TAF and the largest 25 borrowers each borrowing over $47 billion. However, this funding facility is only likely to be restarted if banks on Wall Street stop borrowing at already low rates from the discount window.

During the last financial recession the Federal Reserve also bought a substantial amount in long-term securities. More specifically the Federal Reserve bought mortgage-backed securities and long-term securities. This is also known as quantitative easing, and when the policy was most strongly implemented, the central bank had bought $80.5 billion worth of long-term securities in just one week. The largest bank to benefit from the Fed’s buying spree was Deutsche bank, which sold nearly $294 billion in mortgage backed securities to the U.S. central bank.

Currently, the Fed is buying nearly $7 billion a day in Treasury securities but is not focusing their spending on long-term securities. However, some are skeptical that the Federal Reserve will engage in quantitative easing anytime soon.

“It’s possible they announce something before the June meeting, given that [the Treasury market] absorbed the increase in supply quite well,” said Jon Hill, BMO fixed income strategist. “Treasury dramatically increased auction size, and the 10-year yields are still at 64 basis points. I don’t think there’s an urgency to force a QE before June, but it seems that type of guidance will come by the June meeting at the latest.”