Under the ¬†Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress appropriated $454 billion to the Treasury's Exchange Stabilization Fund (ESF) to backstop emergency lending facilities known as "special purpose vehicles" (SPVs).[1]¬† With the Treasury backstop, the Fed has the potential to lend a maximum of $4.5…

A budget in chains.

One of the more controversial provisions of the CARES Act consists of the $454 billion it allows the U.S. Treasury to devote to "backstopping"¬† (that is, to supplying partial funding for) the Federal Reserve's emergency lending. In a previous post, I argued that these Treasury backstops help…