Treasury moves to fund Fed

Just a not-so-subtle reminder that even for the Fed, there are costs to be borne of building a bail-out nation:

The Treasury Department announced Wednesday that it would provide cash to the Federal Reserve through a new auction program to fund the central bank’s operations to provide liquidity to financial markets. In a statement, Treasury said it would raise the cash in a new temporary program of Treasury bill auctions, known as the Supplementary Financing Program … Immediately, Treasury said it would auction $40 billion of 35-day cash management bills later Wednesday to fund the SFP. At the start of the year, the Fed had close to $800 billion on its balance sheet. Tony Crescenzi, bond analyst for Miller Tabak & Co, estimated that following the rescue of American International Group, the Fed may only have $195 billion left.

Here’s the formal Treasury statement, for those that watch these sort of things.

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