by Wolf Richter
Wolf Street
What gave the Fed the “Authority” to do this? Enter the “13(3) facilities.”
There has been huge hoopla about the Fed stepping into the markets and buying investment-grade corporate bonds and “fallen-angel” junk bonds, syndicated leveraged loans, CLOs (collateralized loan obligations), bond ETFs, and even junk-bond ETFs. The first intentions were announced in March and then expanded to include more asset classes and lower credit ratings. The Fed also announced that it would buy bonds and slices of syndicated loans directly from issuing companies, thereby providing emergency funding directly to companies that are solvent but cannot fund themselves because credit markets have frozen up. So what has the Fed actually done — and under what “authority?”