I found the following on Patrick.net and it is a really good analysis of what the Federal Reserve can actually do to stem the tide of bank failures and asset write downs.
The bottom line is that the FED has about 800 billion in reserves that it can use to help “sustain” the value of crappy assets now on bank and investment houses balance sheets. It has already committed 400 billion with the additon of the various new lending facilities it has created. That leaves 428 billion more it can use, but the total does not begin to carry the entire 2 trillion in mortgages that are now illiquid.
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