In the nine weeks since Congress gave the Treasury and the Fed $500 billion for economic “stabilization,” they’ve used less than 10% of the money to create a single program that has serious conflicts of interests and, at best, a weak connection to stopping ongoing job losses. 1/
The program buys corporate debt, including junk bonds. A Treasury official who helped design the program still has financial ties to his family investment firm -- which owns junk bonds. The program has helped that firm “reverse billions in losses.” 2/
propublica.org/article/this-t…
propublica.org/article/this-t…
The Fed hired BlackRock to manage this program. BlackRock runs a corporate bond ETF. After BlackRock's role was announced, investors poured $4.3B into BlackRock's ETF -- 100x the new investments in a similar ETF run by a BlackRock competitor. 3/
ft.com/content/7091a2…
ft.com/content/7091a2…
BlackRock has agreed to waive the fees it would otherwise generate from the direct Fed purchases of its ETFs. But that $4.3B in new, non-Fed purchases following the Fed announcement? BlackRock makes fees off of those. 4/
Congress directed the Oversight Commission to assess how the Treasury/Fed programs affect “the financial well-being of the people of the United States.” They seem to be helping the financial well-being of BlackRock and a top Treasury official -- but how are they helping you? 5/
Most Americans don’t own corporate bond ETFs, so this is a classic trickle-down story. Propping up financial assets will help financial firms, which will help corporations, which will help their workers. How confident do you feel about that working out? 6/
Unemployment is at record highs. The one program the Fed and Treasury have created seems great for the people managing it but nearly useless to address the real problems we face. As I said this morning, the agencies can do better. END
