In this report, we look into the various windows Members of Congress are proposing for the Fed, detailing what each might do and the implications of these windows for the central bank, financial system, and macroeconomy.  It is too early to tell which, if any, of these windows the Fed might decide to open on its own under current law or whether any of the proposals forcing it to do so will be included in final COVID-rescue legislation or implemented by the Fed under current law.  However, with the Fed opening ever-more windows for the capital markets, pressure is growing for it to do the same more directly to meet desperate constituent demands.  Further, with NEC Director Kudlow yesterday taking an unprecedented step for a conservative Republican – calling for direct U.S. equity investments – anything seems possible as the financial crisis shows no sign of abating and infections mount.  We note that Karen Petrou has proposed one such facility under current law that would provide liquidity more directly to households than most proposals so far; variations on it are included in several of the Congressional proposals discussed in this report.  Existing statutory authority for the Fed and options under other law are analyzed in Client Report COVID3.

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