71 posts on "Treasury"
March 6, 2013
Pick Your Poison: How Money Market Funds Reacted to Financial Stress in 2011
The summer of 2011 was an unsettling period for financial markets. In the United States, Congress was unable to agree to terms for raising the debt ceiling until August, creating considerable uncertainty over whether the government would be forced to default on its debt.
March 4, 2013
How the Nation Resolved Its First Debt Ceiling Crisis
In the second half of 1953, the United States, for the first time, risked exceeding the statutory limit on Treasury debt. How did Congress, the White House, and Treasury officials deal with the looming crisis?
February 20, 2013
Primary Dealers’ Waning Role in Treasury Auctions
On December 12, 2012, primary government securities dealers bought just 33 percent of the new ten-year Treasury notes sold at auction.
April 9, 2012
Innovations in Treasury Debt Instruments
On January 31, 2012, the Treasury Borrowing Advisory Committee advised the Secretary of the Treasury that it unanimously supported the issuance of floating-rate notes by the U.S. Treasury.
March 19, 2012
Failure Is No Longer a (Free) Option for Agency Debt and Mortgage‑Backed Securities
A recommended charge on settlement fails for agency debt and agency mortgage-backed securities (MBS) took effect on February 1, 2012.
November 14, 2011
The Evolution of Federal Debt Ceilings
It’s hardly news that Congress sets a statutory limit on aggregate Treasury indebtedness.
November 9, 2011
The Debt Ceiling as a “Fiscal Rule”
A few months ago, the federal government was once again confronted with the need to raise the statutory limit on the amount of debt issued by the Treasury.
October 19, 2011
Sizing Up the Fed’s Maturity Extension Program
The Federal Open Market Committee (FOMC) recently announced its intention to extend the average maturity of its holdings of securities by purchasing $400 billion of Treasury securities with remaining maturities of six years to thirty years and selling an equal amount of Treasury securities with remaining maturities of three years or less.
June 8, 2011
Will “Quantitative Easing” Trigger Inflation?
The Federal Reserve announced on November 3, 2010, that in the interest of stimulating economic recovery, it would purchase $600 billion of longer-term Treasury securities. The announcement led some commentators to conjecture that the Fed’s large-scale asset purchase (LSAP) program—popularly known as “quantitative easing”—is more likely to trigger inflation than stimulate recovery. This post discusses why those concerns may be misplaced, and also why they are not without some basis. A recent Liberty Street Economics post by James J. McAndrews—“Will the Federal Reserve’s Asset Purchases Lead to Higher Inflation?” addressed the same issue from a broader perspective and came to a substantially similar conclusion.
May 23, 2011
Valuing the Capital Assistance Program
The Capital Assistance Program (CAP) was announced on February 10, 2009, in a joint statement by the U.S. Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision outlining a financial stability plan.
The Capital Assistance Program (CAP) was announced on February 10, 2009, in a joint statement by the U.S. Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision outlining a financial stability plan. The first phase of the plan called for a stress test to assess the capital needs of nineteen major U.S. financial institutions in the event of a worse-than-expected recession. In the second phase, banks requiring additional capital that were unable to raise sufficient private capital would sell to the Treasury convertible preferred securities and warrants on common shares. The combination of the stress test, which provided information about the downside risk faced by the largest U.S. banks, and the CAP securities, which provided backup capital to mitigate this downside risk, was an unprecedented regulatory response to a financial crisis. In this post, we discuss the valuation of CAP securities. The valuation described in our 2009 New York Fed staff report is aligned with the stock market reaction to the announcement of the CAP terms.
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