The U.S. Senate passed Paulson’s $700 billion rescue plan three days after the House rejected it. The House is expected to vote again on Friday. While the political maneuvering continues, the Federal Reserve is forced to hold things together through greater easing and expansion of its liquidity provisions, but as the graph above indicates, its balance sheet is severely stretched. The articles below discuss the limited options left for the Fed.
Irwin, Cho: Treasury, Fed Low on Rescue Options
Hilsenrath, Solomon, Reddy: Fed, Treasury Left with Familiar Arsenal
Andrews: A New Role for the Fed-Investor of Last Resort
Lanman, Torres: Fed Pumps $630 Billion into Financial System
Blackstone: U.S. Moves to Bolster Fed Balance Sheet