BetweenFebruary2008andSummer2009 theFedsupplementeditsopenmarket operations with

BetweenFebruary2008andSummer2009
theFedsupplementeditsopenmarket
operations withagreatlyexpanded
programofdirectlending (bothovernight andshortterm 28 and
84
day
loans)
to
commercial
banks
investment
banksbrokerage andprimary
dealerunitsofbankholding
companies.Italsoagreedtoacceptawiderrangeof
shorttermsecurities (insteadofacceptingonlyT-Bills)ascollateralontheseloansand
eveninitiatedaprogramtobuycommercialpaperfrommoneymarketfunds.
A)ExplainwhytheFedcreated
alltheseextraordinarydirect
lendingfacilitiesinsteadofsimplyrelyingontraditionalopenmarketpurchases
of Treasurysecurities