The Fed creates its own bailout tool: 13.3

Author: | Published: 1 Dec 2008
“13.3 could spark more banks’ return to the government well”

The US Federal Reserve's bailout of Citigroup has raised questions about the government's creation of powers to save its banks.

The Federal Reserve used Section 13.3 of the Federal Reserve Act, which allows it to protect the American economy from systemically threatening collapses, to guarantee more than $290 billion in Citigroup assets.

While the $20 billion that came directly from the Troubled Asset Relief Program (Tarp) garnered a lot of attention, 13.3 could spark more...