Bernanke, hoping to make a silk purse out of a sow’s ear, is expanding the Fed’s Swap-O-Rama program. Bernanke has opened the discount window for GSEs.

Federal Reserve Chairman Ben Bernanke told Freddie Mac chief Richard Syron that his company and Fannie Mae could take advantage of the emergency discount window, said a source familiar with a conversation between Bernanke and Freddie Mac chief Richard Syron.

Bernanke and Syron spoke by telephone Thursday afternoon and in that call the central bank chief said he intended the discount window to be open to the two companies, said a source familiar with the phone conversation.

The Fed declined comment on whether its discount window might be opened to GSEs. Freddie Mac spokesman Douglas Duvall declined to comment when asked about the phone call.

Excuse me, but exactly what good is that supposed to do? How can it possibly help the solvency of those companies? All it will do is expand the Fed’s balance sheet with more garbage.

Mike “Mish” Shedlock
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