> WS is screaming about that haircut. But in any case, say the Fed > takes a loss on this (which is unlikely, because the bank is still on > the hook and would be *very* reluctant to default on the Fed). Who > would pay for that exactly? > > Doug
Basically because the Treasury owns the Fed and would have to make good the capital loss out of appropriated funds. Or allow the Fed to print the money, which would be passed on as an inflation tax. As I used to tell baby central bankers, in the final analysis, the average working customer *always* ends up bearing the cost of *every* financial crisis, because in the final analysis, he is the only one in this game who actually goes out and works for a living. best dd
