The Federal Reserve announced a rate cut today, putting its benchmark rate between 0% and .25%. Beyond the questionable attempt to goad the market back into borrowing money, the Fed announced bigger news. According to Bloomberg, the Fed said it will employ "all available tools" to revive economic growth and it "stands ready to expand" purchases of mortgage-backed securities. Naturally the markets rallied on news that more of their bad investments could be taken off their hands.
In case you missed it, on November 25, the Fed announced a $600 billion program aimed at buying up toxic debt related to Fannie and Freddie. A Fed press release says, "This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally."
It remains unclear why Congress needed to debate for weeks over whether to approve $700 billion to buy up mortgage-backed securities, only to buy bank equity instead, when the Fed has the power to unilaterally do that anyway. Whether because reporters just don't understand or are tried of the story, the increasing cost of "The Bailout" is going largely under the radar. Even when it comes to the transparency debate, the story is focused on TARP accountability and not the boarder picture. $700 billion is a small number compared to the over $8 trillion in commitments from the Fed, Treasury, and FDIC.