Bernanke and Yellen say the Fed needs to find out why the market broke down in March
People walk past the U.S. Federal Reserve building in Washington D.C., the United States, May 21, 2020.
Ting Shen | Xinhua via Getty Images
Former Federal Reserve chairs Ben Bernanke and Janet Yellen are raising questions about the role hedge funds played in the March market tumult.
The duo pointed out in an essay that says the Fed was pushed into action as a result of a breakdown in market functioning triggered by massive hedge fund selling in the early days of the coronavirus pandemic declaration.
As the market became flooded with Treasurys and other long-term securities, buyers bailed out and the Fed had to step in with liquidity facilities and asset purchases aimed at maintaining basic functioning. The Fed’s purchases caused its balance sheet to swell past $7 trillion, or nearly double from its size earlier in the …continued .
[Source: CNBC News]