The Fed cleverly threaded a needle in unwinding its balance sheet by announcing it will not sell its mortgage holdings but instead conduct reverse repurchase agreements with money market mutual funds, shrinking the balance sheet while retaining all the credit risk—avoiding recognition of losses but at the cost of transparency.
factualpending
Speaker
Charles CalomirisEvidence Quote
“the Fed has figured out it doesn't want to recognize the losses on these it knows it's going to need to sell them and so what it's going to do is retain the credit risk but shrink the balance sheets through engaging in reverse repos”
Created: 6/15/2026, 9:20:15 AM
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