A bond is an IOU that some entity (in this case a corporation) gives in exchange for cash. It's essentially a loan but instead of going to a lender they "sell" this bond on the open market to the lowest bidder to get a cheap loan with no fees or conditions. This loan concept breaks down when the bonds are being bought by the Fed with freshly printed and unlimited dollars. The Fed could never collect on the loan, making it a cash bailout.
This money can be used for anything including stock buybacks and bonuses to the directors. Even if the Fed does not intend for this to be free money the board of directors could easily issue billions in bonds, pocket it all and let the company go bankrupt. It would be 100% legal.
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Tallest_Skil ago
Don’t miscontextualize this. Congress was TOLD, and they did as they were told.
Timur9000 ago
What's
the significance of the corporate bond market?
canbot ago
A bond is an IOU that some entity (in this case a corporation) gives in exchange for cash. It's essentially a loan but instead of going to a lender they "sell" this bond on the open market to the lowest bidder to get a cheap loan with no fees or conditions. This loan concept breaks down when the bonds are being bought by the Fed with freshly printed and unlimited dollars. The Fed could never collect on the loan, making it a cash bailout.
This money can be used for anything including stock buybacks and bonuses to the directors. Even if the Fed does not intend for this to be free money the board of directors could easily issue billions in bonds, pocket it all and let the company go bankrupt. It would be 100% legal.