When it comes to helping Wall Street and corporate America, the Federal Reserve spares no expense.
It expanded its authority and bailed out securities and insurance firms. It tethered the main interest rate to zero. It more than doubled its balance sheet to $2.3 trillion by purchasing mortgage-linked securities and U.S. government debt. To arrest the free-falling economy and jolt it back to life, the nation's central bank has engaged in an unprecedented campaign to ensure banks have cash and corporations access to credit.
That part of the Fed's plan has worked. The economy is progressing through a slow, though not entirely visible, recovery. Employers are gradually adding workers to their payrolls. Industrial production is rising, as is personal consumption. The economy is slowly growing.
The problem is that the Fed's actions have served to help just a small, but powerful, constituency: Wall Street, and the firms that do the most business on it.
The rising tide the Fed ushered in with hopes that it would lift all boats hasn't materialized. Now, on the verge of another round of asset purchases and other steps in order to further bring down the cost of credit, questions are being raised over just who, exactly, the Fed would help.
This won't do. Providing more free money to the biggest banks will only further drive consolidation and the creation of even bigger too big to fail banks. Neither will it help the man on the street that needs help with his mortgage. The Fed should subsidize the pay down of mortgages to boost the housing market now!