I have published research on commercial paper, which makes me wonder why did the Fed intervene in the commercial paper market? The interest rate on this paper was less than 4%. What is the big deal? That paper lots of times runs 5-6%. There had been some runoff (decline) in the amount outstanding, but nothing out of the ordinary for a recession if you look back at the 2000 decline. One possible answer is that there were a number of overextended industrial or retail companies that could not issue paper. The market for low-rated paper has always been very thin. … Continue reading Why commercial paper?