VIEW: Wednesday saw Bank of America Research....>

FED: VIEW: Wednesday saw Bank of America Research note that "Fed large-scale

market intervention has successfully achieved its primary objective: to restore

market functioning and keep credit flowing. Fed programs are primarily designed

as "backstop" facilities with punitive rates. The Fed seems to judge their

success not by total usage but by activity in the underlying markets they

target. Reflecting this, we estimate Fed credit and muni program use will see

~15% of potential. We believe several of these programs may have to shift from

their "backstop" design to more explicitly easing financial conditions, given

the expected depth and length of the current recession. Specifically, we expect

(1) UST and agency MBS purchases to shift from focus primarily on market

functioning to easing macro conditions and (2) increased political pressure to

revise Main Street Lending and muni terms to increase credit and lending

activity. We may also see the Fed allocating more funds to secondary market

credit purchases. Such shifts would support lower real rates and risky assets."