The Government Bank

The Fed recently reaffirmed its determination to expand its balance sheet. The crisis has already driven it to take on risky assets such as agency bonds and commercial paper. It has also lent to weak financial institutions, and is expected to participate in the Treasury’s public-private partnership to buy toxic assets. The expansion has averted a crippling credit contraction. But the Fed could lose money by taking on risk.

FOMC Statement

Bernanke: Four Questions About the Financial Crisis

Economist: The Fed

Guha: Fed Move to Buy Treasuries Stuns Investors

FT: Bold Bernanke

Economist: Central Banks

Update (5/26/2009): Per suggestion from C.F. Reader