UPDATE: Fed: intervention or bailout?

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11 a.m. UPDATE: CNBC now reports the Fed has gone shopping for the third time today, injecting a total of $38 billion into the market. What is the Fed buying? Mortgage-backed securities, according to CNBC. This is not the biggest Fed injection of liquidity since just after the September 2001 terrorist attacks.

Good morning. We want to pose a question about the Fed’s moves this morning, in the context of previous discussions here about ‘bailing out’ the housing market. The Federal Reserve this morning pumped cash into the financial system for the second day in a row to prevent a credit freeze. The New York Times: ‘The Federal Reserve added $19 billion to the system through the purchase of mortgage-backed securities.’

So the Federal Reserve is, effectively, buying mortgage-backed securities that nobody else wants (Don’t worry -- they’re not using taxpayer dollars; the Fed can print money if it needs to).

Our question: What do you make of this intervention by the Fed? A smart move? An indication of how dire the situation is right now? A manageable problem or a crisis? A necessary move or a favor to Wall Street? (Remember, if the market for mortgage-backed securities dries up, the housing market freezes) And is it a form of a bailout?

As always, we anticipate your thoughts.