Fed: Keep the parcel

The US plan to buy $600bn of mortgage-related securities and lend $200bn on a non-recourse basis against other types of asset-backed bonds may get funds flowing in the short-term. That’s good. But these schemes don’t spur banks to abandon their troublesome originate and distribute strategies and could distort other capital markets. It would be better to inject more capital into banks, as the Bank of England is advocating. At first glance, the US plans look smart. After all, spreads on bonds iss...