There are lots of great credit stories, but the option of going with the Fed and the government — it takes away part of the risk…There needs to be liquidity. A reverse repo contract is not considered to be liquid in the context of anything beyond seven days.

Deborah Cunningham, a chief investment officer at Federated Investors, $318 billion in money-market investments. Bernanke’s proposal would bring money-market mutual fund managers on as primary dealers, which would dramatically increase the current $100b capacity of its eighteen primary dealers. Bernanke suggested that the relationships would “further increase its capacity to drain reserves through reverse repos…[and is]…in the process of expanding the set of counterparties with which it can transact.” Separately, if there ever was a place with multiple chiefs, it would have to be Federated Investors.

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