/biz/ - Business & Finance

>>50576045

They're matching reserves the Fed gives them with corresponding deposits (which are not loans, they are newly printed money), then crediting those deposits to a non-bank asset holder, thus completing the Fed's payment to the non-bank in exchange for its asset.

They're simply acting as a middlemen to help the Fed get around the fact that it isn't supposed to be printing money. It's money-creation on demand to keep the money supply from contracting, to pump up US asset prices and try to keep us from going into a depression.