Risky Assets: Counting to a Trillion Prior to the financial crisis, the Fed held less than

$1 trillion in assets and most were in safe U.S.

government securities. By mid-December 2008, the Fed’s balance sheet had increased to over $2.3 trillion. The massive expansion began when the Fed rolled out its lending program: sending banks cash in exchange for risky assets.

Source: CNNMoney, September 29, 2009 What are the Fed’s policy tools and which policy tool did the Fed use to increase its assets to $2.3 trillion in 2008?