They could just look at the etf holdings and buy paper based on that. If you’re buying billions of debt, you don’t buy an etf and pay management fees. Backlash is going to be huge when the public finds out how much these fund managers take home in bonuses with all this new capital flowing into their funds.
Blackrock is waiving ETF fees for this facility (don't know off the top of my head if other providers are as well) and overall fees for managing these facilities are not great. The Fed does not have the operational expertise to manage these facilities in-house. You could make an argument if all they were buying was ETFs but a majority of the facility is for corporate bonds and things can go real wrong if you don't know what you're doing there.
