Federal Reserve Open Market Operations I am trying to understand how the Fed effects the fed funds rate. Here it says:


  Once the Federal Open Market Committee deems that economic conditions
  warrant a change in the money supply through specific open market
  operation, the command to buy or sell a specific amount of U.S.
  Treasury securities is passed down through the New York Fed President
  to what is called the Domestic Trading Desk of the New York Federal
  Reserve Bank. The Domestic Trading Desk is then responsible for
  implementing the conducting the actually trades. It does this sending
  messages to a selected group of about 30 securities dealers who
  specializing in the U.S. Treasury securities. These dealers have 15
  minutes to respond back with a indication of their willingness to buy
  participate in the exchange of securities. Some dealers are willing,
  others are not. In fact, the "open" part of open market operations
  means that the trades are open to any of the securities dealers
  willing to participant. The Domestic Trading Desk then has 5 minutes
  to respond back to the each of dealers that the terms of the exchange
  is acceptable.
  
  Once all parties have agreed on the exchange terms, the resulting
  transactions work much like any other. If the Fed buys, then it
  collects the securities from the dealers in exchange for checks. If
  the Fed sells, then the dealers collect the securities from the Fed in
  exchange for checks. In both cases, the checks are cleared much like
  any of the millions of checks process each day.


So the Fed manipulates the reserves of banks in order to increase or decrease fed funds, and it uses open market operations to do this. I am curious, though: what if in the case of "raising rates", the Fed wants to sell securities but no bank wants to buy them? And, why wouldn't a bank buy securities anywhere else? 

Thanks,
The actual details of the auction and so on are interesting, but in principle there is no magic. Its just demand and supply:

There is a number of agents that can supply or demand treasury bonds as well as other bonds. There's the government that issues the treasuries, the Fed that sometimes holds them, sometimes sells them, investors of all kinds( brokers, pension funds, individuals, money market funds, etc). All these agents want to sell more if they deem the price high(rates too low) and they want to buy if they deem the price is low (rates too high). 

When supply shrinks, then agents that want to buy these assets bid up their prices (bid down the rates). similarly, when supply expands then the price falls (the rate rises) as the buyers bid down the  prices after observing the quantity.

To push up an interest rate, the fed will sell bonds. This will increase supply, until the price falls (i.e. until the rate rises).  To push down an interest rate, the fed will buy bonds. This will decrease supply, until the price increases (i.e. until the rate falls).


  I am curious, though: what if in the case of "raising rates", the Fed wants to sell securities but no bank wants to buy them? And, why wouldn't a bank buy securities anywhere else?


If no bank wants to buy the securities, but the fed is trying to sell them, then their price would go down, down, down, increasing the rate, until somebody wants them. If this rate is too high for the Fed, then it can instead buy these securities, lowering the market rate. In principle, if nobody wants to buy it means they are willing to sell, if nobody wants to sell it means they are willing to buy.

The banks can buy securities wherever they want, but the rates of all securities are closely related to each other. If the fed lowers rates on Treasuries, the rates on corporates, munies, etc, are all going to follow suit, at least to some extent. This is because the securities are all close substitutes of each other, so if you were thinking of buying a treasury, but its price increases, you go and, for example, you try to buy a muni, thereby increasing its price too.