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Credit and Liquidity Programs and the Balance Sheet
Other lending facilities
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF) is a lending facility that finances the purchases of high-quality asset-backed commercial paper (ABCP) from money market mutual funds by U.S. depository institutions and bank holding companies. The program is intended to assist money funds that hold such paper to meet the demands for redemptions by investors and to foster liquidity in the ABCP market and money markets more generally. Collateral policies for the AMLF are discussed in the collateral and rate setting and risk management sections of this website. The loans extended through the AMLF are non-recourse loans, meaning that the borrower's obligation to repay the loan can be fulfilled by surrendering the collateral. The terms and conditions of the facility and other information are presented on this website.
The initiation of the AMLF, announced on September 19, 2008, relied on authority under section 13(3) of the Federal Reserve Act. It is administered by the Federal Reserve Bank of Boston, which is authorized to make AMLF loans to eligible borrowers in all twelve Federal Reserve districts. Lending through the AMLF is presented in table 1 of the H.4.1 statistical release and is included in "Other loans" in tables 9 and 10. The Federal Reserve Board has authorized extension of credit through the AMLF until October 30, 2009.
Related
Commercial Paper Funding Facility
The Commercial Paper Funding Facility (CPFF) is a facility, authorized under section 13(3) of the Federal Reserve Act, that enhances liquidity in the commercial paper markets. The CPFF provides a liquidity backstop to U.S. issuers of commercial paper through a specially created limited liability company (LLC), the CPFF LLC. This LLC purchases three-month unsecured and asset-backed commercial paper directly from eligible issuers. The Federal Reserve provides financing to the LLC through the CPFF. The Federal Reserve's lending to the LLC is secured by all of the assets of the LLC and by the retention of up-front fees paid by the issuers. Collateral policies for the CPFF are discussed in the collateral and rate setting and risk management sections of this site.The CPFF was announced on October 7, 2008. It is administered by the Federal Reserve Bank of New York (FRBNY). Because the FRBNY is the sole beneficiary of the CPFF LLC, the assets and liabilities of the LLC are consolidated onto the balance sheet of the FRBNY. The net assets of the LLC are shown in tables 1, 9, and 10 of the H.4.1 statistical release and primary accounts of the LLC are presented in table 7. The Federal Reserve Board has authorized the extension of credit from the CPFF through October 30, 2009. Detailed information on the CPFF is provided on this website.
Money Market Investor Funding Facility
The Money Market Investor Funding Facility (MMIFF), announced on October 21, 2008 and authorized under section 13(3) of the Federal Reserve Act, is intended to provide liquidity to U.S. money market mutual funds and certain other money market investors, thereby increasing their ability to meet redemption requests and hence their willingness to invest in money market instruments, particularly term money market instruments. Under the MMIFF, the FRBNY can provide senior secured funding to a series of LLCs that were established with the private sector. The FRBNY finances the purchase of eligible assets from eligible investors by these LLCs. Eligible assets include U.S. dollar-denominated certificates of deposit and commercial paper that are issued by highly rated financial institutions and have remaining maturities of 90 days or less. Collateral policies for the MMIFF are discussed in the collateral and rate setting and risk management sections of this website. Initially, only U.S. money market mutual funds were eligible investors. Since January 7, 2009, the Federal Reserve made a number of other money market investors eligible participants, including U.S.-based securities-lending cash-collateral reinvestment funds, portfolios, and accounts (securities lenders); and U.S.-based investment funds that operate in a manner similar to money market mutual funds, such as certain local government investment pools, common trust funds, and collective investment funds.The FRBNY is the primary beneficiary of the LLCs funded through the MMIFF and, as a result, consistent with generally accepted accounting principles, the assets and liabilities of the LLC are consolidated onto the books of the FRBNY. The net portfolio holdings of the LLC are presented in tables 1, 9, and 10 of the Federal Reserve Board's H.4.1 statistical release, and principal accounts of the LLC are presented in table 8. To date, there has been no borrowing under the MMIFF. The Federal Reserve Board has authorized the extension of credit from the MMIFF through October 30, 2009. Detailed information on the MMIFF is provided on the Federal Reserve Board's public website.
Term Asset-Backed Securities Loan Facility
On November 25, 2008, the Federal Reserve announced the creation of the Term Asset-Backed Securities Loan Facility (TALF) under section 13(3) of the Federal Reserve Act. The TALF is a funding facility that issues loans with a term of up to three years to holders of eligible asset-backed securities (ABS). The TALF is intended to assist the financial markets in accommodating the credit needs of consumers and businesses of all sizes by facilitating the issuance of ABS collateralized by a variety of consumer and business loans and to improve the market conditions for ABS more generally. Operational details of the facility and other information are presented on this site.Eligible collateral includes U.S. dollar-denominated cash ABS that are backed by student loans, auto loans, credit card loans, loans or leases relating to business equipment, leases of vehicle fleets, floor plan loans, mortgage servicing advances, and loans guaranteed by the Small Business Administration (SBA) and that have a credit rating in the highest investment-grade rating category from two or more nationally recognized statistical rating agencies and do not have a credit rating below the highest investment grade rating category from a major rating agency. Collateral policies for the TALF are discussed in more detail in the collateral and rate setting and risk management sections of this website. The loans provided through the TALF are non-recourse loans, meaning that the borrower's obligation to repay the loan can be fulfilled by surrendering the collateral. The U.S. Treasury is providing credit protection to the FRBNY using funds authorized under the Troubled Assets Relief Program (TARP). The loan from the FRBNY is senior to the TARP funds.
On February 10, 2009, the Federal Reserve Board announced that it is prepared to expand the size of the TALF to as much as $1 trillion and potentially to broaden the eligible collateral to encompass other types of newly issued AAA-rated asset-backed securities, such as ABS backed by commercial mortgages or private-label (non-agency) ABS backed by residential mortgages. Any expansion of the TALF would be supported by the Treasury providing additional funds from the TARP.
On March 23, the Federal Reserve and the Treasury announced that they were planning on expanding the list of eligible collateral for TALF loans to include older securities in conjunction with the Treasury's Public Private Partnership Investment Program. Eligible securities are expected to include certain non-agency RMBS that were originally rated AAA and outstanding commercial mortgage-backed securities and ABS that are rated AAA.
