Print
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. To help ensure that the AMLF is used for its intended purpose of providing a temporary liquidity backstop to money market mutual funds (MMMFs), the Federal Reserve has established a redemption threshold whereby a MMMF must experience material outflows--defined as at least 5 percent of net assets in a single day or at least 10 percent of net assets within the prior five business days--before it can sell asset-backed commercial paper (ABCP) that would be eligible collateral for AMLF loans to depository institutions and bank holding companies. Any eligible ABCP purchased from a MMMF that has experienced redemptions at these thresholds could be pledged to AMLF at any time within the five business days following the date that the threshold level of redemptions was reached. 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 the extension of credit through the AMLF until February 1, 2010.
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 February 1, 2010. 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, was 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 could provide senior secured funding to a series of LLCs that were established with the private sector. The FRBNY financed the purchase of eligible assets from eligible investors by these LLCs. Eligible assets included 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 archived versions of 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 Federal Reserve Board authorized the extension of credit from the MMIFF through October 30, 2009. With the termination of the facility, the information about the MMIFF was removed from the H.4.1 statistical release. Other 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 five 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; it is also intended to improve the market conditions for ABS more generally. Lending through the TALF 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 extensions of credit through the TALF until June 30, 2010, for loans collateralized by newly issued CMBS and through March 31, 2010, for loans collateralized by all other TALF-eligible securities. Operational details of the facility and other information are presented on this site.Eligible collateral initially included U.S. dollar-denominated ABS that (1) are backed by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA) and (2) have a credit rating in the highest investment-grade rating category from two or more approved rating agencies and do not have a credit rating below the highest investment-grade rating category from a major rating agency. 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. Borrowers commit their own risk capital in the form of "haircuts" against the collateral, which serve as the borrower's equity in the transaction and act as a buffer for absorbing any decline in the collateral's value in the event the loan is not repaid.
TALF LLC has committed, for a fee, to purchase all ABS surrendered to the FRBNY in conjunction with a TALF loan at a price equal to the TALF loan plus accrued but unpaid interest. Purchases of these securities are funded first through the commitment fees received by the LLC and any interest the LLC has earned on its investments. In the event that such funding proves insufficient, the U.S. Treasury's Troubled Asset Relief Program (TARP) will provide additional subordinated debt funding to the TALF LLC to finance up to $20 billion of asset purchases. Subsequently, the FRBNY will finance any additional purchases of securities by providing senior debt funding to TALF LLC. Thus, the TARP funds provide credit protection to FRBNY. Because the FRBNY is the primary beneficiary of the TALF LLC, the assets and liabilities of the LLC are consolidated onto the books 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 principal accounts of the LLC are presented in table 8.
On February 10, 2009, the Federal Reserve Board announced that it would consider expanding the size of the TALF to as much as $1 trillion and potentially 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 19, the Federal Reserve Board announced that starting in April, the set of eligible collateral for TALF loans was being expanded to include ABS backed by loans or leases related to business equipment, leases of vehicle fleets, floorplan loans, and mortgage servicing advances.
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 previously issued securities--so called "legacy securities"--as a complement to the Treasury's Public Private 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.
On May 1, the Federal Reserve announced that, starting in June 2009, newly issued CMBS and securities backed by insurance premium finance loans would be eligible collateral under the TALF. The Federal Reserve also authorized TALF loans with maturities of five years, available for the June funding, to finance purchases of CMBS, ABS backed by student loans, and ABS backed by loans guaranteed by the Small Business Administration. The Federal Reserve indicated that up to $100 billion of TALF loans could have five-year maturities and that some of the interest on collateral financed with a five-year loan may be diverted toward an accelerated repayment of the loan, especially in the fourth and fifth years.
On May 19, the Federal Reserve announced that starting in July 2009, certain high-quality CMBS issued before January 1, 2009 (legacy CMBS) would become eligible collateral under the TALF. The Federal Reserve indicated that eligible newly issued and legacy CMBS must have at least two AAA ratings from a list of approved ratings agencies--DBRS, Fitch Ratings, Moody's Investors Service, Realpoint, or Standard & Poor's--and must not have a rating below AAA from any of these rating agencies. More broadly, the Federal Reserve announced that it was formalizing procedures for determining the set of rating agencies whose ratings would be accepted for various types of eligible collateral in the Federal Reserve's credit programs.
On August 17, the Federal Reserve and the Treasury announced that they were extending TALF loans against newly issued ABS and legacy CMBS through March 31, 2010, and loans against newly issued CMBS through June 30, 2010. TALF loans were previously authorized through December 31, 2009. The Federal Reserve and Treasury also announced that they were holding in abeyance any further expansion in the types of collateral eligible for the TALF.
