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Comment: The acronyms multiply as the Fed acts to get liquidity to where it is needed

The Federal Reserve announced “extensive new measures to support the economy” first thing on Monday, March 23.  Some were new, some were expansion of current facilities, and one revival of an older facilities used during the financial crisis in 2007-2008.

  • Purchases of MBS were expanded to agency commercial mortgage-backed securities in addition to MBS.
  • The US Treasury will use the Exchange Stabilization Fund (ESF) to provide $30 billion in equity to new facilities: Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
  • The Term Asset-Backed Securities Loan Facility (TALF) makes a reappearance to support the flow of credit to consumers and businesses.
  • The Money Market Mutual Fund Liquidity Facility (MMLF) expanded to include “a wider range of securities, including municipal variable rate demand notes and bank certificates of deposit”.
  • The Commercial Paper Funding Facility expanded to include high-quality, tax-exempt commercial paper as eligible securities. “In addition, the price of the facility has been reduced.”

The Fed also announced it “expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the SBA.

The Federal Reserve announced “extensive new measures to support the economy” first thing on Monday, March 23.  Some were new, some were expansion of current facilities, and one revival of an older facilities used during the financial crisis in 2007-2008.

  • Purchases of MBS were expanded to agency commercial mortgage-backed securities in addition to MBS.
  • The US Treasury will use the Exchange Stabilization Fund (ESF) to provide $30 billion in equity to new facilities: Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance and the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
  • The Term Asset-Backed Securities Loan Facility (TALF) makes a reappearance to support the flow of credit to consumers and businesses.
  • The Money Market Mutual Fund Liquidity Facility (MMLF) expanded to include “a wider range of securities, including municipal variable rate demand notes and bank certificates of deposit”.
  • The Commercial Paper Funding Facility expanded to include high-quality, tax-exempt commercial paper as eligible securities. “In addition, the price of the facility has been reduced.”

The Fed also announced it “expects to announce soon the establishment of a Main Street Business Lending Program to support lending to eligible small-and-medium sized businesses, complementing efforts by the SBA.

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