Fed Amends Programs' Rules, Extends Liquidity-Enhancing Measures
Recent Federal Reserve actions taken to improve financial markets include additional terms and conditions on the Term Asset-Back Securities Loan Facility (TALF) and the announcement of two final rules pertaining to the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF).
New TALF terms include loan rates and qualifications
Under the TALF, the Federal Reserve Bank of New York will lend up to $200 billion to eligible owners of certain types of auto loans, credit card loans, student loans, and small business loans guaranteed by the Small Business Administration.
New rules for AMLF facilitate banks' participation
The second rule provides a temporary limited exception from sections 23A and 23B of the Federal Reserve Act, which establish certain restrictions on and requirements for transactions between a bank and its affiliates.
Liquidity programs receive extension
The Board of Governors approved the extension through Oct. 30 of the AMLF, the Commercial Paper Funding Facility, the Money Market Investor Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility, which is established under the joint authority of the Board and the Federal Open Market Committee.
In addition, to address continued pressures in global U.S. dollar funding markets, the temporary reciprocal currency arrangements (swap lines) between the Federal Reserve and other central banks have been extended to Oct. 30.
February 26, 2009