Ep.96 - Federal Reserve's Lending Facilities Explained in Plain English
📸 IG handle: DollarSenseLA
UNPRECEDENTED DIRECT INTERVENTION FROM THE FEDERAL RESERVE
In the last 30 days, the Federal Reserve launched 10 facilities, pumping trillions of dollars into the market to increase liquidity. Each facility is basically a program, done through a Special Purpose Vehicle (SPV), which means a subsidiary of the Federal Reserve.
Historically, the Federal Reserve only purchased high-quality long-term assets indirectly from primary dealers. However, during the Covid-19 crisis, the Federal Reserve has increased direct intervention to directly purchase debt from companies and local governments.
The Fed is now very much a visible hand in our so-called market economy.
FEDERAL RESERVE’S 10 FACILITIES TO DATE (4/11/2020)
The 10 facilities the Federal Reserve has created so far are:
Direct lending programs
Commercial Paper Funding Facility (CPFF)
Primary Market Corporate Credit Facility (PMCCF) ——NEW in 2020
Secondary Market Corporate Credit Facility (SMCCF) —— NEW in 2020
Municipal Liquidity Facility (MLF) —— NEW in 2020
Indirect lending programs
Term Asset-Backed Loan Facility (TALF)
Money Market Mutual Fund Liquidity Facility (MMLF)
Primary Dealer Credit Facility (PDCF)
Paycheck Protection Program Liquidity Facility (PPPLF) ——NEW in 2020
FIMA Repo Facility ——NEW in 2020
Main Street New Loan Facility (MSNFL) ——NEW in 2020
