Capital Markets

Fed Extends Three Liquidity Programs to April 30

The facilities supporting primary dealer credit, asset-backed commercial paper money market liquidity, and term loans to primary dealers were previ...
Stephen TaubDecember 2, 2008

The Federal Reserve has extended three of its liquidity facilities through April 30, 2009 from an originally planned January 30, 2009 “in light of continuing strains in financial markets.”

The three facilities are the Primary Dealer Credit Facility (PDCF), the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF), and the Term Securities Lending Facility (TSLF).

The Fed said the goal is to make the deadlines consistent with the term authorized for several other liquidity-related facilities: the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), and the temporary reciprocal currency arrangements (swap lines) with 14 other central banks.

The PDCF provides discount window loans to primary dealers of government securities. The AMLF provides loans to depository institutions to buy asset-backed commercial paper from money market mutual funds. Under the TSLF, the Federal Reserve Bank of New York auctions term loans of Treasury securities to primary dealers.

The CPFF provides a liquidity backstop to U.S. issuers of commercial paper. The MMIFF supports a private-sector effort to supply liquidity to U.S. money market investors.

In a Monday speech: Fed Chairman Ben S. Bernanke said: “Once financial conditions become more normal, the extraordinary provision of liquidity by the Federal Reserve will no longer be needed.”