FACTBOX-Four emergency Fed lifelines expire

Feb 1 (BestGrowthStock) – Four emergency U.S. Federal Reserve
programs expired on Monday in a sign of confidence the
financial market lifelines are no longer needed.

The programs, detailed below, were designed to wind down
automatically as financial conditions improved and better rates
became available in the market. Three of the facilities have
been dormant for several months.

The programs were central to the Fed’s extraordinary
response to the financial crisis and their alphabet-soup
acronyms became common parlance among monetary policy
specialists for a short while.

They were authorized under a section of the Federal Reserve
Act that can be invoked only when conditions are “unusual and
exigent.”

THE COMMERCIAL PAPER FUNDING FACILITY (CPFF)

The Fed said in October 2008 it would fund purchases of
highly rated, U.S.-dollar-denominated, three-month commercial
paper.

Usage peaked at $350.5 billion in January 2009, and dropped
to approximately $8.7 billion by the end of January 2010.

ASSET-BACKED COMMERCIAL PAPER MONEY MARKET MUTUAL FUND
LIQUIDITY FACILITY (AMLF)

The AMLF was first made available on Sept. 19, 2008,
enabling the Fed to make nonrecourse loans to U.S. financial
institutions to help them finance the purchase of asset-backed
commercial paper from money market mutual funds.

The AMLF extended as much as $152 billion in loans in
October 2008, but has not been used since October 2009.

THE PRIMARY DEALER CREDIT FACILITY (PDCF)

On March 16, 2008, the Fed launched the PDCF, a new
facility for investment banks, marking the first time since the
Great Depression it had lent to nondepository institutions via
its discount window.

Borrowing from the PDCF peaked at $155.8 billion on Sept.
29, 2008 and has not been used since May 13, 2009.

TERM SECURITIES LENDING FACILITY (TSLF)

The TSLF was authorized in March 2008 to promote liquidity
in the financing markets for Treasuries and other collateral by
allowing dealers to swap riskier securities for Treasuries.

At its peak on July 24, 2008, dealers submitted as much as
$51.72 billion of bids for $25 billion in Treasuries on offer.
That generated a bid-to-cover ratio, an indication of demand,
of 2.07.

TSLF Schedule 1 auction amounts fell to zero in April 2009.
Dealers submitted no bids for the TSLF Schedule 2 operations
after the July 16, 2009 auction.

Investing Research

(Editing by Jeffrey Benkoe)
([email protected]; Tel: +1 646 223 6154;
Reuters
Messaging:rm://[email protected]))

FACTBOX-Four emergency Fed lifelines expire