U.S. Economy And Budget

Note: Securities presently consist almost completely (over 97 percent) of U.S Treasuries. Treasury outstanding currently, and Float. 85 billion to the American International Group (AIG) under section 13(3) of the Federal Reserve Act. The secured loan has terms and conditions designed to protect the interests of the U.S. The Board driven that, in current circumstances, a disorderly failing of AIG could add to already significant degrees of financial market fragility and business lead to considerably higher borrowing costs, reduced household wealth, and materially weaker financial performance. The purpose of this liquidity facility is to aid AIG in meeting its obligations as they come due.

This loan will assist in an activity under which AIG will sell certain of its businesses within an orderly manner, with the least possible disruption to the entire economy. The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility is a lending facility that provides financing to U.S. The program is intended to assist money money that hold such paper in meeting demands for redemptions by investors and to foster liquidity in the ABCP market and money markets more generally.

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The Federal Reserve created the Commercial Paper Funding Facility (CPFF) to give a liquidity backstop to U.S. The CPFF is intended to boost liquidity in short-term funding markets and therefore contribute to higher option of credit for businesses and households. Under the CPFF, the Federal Reserve Bank or investment company of NY will fund the purchase of highly rated unprotected and asset-backed commercial paper from entitled issuers via eligible primary dealers. When the Federal Reserve System was founded in 1913, lending reserve funds through the Discount Window was intended as the main instrument of central banking operations.

Although the Window was long ago superseded by open up market operations as the most important tool of monetary policy, it still performs a complementary role. The Discount Window functions as a safety valve in relieving pressures in reserve markets; extensions of credit can help reduce liquidity strains in a depository organization and in the bank operating system as a whole.

The Window also helps ensure the basic balance of the payment system more generally by supplying liquidity during times of systemic stress. On June 26, 2008, the Federal Reserve Bank or investment company of NY (FRBNY) extended credit to Maiden Lane LLC under the specialist of section 13(3) of the Federal Reserve Act.

This limited responsibility company was formed to acquire certain property of Bear Stearns and also to manage those property through time to increase repayment of the credit expanded and to minimize disruption to financial markets. November 25 On, 2008, the Federal Reserve Bank or investment company of New York (FRBNY) began increasing credit to Maiden Lane III LLC under the specialist of section 13(3) of the Federal Reserve Act.

This limited liability company was created to purchase multi-sector collateralized debt obligations (CDOs) which the FINANCIAL LOANS band of the American International Group, Inc. (AIG) has written credit default swap (CDS) contracts. In connection with the purchase of CDOs, the CDS counterparties will relax the related CDS transactions concurrently.

The Money Market Investor Funding Facility (MMIFF), certified by the Board under Section 13(3) of the Federal Reserve Act, will support a private-sector initiative made to provide liquidity to U.S. Under the MMIFF, the New York Fed provides senior secured funding to some special purpose vehicles to assist in an industry-supported private-sector effort to finance the purchase of qualified assets from entitled investors.

The Primary Dealer Credit Facility (PDCF) can be an overnight loan facility that provides financing to primary dealers in exchange for a specified selection of eligible guarantee and is supposed to foster the working of financial marketplaces more generally. The Fed uses repurchase agreements, also called “RPs” or “repos”, to make collateralized loans to major dealers. Within a reverse “RRP” or repo, the Fed borrows money from primary dealers.