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FRB Highlights Measures to Support the Flow of Credit

The Federal Reserve Board ("FRB") highlighted recent measures to support the economy through the flow of credit and limit job losses amid the COVID-19 pandemic.

In a press statement, the FRB identified several initiatives to support the flow of credit to families and businesses, including:

  • purchasing Treasury and agency mortgage-backed securities in accordance with the amounts needed to facilitate (i) "smooth market functioning" and (ii) broader transmission of monetary policy throughout various sectors of the economy;

  • providing up to $300 billion in new financing through new programs intended to support the flow of credit to employers, consumers, and businesses;

  • providing credit to large employers by establishing (i) the Primary Market Corporate Credit Facility (or "PMCCF") to provide new bond and loan issuance, and (ii) the Secondary Market Corporate Credit Facility (or "SMCCF") to provide liquidity for outstanding corporate bonds;

  • establishing the Term Asset-Backed Securities Loan Facility (or "TALF") to (i) increase the availability of credit to consumers and businesses, and (ii) enable the issuance of asset-backed securities backed by loans, such as student loans, auto loans or Small Business Administration ("SBA") loans; and

  • supporting the flow of credit to municipalities by expanding (i) the Money Market Mutual Fund Liquidity Facility (or "MMLF") by including a wider range of securities, and (ii) the Commercial Paper Funding Facility (or "CPFF") (see previous coverage) by making high-quality, tax-exempt commercial paper an eligible security.

The FRB noted that it expects to soon make available a Main Street Business lending program for eligible small- and medium-sized businesses to obtain greater access to lending opportunities. The FRB stated that this would complement efforts by the SBA.

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