Fed
Prudent Commercial Real Estate Loan Workouts
Date:
October 30, 2009
Who:
Fed
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Regulatory Change This policy statement, adopted by each of the financial regulators, provides guidance for examiners and financial institutions that are working with commercial real estate (CRE) borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties.
This policy statement details risk-management practices for loan workouts that support prudent and pragmatic credit and business decisionmaking.
Notes:
Associated costs, if any, are unknown.
Fed Payment of Interest on Bank Reserves
Date:
October 6, 2008
Who:
Fed
Policy Area:
Financial Sector Policy
Economic Target:
Depository Institutions
Action Type:
Regulatory Change Federal Reserve will pay interest on depository institutions' required and excess cash reserves. Program originally slated to begin in October of 2011 was moved up to October 2008 because of the financial crisis. Objective is to compensate depository institutions for lost income they could derive by investing reserve funds elsewhere.
Source:
Notes:
Cost of paying interest is unknown. Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.
Enhanced Consumer Protection for Credit Cards
Date:
December 18, 2008
Who:
Fed
Who:
NCUA
Who:
Treasury
Policy Area:
Financial Sector Policy
Economic Target:
Consumers
Economic Target:
Financial Institutions
Action Type:
Regulatory Change New credit card regulations adopted under the Federal Trade Commission Act, in coordination with similar sets of new rules adopted by the Office of Thrift Supervision and the National Credit Union Administration.
The new regulations, as described on the Federal Reserve's website:
Notes:
Associated costs, if any, are unknown.
Fed Guarantee of Bank of America Assets
Date:
January 16, 2009
Who:
Fed
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Government Guarantee
Maximum Amount:
$87.00 billion Part of multi-agency government guarantee of approximately $118 billion in Bank of America assets, most of which it acquired through the purchase of investment bank Merrill Lynch. Under the terms of the agreement, Bank of America is responsible for the first $10 billion in losses on the assets. Remaining losses are divided 90/10 between the government and Bank of America. For the next $10 billion in losses, the Treasury and FDIC split the government’s 90% share. 90% of the remaining losses are covered by the Fed through a non-recourse loan.
Notes:
Maximum amount figure represents total potential liabilities.
Fed Guarantee of Citigroup Assets
Date:
November 23, 2008
Who:
Fed
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Government Guarantee
Maximum Amount:
$230.00 billion Part of a government guarantee of $301 billion in Citigroup assets by multiple entities (Treasury, FDIC, Federal Reserve). After Citigroup absorbs the first $29 billion in losses, the remaining losses are split 90:10 between the government and Citigroup, with the first $5 billion absorbed by the Treasury with TARP funds, the next $10 billion paid by the FDIC, and the remaining losses covered by the Federal Reserve with a non-recourse loan.
Notes:
Maximum amount figure represents total potential liabilities.
On 1/16/2008, the Treasury revised its figure for total Citigroup guaranteed assets from $306 billion down to $301 billion.
Interest Rate Changes
Who:
Fed
Policy Area:
Monetary Policy
Economic Target:
Financial Institutions
Economic Target:
Financial Institutions
Action Type:
Change in Interest Rate The federal funds rate is the interest rate at which one bank lends money, available at the Federal Reserve, to another financial institution. It is determined by the Federal Open Market Committee (FOMC), which meets eight times per year in order to set monetary policy, review current economic conditions, determe risks to economic growth and fiscal sustainability, and adjust the federal funds rate.
Notes:
Since 12/16/2008 the federal funds rate has been a range between 0% and .25%. Since that date, the above graph displays the federal funds rate as the average of the range, or .125%. Federal funds rate historical tables can be found here.