Stimulus.org - Financial Institutions

Reverse Repurchase Agreement Program

Jason Peuquet — Tue, 09 Mar 2010 22:07:30 +0000

Date:

March 8, 2010

Policy Area:

Financial Sector Policy

Policy Area:

Monetary Policy

Economic Target:

Financial Institutions

Action Type:

Other

Maximum Amount Special Symbol:

Amount Spent:

The New York Federal Reserve announced a new Reverse Repurchase Agreement Program to reduce some of the liquidity in financial markets. Under the program, the Fed will sell securities from it's portfolio with agreements to repurchase them at later dates. This is an additional sign of tightening from the Fed, in light of last month's increase in the discount rate from 0.5 to 0.75 percent.

The New York Fed originally announced this program in October 2009 in an operating policy statement, stating that they had been working internally on the operational details of repurcahses and reverse repurchases to make it a viable option for draining excess liquidity if the FOMC decided such a program should be used. In the statement, the Fed also announced that reverse repos are nothing new and have even "been in the Federal Reserve's toolkit for years, and the Federal Reserve has conducted them both as recently as December 2008."

Even though this can be interpretted as a method of tightening, the Fed's statement yesterday maintained that the announcement of this program should affect expectations on other monetary policy moves.

Source:

New York Fed Operating Policy Statement 10/19/2009

New York Fed Operating Policy Statement 3/8/2010

Notes:

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Prudent Commercial Real Estate Loan Workouts

Jason Peuquet — Wed, 25 Nov 2009 18:53:26 +0000

Date:

October 30, 2009

Who:

Fed

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

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.

Financial institutions that implement loan workouts for CRE as inidicated in this policy statement will not be subject to criticism for engaging in CRE loans, even if restructured loans have weaknesses and poor ratings. In addition, the credit rating for reviewed loans will not be lowered if solely the value of the collateral declines.

Source:

Federal Reserve Release 10/30/2009

Policy Statement for CRE Loans Workouts

Notes:

Associated costs, if any, are unknown.

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Asset Guarantee Program

Jason Peuquet — Tue, 03 Nov 2009 21:48:44 +0000

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Government Guarantee

Maximum Amount:

12500000000

Amount Spent:

Deficit Impact:

-2250000000

In addition to purchasing Bank of America and Citigroup stock, the TARP program participated in a multi-agency guarantee, in conjunction with the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), of around $425 billion in Citigroup and Bank of America assets. The terms of the guarantees stipulate that Citigroup and Bank of America would cover all portfolio losses up to $29 billion and $10 billion , respectively, while 90 percent of additional losses from both companies would be covered by the federal government.

See the companion guarantess of Bank of America assets by the Fed and FDIC.

See the companion guarantees of Citigroup assets by the Fed and FDIC.

Source:

January 16, 2009 Treasury Release

Treasury Nov. 23 Release

Notes:

Maximum amount figure represents Treasury's share of total assets under guarantee. Deficit impact based on amount spent.

Deficit impact is derived from Treasury's reporting of TARP transactions.

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Targeted Investment Program

Jason Peuquet — Tue, 03 Nov 2009 21:33:01 +0000

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Equity Purchase

Maximum Amount:

40000000000

Amount Spent:

Deficit Impact:

-1250000000

In late 2008 the Treasury announced that it would provide “exceptional assistance” to three institutions—Bank of America, Citigroup, and AIG—deemed to be vital for financial markets and created three programs—the Targeted Investment Program, the Asset Guarantee Program, and Systemically Important and Failing Institutions—to provide the targeted assistance. Through the TIP, the Treasury purchased $20 billion in preferred shares from both Bank of American and Citigroup.

This purchase was on top of an initial $25 billion investment through the Capital Purchase Program, and followed by a multi-agency government guarantee of approximately $118 billion of its assets offered through the Department of Treasury, FDIC, and Federal Reserve.

In December 2009, both Bank of America and Citigroup repurchased $20 billion each in their held by TIP. Currently, there are no outstanding investments for this program.

Source:

January 16, 2009 Treasury Release

Troubled Asset Relief Program

Notes:

Amount spent indicates investment made as of 12/7/2010 (http://www.ustreas.gov/initiatives/eesa/transactions.shtml). Budgetary impact calculated by CRFB using CBO's practice of estimating costs on a risk-adjusted present value basis.

Deficit impact is derived from CBO's estimated subsidy cost for the Targeted Investment Program investments in Bank of America and Citigroup, as listed in CBO's January 2010 baseline.

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Enhanced Consumer Protection for Credit Cards

Maya MacGuineas — Mon, 17 Aug 2009 14:04:40 +0000

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

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

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:

"Protect consumers from unexpected interest charges, including increases in the rate during the first year after account opening and increases in the rate charged on pre-existing credit card balances.
Forbid banks from imposing interest charges using the "two-cycle" billing method.
Require that consumers receive a reasonable amount of time to make their credit card payments.
Prohibit the use of payment allocation methods that unfairly maximize interest charges.
Address subprime credit cards by limiting the fees that reduce the amount of available credit."

Source:

Federal Reserve Announcement 12/18/2008

Details of New Rules

Notes:

Associated costs, if any, are unknown.

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Change of "Market-to-Market" Financial Accounting Rules

Maya MacGuineas — Mon, 17 Aug 2009 13:58:39 +0000

Date:

April 2, 2009

Who:

Other

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Regulatory Change

Maximum Amount Special Symbol:

Amount Spent Special Symbol:

Deficit Impact Special Symbol:

On April 2, 2009, the Financial Accounting Standards Board announced that it would relax fair-value (i.e., "market-to-market") accounting rules that obligated banks to value all assets at the current market price. New guidelines would give banks greater flexibility in how they value "distressed" assets.

Source:

FASB Meeting Report 4/2/2009

Notes:

Fiscal and budgetary impacts unknown.

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Capital Purchase Program

Maya MacGuineas — Mon, 20 Jul 2009 19:20:55 +0000

Capital Purchase Program

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Equity Purchase

Maximum Amount:

204940000000

Amount Spent:

9712000000

Deficit Impact:

-17000000000

Purchase of equity shares of banks by the Department of Treasury, in order to promote lending and market liquidity under the “Capital Purchase Program” of the Troubled Assets Relief Program.

The Capital Purchase Program was the first of the programs implemented under TARP. Through the program, the Treasury will invest up to $250 billion of senior preferred shares in U.S. banks, savings associations, and certain bank and loan holding companies. The maximum amount available for each financial institution is $25 billion or 3 percent of risk-weighted assets, with a mimumum subscription amount of 1 percent of risk-weighted assets. In the program's announcement, the Treasury stated that "companies participating in the program must adopt the Treasury Department's standards for executive compensation and corporate governance," applying to the CEO, CFO, and the next three highly compensated executive officers.

Hundreds of financial instutitions, including the country's largest banks, have participated in the program.

Source:

Troubled Asset Relief Program

Treasury Release 10/14/2008

Notes:

Original Treasury statements indicate that the maximum amount for CPP is $250 billion. However, in the report Special Inspector General on TARP report (http://www.sigtarp.gov/reports.shtml) the maximum was listed as $218 billion, although the Treasury could be authorized to spend up to $250 billion through the program. Since then, the Treasury has listed the maximum amount as $205 billion in its report on TARP (http://www.financialstability.gov/latest/reportsanddocs.html). Amount spent indicates loans and purchases minus loan repayments (but not dividends), as of 8/22/2012 (http://www.financialstability.gov/latest/index.html). Deficit impact based on CBO's estimate of CPP's cost as stated in their March 2011 Report on TARP.

Deficit impact is from CBO's March 2011 Report on TARP. Deficit impact for individual banks is either derived from CBO's subsidy rate for the Capital Purchase Program (-4%), as listed in CBO's January 2010 baseline or the amount of dispositions received if the bank has repaid Treasury in full.

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Foreign Currency Swap Lines

Maya MacGuineas — Fri, 10 Jul 2009 20:06:45 +0000

Foreign Currency Swap Lines

Date:

December 12, 2007

Policy Area:

Monetary Policy

Economic Target:

Financial Institutions

Action Type:

Currency Swap

Maximum Amount:

286000000000

Amount Spent:

8071000000

Currency swaps between the Fed and other foreign central banks are intended to increase foreign currency liquidity and allow for the provision of U.S. dollar funding abroad.

Since December of 2007, the Fed has announced several new and expanded currency exchanges with numerous foreign central banks. The below currency swaps expired in February 2010. However, on May 9, 2010 the Fed reauthorized the use of foreign currency swap lines through January 2011 to help add liquidity to global markets following European debt fears.

Announced Date	Expired Date	Participating Foreign Central Banks	Maximum Authorized Amount
04/06/09	10/30/09	Eurozone, Japan, England, Switzerland	$286 billion
10/29/08	04/30/09	Brazil, Mexico, Korea, Singapore	$120 billion
10/28/08	04/30/09	New Zealand	$15 billion
09/29/08	04/30/09	Canada, England, Eurozone, Japan, Switzerland, Australia, Sweden, Norway, Denmark	$620 billion
09/26/08	09/29/2008*	Canada, England, Eurozone, Japan, Switzerland	$260 billion
09/24/08	09/29/2009*	Australia, Sweden, Norway, Denmark	$30 billion
09/18/08	09/26/2008*	Canada, England, Eurozone, Japan, Switzerland	$247 billion
07/30/08	09/18/08*	Eurozone, Switzerland	$67 billion
05/02/08	7/30/2008*	Eurozone, Switzerland	$62 billion
03/11/08	05/02/2008*	Eurozone, Switzerland	$36 billion
12/12/07	3/11/2008*	Eurozone, Switzerland	$24 billion

* "Expired date" indicates date that existing currency swap was superseded by new arrangement

Source:

See links within table for individual Fed releases on each action.

Fed Press Release December 12, 2007

Fed Press Release May 9, 2010

Notes:

Maximum amount is total amount of all unexpired swap arrangements. Amount spent is reported from Fed's balance sheet and current as of 1/16/2013. Maximum swap amounts are listed in dollar exchange rates current at the time the action was announced. 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.

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Term Auction Facility

Maya MacGuineas — Fri, 10 Jul 2009 19:53:37 +0000

Term Auction Facility

Date:

December 12, 2007

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

300000000000

Amount Spent:

The Term Auction Facility (TAF) allows banks and other financial institutions to pledge collateral in exchange for a loan from the Federal Reserve in order to alleviate liquidity pressures in short-term funding markets. The interest rate on the loan is determined by auction; such auctions are conducted biweekly for loans with a maturity of either 28 or 84 days.

On 5/2/2008 a Fed release increaed the maximum size of all auctions from $50 billion to $75 billion. A maximum of $150 billion could then be lent.

On 9/29/2008 a Fed release increased the maximum credit available in the 24-day and 84-day auction cycles to $300 billion.

On 10/7/2008 a Fed release established a third and fourth auction of three-month funding and increased the maximum size of each auction to $150 billion. A maximum of $600 billion could then be lent out.

On 6/25/2009 a Fed release reduced the maximum size of each auction from $150 billion to $125 billion each. A maximum of $500 billion could then be lent.

On 7/24/2009 a Fed release lowered the maximum size of each auction to $100 billion, although accepted bids for most recent auctions have been considerably smaller. A maximum of $400 billion could then be lent.

On 8/28/2009 a Fed release lowered the maximum size of each auction from $100 to $75 billion. A maximum of $300 can now be lent through the facility.

Source:

Federal Reserve TAF Announcements

Notes:

Amount spent indicates outstanding Term Auction Loans as of 5/10/2010 (http://www.federalreserve.gov/releases/h41/Current/). 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.

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Term Repurchase Transactions

Maya MacGuineas — Fri, 10 Jul 2009 19:49:58 +0000

Term Repurchase Transactions

Date:

March 7, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

100000000000

Maximum Amount Special Symbol:

Amount Spent:

Program allows primary dealers (i.e., banks or securities firms that trade directly with the Federal Reserve) to trade securities in exchange for a 28-day cash loan from Federal Reserve. The primary dealer gives the Federal Reserve a security and receives a cash loan, and also agrees to buy back the security in 28 days for a fixed price.

Source:

Federal Reserve March 7 Statement

Notes:

Amount spent current as of 4/13/2010 (http://www.federalreserve.gov/releases/h41/Current/). Total purchases were "expected to cumulate" at $100 billion, but in fact reached over this amount at their peak. 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.

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Term Securities Lending Facility

Maya MacGuineas — Fri, 10 Jul 2009 19:48:58 +0000

Term Securities Lending Facility

Date:

March 11, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

75000000000

Amount Spent:

Lending entity created by the Federal Reserve to promote liquidity for primary dealers in the financing markets for Treasury and other collateral. A primary dealer is a bank or securities firm that trades directly with the Federal Reserve. Loans given are for a 28-day period. Initially, the maximum lending allowed through the facility was $200 billion.

However, in a Fed press release on 6/25/2009, the Fed reduced the maximum loan amount available through the facility to $75 billion due to weak demand in recent months.

As has been previously announced, the Fed closed this program on February 1, 2010, along with three other Fed lending facilities that were created in response to the economic and financial crisis: Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Commercial Paper Funding Facility, and the Primary Dealer Credit Facility.

Source:

Federal Reserve Release 3/11/2008

Federal Reserve Release 6/25/2009

Fed Release 2/1/2010

Notes:

Amount spent indicates loans extended as of 6/9/2010 (http://www.federalreserve.gov/releases/h41/Current/). 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.

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Bear Stearns Funding

Maya MacGuineas — Fri, 10 Jul 2009 19:48:07 +0000

Bear Stearns

Date:

March 14, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

29000000000

Amount Spent:

1417000000

To prevent further market disorder in the wake of Bear Stearn's collapse, the Fed issued $29 billion in non-recourse loans to a holding company ("Maiden Lane, LLC") set up by J.P Morgan to manage and gradually liquidate Bear Stearns' assets.

Source:

Federal Reserve March 4 Release

Notes:

Amount spent indicates loan extended as of 1/16/2013 (http://www.federalreserve.gov/releases/h41/Current/). The $29 billion in loans to Bear Stearns in 2008 is only worth $26 billion in 2009 dollars, which is how the Fed reports it on its balance sheet. 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.

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Primary Dealer Credit Facility

Maya MacGuineas — Fri, 10 Jul 2009 19:46:21 +0000

Primary Dealer Credit Facility

Date:

July 20, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

134066000000

Amount Spent:

Overnight lending program allows primary dealers to use collateral to borrow at the Federal Reserve's "discount window." A primary dealer is a bank or securities firm that trades directly with the Federal Reserve. This lending facility gives primary dealers greater capacity to provide financing in securities markets.

On August 17, 2007, the Federal Reserve increased the maximum maturity of primary credit loans to 30 days, citing a slight deterioration in financial market conditions.

On March 16, 2008, the Federal Reserve further increased the maximum maturity to 90 days.

On November 17, 2009, the Federal reduces the maximum maturity from 90 to 28 days, noting improvements in financial markets.

Source:

Federal Reserve March 16 Release

Federal Reserve November 17 Release

Fed Release 2/1/2010

Notes:

Maximum amount is the peak cumulative cost of the facility, which occurred on October 8, 2008. Amount spent indicates outstanding loans as of 6/9/2010 (http://www.federalreserve.gov/releases/h41/Current/). 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.

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Options on Term Security Lending Facility Auctions

Maya MacGuineas — Fri, 10 Jul 2009 19:45:11 +0000

Date:

September 15, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

50000000000

Amount Spent:

Federal Reserve auctions an additional $50 billion (maximum) of options under its Term Security Lending Facility (TSLF) auctions. Participating primary dealers receive Treasury securities (Treasury bills, notes, bonds or TIPS) in exchange for approved forms of collateral. Loans are short-term, usually less than the 28 days for normal TSLF loans. Primary dealers might exercise this option during times when they typically face heightened market pressure to hold additional collateral, such as near the end of the business quarter.

Source:

Program Details from New York Fed

Current Operations

Notes:

Maximum amount is announced maximum value of program. Amount spent is total value of options not yet exercised or not yet at maturity (see here for details). Data current as of 10/7/2009. 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.

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Lehman Brothers Bankruptcy Loans

Maya MacGuineas — Fri, 10 Jul 2009 19:42:49 +0000

Date:

September 15, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

138000000000

Amount Spent:

Total of two loans from Federal Reserve to J.P. Morgan to promote orderly dismantling of Lehman Brothers assets and trades.

Source:

Federal Reserve September Decision

Notes:

Loan was issued by Fed to J.P. Morgan and paid back in its entirety. 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.

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Public-Private Investment Fund: FDIC Guarantees

suggp — Fri, 10 Jul 2009 19:42:16 +0000

Date:

February 10, 2009

Who:

FDIC

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Government Guarantee

Maximum Amount:

600000000000

Amount Spent:

727770000

Deficit Impact Special Symbol:

See the companion TARP entry for the Public-Private Investment Program (PPIP) and the Fed entry for PPIP.

Program first announced by Treasury Secretary Geithner on 2/10/2009.

Program is run by the Treasury in conjunction with the Federal Reserve and Federal Deposit Insurance Corporation. It will enlist "$75 to $100 billion" of TARP capital to create up to $500 billion in total public-private asset purchasing power. The program may eventually expand to $1 trillion in total leveraged purchasing capacity.

The Treasury released details of the program on March 23, 2009. Its aim is to use public money to entice private purchase of distressed bank loans and illiquid securities. The program has two main components:

1) The "legacy loans" program uses public financing (via TARP) to help private entities purchase pools of bank loan assets. The FDIC is charged with guaranteeing the purchase of loans once they are sold, and the Treasury provides half of the initital financing required to purchase the loan. Under the terms of the program, banks determine the loans they consider distressed and put these loans up for auction to other private market participants. The FDIC determines the eligibility of the proposed loans, and specifies how much leverage it will allow for the initial purchase. The maximum potential leverage is a 6:1 ratio, meaning that any party that purchases a loan can make the purchase at a debt to equity ratio of no greater than 6:1. For example, if a pool of loan assets costs $42, an initial payout ("equity") of $6 would be required, creating $6 in equity and $36 in debt. The bidder that wins the auction for the loan is allowed to draw on the public-private investment fund for half of its equity cost. In the case of the previous example, the bidder could take $3 from the public-private partnership, and would be required to provide the other $3 itself. The buyer issues debt that is guaranteed by the FDIC to fund the remaining cost of purchasing the loan. The FDIC is then charged with managing and overseeing the servicing of this remaining debt.

2) The "legacy securities" program has two components:

a) The government will choose five "asset managers" (selected from an open application process) that agree to raise some amount of private capital to buy legacy securities. The government matches whatever funds these asset managers manage to raise (via TARP). The private funds are matched at least one to one, although the Treasury has indicated that it may provide as much as two or even three dollars for every dollar of private capital raised. The fund manager has substantial discretion in how he/she invests the funds.

b) The Fed's recently-started Term Asset Backed Securities Lending Facility (TALF) will be expanded to include asset classes of non-agency residential mortgage-backed securities, commercial mortgage-backed securities, and other classes of asset-backed securities. Asset managers who take part in the public-private investment fund (see above) will be allowed to participate jointly in TALF.

On July 8, 2009 the Treasury, FDIC, and Fed released details concerning the Legacy Securities program of PPIP. According to the release , the "Treasury will invest up to $30 billion of equity and debt in PPIFs [Public-Private Investment Funds] established with private sector fund managers and private investors for the purpose of purchasing legacy securities. Thus, Legacy Securities PPIP allows the Treasury to partner with leading investment management firms in a way that increases the flow of private capital into these markets while maintaining equity “upside” for US taxpayers."

On September 16, 2009 the FDIC announced a pilot sale of receivership assets to test the Legacy Loans Program. A total of 12 consortiums bid in a competitive process for a portfolio of $1.3 billion in residential mortgage loans owned by the FDIC as Receiver of Franklin Bank, LLC in Houston, Texas. Residential Credit Solutions (RCS), the winning bidder, will pay $64.2 million for a 50 percent equity stake in the LLC, and the LLC will issue a $727.8 million note to the FDIC.

Source:

Treasury Term Sheet 3/23/2009

Treasury Release 7/8/2009

Notes:

Maximum risk is value of all debt that could possibly be guaranteed by FDIC under the current restrictions of a 6:1 debt-equity ratio. Amount spent as of 9/16/2009 (http://www.fdic.gov/news/news/press/2009/pr09172.html). Deficit impact unknown.

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Fed Guarantee of Bank of America Assets

suggp — Fri, 10 Jul 2009 19:37:42 +0000

Date:

January 16, 2009

Who:

Fed

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Government Guarantee

Maximum Amount:

87000000000

Amount Spent:

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.

See the companion guarantees of Bank of America assets by the Treasury and the FDIC.

Source:

Treasury Jan. 16th Release

Term Sheet for Bank of America Asset Guarantee

Notes:

Maximum amount figure represents total potential liabilities.

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Money Market Mutual Fund Liquidity Facility

Maya MacGuineas — Fri, 10 Jul 2009 19:36:34 +0000

Money Market Mutual Fund Liquidity Facility

Date:

September 19, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

145890000000

Amount Spent:

Establishment of Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility to allow Federal Reserve to increases market liquidity by purchasing three month unsecured and asset-backed commercial paper directly from selected corporate issuers.

As has been previously announced, the Fed closed this program on February 1, 2010, along with three other Fed lending facilities that were created in response to the economic and financial crisis: Term Securities Lending Facility, Commercial Paper Funding Facility, and the Primary Dealer Credit Facility.

Source:

Federal Reserve Oct. 7 Release

Fed Release 2/1/2010

Notes:

Amount spent indicates outstanding loans as of 10/21/2009 (http://www.federalreserve.gov/releases/h41/Current/). Facility maximum lending amount is unlimited, but never exceeded $416 billion. 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.

Is not a top-level node

Forward Term Auction Loan Facility

Maya MacGuineas — Fri, 10 Jul 2009 19:35:05 +0000

Date:

September 29, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

44000000000

Amount Spent:

Total of two auctions for 17-day and 13-day Term Auction Facility (TAF) loans conducted in December, designed to provide market reassurance about availability of TAF funding at year end. Loans came due in late December 2008 and early January 2009 (all already repaid).

Source:

Federal Reserve Sep. 29th Release

Notes:

Maximum amount indicates amount lent across both options. Amount spent indicates net cost of loans.

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.

Is not a top-level node

Commercial Paper Funding Facility

Maya MacGuineas — Fri, 10 Jul 2009 19:33:57 +0000

Commercial Paper Funding Facility

Date:

October 7, 2008

Policy Area:

Financial Sector Policy

Economic Target:

Financial Institutions

Action Type:

Loans

Maximum Amount:

1800000000000

Amount Spent:

Federal Reserve increases market liquidity by purchasing three month unsecured and asset-backed commercial paper directly from selected corporate issuers.

As has been previously announced, the Fed closed this program on February 1, 2010, along with three other Fed lending facilities that were created in response to the economic and financial crisis: Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Primary Dealer Credit Facility, and the Term Securities Lending Facility.

Source:

Federal Reserve Oct. 7 Release

Fed Release 2/1/2010

Notes:

Maximum amount indicates size of the market. Amount spent indicates outstanding loans as of 7/28/2010 (http://www.federalreserve.gov/releases/h41/Current/). 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.

Is not a top-level node