Court filing
Report on Certain Lending Facilities Authorized under Section 13(3) — December 3, 2020
Record facts
| Court | Board of Governors of the Federal Reserve System |
|---|---|
| Filed | 2020-12-03 |
Summary
A report dated December 3, 2020 from the Board of Governors of the Federal Reserve System on lending facilities authorized under section 13(3) of the Federal Reserve Act (12 U.S.C. § 343), provided under the Board's Regulation A. It describes the Board's approval on November 28, 2020, with the Secretary of the Treasury, of extending the Primary Dealer Credit Facility, Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility from December 31, 2020 until March 31, 2021. The Commercial Paper Funding Facility is extended from March 17, 2021 to the same date. The report cites continued uncertainty over the economic effects of the COVID-19 pandemic and states that the facilities' terms are otherwise unchanged. It briefly describes each facility, including the PPPLF authorized April 8, 2020.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
1
Report on Certain Lending Facilities
Authorized by the Board under Section 13(3) of the Federal Reserve Act
December 3, 2020
Overview
The Board of Governors of the Federal Reserve System (Board) is providing
the following report concerning certain lending facilities established by the Board
under section 13(3) of the Federal Reserve Act (12 U.S.C. § 343). Pursuant to the
Board’s Regulation A,1 the Board is required to provide a report to the public and
the Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives (the
Committees) no later than seven days after renewing a program or facility under
section 13(3)(C) of the Federal Reserve Act.
This report describes the Board’s approval, on November 28, 2020, of an
extension until March 31, 2021, of the termination date for certain emergency
lending facilities previously authorized by the Board under section 13(3) of the
Federal Reserve Act. The extension applies to the Primary Dealer Credit Facility
(PDCF), Money Market Mutual Fund Liquidity Facility (MMLF), Commercial
Paper Funding Facility (CPFF), and Paycheck Protection Program Liquidity
Facility (PPPLF) (collectively, Facilities).
Basis for Extension
On November 28, 2020, the Board and the Secretary of the Treasury
approved an extension of the PDCF, MMLF, and PPPLF from December 31, 2020,
until March 31, 2021, and an extension of the CPFF from March 17, 2021, until
March 31, 2021. As described in the Board’s initial reports to the Committees
regarding the Facilities, the Board took into consideration the disruptions in
financial markets and economic activity caused by the COVID-19 pandemic when
it initially authorized the Facilities. Specifically, the Board considered the
presence and extent of volatility and illiquidity in financial markets. The Board
also assessed the price and availability of credit in the market or sector targeted by
each Facility as compared to normal market conditions. In addition, the Board
considered the effects of the pandemic on economic activity generally, including
unemployment claims and the effects of the pandemic on the revenues and
expenses of businesses and municipalities.
1 12 CFR part 201.
2
Although financial markets have stabilized significantly, there is substantial
continued uncertainty related to the economic effects of the COVID-19 pandemic,
and near-term risks associated with the impact of the virus on the economy and the
financial system remain high.
The Board’s Regulation A provides that an emergency lending facility may
be renewed if the Board finds that unusual and exigent circumstances continue to
exist and the facility continues to appropriately provide liquidity to the financial
system.2 On November 28, 2020, based on the continued economic disruptions
described above, the Board extended the termination date for each Facility until
March 31, 2021. The terms of the Facilities are otherwise unchanged as result of
this action. A brief description of each Facility is provided below. Additional
information regarding each Facility may be found in the Board’s previous reports
to the Committees regarding the Facilities and at the websites listed below.
Extended Emergency Lending Facilities
A. Primary Dealer Credit Facility
On March 17, 2020, the Board authorized the Federal Reserve Bank of
New York (FRBNY) to establish and operate the PDCF. The PDCF is a term
loan facility that provides funding to primary dealers in exchange for a broad
range of collateral and is intended to foster the functioning of financial markets
more generally. The facility allows primary dealers to support smooth market
functioning and facilitate the availability of credit to businesses and households.
Additional information concerning the PDCF can be found on the Board’s public
website at https://www.federalreserve.gov/monetarypolicy/pdcf.htm.
B. Money Market Mutual Fund Liquidity Facility
On March 18, 2020, the Board authorized the Federal Reserve Bank of
Boston to establish and operate the MMLF. The MMLF provides funding to U.S.
depository institutions and bank holding companies to finance their purchases of
certain types of assets from money market mutual funds under certain conditions.
The program is intended to assist money market mutual funds that hold such
assets in meeting demands for redemptions by investors and to foster liquidity in
the markets for the assets held by money market mutual funds, including the
2 12 CFR 201.4(d)(9)(ii).
3
market for short-term municipal securities. Additional information concerning
the MMLF can be found on the Board’s public website at
https://www.federalreserve.gov/monetarypolicy/mmlf.htm.
C. Commercial Paper Funding Facility
On March 17, 2020, the Board authorized the FRBNY to establish and
operate the CPFF. The purpose of the CPFF is to provide liquidity to short-term
funding markets. The CPFF provides a liquidity backstop to U.S. issuers of
commercial paper, including municipalities, by purchasing three-month unsecured
and asset-backed commercial paper directly from eligible issuers. Additional
information concerning the CPFF can be found on the Board’s public website at
https://www.federalreserve.gov/monetarypolicy/cpff.htm.
D. Paycheck Protection Program Liquidity Facility
On April 8, 2020, the Board authorized each of the 12 Federal Reserve
Banks to establish and operate the PPPLF. The PPPLF offers a source of
liquidity to the financial institution lenders that lend to small businesses through
the Small Business Administration’s Paycheck Protection Program. Additional
information about the PPPLF can be found on the Board’s public website at
https://www.federalreserve.gov/monetarypolicy/ppplf.htm.File and source
- File
- pdcf-mmlf-cpff-ppplf-12-04-2020.pdf
- Size
- 129,276 bytes
- SHA-256
- ccba425db5ed9d740a56876a9a31c3b9222a23805c6af59b077b3703df68f827
- Original
- www.federalreserve.gov