Commercial Paper Funding Facility (FRBNY)

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The Commercial Paper Funding Facility (FRBNY)

Wall Street Bailout Accounting
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COMMERCIAL PAPER FUNDING FACILITY (FRBNY)
Balance Sheet
Disbursed*: $349.9B [1]
Current outstanding: $0[2]
Public Funds
Maximum at-risk: $1,800B [3]
Current at-risk: $0[4]

* See the methodology and glossary for definitions of "disbursed," etc.

Funding agency and aid type

The funding agency was the Federal Reserve.

Who benefits

Background

Notes

CPFF was created in October 2008 and was terminated on Feb. 1, 2010. At its peak on Jan. 21, 2009, the facility had a net portfolio holding of $349.940 billion. As of Mar. 15, 2010, the facility still held $7.71 billion in commercial paper.[5]

SIGTARP:[6]

“Commercial Paper Funding Facility (“CPFF”) — Total Potential Support: $1.8 Trillion. The Commercial Paper Funding Facility (“CPFF”) was created in October 2008 to provide an emergency source of funds (in the Federal Reserve’s terms, a “liquidity backstop”) to U.S. corporations that borrow short-term funds by issuing Commercial Paper (“CP”). CP is a short-term debt security used by corporations to raise funds in what has historically been a liquid market. This market ceased to function well in the fall of 2008, and the CPFF has played a role in assuring issuers and investors in CP that they have a “buyer of last resort.” The CPFF, according to the Federal Reserve Board’s February 24, 2009, Monetary Report to Congress, “is intended to improve liquidity in short-term funding markets and thereby increase the availability of credit for businesses and households.” Under CPFF, the Federal Reserve Bank of New York (“FRBNY”) is committed to lending funds as needed to a special purpose vehicle (“SPV”) that buys eligible CP from eligible issuers. Eligible CP is U.S.-dollar-denominated CP or asset-backed CP rated at least A-1/P-1/F1 (these are the top ratings of the different rating agencies). Eligible issuers are U.S. corporations, including those with a foreign parent company. For any given issuer, the SPV is limited to the maximum amount of CP that issuer had outstanding between January 1 and August 31, 2008. Issuers must pay a fee to FRBNY of 0.1% of the maximum amount of its CP the SPV could own. The CPFF is scheduled to expire on February 1, 2010.”

Via Prins:[7]

“The CPFF is intended to improve liquidity in short-term funding markets and thereby contribute to greater availability of credit for businesses and households. Under the CPFF, the Federal Reserve Bank of New York will finance the purchase of highly-rated unsecured and asset-backed commercial paper from eligible issuers via eligible primary dealers.”

Prins:

“With the support from the Treasury, the Fed established the CPFF in October 2008 to increase the availability of short-term debt (commercial paper) funding. Up to $1.8 trillion was earmarked for the program.”

Articles and resources

Related SourceWatch articles

References

  1. This figure is a proxy for disbursed. It actually represents the peak outstanding lending during the life of the facility. The facility peaked with a commercial paper portfolio of $349.49 billion on January 21, 2009. The loans are for three-month commercial paper, so the total disbursed is above this figure. Federal Reserve Bank of St. Louis, “Series: WCPFF - Net Portfolio Holdings of Commercial Paper Funding Facility LLC,” [1] June 29, 1011.
  2. Federal Reserve Bank of St. Louis, “Series: WCPFF - Net Portfolio Holdings of Commercial Paper Funding Facility LLC,” June 29, 2011.
  3. Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), “Quarterly Report to Congress – July 21, 2009,”[ http://www.sigtarp.gov/reports/congress/2009/July2009_Quarterly_Report_to_Congress.pdf] p. 143.
  4. Federal Reserve Bank of St. Louis, “Series: WCPFF - Net Portfolio Holdings of Commercial Paper Funding Facility LLC,” June 29, 2011.
  5. Federal Reserve Bank of St. Louis: http://www.research.stlouisfed.org/fred2/data/WCPFF.txt and http://www.research.stlouisfed.org/fred2/series/WCPFF?rid=20 Accessed Feb. 21, 2010.
  6. SIGTARP July 2009 report, p. 143.
  7. Board of Governors of the Federal Reserve System, “Report Pursuant to Section 129 of the Emergency Economic Stabilization Act of 2008: Commercial Paper Funding Facility”, n.d., p. 4; Federal Reserve Bank of New York, Commercial Paper Funding facility, (accessed September 10, 2009).

External resources

External articles

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