Nov 19 (Reuters) - Treasury Secretary Steven Mnuchin on Thursday requested the Federal Reserve return unused funds from several emergency lending facilities set up last spring to shore up a range of credit markets rocked by the coronavirus outbreak.
The move effectively means many of the programs will be sunset after Dec. 31, when they are set to expire. Mnuchin extended some of the programs, including those supporting money market funds and the market for commercial paper, for an additional 90 days beyond year-end.
While some of the programs were lightly used, Fed officials said having them open as a backstop helped to stabilize markets during the pandemic.
Here’s a look at where the various programs stand, how much they were used, and when they expire. EXPIRING DEC. 31:
** MAIN STREET LENDING FACILITY Loans extended through Nov. 18: $5.4 billion The Fed has made several changes to the $600 billion Main Street program, including as recently as last month, in an effort to boost participation. The Fed opened the program to nonprofit groups and reduced the minimum loan amount to $100,000. But use of the program remained tepid. ** MUNICIPAL LIQUIDITY FACILITY Loans extended through Nov. 18: $1.7 billion The Municipal Liquidity Facility made up to $500 billion available for state and local governments, but it was only tapped by two borrowers - Illinois and New York’s cash-strapped Metropolitan Transportation Authority.
** TERM ASSET-BACKED SECURITIES LOAN FACILITY Loans extended through Nov. 18: $3.8 billion The TALF program purchased bundles of assets secured by auto loans, credit cards, student loans, loans backed by the Small Business Administration and other types of credit. Its aim is to make sure banks and other lenders such as auto finance companies have the cash to keep making loans to consumers and businesses. ** PRIMARY MARKET CORPORATE CREDIT FACILITY Loans extended through Nov. 18: $0 This program is meant to serve as a backstop for corporate debt, with the Fed offering to buy bonds and issue loans to companies. But issuers never tapped the facility for support. ** SECONDARY MARKET CORPORATE CREDIT FACILITY Loans extended through Nov. 18: $13.5 billion The Fed used this program to boost liquidity in the corporate credit market, at first by purchasing exchange-traded funds that invest in corporate bonds. The central bank then pivoted to purchasing individual corporate credit bonds in the secondary market, using an indexing approach to create broad market exposure. EXTENDED FOR 90 DAYS AFTER DEC. 31:
** COMMERCIAL PAPER FUNDING FACILITY Loans extended through Nov. 18: $0 The Fed reintroduced the CPFF, a tool it used during the last financial crisis, to get money directly into the hands of large businesses, which are major employers. The market for commercial paper, an essential source of short-term funding for many companies, had come under strain amid worries that companies affected by the pandemic would not be able to repay their IOUs. ** PRIMARY DEALER CREDIT FACILITY Loans extended through Nov. 18: $255 million Through this facility, the Fed offers short-term loans to the two dozen Wall Street firms authorized to transact directly with the central bank. The program offers funding of up to 90 days to primary dealers. A similar program run from 2008 to 2010 only offered overnight loans. ** MONEY MARKET MUTUAL FUND LIQUIDITY FACILITY Loans extended through Nov. 18: $5.2 billion This facility was established to keep the money market mutual fund industry functioning at a time when investors were withdrawing money at a fast clip. The tool offers loans of up to one year to financial institutions that pledge as collateral high-quality assets like U.S. Treasury bonds that they have purchased from money market mutual funds.
Reporting by Jonnelle Marte; Editing by Kenneth Maxwell