Here are the 9 economic relief programs the Fed is using to combat coronavirus fallout
Ben Winck
- The Federal Reserve's array of lending facilities propped up credit markets and eased fears of default as the coronavirus continued to rage across the US.
- Working alongside the Treasury Department, the central bank's programs target financial pressures in state and local governments, corporations, and small businesses.
- Here are the nine relief programs created by the Fed through March and April.
- Visit the Business Insider homepage for more stories.
The Federal Reserve unveiled a spate of emergency lending programs through March and April to lift credit stresses and improve market functioning.
In the following months, the facilities lifted stocks and bonds alike, opened up much-needed credit pools, and boosted liquidity throughout the financial sector. Several of the programs are also backstopped by the Treasury, leaving billions of dollars in loans on the table for eligible corporations, small businesses, and governments.
Here are the nine unprecedented relief facilities created by the Fed and how they intend to keep the economy afloat through the deepest recession in nearly a century.
Primary Dealer Credit Facility
Treasury support: None
Launch date: March 20
This program buys assets ranging from corporate debt to mortgage-backed securities from major banks and brokerages. The assets are set to be sold back after a specific amount of time, allowing firms to trade securities for cash and avoid immediate cash flow pressures.
Money Market Fund Liquidity Facility
Treasury support: $10 billion
Launch date: March 23
The MMFLF supports the Fed's purchases of high-quality assets including government bonds and commercial paper. Purchases are made from money market mutual funds.
Commercial Paper Funding Facility
Treasury support: $10 billion
Launch date: April 14
This facility will purchase short-dated debt from companies and governments to lift credit pressures and help firms continue operating through the economic freeze.
Paycheck Protection Program Liquidity Facility
Treasury support: None
Launch date: April 16
This program works in tandem with the Treasury's Paycheck Protection Program, allowing the Fed to buy debt backed by PPP loans and lift banks' liquidity constraints.
Municipal Liquidity Facility
Treasury support: $35 billion
Announcement date: May 26
The MLF allows state and local governments to sell short-term bonds to the central bank to shore up cash for relief efforts. Illinois became the first state to tap the credit pool on June 3.
Primary Market Corporate Credit Facility
Treasury support: $50 billion
Launch date: Not yet open
The PMCCF is slated to directly purchase investment-grade corporate bonds. The program's announcement in March immediately buoyed the credit market and eased fears of near-term defaults.
Secondary Market Corporate Credit FacilityTreasury support: $25 billion
Launch date: May 12
Backing up the aforementioned corporate-debt facility, the SMCCF targets bonds and bond exchange-traded funds on the secondary market. The Fed's first week of purchases took in $1.3 billion worth of ETFs.
Term Asset-Backed Securities Loan Facility
Treasury support: $10 billion
Launch date: Not yet open
This facility will buy up securities backed by consumer debt, including student loans, small business loans, and car loans.
Main Street Lending ProgramTreasury support: $75 billion
Announcement date: Not yet open
This program will work alongside banks to lend to US companies with fewer than 15,000 employees or less than $5 billion in annual revenue. The Fed expanded the program, which can lend up to $600 billion, on April 30 to include larger businesses.
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