Federal Reserve Liquidity Programs to Date

Every industry has its share of acronyms, but unless one is a part of a particular industry, specific acronyms generally have no meaning. Since it is our money being used in the latest iteration of the current corporate/social bailout, I believe every taxpayer should take an interest in the list below.

• TAF – Term auction facility. The Fed auctions discount window loans to banks for terms of 28 and 84 days.
• PDCF – Analogous to the TAF in that the Fed is providing collateralized loans to primary dealers. The loans are for overnight terms. Primary dealers can pledge assets (including equities) from their London branches.
• Foreign currency swaps – The Fed is providing dollar loans to foreign central banks who will then pass the funds onto banks in the libor market. Four of the nine participating banks will provide dollar funding in unlimited amounts.
• TSLF – The Fed’s swap program exchanging its holdings of TSYs for investment grade assets. Available to primary dealers via weekly auctions. The Fed recently increased the size and expanded the eligible assets in the program.
• TOP – Designed to offer primary dealers options to draw on special short-dated TSLF auctions scheduled around quarter and year-end periods. Options can be allowed to expire unexercised or used to swap mortgage collateral against general Treasury collateral.
• AB-CP back up (AMLF)– The Fed is providing loans to banks and other depository institutions to purchase asset backed commercial paper from money market funds.
• CP-FF – The commercial paper funding facility where the Fed will buy CP directly from issuers. For most issuers, the CP will be purchased at 3- month OIS+200bp. Banks can lower their cost by securing FDIC debt insurance.
• MMIFF – A facility created by the Fed designed to purchase assets out of money market funds through newly created SPVs that themselves are financed with AB-CP.
• Other credit extension – This includes the Fed loan to AIG collateralized by the companies businesses and assets. The total line of credit is $123bn.
• Maiden Lane LLC – The Fed entity created to hold BSC’s portfolio of assets that collateralize the loan the Fed made to JPM ($30bn) to finance the purchase of BSC. Any losses over the first $1bn accrue to the Fed.
• Fed purchases of GSE securities – The Fed plans to purchase up to $100 billion in GSE direct obligations from primary dealers and $500 billion in MBS from asset managers, in conjunction with the Treasury's bailout of the GSEs.
• TALF – Term Asset-Backed Securities Loan Facility. The New York Fed plans to lend up to $200 billion (with an added $20 billion in credit protection from the Treasury’s TARP funds) to holders of AAA ABS securities tied to student, credit card, auto, and small business loans.
• TARP – While not a Fed program, the TARP is designed to inject capital into financial institutions and purchase “troubled assets.” The scope and structure of the program has gotten broader and less clearly defined as there has been talk of using the money to modify home mortgages and make loans to auto manufacturers.

Surely this list will grow, so check back often.