Winding Down - A visual review of the lending facilities created by the Federal Reserve during the...
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7/31/2019 Winding Down - A visual review of the lending facilities created by the Federal Reserve during the credit crisis
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Winding Down Financial Graph & Artwww.financialgraphart.com
Oct 31, 2012
John Paul Koning
Source: Federal Reserve. Last data point is August 2012. Amounts are in billions of dollars
A visual review of the lending facilities created by the Federal Reserve during the credit crisis
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2008 2009 2010 2011 2012
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2008 09 10 11 120
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2008 09 10 11 12 2008 09 10 11 12 2008 09 10 11 12
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Central bankliquidity swaps
Term Auction Facility(TAF)
Commercial Paper Fund-ing Facility (CPFF)
Discount lending
Maiden Lane LLC Maiden Lane II LLC Maiden Lane III LLC AIA and ALICO holdings
Term Asset-Backed Secu-
rities Loan Facility (TALF)Lending to American
International Group
Primary Dealer
Credit Facility
ABCP MMMF Liquid-
ity Facility (AMFL)
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1 Central bank liquidity swaps initially expired in early 2010, but were reactivated in
May 2010, and again in November 2011 to deal with credit market tightness.2. The TAF auctioned credit to depository institutions on a collateralized basis for pe-
riods of 28 and 84-days.
3. The Federal Reserve lent to CPFF LLC so that the CPFF could purchase three
month unsecured as well as asset-backed commercial paper from eligible issuers
4. Discount window lending is the traditional means by which the Federal Reserve
lends to depository institutions. Usually provided on an overnight basis, terms were
stretched to 30-days during the crisis. Unlike TAF, discount loans are provided not by
auction, but at a penalty to the market rate
5. The Federal Reserve created and lent to Maiden Lane LLC so it could purchase cer-
tain assets of Bear Stearns so as to facilitate the purchase of Bear Stearns by JP
Morgan
6. The Federal Reserve created and lent to Maiden Lane II LLC so it could purchase
residential mortgage backed securities from American International Group (AIG).
7. The Federal Reserve created and lent to Maiden Lane III LLC so it could purchase
collateralized debt obligations on which AIG Financial Products had written credit de-
fault swaps.8. The Federal Reserve received an interest in the common stock of two AIG insur-
ance subsidiaries, American International Assurance Company Ltd. (AIA) and Ameri-
can Life Insurance Company (ALICO). In exchange, the outstanding loans to AIG (12)
were reduced by $25 billion.
9. TALF lent for terms of up to five years, accepting as collateral asset-backed securi-
ties secured by student loans, auto loans, credit card loans, or small business loans
10 The Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
lent to depository institutions so they might finance purchases of commercial paper
held by money market mutual funds
11 The PDCF provided overnight funds to primary dealers on a collateralized basis
12 The Federal Reserve opened a line of credit for AIG. This was in part reduced by
the creations of Maiden Lane II and III, and the transfer of AIA and ALICO