# Ep.96 - Federal Reserve's Lending Facilities Explained in Plain English

## **UNPRECEDENTED DIRECT INTERVENTION FROM THE FEDERAL RESERVE**

In the last 30 days, the Federal Reserve launched 10 facilities, pumping trillions of dollars into the market to increase liquidity. Each facility is basically a program, done through a Special Purpose Vehicle (SPV), which means a subsidiary of the Federal Reserve.

Historically, the Federal Reserve only purchased high-quality long-term assets indirectly from primary dealers. However, during the Covid-19 crisis, the Federal Reserve has increased direct intervention to directly purchase debt from companies and local governments.

**The Fed is now very much a visible hand in our so-called market economy.**

## **FEDERAL RESERVE’S 10 FACILITIES TO DATE (4/11/2020)**

The 10 facilities the Federal Reserve has created so far are:

**Direct lending programs**

1. Commercial Paper Funding Facility (CPFF)  
2. Primary Market Corporate Credit Facility (PMCCF) —— **NEW in 2020**  
3. Secondary Market Corporate Credit Facility (SMCCF) —— **NEW in 2020**  
4. Municipal Liquidity Facility (MLF) —— **NEW in 2020**

**Indirect lending programs**

1. Term Asset-Backed Loan Facility (TALF)  
2. Money Market Mutual Fund Liquidity Facility (MMLF)  
3. Primary Dealer Credit Facility (PDCF)  
4. Paycheck Protection Program Liquidity Facility (PPPLF) —— **NEW in 2020**  
5. FIMA Repo Facility —— **NEW in 2020**  
6. Main Street New Loan Facility (MSNFL) —— **NEW in 2020**

## **Commercial Paper Funding Facility (CPFF)**

## **Primary Market Corporate Credit Facility (PMCCF)**

## **Secondary Market Corporate Credit Facility (SMCCF)**

## **Municipal Liquidity Facility (MLF)**

## **Term Asset-Backed Loan Facility (TALF)**

## **Money Market Mutual Fund Liquidity Facility (MMLF)**

## **Primary Dealer Credit Facility (PDCF)**

## **Paycheck Protection Program Liquidity Facility (PPPLF)**

## **FIMA Repo Facility**

## **Main Street New Loan Facility (MSNFL)**