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Financial Services Law Insights and Observations

Fed announces creation of special credit facility

Federal Issues Federal Reserve Covid-19 Commercial Lending

Federal Issues

On March 17, the Federal Reserve announced the creation of a special credit facility to serve as a funding backstop to facilitate commercial lending.  Under the structure, the Federal Reserve Bank of New York will lend money to the newly created special purpose vehicle (SPV) on a resource basis, to be secured by the commercial loans purchased by the SPV from eligible issuers.  There are limits on the maximum amount any single issuer may sell to the SPV. The SPV is scheduled to cease purchasing additional commercial paper on March 17, 2021.

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