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Federal Reserve Board files reports with Congress on newly established lending facilities
On March 25, the Federal Reserve Board filed three reports to Congress pursuant to Section 13(3) of the Federal Reserve Act on the Primary Dealer Credit Facility, the Commercial Paper Funding Facility, and the Money Market Mutual Fund Liquidity Facility. Each report provides Congress with details on the facilities, including the structure and basic terms of the facilities. The announcement of the lending facilities was previously covered here.
Fed agencies issue regulatory capital interim rule
On March 19, the OCC, the Fed, and the FDIC announced the release of an interim final rule for the Money Market Mutual Fund Liquidity Facility (MMLF) which revises capital rules for activities with the MMLF. The agencies issued the rule to enable financial institutions to “effectively use” the MMLF following its launch by the Fed on March 18. Pursuant to the Federal Reserve Act, the Fed granted authority to establish the MMLF to the Federal Reserve Bank of Boston, allowing it to provide “non-recourse loans to eligible institutions” secured by assets those institutions buy from money market mutual funds. The rule will allow financial institutions to participate because activities with the MMLF will “neutralize the regulatory capital effects of participating in the program” on the institution. The rule is effective immediately and there will be a 45-day comment period.