Commercial Paper Funding Facility


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Commercial Paper Funding Facility

A program implemented by the Federal Reserve System in response to the 2008 financial crisis. The New York Federal Reserve Bank (through a special purpose vehicle) purchased commercial paper from U.S.-based issuers in order to promote liquidity and the availability of credit in the wake of collapse of Lehman Brothers and other investment banks. The Commercial Paper Funding Facility expired in 2010.
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This paper offers an overview of the Commercial Paper Funding Facility.
The creation of the Commercial Paper Funding Facility is closely tied to the operation of money market mutual funds.
The Commercial Paper Funding Facility was designed to stabilize short-term financing markets by providing an additional source of funding to institutions to help them reduce reinvestment risk and stave off liquidity-driven defaults.
In September 2009, the collapse of Lehman Brothers spurred the formation of the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF) and the Commercial Paper Funding Facility (CPFF).
These include the TALF, the Commercial Paper Funding Facility (CPFF), and the Money Market Mutual Fund Investor Funding Facility (MMIFF).
The net portfolio holdings of the Commercial Paper Funding Facility (CPFF) continue to decline, leaving it well off its peak of $351 billion in late January.
Best believes PFI and its operating subsidiaries have strong liquidity including access to commercial paper programs, committed credit lines, membership in the Federal Home Loan Bank of New York and access to the Federal Reserve's Commercial Paper Funding Facility, which is available through October 2009.
The Fed's Commercial Paper Funding Facility (CPFF) was introduced on October 7 to support the commercial paper market.
PFI's existing liquidity sources--which include commercial paper programs, committed credit facilities and membership in the Federal Home Loan Bank of New York--recently have been supplemented by its participation in the Commercial Paper Funding Facility (CPFF) program and potential involvement in the Troubled Asset Recovery Program (TARP).
The Commercial Paper Funding Facility (CPFF) has allowed AIG to reenter the commercial paper market.
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