cares act Archives

On November 19, Treasury Secretary Steven Mnuchin announced that he would sunset five of the Federal Reserve’s emergency lending programs at year-end: the Primary Market Corporate Credit Facility, Secondary Market CCF, Municipal Liquidity Facility, Main Street Lending Program, and Term Asset-Backed Securities Loan Facility (TALF). His decision,…

Booms & Busts, Money & Politics, News, The Fed & Central Banks

Fed's Intervention in Corporate Credit: A Risky Venture

James Dorn/July 13, 2020June 19, 2022

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress appropriated $454 billion to the Treasury’s Exchange Stabilization Fund (ESF) to backstop emergency lending facilities known as “special purpose vehicles” (SPVs).[1] With the Treasury backstop, the Fed has the potential to lend a maximum of $4.5…

Banking Regulation, Booms & Busts, Money & Politics, News, The Fed & Central Banks

Catch-11

George Selgin/May 13, 2020June 19, 2022

The government’s plan for saving small and medium-sized businesses from liquidation puts them in a bind that brings to mind the one Yossarian had to contend with. The problem, in a nutshell, is this: Chapter 11 bankruptcy may be many firms’ best hope for surviving the present…

Banking Regulation, Fiat Money, Money & Politics, News, The Fed & Central Banks

The Constitutional Case for the Fed's Treasury Backstops

George Selgin/April 13, 2020June 19, 2022

One of the more controversial provisions of the CARES Act consists of the $454 billion it allows the U.S. Treasury to devote to "backstopping" (that is, to supplying partial funding for) the Federal Reserve's emergency lending. In a previous post, I argued that these Treasury backstops help…