Lending Facilities

As the conditions of the financial system have improved, a substantial amount of these programs have been phased out. Much of this has been a natural occurrence as financial institutions have convalesced and no longer need to rely on the Federal Reserve for loans. Aside from the regular discount window, which allows banks to borrow money from the Federal Reserve at an interest rate equal to the discount rate, the only facility that currently remains in operation is the Term Asset-Backed Securities Loan Facility (TALF), the purpose of which is to support the issuance of asset-backed securities. Because of the marked increase in the conditions of many asset-backed securities markets, the TALF closed on March 31 for loans backed by all types of collateral except newly issued commercial mortgage-backed securities (CMBS), for which it is set to close on June 30. 

Because most of these facilities have dissipated naturally, as shown in the graph to the right, the Federal Reserve has said that these are not of primary concern with regard to their exit strategy and provide little hazard to the future performance of the economy.

Credit Extended Through Federal Reserve Liquidity Facilities, in $billions

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