Primary Dealer Credit Facility (FRBNY)

The Primary Dealer Credit Facility (FRBNY)

Funding agency and aid type
The funding agency was the Federal Reserve.

Cheap Loans.

Who benefits
Financial firms.

Background
SIGTARP: "“Primary Dealer Credit Facility (“PDCF”) — Total Potential Support: At Least $148 Billion. The Federal Reserve Board’s February 2009 Monetary Report to Congress states that “to bolster market liquidity and promote orderly market functioning, on March 16, 2008, the Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create a lending facility — the Primary Dealer Credit Facility [“PDCF”] — to improve the ability of primary dealers to provide financing to participants in securitization markets.” Loans are made to primary dealers, against which they must post eligible collateral — the definition of which has been expanded from all investment-grade securities to now include “all collateral eligible for pledge in tri-party funding arrangements through the major clearing banks. The interest rate charged on such credit is the same as the primary credit rate at the Federal Reserve Bank of New York.” The first participants in the PDCF were Merrill Lynch, Goldman Sachs, and Morgan Stanley; it was later expanded to include other primary dealers. The program is scheduled to terminate on February 1, 2010.”"

Via Prins: "“The Primary Dealer Credit Facility (PDCF) is an overnight loan facility that will provide funding to primary dealers in exchange for any tri-party-eligible collateral and is intended to foster the functioning of financial markets more generally.”"

Prins: "“The PDCF provides overnight loans to primary dealers (financial firms that can engage in direct transactions with the federal government). The Fed allocated $147.7 billion for it in 2009.”"

Related SourceWatch articles

 * SIGTARP Quarterly Report to Congress July 21, 2009
 * Troubled Asset Relief Program

External resources

 * FRBNY homepage: http://www.newyorkfed.org/markets/pdcf.html
 * FRBNY report on PDCF: http://www.newyorkfed.org/research/current_issues/ci15-4.pdf