Established in the wake of Lehman Brothers’ bankruptcy to stabilize severe disruptions in the commercial paper market, the Commercial Paper Funding Facility (CPFF) allowed the Federal Reserve to act as a lender of last resort for issuers of commercial paper, thereby effectively addressing...

Testimony of Thomas C. Baxter, Jr., and Scott G. Alvarez, General Counsel of the Board of Governors, before the Subcommittee on Domestic Monetary Policy and Technology, Committee on Financial Services, U.S. House of Representatives, Washington, D.C.

Related links: http://www.richmondfed.org/publications/research/region_focus/2011/q1/federal_reserve_weblinks.cfm

We study a model of interbank credit where physical and informational frictions limit the opportunities for intertemporal trade among banks and outside investors. Banks obtain loans in an over-the-counter market (involving search, bilateral matching, and negotiations over the terms of the loan)...

Numerous commentaries have questioned both the legality and appropriateness of Federal Reserve lending to banks during the recent financial crisis. This article addresses two questions motivated by such commentary: Did the Federal Reserve violate either the letter or spirit of the law by lending...

The Term Securities Lending Facility (TSLF) lent $2.3 trillion worth of general collateral to 18 investment houses in exchange for riskier securities. Treasury collateral was in high demand in 2008 and 2009 as repo markets shunned lower quality collateral. This paper finds a negative and...

In response to the near collapse of US securitization markets in 2008, the Federal Reserve created the Term Asset-Backed Securities Loan Facility, which offered non-recourse loans to finance investors’ purchases of certain highly rated asset-backed securities. We study the effects of this...

Predatory trading may affect the incentives for banks to raise liquidity in times of financial distress. In these periods, borrowing becomes a signal of illiquidity, exposing borrowers to predatory trading and possible insolvency. A stigma of borrowing thus arises, leading distressed banks to...

A recent study using data on seventy-one countries revealed that the central bank's retained profits serve as financial leverage for its discretion to choose the discount window, which tends to confer more benefits to bureaucrats than other monetary instruments. As an extension, we investigate...