Fed Extends Paycheck Protection Liquidity Facility Until June 30
(Bloomberg) -- The Federal Reserve is extending its paycheck protection facility for three months, but three other emergency lending programs will expire at the end of March amid low usage, highlighting how far strains caused by the pandemic have eased in financial markets.
The Paycheck Protection Program Liquidity Facility is now set to expire on June 30, the central bank said in a statement Monday.
The facility is one of a number of programs that was rolled out last year to support the flow of credit to businesses at the onset of the Covid-19 pandemic. Banks that make loans through the Small Business Administration’s Paycheck Protection Program can pledge them as collateral to the central bank in exchange for term financing.
The Fed also said its other remaining emergency facilities -- the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility and the Primary Dealer Credit Facility -- would expire as scheduled on March 31, citing low usage since last summer.
The facilities had all been scheduled to close at the end of last year but were extended for three months as a precaution at the Fed’s request, with the agreement of then-Treasury Secretary Steven Mnuchin. However, he declined to grant the central bank’s call to extend several other emergency facilities that made loans to companies and municipal debt issuers. Instead, Mnuchin ruled they should close on schedule and unused taxpayer money that backstopped them be returned.
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