The Region

Actions to Increase Credit Availability

Published December 1, 2008  |  December 2008 issue

Actions to Increase Credit Availability | The Region | December 2008 | Publications & Papers| Federal Reserve Bank of Minneapolis

Fed actions have increased available credit by expanding terms, types of borrowers and collateral, and reducing costs:

  • Lengthening the term of loans
    Previously, Fed loans were generally short term; now, most loans have longer term options.

  • Expanding who can borrow
    Previously, recipients of credit were banks and other depository institutions; now, primary dealers, commercial paper issuers, and others can receive credit from the Fed

  • Increasing the types of collateral that can be pledged
    For example, the collateral for the Term Securities Lending Facility (TSLF) has been expanded to include all investment-grade debt securities. That said, the types of collateral that banks could pledge to the discount window were already quite broad and therefore are essentially unchanged during this period.

  • Reducing the cost of borrowing
    Spreads for bank borrowing have been reduced to lower the cost of Fed loans.

Return to: Actions to Restore Financial Stability

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Narayana Kocherlakota