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