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.
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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
