Commercial Paper Funding Facility (CPFF)

Tuesday, October 07, 2008 | 10:26 AM

Speaking of pulling another trick out of the bag, here is the Fed statement on the latest alphabet scramble (CPFF) form of lending:

"The Federal Reserve Board on Tuesday announced the creation of the Commercial Paper Funding Facility (CPFF), a facility that will complement the Federal Reserve's existing credit facilities to help provide liquidity to term funding markets. The CPFF will provide a liquidity backstop to U.S. issuers of commercial paper through a special purpose vehicle (SPV) that will purchase three-month unsecured and asset-backed commercial paper directly from eligible issuers. The Federal Reserve will provide financing to the SPV under the CPFF and will be secured by all of the assets of the SPV and, in the case of commercial paper that is not asset-backed commercial paper, by the retention of up-front fees paid by the issuers or by other forms of security acceptable to the Federal Reserve in consultation with market participants. The Treasury believes this facility is necessary to prevent substantial disruptions to the financial markets and the economy and will make a special deposit at the Federal Reserve Bank of New York in support of this facility."   (continued below)

Markets give up 100+ gains, still unsure of what direction to take . . .


Commercial Paper Funding Facility (CPFF)
Federal Reserve, October 7, 2008

The commercial paper market has been under considerable strain in recent weeks as money market mutual funds and other investors, themselves often facing liquidity pressures, have become increasingly reluctant to purchase commercial paper, especially at longer-dated maturities. As a result, the volume of outstanding commercial paper has shrunk, interest rates on longer-term commercial paper have increased significantly, and an increasingly high percentage of outstanding paper must now be refinanced each day. A large share of outstanding commercial paper is issued or sponsored by financial intermediaries, and their difficulties placing commercial paper have made it more difficult for those intermediaries to play their vital role in meeting the credit needs of businesses and households.

By eliminating much of the risk that eligible issuers will not be able to repay investors by rolling over their maturing commercial paper obligations, this facility should encourage investors to once again engage in term lending in the commercial paper market. Added investor demand should lower commercial paper rates from their current elevated levels and foster issuance of longer-term commercial paper. An improved commercial paper market will enhance the ability of financial intermediaries to accommodate the credit needs of businesses and households.

Commercial Paper Funding Facility (CPFF) Terms and Conditions (57 KB PDF)



Additional reading:
Fed to Purchase U.S. Commercial Paper to Ease Crunch
Craig Torres
Bloomberg, Oct. 7  2008

Fed Announces Plan to Buy Short-Term Debt
NYT, October 7, 2008

Fed Moves to Thaw Credit Markets

Steven Mufson and Neil Irwin
Washington Post October 7, 2008; 10:18 AM

Fed to Purchase Commercial Paper In New Facility Backed by Treasury
WSJ, OCTOBER 7, 2008, 9:45 A.M. ET

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maybe now? we'll see this:

Western nations including the United States have gradually implemented virtually all of Marx's 10 key steps toward creating a dictatorship. What are some examples can you find? Americans would be wise to study the "Ten Planks" and demand that the President and Congress abolish all laws, regulations and agencies which govern these (and all other) unconstitutional seizures of power. Communism was never intended to free man, but to enslave him; indeed the Communist Manifesto promised a "dictatorship of the proletariat" and history proved it always ended up slaughtering millions of the proletariat.

Karl Marx's "10 Planks" to seize power and destroy freedom:

Abolition of Property in Land and Application of all Rents of Land to Public Purpose.

A Heavy Progressive or Graduated Income Tax.

Abolition of All Rights of Inheritance.

Confiscation of the Property of All Emigrants and Rebels.

Centralization of Credit in the Hands of the State, by Means of a National Bank with State Capital and an Exclusive Monopoly.

Centralization of the Means of Communication and Transport in the Hands of the State.

Extension of Factories and Instruments of Production Owned by the State, the Bringing Into Cultivation of Waste Lands, and the Improvement of the Soil Generally in Accordance with a Common Plan.

Equal Liability of All to Labor. Establishment of Industrial Armies, Especially for Agriculture.

Combination of Agriculture with Manufacturing Industries; Gradual Abolition of the Distinction Between Town and Country by a More Equable Distribution of the Population over the Country.

Free Education for All Children in Public Schools. Abolition of Children's Factory Labor in it's Present Form. Combination of Education with Industrial Production.

in a clearer light(?)

don't get me wrong it isn't about 'Communism', it's about Control.

for further study, see:

Posted by: Mark E Hoffer | Oct 7, 2008 10:33:17 AM

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