Income Effects of Federal Reserve Liquidity Facilities
7 Pages Posted: 6 Mar 2011
Date Written: February 2011
One of the chief actions taken by the Federal Reserve in response to the financial crisis was the introduction or expansion of facilities designed to provide liquidity to the funding markets. A study of the programs suggests that the liquidity facilities generated $20 billion in interest and fee income between August 2007 and December 2009, or $13 billion after taking into account the estimated $7 billion cost of funds. Moreover, the Fed took important steps to limit the credit exposure it incurred in connection with the facilities.
Keywords: Federal Reserve, Liquidity facilities, Lender of last resort
JEL Classification: E58, E52, G18
Suggested Citation: Suggested Citation