Income Effects of Federal Reserve Liquidity Facilities

Fleming, Michael J.; Klagge, Nicholas

doi:10.2139/ssrn.1775169

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Income Effects of Federal Reserve Liquidity Facilities

Current Issues in Economics and Finance, Vol. 17, No. 1, February 2011

7 Pages Posted: 6 Mar 2011

See all articles by Michael J. Fleming

Nicholas Klagge

Federal Reserve Bank of New York

Date Written: February 2011

Abstract

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

Fleming, Michael J. and Klagge, Nicholas, Income Effects of Federal Reserve Liquidity Facilities (February 2011). Current Issues in Economics and Finance, Vol. 17, No. 1, February 2011, Available at SSRN: https://ssrn.com/abstract=1775169 or http://dx.doi.org/10.2139/ssrn.1775169