ABCPMMMFLF is Fed new relief program for ‘Shadow Banking’ system

November 17, 2008 by · Leave a Comment
Filed under: Policy News 

This alphabet soup keeps getting better.  The ABCPMMMFLF stand for (I am not making this up), Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility.  Its pupose is basically to help the official $4 trillion dollars in off-balance (I thought this was no more after Enron) sheet bets that have gone bad for the various financial institutions.  So when you are wondering where our tax dollars will be going for generations to come, you can think about this credit facility that will be monetized at some point because the earnings and leverage these banks enjoyed, is not coming back.  If you are asking yourself why I cover this.  Two reasons, one is that I want to make sure we have a record of the important events as I find them.  Second, so people can see my stance and opinion so in the future when I decide to run for office.  I want to be very clear on this subject because it is very near and dear to me.  Thank you for your time reading.



The U.S. Federal Reserve’s emergency lending programs, intended to thaw commercial paper and money markets, are also helping banks limit losses from some of their $4 trillion in off-the-books guarantees and loan commitments.

A Fed program to buy as much as $1.8 trillion of short-term debt from U.S. companies means they don’t have to tap backup credit lines provided by banks, which would have forced JPMorgan Chase & Co.,Citigroup Inc. and other financial institutions to record the loans on their balance sheets and raise more capital. Another Fed program, with the acronym ABCPMMMFLF, aims to shore up the $1 trillion market for asset-backed commercial paper issued by off-the-books financing vehicles guaranteed by banks.

“The Fed’s commercial paper programs avoided a mid-air collision,” saidJosh Rosner, managing director of New York- based research firm Graham Fisher & Co. Having to deliver on the loan commitments “would have caused a liquidity crunch” for the banks that made them, he said.

The three-week-old program for commercial paper, or debt maturing in nine months or less, had $257 billion of loans outstanding as of Nov. 13, the Fed reported.

Source: Bloomberg


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