Treasury and Federal Reserve Announce Start of PMCCF Purchases and Timeline for MSLP and MLF Implementation

On Tuesday, May 12, the Secretary of the Treasury Steve Mnuchin issued a statement announcing the start of purchases through the Secondary Market Corporate Credit Facility by the Federal Reserve Bank of New York. In his statement^[1], Mnuchin says, “[s]ince announcing the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) on March 23, we have seen a dramatic improvement in liquidity and credit market function. Today, the Federal Reserve Bank of New York will begin purchasing shares of eligible U.S.-listed exchange-traded funds in the secondary market through the SMCCF, and eligible corporate bonds shortly thereafter. Once operational, the PMCCF will provide loan and bond financing to U.S. companies with investment grade debt ratings as of March 22, 2020.”

Also on Tuesday, Federal Reserve Vice Chairman for Supervision Randy Quarles reported^[2] to the Senate Committee on Banking, Housing, and Urban Affairs. Among his remarks, Quarles spoke about timing for implementation of the Main Street Lending Program (“MSLP”) and the Municipal Lending Facility (“MLF”). With regards to the MSLP and the MLF Facility Quarles stated: “I don’t think we’re looking at months, but it would be premature for me to say exactly how many weeks it will be before they will be operational. But, it is the highest priority of what we are working on.”

Be sure to monitor the Federal Reserve’s website and visit BDO’s Crisis Response Resource Center for the latest program updates and details. 

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[1] https://home.treasury.gov/news/press-releases/sm1007
[2] https://www.banking.senate.gov/hearings/05/12/2020/oversight-of-financial-regulators