Fed loan programs may now start to increase; Mnuching here saying he transferred balances to the Fed for financial guarantees for the corporate bond ETF lending program:
Mnuchin says he sent the Fed money from a $454 billion coronavirus rescue package to begin lending to U.S. corporations https://t.co/aN8DYrAKPG— Bloomberg (@business) May 11, 2020
“I can tell you I’m authorizing a wire this morning going into the secondary corporate facility. It’s on it’s way out,” Mnuchin said in a CNBC interview on Monday.
The facility, which has not yet launched, was backstopped with $25 billion from Treasury to leverage into $250 billion in loans.
In the interview, Mnuchin said the rest of the Fed’s loan programs created in response to legislation will launch in “several weeks.”
Total Fed loans have only reached about $100B so far.
This may be the line item to watch in the DTS as the ESF has previously provided the $10B here so Fed lending remains about the 10x that guarantee and is at $113B...
So with Treasury providing an additional amount (not sure what the amount was, may not be the full $25B allocated to this ETF facility) yesterday this will allow the Fed to lend an additional 10x whatever Treasury transferred to Fed for guarantee...
This is at least going to create conditions to test to see if there is any current use for additional temporary Fed lending for liquidity...
Even if there is some use for the Fed lending any Reserve Assets created are still going to accrue to Depositories... iow even though the Depositories wont be doing the loans, the Fed loans are still going to have the same effect on Depository total Assets and total Liabilities as if they did...
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