Term Auction Facility
Data File:
Date:
December 12, 2007
Policy Area:
Financial Sector Policy
Economic Target:
Financial Institutions
Action Type:
Loans
Maximum Amount:
$300.00 billion The Term Auction Facility (TAF) allows banks and other financial institutions to pledge collateral in exchange for a loan from the Federal Reserve in order to alleviate liquidity pressures in short-term funding markets. The interest rate on the loan is determined by auction; such auctions are conducted biweekly for loans with a maturity of either 28 or 84 days.
On 5/2/2008 a Fed release increaed the maximum size of all auctions from $50 billion to $75 billion. A maximum of $150 billion could then be lent.
On 9/29/2008 a Fed release increased the maximum credit available in the 24-day and 84-day auction cycles to $300 billion.
On 10/7/2008 a Fed release established a third and fourth auction of three-month funding and increased the maximum size of each auction to $150 billion. A maximum of $600 billion could then be lent out.
On 6/25/2009 a Fed release reduced the maximum size of each auction from $150 billion to $125 billion each. A maximum of $500 billion could then be lent.
On 7/24/2009 a Fed release lowered the maximum size of each auction to $100 billion, although accepted bids for most recent auctions have been considerably smaller. A maximum of $400 billion could then be lent.
On 8/28/2009 a Fed release lowered the maximum size of each auction from $100 to $75 billion. A maximum of $300 can now be lent through the facility.
Notes:
Amount spent indicates outstanding Term Auction Loans as of 5/10/2010 (http://www.federalreserve.gov/releases/h41/Current/). Activities of the Federal Reserve are not directly recorded in the federal budget. However, each year the Federal Reserve remits a portion of its earnings to the general treasury. This remittance is generally in the range of $20-$30 billion per year, but the CBO estimates that the Fed's earnings will be lower by approximately $90 billion over the next ten years.