Fed broadens access to three emergency lending facilities

The Federal Reserve Board on Thursday broadened access to three of its lending facilities designed to provide a credit backstop to firms hurt in the coronavirus crisis, allowing broker dealers that meet certain minimums to participate.

To get the programs -- the Term Asset-Backed Securities Loan Facility (TALF), the Commercial Paper Funding Facility (CPFF) and Secondary Market Corporate Credit Facility (SMCCF) -- off the ground quickly, participation was initially limited to financial institutions that regularly deal with the central bank, known as primary dealers.

With Thursday's announcement, broker-dealers with net regulatory capital of at least $1 million, a minimum shareholders'equity of $1 million, and a track record in the targeted market may submit an expression of interest to be a vendor or counterparty for the Fed's facilities.

Allowing broader distribution could help reach firms in corners of markets otherwise unable to access the credit they need, just as a surge of infections is making the economic landscape more difficult for firms in many parts of the country. Use of the Fed's lending facilities has been tepid so far, though Fed officials credit their availability with having steadied financial markets initially rocked by the crisis.

The CPFF, for instance had extended just over $4.25 billion at its peak about a month ago, but the latest outstanding loan balance is down to just $2.1 billion.