Talk:Commercial Paper Funding Facility

Fixing the Article

I think that this article needs a bit of reworking. I plan on trying to tackle it in a few weeks. This needs some more references and it has some opinionated areas. Before I do a complete rework I would like to hear how others want this laid out. 69.207.154.24 (talk) 00:22, 2 December 2008 (UTC)

Ideas

Well, better late than never (responding to the 2008 comment above.) I'd start by including the shinny new as of today Commercial Paper Funding Facility (CPFF). https://home.treasury.gov/news/press-releases/sm944 Key areas to address might be:

• does the FED (the bankers trade org) formally request Treasury help to prop up markets? What "sets it in motion"?
• does the FED, the FRBNY specifically, borrow bail out money from the Treasury and invest it like a hedge fund manager and make all the buy/hold/sell decisions against the "investment policy statement" set up by Treasury?
• does the facility, now run by the bank trade association, actually lend taxpayer money to primary dealers? (A trade association lending to its members?)
• on who's balance sheet are the assets (the IOUs) listed: FED or Treasury?
• does a Facility of this nature inject currency into the system at a time when asset prices are declining (monetary expansion and inflation...)
• its restricted to commercial paper rated at least A-1/P-1/F1 by a major nationally recognized statistical rating organization (NRSRO) and, if rated by multiple major NRSROs, must have been rated at least A-1/P-1/F1 by two or more major NRSROs. Where is the WikiPedia in-depth guide to A-1/P-1/F1 ratings and what those mean?
• how current must the rating be? Boeing for example was doing very well before the virus. Can it use that somewhat stale rating?
• how do they handle "on credit watch" by any of the nationally recognized statistical rating organizations?
• This "facility" is really supposed to be "only a last resort" (no other commercial lenders)...so how does the facility manager "price the risk"?
• "FRBNY would extend loans at the primary credit rate" - what does that mean when there are NO OTHER lenders other than this facility? Does it mean taxpayers just paid more than anyone else would for the assets?
• Treasury lends to the FED, who lend to the primary dealers, who finally lend the money to corporations. Why doesn't the Treasury just lend direct, or offer guarantees direct to corporations. Why enrich the banking industry when its corporations that need the assistance because the primary dealers are not willing to "hold the paper"?
• Can this facility absorb 5-10-20% of investors bailing out of money markets?
• How did the last facility work, how much was actually drawn, who borrowed? Who were shut out of the regular markets? How did the repay go?
• How does a facility like this wrap up. Its stated to be 6 months minimum with chance of extra renewals. How was it wrapped up "last time"

I think I understand at least the basics of how this works, and I know its essential and well thought through. However, I'm sure the general public need better answers to the above. Rick (talk) 00:20, 18 March 2020 (UTC)