5 For example, in March 2008 the Federal Reserve created the Primary Dealer Credit Facility, which lent to primary dealers on an overnight, overcollateralized basis. Subsequently, the Federal Reserve created facilities that proved effective in helping to stabilize other key institutions and markets, including money market mutual funds, the commercial paper market, and the assetbacked securities market.
As was intended, use of many of the Federal Reserve’s lending facilities has declined sharply as financial conditions have improved. 6 Some facilities were closed over the course of 2009, and most other facilities expired at the beginning of this month.