Response to COVID-19: U.S. Government Financial Sector Initiatives

This week the U.S. federal government announced a raft of significant new programs and policies aimed at stabilizing the markets, addressing immediate liquidity concerns, and facilitating lending and other assistance to businesses and individuals affected by shutdowns due to COVID-19.

Many of the initiatives announced were modeled on similar programs employed in the 2008 financial crisis. 

The most significant initiatives announced this week included:

• A lending facility to support money market mutual funds;
• A repo facility to allow access to short-term liquidity for primary dealers; and
• A commercial paper facility to increase liquidity for businesses that issue commercial paper.

Potential additional measures that are under active consideration and could be enacted in coming days include:

• Expanded Federal Reserve lending facilities to other sectors, perhaps in a form similar to the financial crisis-era Term Asset-Backed Securities Loan Facility;
• Regulatory relief for financial institutions aimed at supporting increased lending;
• A Treasury guarantee of money market mutual funds; and
• Economic stimulus legislation that would support lending to sectors hit hardest.

Click here, for a concise summary of the key programs and initiatives to date, as well as an update on programs and legislation that are under active consideration.

Our March 17, 2020 alert memorandum highlighting key measures used by the government during the 2008 financial crisis is available here.