Investment Bank Welfare? The Implicit Bank Subsidies in the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) Created by the Federal Reserve Board

Dean Baker and Matthew Sherman

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: This study produces calculations of the amount of money being dispersed by the government to the 16 primary dealers and investment banks who qualify to borrow through the special lending facilities created in the last year by the Federal Reserve Board under the assumption that each borrows in proportion to its assets. The study then uses Fed data on the interest rate charged for loans from these lending facilities to calculate the potential subsidy in this lending. The report calls attention to the fact that few details have been given about the specific loan amounts, recipients, or collateral posted.

Keywords: Federal Reserve; special lending facilities (search for similar items in EconPapers)
JEL-codes: E E5 E58 G G2 G24 G28 H H2 H25 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2009-03
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2009-09

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