(Reuters) - The U.S. government is plotting a gradual exit from financial rescue and support programs worth trillions of dollars, one year after taking unprecedented action to prevent a devastating market collapse.
Following is a rundown of the government’s bailout and support efforts, including approaching expiration dates for some programs.
FDIC BANK DEBT GUARANTEES
* The Federal Deposit Insurance Corp last year pledged to guarantee up to $1.4 trillion in debt issued by banks. The program will end for newly issued debt as scheduled on October 31, but the agency is considering whether to provide emergency guarantees for six more months on a case-by-case basis. As of September 4, there was $304 billion of FDIC-guaranteed bank debt outstanding.
FDIC TRANSACTION ACCOUNT GUARANTEES
* The FDIC last month extended its guarantee program for some $700 billion in transaction deposit accounts until June 30, 2010. The program, launched alongside the debt guarantee program in October 2008, backs accounts typically used by businesses to meet payroll and pay vendors.
FED EFFORTS TO HOLD DOWN MORTGAGE RATES
* The Fed is in the latter stages of a program to buy up to $1.25 trillion in mortgage-backed securities, $200 billion in mortgage agency debt and $300 billion of longer-maturity U.S. Treasury debt in a bid to hold down mortgage rates. So far, it has bought $836 billion in MBS, $125 billion in agency debt and $281 billion in longer-term Treasuries. It will phase out the Treasury purchases by October 31. The MBS and agency debt purchases are scheduled to halt by the end of 2009, although the Fed has said these could be “tapered” off more gradually.
FED/TREASURY SUPPORT FOR CONSUMER CREDIT MARKETS
The Fed, with Treasury capital, is still ramping up a securities lending facility originally envisioned at up to $1 trillion to boost credit for consumers and small businesses. The facility, which also aims to plug a financing hole for commercial real estate, has made nearly $47 billion in loans since it was launched in March. The Fed last month extended this program, the Term Asset-Backed Securities Loan Facility, for newly issued commercial MBS through June 30, 2010, while the program for securities backed by consumer and small business loans was extended through March 31, 2010.
TREASURY MONEY MARKET FUND GUARANTEE
* The Treasury will allow a guarantee program for money market mutual funds to expire on September 18. The Treasury had pledged up to $50 billion to prevent mass withdrawals from money market funds a year ago. It has not had any payouts, but took in $1.2 billion in fees from funds.
FED MONEY MARKET INVESTOR FUNDING FACILITY
* The Fed pledged to buy up to $600 billion of commercial paper and certificates of deposit under a Money Market Investor Funding Facility. As of September 10, the Fed held nothing in this facility. It expires February 1, 2010.
FED DISCOUNT WINDOW LENDING COMMITMENTS
* Fed loans to banks and broker dealers through its discount window, a regular emergency lending program with no set upper limit, averaged $107.2 billion in the week ended September 9, less than a quarter of peak levels last October.
FED COMMERCIAL PAPER FUNDING FACILITY
* Usage of the commercial paper funding facility -- once envisioned as providing potentially $1.8 trillion in liquidity to businesses -- has waned as commercial paper markets have strengthened. The week of September 10, it averaged $47.12 billion outstanding. The program has been extended until February 1, 2010.
FED TERM AUCTION FACILITY LOANS
* The Fed has steadily reduced the amount of loans offered to banks offered through its Term Auction Facility as demand has waned. It is auctioning $75 billion in each of two September auctions, but the first of these drew bids for only $31.9 billion. The program has no set expiration date.
FED TERM SECURITIES LENDING FACILITY
* The Fed has slashed auction amounts for loans to primary dealers against investment grade debt securities. The September auction of $75 billion drew no bids. The program is due to expire on February 1, 2010.
FED CURRENCY SWAP LINES
* The Fed has extended unlimited temporary currency swap lines with the European Central Bank and central banks in Britain, Japan and Switzerland to provide U.S. dollars in those markets. It also has swap lines with 10 other central banks. The Fed averaged $61.6 billion in foreign currency under these agreements in the week ended September 9. The swap programs expire February 1.
OBAMA FISCAL STIMULUS PROGRAM
* Obama signed into law on February 17 a $787 billion fiscal stimulus plan, including $287 billion in temporary tax breaks and $500 billion in spending on infrastructure, research facilities, energy projects and aid to states, the unemployed and the poor. The funds will not be fully spent until next year.
TREASURY TROUBLED ASSET RELIEF PROGRAM
* Congress in October created a $700 billion fund for the U.S. Treasury to shore up the financial system. Of this fund, $204 billion has been used to purchase preferred stocks in banks ($70.5 billion has been repaid); $83.5 billion in aid has been extended to automakers, their suppliers and their finance companies ($2.1 billion has been repaid) and $110 billion was tapped to support American International Group, Citigroup and Bank of America.
AIG LOAN SUPPORT
* In addition to $69.84 billion in capital investments under TARP, AIG has been granted a $60 billion government credit line and up to $52 billion in loans for assets shifted to the Fed’s balance sheet.
TREASURY-LED PUBLIC-PRIVATE INVESTMENT FUND
* The Treasury expects by next month to launch purchases of toxic mortgage securities by nine public-private investment funds. The program has been scaled back sharply from its initial plan of up to $1 trillion to about $40 billion, with $30 billion of that from taxpayer funds.
FANNIE MAE/FREDDIE MAC SUPPORT
* Up to $400 billion to backstop Fannie Mae and Freddie Mac. The Treasury will inject up to $200 billion into each institution as needed to maintain a positive net worth. Freddie’s capital draw is expected to grow to as much as $49 billion in coming weeks, while Fannie has said it will draw $15.2 billion.
* Expansion of loan portfolios to allow Fannie and Freddie to increase MBS purchases by up to $244 billion since the government took control of them in September 2008.
* The Treasury has purchased $160.2 billion in Fannie Mae-Freddie Mac mortgage-backed securities so far this fiscal year.
* $300 billion for the Federal Housing Administration to refinance failing mortgages into new, reduced-principal loans with a federal guarantee, passed in July 2008.
* $25 billion modification costs for loans held directly by Fannie Mae and Freddie Mac as part of a foreclosure prevention plan that also uses $50 billion in TARP funds.
* $6 billion in grants and “stabilization funds” to local communities to help them buy and repair homes abandoned due to mortgage foreclosures.
* $1.5 billion in relocation aid for renters displaced by foreclosures.
BEAR STEARNS SALE SUPPORT
* $29 billion in Fed financing for JPMorgan Chase’s government-brokered buyout of Bear Stearns & Co in March. The Fed agreed to take $30 billion in questionable Bear assets as collateral, making JPMorgan liable for the first $1 billion in losses, while agreeing to shoulder any further losses.
Compiled by David Lawder
Our Standards: The Thomson Reuters Trust Principles.