Fed Announces Rules on AMLF
On Friday, the Board of Governors of the Federal Reserve System announced "Final Rules pertaining to Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF)." The statement says, "The Federal Reserve Board on Friday announced two final rules pertaining to the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility (AMLF), which extends loans to banking organizations to finance their purchases of high-quality asset-backed commercial paper from money market mutual funds. The first rule provides a temporary limited exception from the Board's leverage and risk-based capital rules for bank holding companies and state member banks. The second rule provides a temporary limited exception from sections 23A and 23B of the Federal Reserve Act, which establish certain restrictions on and requirements for transactions between a bank and its affiliates." The rules were "originally approved as interim final rules on September 19, 2008, [and] will facilitate participation by depository institutions and bank holding companies as intermediaries between the AMLF and money market mutual funds." The "Board has also adopted a third final rule ... allowing all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market."
