The Federal Reserve allocated Term Auction Facility funds through an auction, in which participants placed bids specifying an amount of money to be borrowed, up to a pre-specified limit, and an interest rate they would be willing to pay.
For some banks, the money served as a lifeline, or life support, in providing cash liquidity when the capital markets froze in 2008.
For other banks, the money was a low-cost source of cash that enabled them to avoid borrowing from other banks or raising capital through selling new stock.
The borrowing was available from December 2007 through April 2010. It ended when the need for the program had dried up.
For an in-depth look at the background of this program and others like it, click here.
For details on other government programs, click here.
Deal of the Day
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