Market participants want more municipalities to be allowed to participate in the Federal Reserve’s short-term municipal lending program.
Groups communicated that in letters sent to the Fed this week. The Fed solicited feedback through April 16 on its Municipal Liquidity Facility program, and sources say the Fed is putting together a frequently asked questions document about the program.
In letters sent to the Fed on Wednesday, the Bond Dealers of America and Government Finance Officers Association made a few recommendations to the Fed — one being to increase the scope of the program. Through the MLF, the Fed will purchase up to $500 billion of short-term notes, with Treasury providing $35 billion of credit protection to the Fed using funds appropriated in the $2 trillion Coronavirus Aid, Relief and Economic Security Act.
“Unfortunately, the cut-off for direct issuer participation is much too high,” wrote Mike Nicholas, BDA CEO. “By our calculation, only 24 local governments nationwide would qualify for direct access to the Fed program. This would leave tens of thousands of local governments and authorities unable to access the facility directly.”
(Read more: The Bond Buyer)
