Fed to sell off assets from an emergency loan program

The Federal Reserve says it will start selling off the holdings of one of its emergency lending programs created last year to stabilize financial markets at the height of the pandemic crisis

WASHINGTON — The Federal Reserve said Wednesday that it will start selling off the holdings of one of its emergency lending programs created last year to stabilize financial markets at the height of the pandemic crisis.

The Fed will begin winding down the portfolio of the Secondary Corporate Credit Facility, which at the close of last year held $14.2 billion in assets.

The asset sales from the facility will be “gradual and orderly and will aim to minimize the potential for any adverse impact on market functioning,” the Fed said.

The corporate facility was one of a number of emergency lending vehicle closed on Dec. 31 in a decision by then-Treasury Secretary Steven Mnuchin.

The Fed announcement came as speculation has increased that the central bank could be preparing to make a decision on when it might start trimming its $120 billion in monthly purchases of Treasury bonds and mortgage-backed securities. Those purchases are being made to give the economy a boost by putting downward pressure on long-term interest rates.

The Fed said that its announcement on selling off the small amount of holdings in the corporate lending facility was not related to its handling of monetary policy. The sales from the corporate loan fund are expected to be completed by the end of the year.

The emergency lending programs came in response to credit markets nearly freezing in March 2020 as the pandemic triggered lockdowns in the United States and resulted in the loss of 22 million jobs last spring.

In his December decision, Mnuchin said in a letter to Fed Chairman Jerome Powell that the programs he was allowing to end had “clearly achieved their objectives.”

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