N.Y. Fed to finance money market fund buys

The New York Federal Reserve Bank on Nov. 24 will begin funding five special-purpose vehicles to finance the purchase of certain assets from money market mutual funds through its Money Market Investor Funding Facility program. The goal is to improve liquidity in short-term funding markets, the bank said in a statement. The program, authorized Oct. 21, provides loans for the purchase of U.S.-denominated certificates of deposit, bank notes and commercial paper issued by highly rated financial institutions. The investments must have remaining maturities of no fewer than seven days and no more than 90 days. The loans will be offered through the financing vehicles managed by JPMorgan Securities, a division of JPMorgan Chase & Co. of New York. The program authorizes a maximum purchase amount of $600 billion in eligible assets of 50 institutions. As the New York Federal Reserve will provide 90% of the financing, the bank’s lending may total $540 billion. The Federal Reserve will charge the primary credit discount rate.