The Federal Reserve announced a plan to buy large amounts of short-term "commercial paper" debts because the market for this type of financing has been hampered due to the credit crisis. Associated Press: Fed To Buy Massive Amounts of Short-Term Debt (October 7, 2008)
The new program was announced by the Federal Reserve on October 7, 2008.CNNMoney: Business Loan Bailout (October 7, 2008)
Under the program, the Fed will purchase three month-unsecured and asset-backed commercial paper directly from eligible buyers. The program will be financed by tax-payers.CNNMoney: Business Loan Bailout (October 7, 2008)
Commercial Papers
Commercial paper is a short-term loan that companies use to finance the purchases of supplies, paying employees or other daily operations. The plan is an effort to ensure that small companies are not crippled by the economic crisis. Associated Press: Fed To Buy Massive Amounts of Short-Term Debt (October 7, 2008)
References
Fast Facts
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Fact:
Business loan bailout announced by the Federal Reserve on Tuesday, October 7, 2008
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Fact:
The Fed will create a new commercial-paper funding facility to help struggling short-term funding to businessesWSJ.com: Move Damps Treasury (October 7, 2008)
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Fact:
Will purchase three-month unsecured and asset-backed commercial paper from eligible issuers
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Fact:
Intended to prevent financial market disruptionsWSJ.com: Move Damps Treasury (October 7, 2008)
