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Money Market Investor Funding Facility:
Program Terms and Conditions
Effective February 3, 2009

Securities Lending
Term Securities
Lending Facility
Commercial Paper
Funding Facility
Money Market Investor
Funding Facility
MMIFF Terms and
Term Asset-Backed
Securities Loan Facility
Primary Dealer Credit
Primary Dealers

The Money Market Investor Funding Facility (MMIFF) is intended to
help restore liquidity to the money markets. The MMIFF will be a
credit facility provided by the Federal Reserve to a series of special
purpose vehicles established by the private sector (SPVs) in
accordance with the terms described below. Each SPV will purchase
eligible money market instruments from eligible investors using
financing from the MMIFF and from the issuance of asset-backed
commercial paper (ABCP). The MMIFF is authorized under section
13(3) of the Federal Reserve Act.
Eligible Assets of a SPV
A SPV will purchase from eligible investors at amortized cost U.S.
dollar-denominated certificates of deposit, bank notes and
commercial paper with a remaining maturity of at least seven days
and no more than 90 days. Assets must have a yield at least 60 basis
points above the primary credit rate at the time of the purchase by
the SPV. Each SPV will only purchase debt instruments issued by ten
financial institutions designated in its operational documents. Each of
these financial institutions will have a short-term debt rating of at
least A-1/P-1/F1 from two or more major nationally recognized
statistical rating organizations (NRSROs), S&P, Moody’s and Fitch,
SPV Concentration Limit
At the time of a SPV’s purchase of a debt instrument issued by a
financial institution, the debt instruments of that financial institution
may not constitute more than 15 percent of the assets of the SPV,
except during an initial ramp-up period when the concentration limit
may be 20 percent.
Eligible Investors
In addition to U.S. 2a-7 money market mutual funds, eligible
investors will include funds that are managed or owned by a U.S.
bank, insurance company, pension fund, trust company, SECregistered investment advisor or a U.S. state or local government
entity and are required to (i) maintain a dollar-weighted average
portfolio maturity of 90 days or less; (ii) hold the fund's assets until
maturity under usual circumstances; and (iii) hold only assets that, at
time of purchase, are rated by an NRSRO in one of the top three
long-term investment-grade rating categories (e.g., A and above) or
the top two short-term investment-grade rating categories (e.g., A-2
and above), or that are the credit equivalent thereof. Eligible
investors will also include any U.S. dollar-denominated cash collateral
reinvestment fund, account, or portfolio associated with securities
lending transactions that is managed or owned by a U.S. bank,
insurance company, pension fund, trust company, or SEC-registered
investment advisor. Eligible investors will be subject to approval by
the New York Fed prior to participation, and may be subject to debt
and/or deposit rating criteria.

Liabilities of a SPV
Each SPV will finance its purchase of an eligible asset by selling ABCP
and by borrowing under the MMIFF. The SPV will issue to the seller of
the eligible asset ABCP equal to 10 percent of the asset’s purchase
price. The ABCP will have a maturity equal to the maturity of the
asset and will be rated at least A-1/P-1/F1 by two or more major
NRSROs (S&P, Moody’s and Fitch, respectively). The Federal Reserve
Bank of New York will commit to lend to each SPV 90 percent of the
purchase price of each eligible asset. The New York Fed loans will be
on an overnight basis and at the primary credit rate. The loans will be
senior to the ABCP, with recourse to the SPV, and secured by all the
assets of the SPV.
Downgrade or Default of an Eligible Asset
If the debt instruments of a financial institution held by a SPV are no
longer eligible assets due to a debt rating downgrade, the SPV must
cease all asset purchases until all of the SPV’s assets issued by that
financial institution have matured.
Upon a payment default of any asset held by a SPV, the SPV must
cease all asset purchases and repayments on outstanding ABCP.
Proceeds from maturation of the SPV’s assets will be used to repay
the New York Fed and, upon maturation of all assets in the SPV, any
remaining available cash will then be used to repay principal and
interest on the ABCP. Any excess spread will be allocated as
described below.
Termination and Wind-down Process
A SPV will cease purchasing assets and will enter the wind-down
process described below on October 30, 2009, unless the Board
extends the MMIFF.
During the wind-down process, proceeds from the maturation of the
assets of a SPV on a given day will be used first to repay principal
and interest on the New York Fed loans and then to repay principal
and interest on the ABCP that matures on that day. A small fixed
amount of any excess spread remaining in the SPV after completion
of the wind-down process will be allocated proportionally among
investors that sold assets to the SPVs; the New York Fed will receive
any remaining excess spread.
Program Terms and Conditions: January 7, 2009 ››

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