The U.S. Treasury Department today announced a special new financing program to support the U.S. Federal Reserve’s recent efforts to maintain market liquidity and support failing financial institutions.

At the request of the Fed, the Treasury has announced a temporary Supplementary Financing Program, which will consist of a series of Treasury bills that will provide cash for use in the Fed initiatives. Auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules.

During the past few quarters the Fed has announced a series of lending and liquidity initiatives intended to ameliorate heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. The Treasury notes that to manage the balance sheet impact of these efforts, the Fed has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio.

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