[1] On March 12, the Federal Reserve created the Bank Term Funding Program (BTFP), an emergency lending program providing loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions that pledge U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral.
It was also created to reduce the risks associated with unrealized losses in the U.S. banking system, which totaled over $600 billion at the time of the program's launch.
The Federal Reserve also raised the interest rate on new loans from the Bank Term Funding Program (BTFP).
[17][5] Reuters wrote that the program closed "amid evidence it helped turn the tide of trouble that risked derailing the economy," noting "no bank of meaningful size" had failed in the United States since ten months, and the Fed had not changed policy.
It noted that new loans had "all but dried up" after the Fed shut down the arbitrage advantages in late January, with the program's credit outstanding holding after that point at around $160 bln.
[18] BTFP lets banks, savings associations, credit unions, and other types of depository institutions[19][20] use "Treasury and agency mortgage-backed securities as collateral for loans up to one year.