A Network of the National Association of State Treasurers
Policy Update:

Mnuchin Signals End of Municipal Liquidity Facility

Federal Reserve Bank building in Washington, D.C.

Today, Treasury Secretary Mnuchin sent a letter to Federal Reserve Chairman Powell requesting that unused Exchange Stabilization Fund (ESF) money from the CARES Act be returned to the U.S. Treasury by the end of the year. Title IV of the CARES Act appropriated $454 billion to the ESF to be used by Treasury to support emergency lending. The money was used to capitalize a number of emergency Federal Reserve programs, known as 13(3) facilities, including $35 billion for the Municipal Liquidity Facility (MLF). Without the capital, the MLF and other ESF-backed facilities will need to cease new transactions. NAST and other issuer-groups have advocated that the MLF and other facilities supporting liquidity in the municipal markets should be extended until at least the end of the COVID-19 pandemic.

Issuers interested in accessing the MLF should note that updated FAQs for the facility have noted that issuers must submit a Notice of Interest (NOI) no later than 30 calendar days before the Facility’s stated termination date, which remains December 31, 2020.

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