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Posts categorized "Finance"


US Treasury Extends $700 Million Loan to YRC Worldwide Inc. under CARES Act Provision

July 1, 2020

On July 1, the US Treasury announced it would make a $700 million loan to YRC Worldwide Inc., a heavyweight equipment transportation company that was deemed by the US Secretary of Defense to be critical to national security. Treasury will receive a 29.6% equity stake in the company in connection with the loan.

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U.S. Banks to Maintain Dividends for Now, Following Pre-COVID Stress Test

July 1, 2020

Most of the largest U.S. banks announced Monday that they will continue to pay dividends in the third quarter at the same level as the second quarter. This news comes just two business days after the Federal Reserve announced the results of its annual stress test and an unprecedented “sensitivity analysis” estimating the potential impact of different economic recoveries from the COVID recession on bank performance. Based on these scenarios, the Fed announced a number of temporary restrictions on dividends and other corporate actions. 

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Reserve liquidity facilities shift from advanced economies to emerging markets

July 1, 2020

On June 19, the European Central Bank (ECB) joined the central banks of England, Japan, and Switzerland in scaling back the frequency of their US dollar liquidity swaps with the Federal Reserve (Fed). Central bank liquidity swap lines facilitate access to foreign capital during periods of international financial stress. While these bilateral swap operations with the Fed have slowed, the ECB announced on June 25 the establishment of the Eurosystem repo facility for central banks (EUREP). The new facility will complement the ECB’s current bilateral swap lines by allowing for less stable currencies to participate in repurchase agreements. This post summarizes the recent activity on Fed swap lines and documents the shift in currency facilities from those aimed at the sturdiest reserve institutions to those aimed at central banks with smaller stocks of dollars.

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