Yale School of Management

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How Available Is the ESF for New Fed Facilities?

January 12, 2021
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, 2020, it allocated $500 billion to the Exchange Stabilization Fund (ESF), $454 billion of which was for the Treasury Secretary to support Federal Reserve lending facilities. The Secretary committed $195 billion of these funds to provide credit support to some of the programs the Fed set up under its Section 13(3) emergency lending authority. The Consolidated Appropriations Act, 2021 signed into law on December 27 definitively closed these facilities and rescinded funds “not needed to meet the commitments, as of January 9, 2021, of the programs and facilities established.” Continue reading “How Available Is the ESF for New Fed Facilities?”

Short-Selling Restrictions During COVID-19

January 12, 2021
Financial regulators restricted short selling in March 2020 after global stock markets declined in response to the COVID-19 pandemic (Otani 2020). As market participants grappled with uncertainty about quarantine measures, travel restrictions, and other impediments to commercial activity, authorities identified short-selling as a potential threat to market stability. By limiting the trading strategy, authorities attempted to keep financial markets fair, orderly, and efficient. Though scholars argue that short-selling restrictions can exacerbate market turbulence, policymakers banned short-selling for several months in a row. Continue reading “Short-Selling Restrictions During COVID-19”