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Municipal Liquidity Facility

On December 31, 2020, the MLF’s authorization to purchase eligible notes expired. On March 4, 2024, the special purpose vehicle established to purchase eligible notes was terminated. The materials and information on the webpages associated with this facility will remain available.

On April 9, 2020, the Federal Reserve announced the establishment of the Municipal Liquidity Facility (MLF), to help state and local governments better manage the cash flow pressures they faced due to the increase in state and local government expenditures related to the COVID-19 pandemic and the delay and decrease in certain tax and other revenues.

MLF, which was authorized under Section 13(3) of the Federal Reserve Act, supported lending to U.S. states (including the District of Columbia), U.S. counties with a population of more than 500,000 residents, U.S. cities with a population of more than 250,000 residents, Multi-State Entities, and certain designated revenue bond issuers.

To establish the facility, the Federal Reserve Bank of New York financed a special purpose vehicle called Municipal Liquidity Facility LLC, which purchased eligible notes directly from eligible issuers on a recourse basis. The New York Fed was secured by all the assets of Municipal Liquidity Facility LLC. The U.S. Department of the Treasury, using funds appropriated to the Exchange Stabilization Fund under section 4027 of the Coronavirus Aid, Relief, and Economic Security Act, made an initial equity investment of $17.5 billion in Municipal Liquidity Facility LLC.

On December 31, 2020, the MLF’s authorization to purchase eligible notes expired. Notes held by the MLF were repaid in full on or before December 15, 2023.

Municipal Liquidity Facility LLC returned the Treasury’s entire equity contribution (together with earnings on investment of those funds) in installments beginning on January 5, 2021 and culminating on December 22, 2023.

On January 19 and February 23, 2024, the Municipal Liquidity Facility LLC made its final distributions of assets to the Treasury and the New York Fed. In accordance with the Municipal Liquidity Facility LLC limited liability agreement, 90% of the distributions were sent to the Treasury and 10% to the New York Fed.

On March 4, 2024, Municipal Liquidity Facility LLC was terminated.

Vendors

In April 2020, the New York Fed selected PFM Financial Advisors LLC (PFM) through an RFP process to provide short-term consulting services to help the New York Fed design and set up the MLF. PFM was selected based on, among other things, its knowledge of and experience in the municipal securities market, as well as its assurances that it could effectively advise the New York Fed within the short timeframe outlined in the RFP. The New York Fed also selected two law firms, Arent Fox LLP and Orrick, Herrington & Sutcliffe LLP, after a search process, to advise it with respect to design, setup and execution of the facility.

In May 2020, Municipal Liquidity Facility LLC, designated BLX Group LLC (BLX) as its administrative agent. In serving as the administrative agent, BLX received notices of interest and applications from eligible issuers interested in selling notes to the SPV. BLX reviewed those notices and applications based on criteria established by the New York Fed and was available to respond to questions from eligible issuers. Decisions to purchase eligible notes were in the sole discretion of Municipal Liquidity Facility LLC.

In May 2020, the New York Fed retained The Bank of New York Mellon (BNYM) through an RFP process to serve as the custodian and administrator for the MLF. BNYM also performed certain ancillary, settlement-related services for the MLF that were not covered by the RFP. A BNYM affiliate, Mellon Investments Corporation, was chosen through the same RFP process to provide investment management services for the MLF’s liquidity account. BNYM and its affiliate were selected chiefly for their operational capabilities and favorable pricing.

Another BNYM affiliate, BNY Mellon Capital Markets, LLC (BNYMCM), was retained on a short-term basis to provide settlement and competitive bidding-related services for the MLF. BNYMCM was chosen for these roles principally to speed the MLF to market based on BNYMCM’s experience in the municipal securities market, its operational capabilities, and synergies with the other BNYM affiliates.

In June 2020, the New York Fed selected Eaton Vance Management (EVM) through an RFP process to serve as the credit risk service provider for the MLF. EVM was responsible for providing services to help monitor the credit risk profiles of eligible issuers that accessed the MLF. EVM provided the MLF with credit opinions, regular portfolio risk and analytics reporting, and updates on current conditions and trends in the municipal securities market.

Quarterly reports on the costs associated with the vendors supporting this facility are available in Vendor Information.

Facility Agreements