Risk Sharing in the Federal Reserve's Emergency Lending Facilities During the COVID-19 Pandemic

In this report, the Congressional Budget Office describes the role the Federal Reserve plays in stabilizing financial markets during crises, focusing particularly on the programs—referred to as facilities— created during the COVID-19 pandemic to provide liquidity and address stress in financial markets. The Federal Reserve's announcement of those facilities, most of which were backed by equity contributions from the Treasury, helped restore confidence in financial markets by assuring participants that the central bank would take action to support the flow of credit and liquidity. The report discusses the facilities that were funded with equity from the Treasury; for each facility, it describes the budgetary treatment; the risk-sharing arrangement between the Federal Reserve, the Treasury, and banks; the cost to the federal government; and the effects on the economy.

The programs were funded in two ways, and the method of funding determined their budgetary treatment:

• The Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized the Treasury to provide up to $454 billion to fund emergency lending facilities established by the Federal Reserve. That law required that the funding be accounted for on an accrual basis—that is, estimated net lifetime costs (known as subsidy costs) would be recorded when they were incurred rather than when cash transactions took place—using the procedures specified in the Federal Credit Reform Act of 1990. In April 2020, CBO estimated that the facilities would have no net effect on deficits over the next 10 years: The income and costs would roughly offset each other, on average. In all, the Treasury invested $102.5 billion in the facilities, and subsequent reestimates by the Office of Management and Budget have indicated that the income and costs have mostly offset each other, resulting in a net subsidy cost of less than $1 million as of 2025. (Loans issued under one program remain outstanding.)
• Some other programs were funded with the existing assets of the Treasury's Exchange Stabilization Fund. Such funding was accounted for on a cash basis, which is the standard budgetary treatment for investments. Outlays of $11.5 billion were recorded in the budget for those facilities in 2020, and receipts of $11.7 billion were recorded in 2021, resulting in a net budgetary savings of $183 million. In total, after the roughly $1 million in subsidy costs recorded on an accrual basis are accounted for, the net income to the Treasury was $182 million.
• Most of the programs also affected the income of the Federal Reserve banks. The resulting net income to the Federal Reserve was $567 million, which consists mostly of earnings from two emergency facilities that were established without the support of the Treasury's equity. (Other earnings of the facilities were distributed to the Treasury and are reflected in the accrual cost discussed above.)
• All told, as of September 2025, the combined net gain to the Treasury and the Federal Reserve from all the emergency facilities was $749 million.