An examination of Treasury term investment interest rates

In November 2003, the Term Investment Option (TIO) program became an official cash management tool of the U.S. Treasury Department. Through TIO, the Treasury lends funds to banks for a set number of days at an interest rate determined by a single-rate auction. One reason why the Treasury introduced TIO was to try to earn a market rate of return on its excess cash balances. This article studies 166 TIO auctions from November 2003 to February 2006 to determine how TIO interest rates have compared with market rates. The author investigates the spread between TIO rates and rates on mortgage-backed-security repos, a close benchmark for TIO rates. He finds that aside from offerings with very short term lengths, the Treasury receives an interest rate on TIO auctions comparable to market rates. He also documents a negative relationship between an auction's size and the spread between TIO and repo rates. Furthermore, the Treasury's announcement and auctioning of funds on the same day does not adversely affect rate spreads, a finding that suggests that banks are indifferent to more advance notice of TIO auctions.Auctions ; Government securities ; Interest rates ; Repurchase agreements

Do Attorneys Do Their Clients Justice? An Empirical Study of Lawyers\u27 Effects on Tax Court Litigation Outcomes

Do attorneys really add value or can unrepresented parties achieve equivalent results? This fundamental question ordinarily is difficult to answer empirically. An equally important question both for attorneys and the justice system is whether attorneys prolong disputes or instead facilitate expeditious resolution of cases. Fortunately, there is a federal court that provides an excellent laboratory in which to test and answer these questions. In the United States Tax Court (Tax Court), where most federal tax cases are litigated, the government always is represented by Internal Revenue Service attorneys but a large portion of the taxpayer litigants proceed pro se. In addition, the Tax Court is exceptional in that it maintains files on cases that settle. Furthermore, Tax Court disputes involve money, so case outcomes can be readily compared. These institutional characteristics provide the rare opportunity to isolate the effects of lawyers on outcomes in both settled and tried cases. In order to assess the predicted and actual impacts of attorneys on case outcomes, the article identifies five distinct ways in which attorneys typically differ from unrepresented parties and explores how each of those characteristics may affect case outcomes. The article then exploits the opportunity afforded by the institutional features of the Tax Court; using a unique database of randomly selected cases, the study tests the impact of attorneys on financial outcomes in both tried and settled cases. It also tests the effects of attorneys on time to settlement and time to trial. Interestingly, the study found that the presence of an attorney for the taxpayer significantly improved the taxpayer\u27s financial outcome in tried cases, an effect that increased with the experience of the attorney. No such effect existed in settled cases. Although the latter result initially is surprising, it highlights the paramount importance of procedural expertise in formal trial proceedings, as opposed to negotiations with the opposing party. The study also found that the presence of an attorney for the taxpayer did not affect time elapsed to trial or settlement. Thus, the study found that taxpayers\u27 attorneys, who generally are paid by the hour, neither prolonged disputes nor expedited their resolution but did significantly improve the financial outcomes of the cases they tried

The Term Securities Lending Facility: origin, design, and effects

The Federal Reserve launched the Term Securities Lending Facility (TSLF) in 2008 to promote liquidity in the funding markets and improve the operation of the broader financial markets. The facility increases the ability of dealers to obtain cash in the private market by enabling them to pledge securities temporarily as collateral for Treasuries, which are relatively easy to finance. The TSLF thus reduces the need for dealers to sell assets into illiquid markets as well as lessens the likelihood of a loss of confidence among lenders.Liquidity (Economics) ; Financial markets ; Federal Reserve System ; Treasury notes

from Covered Interest Rate Parity

This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit comments. The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors. Capital Constraints, Counterparty Risk, and Deviation

The Term Securities Lending Facility: Origin, Design, and Effects

Facility (TSLF) in 2008 to promote liquidity in the funding markets and improve the operation of the broader financial markets. The facility increases the ability of dealers to obtain cash in the private market by enabling them to pledge securities temporarily as collateral for Treasuries, which are relatively easy to finance. The TSLF thus reduces the need for dealers to sell assets into illiquid markets as well as lessens the likelihood of a loss of confidence among lenders. To address unprecedented liquidity pressures in funding markets, in March 2008 the Federal Reserve introduced the Term Securities Lending Facility (TSLF). This auction facility allows primary dealers—institutions with a trading relationship with the Federal Reserve Bank of New York—to bid a fee to borrow over time up to $200 billion in Treasury securities from the Fed for a term of twenty-eight days, with the dealers agreeing to provide other securities as collateral. They can then use the borrowed Treasuries, which are relatively easy to finance, as collateral to obtai

Repo Market Effects of the Term Securities Lending Facility

This article is published in the American Economic Association\u27s American Economic Review. To view this article in its entirety please see the related resources section above

Repo Market Effects of the Term Securities Lending Facility

This article is published in the American Economic Association\u27s American Economic Review. To view this article in its entirety please see the related resources section above