Feds Loaned Harley-Davidson $2.3B
Commercial paper purchased during financial crisis
According to documents released by the U.S. Federal Reserve, Harley-Davidson received short term loans totaling $2.3 billion in the midst of the financial crisis. The central bank purchased commercial papers from Harley-Davidson 33 times from Oct. 27, 2008 to Feb. 11, 2009 as part of the Federal Reserve’s Commercial Paper Funding Facility (CPFF).
Commercial paper is a form of short term promissory note issued by banks and corporations to help fund daily activities, such as meeting payroll and paying suppliers. The market for commercial paper market essentially froze in September 2008 after the collapse of Lehman Brothers.
The Federal Reserve formed the CPFF to help companies maintain liquidity by purchasing three-month commercial paper. Commercial paper was purchased from banks and insurers as well as companies such as Harley-Davidson, McDonalds, Verizon and General Electric. The largest purchases were with financial services company UBS ($74.5 billion), insurance corporation AIG ($60.2 billion) and financial institution Dexia ($53.5 billion).
All commercial paper purchased by the CPFF was repaid, with interest, by May 2009 including all of Harley-Davidson’s. In all, the CPFF earned $6.1 billion in interest and usage fees.