•  
  •  
 

Document Type

Case Study

Case Series

Market Liquidity Programs

JEL Codes

G01, G28

Abstract

Penn Central Transportation Company (Penn Central), the resulting railroad company of the late 1960s merger of Pennsylvania Railroad and New York Central Railroad, filed for bankruptcy on June 21, 1970. The bankruptcy came in the middle of the 1969–70 recession and sparked a sharp downturn in the commercial paper market. The Federal Reserve did not intervene directly in the commercial paper market but rather increased funding options available to banks via the discount window and an amendment to Regulation Q. The banks then provided funds to corporations unable to acquire them from the commercial paper market. The liquidity crisis abated within a few weeks.

Date Revised

2020-10-08

Share

COinS