The Fed: Fed announces new lending plans it says will provide $2.3 trillion in support for economy
The Federal Reserve on Thursday set up new loan programs and bolstered existing ones in an effort to provide $ 2.3 trillion in support for the economy essentially shut down due to the coronavirus.
In a statement, Fed Chairman Jerome Powell said the central bank is trying to “provide as much relief and stability as we can” during this period where Americans are staying at home to stop the spread of the pandemic.
The U.S. Treasury Department is providing critical support for the programs, set up using the central bank’s powers to fight emergencies.
The cornerstone of today’s actions is a new $ 600 billion “Main Street Lending Fund” to offer support for mid-sized businesses. The plan is to offer 4 -year loans to companies, with principal and interest payments deferred for one year. The loans will be originated by banks, who will retain a 5% share and sell the rest to the Fed’s facility.
Another facility set up Thursday will purchase up to $ 500 billion of short-term notes directly from states, counties and cities. The Fed stopped short of setting up a facility to buy muni-bonds from the market, saying only that it would continue to “closely monitor” that market. This suggests the Fed may act in the sector in the future.
The Fed expanded another facility to begin to buy highly rated new issues of colllateralized loan obligations.