The U.S. Federal Reserve on Thursday announced a broad, US$2.3 trillion effort to bolster local governments and small and mid-sized businesses, ...
WASHINGTON: The U.S. Federal Reserve on Thursday announced a broad, US$2.3 trillion effort to bolster local governments and small and mid-sized businesses, the latest in an expanding suite of programs meant to keep the U.S. economy intact as the country battles the coronavirus pandemic.
Fed Chair Jerome Powell said the demands of the crisis have led the central bank to broaden its role beyond the usual focus on keeping markets"liquid" and functional, to helping the United States get the economic and financial space it needs to fix a dire health emergency. “We are deploying these lending powers to an unprecedented extent…We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery," Powell said.HELPING LOCAL GOVERNMENTS
The new"Main Street" facility will use banks to funnel up to US$600 billion in loans of at least US$1 million to firms that have up to 10,000 employees or less than US$2.5 billion in revenue, an effort to expand the safety net for businesses begun under the CARES act recently passed by Congress. That rescue bill authorizes direct loans by the U.S. Treasury to some larger firms, and US$350 billion for businesses with under 500 workers. Payments on the new Main Street loans will be deferred for a year; banks will be required to keep at least a 5per cent stake in each loan.
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