Continuing its unprecedented steps to support the economy amid the coronavirus pandemic, the Federal Reserve announced additional actions on Thursday.
The Fed said it will provide up to $2.3 trillion in loans to assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.
“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” said Federal Reserve Chair Jerome Powell.
He added, “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
The Fed said the specific actions it is taking include bolstering the effectiveness of the Small Business Administration’s Paycheck Protection Program by supplying liquidity to participating financial institutions.
The central bank said the Paycheck Protection Program Liquidity Facility will extend credit to eligible financial institutions that originate PPP loans, taking the loans as collateral at face value.
Additionally, the Fed said it will ensure credit flows to small and mid-sized businesses with the purchase of up to $600 billion in loans through the Main Street Lending Program.
The Treasury Department, using funding from the Coronavirus Aid, Relief, and Economic Security Act, will provide $75 billion in equity to the facility.
The Fed said it will also increase the flow of credit to households and businesses through capital markets, by expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities as well as the Term Asset-Backed Securities Loan Facility.
These three programs will now support up to $850 billion in credit backed by $85 billion in credit protection provided by the Treasury, the Fed said.
The central bank also said it will help state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities.
The Treasury will provide $35 billion of credit protection to the Fed for the Municipal Liquidity Facility using funds appropriated by the CARES Act.
The Fed noted it remains committed to using its full range of tools to support the flow of credit to households and businesses to counter the economic impact of the coronavirus pandemic and promote a swift recovery once the disruptions abate.
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