The Federal Reserve on Thursday said it would provide up to $2.3 trillion in loans to bolster the economy by ensuring credit flows to households, small and midsized businesses, and state and local governments.
“The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity,” said Federal Reserve Board Chairman Jerome Powell, “and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
The Fed’s announced measures will include buying up to $600 billion in loans through a new Main Street Lending Program, to support small and midsized businesses of up to 10,000 workers.
Additionally, a new program called the ‘Municipal Liquidity Facility’ will offer up to $500 billion in lending to states and municipalities to help them manage cash flow stresses caused by the pandemic.
The Fed will also boost existing programs meant to ensure the functioning of markets for corporate debt.
The new round of lending programs announced Thursday was authorized by Congress in the CARES Act signed by President Trump, which also authorized the Treasury to capitalize the new programs, meaning that the Treasury would be first in line to bear losses on the loans.
