The Federal Reserve and the U.S. Treasury announced the rollout of several new lending facilities, totaling over $2 trillion, for businesses and local governments affected by the CCP virus pandemic.
“The combination of these facilities will provide up to $2.3 trillion in new financing to support American workers by helping American businesses preserve jobs, sustain operations, and continue to serve their customers,” Treasury Secretary Steven Mnuchin said in a release.
The funds will be channeled via the establishment of a Main Street Business Lending Program, worth $600 billion, and a Municipal Liquidity Facility, worth $500 billion, among other initiatives.
“The Main Street Business Lending Program will make a significant difference for the 40,000 medium-sized businesses that employ 35 million Americans,” Mnuchin said.
The Treasury will make a $75 billion equity investment in a special purpose vehicle (SPV) established to implement the Main Street Business Lending Program, which will allow the Federal Reserve to work through commercial banks to provide some $600 billion in new financing for businesses with up to 10,000 employees or $2.5 billion in 2019 annual revenues.
The Fed said in a release that in addition to using the SPV set up by the Treasury to “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 central bank would also directly buy the bonds of states, more populous counties, and cities to help them respond to the health crisis.
The loans to small and medium-sized businesses would be four years in duration, the Fed said, with principal and interest payments deferred for one year.
“Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers,” the Fed said, adding that borrowers would also be subject to compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act.
“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,” Fed Chairman Jerome Powell said. “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 and Treasury’s announcements came as data showed that the number of Americans seeking unemployment benefits topped 6 million for the second straight week, with businesses closed across the country in an attempt to stem the spread of the virus.
“The Fed’s bold efforts helped to offset more horrific news on the job market. I would say that the Fed’s forceful action today underscores the unlimited firepower that the central bank wields and that’s going some way into sustaining the calm that’s descended on markets this week,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Powell said the Fed will continue to use all the tools at its disposal until the U.S. economy begins to rebound fully from the harm caused by the outbreak of the CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus.
Speaking in a webcast from the Brookings Institution on April 9, Powell said that the Fed’s role is to “provide as much relief and stability as we can during this period of constrained economic activity.”
The Fed fully intends to use its powers “forcefully, proactively and aggressively until we are confident that we are solidly on the road to recovery,” he added.
Reuters contributed to this report.
From The Epoch Times
