The US Federal Reserve on Thursday rolled out a host of new measures aimed at getting another $2.3 trillion to bail out small and mid-sized businesses and cash-strapped local governments.
The Fed said its Main Street Lending program will support up to $600 billion in loans to small and mid-sized businesses - defined as under 10,000 workers with less than $2.5 billion in annual revenue.
The loans will be disbursed through eligible banks but backed by the Fed.
The task of delivering financial support "directly to those most affected falls to elected officials, who use their powers of taxation and spending to make decisions about where we, as a society, should direct our collective resources", Mr. Powell said.
Along with rolling out programs for smaller and mid-sized firms that are at the core of the United States economy, as well as local governments, the Fed also broadened the universe of larger corporations it can help to account for the fact that the credit-worthiness of some may decay because of the current crisis.
The Fed chairman's remarks echo those of USA bank leaders. The money will target American households and businesses, as well as local governments besieged by the coronavirus outbreak.
The extraordinary rescue package comes on top of efforts the Fed has already made to bolster the economy, including cutting its benchmark interest rate to near zero and supplying more than $1 trillion to purchase Treasury and mortgage-backed securities to help keep credit flowing.
The programs the Fed announced Thursday includes establishing a Municipal Liquidity Facility that will offer up to 500 billion dollars in lending to states and municipalities.
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.
Powell said the Fed will continue to use all the tools at its disposal until the US economy begins to rebound fully from the harm caused by the CCP (Chinese Communist Party) virus outbreak.
WASHINGTON (AP) - The Federal Reserve is taking additional steps to provide up to $2.3 trillion in loans to support the economy. This time, the Fed has signaled a willingness to buy assets or make loans in any market it thinks will be necessary to stave off further job losses and business failures.
The three programs now account for $850 billion in credit, and firms tapping the lending pool will face restrictions on stock buybacks and dividend payments for one year after the debt is repaid. Firms receiving the loans "must commit to make reasonable efforts to maintain payroll and retain workers", and can not use them to refinance existing debt, and must follow the limits on things like dividend payments and compensation set out for larger firms.