/Feds Powell says $600 billion Main Street Lending Program and remaining initiatives will begin by June
Feds Powell says $600 billion Main Street Lending Program and remaining initiatives will begin by June

Feds Powell says $600 billion Main Street Lending Program and remaining initiatives will begin by June


jerome powellChip Somodevilla/Getty
  • The four Federal Reserve aid programs that haven’t launched yet — including its $600 billion Main Street Lending Program — will be operational by the end of May, Jerome Powell said during a Tuesday Senate hearing.
  • “People are working literally around the clock and have been for weeks” to get the credit pools up and running, the Fed chair added.
  • Speaking at the same hearing, Treasury Secretary Steven Mnuchin said the department planned to use all $500 billion that Congress allocated for economic relief.
  • Mnuchin added that the Treasury was “fully prepared to take losses in certain scenarios” on its emergency loans.
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The four Federal Reserve lending programs that are not yet operational will begin issuing emergency loans by the end of the month, Chairman Jerome Powell said on Tuesday.
The central-bank chief reiterated his plan to use the “full range of tools” to aid the economy while testifying before the Senate banking committee. While the majority of the Fed’s aid programs were announced in March, several are still being worked on and are extremely complex to implement, Powell said.
“We expect all of them to be stood up and ready to go by the end of this month,” Powell said of the remaining programs. “People are working literally around the clock and have been for weeks.”
Here are the four facilities not yet in place:
  • $600 billion Main Street Lending Program
    • Will lend to midsize companies with fewer than 15,000 employees or less than $5 billion in annual revenue.
  • Primary Market Corporate Credit Facility
    • Will purchase corporate bonds from investment-grade firms and those that fell into junk status after March 22.
  • Municipal Liquidity Facility
    • Will buy debt from investment-grade state and local governments.
  • Term Asset-Backed Securities Loan Facility
    • Will buy credit-backed securities including auto loans, student loans, and small-business loans.
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The monetary authority most recently launched its Secondary Market Corporate Credit Facility to purchase corporate-debt exchange-traded funds. The facility took in $305 billion worth of ETFs in its first day of operation, the Fed said.
Speaking during the same Senate hearing, Treasury Secretary Steven Mnuchin said he planned to use all of the $500 billion allocated by Congress to issue loans and support the Fed’s programs. He added that the Treasury was “fully prepared to take losses in certain scenarios” on the loans.
The Treasury has so far committed up to $195 billion to its lending efforts. About $46 billion of the congressionally allocated aid is designated for airlines.
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Though the Fed has only recently started corporate credit purchases, the debt market rallied on the announcement of the related programs on March 23. Investors viewed the facilities as a backstop for credit health, and both the stock and the bond markets surged through April.
Mnuchin said that the announcement bump might be enough to help struggling companies issue their own bonds. The secretary used Boeing as an example, highlighting how the beleaguered plane manufacturer was able to draw on public interest for its debt instead of using government programs.
“In the best-case scenario, the markets open up and we don’t need to use these facilities,” he said.
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