Fed: New lending programs launches June 1
WASHINGTON — Federal Reserve Chair Jerome Powell said Tuesday that the Fed’s lending programs for medium-sized businesses and state and local governments would begin operating by the end of this month.
Powell said that while the Fed has received a “good deal of interest” in those programs, if not enough companies or state and local governments seek to borrow the Fed would consider changes to them. That could include expanding their eligibility.
Powell’s comments came before the Senate Banking, Housing and Urban Affairs Committee held an oversight hearing on the $2 trillion federal relief package approved in late March.
Treasury Secretary Steven Mnuchin, who also testified, came under sharp questioning from Bay State U.S. Sen. Elizabeth Warren, who charged that he wasn’t doing enough to force companies that receive aid from the joint Fed-Treasury program to keep workers on their payrolls.
“Will you require companies that receive money from this half-a-trillion-dollar slush fund to keep people on the payroll?” Warren asked the Treasury secretary.
The senator pressed Mnuchin to ensure that the loans include that requirement. When Mnuchin declined to commit to that change, Warren said, “You’re boosting your Wall Street buddies.”
Mnuchin told Warren that the legislation that provides the government aid includes restrictions on top executive pay and on company dividends and stock buybacks.
The Fed’s Main Street Lending program, announced in March, will extend up to $600 billion in loans to companies with up to 15,000 employees. The Treasury has provided $75 billion to offset any losses from the loans, drawn from $454 billion that Congress provided the Treasury to support Fed loans in the relief package.
Sen. Sherrod Brown, a Democrat from Ohio, charged that the Trump administration by pushing a quick effort to reopen the economy, was risking the lives of poorer workers.
Mnuchin noted that prolonged shutdowns of the economy would risk widespread business bankruptcies and long-term unemployment.
“There is risk of permanent damage,” Mnuchin said. “We are conscious of the health issues, and we will do this in a safe way.”