Fed chief: New lending programs to debut
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.
The chairman’s comments came before the Senate Banking, Housing and Urban Affairs Committee, which held an oversight hearing on the $2 trillion federal relief pac age approved in late March.
Treasury Secretary Steven Mnuchin, who also testified, came under sharp questioning from Sen. Elizabeth Warren, D-Mass., 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 Treasury to support Fed loans in the relief package.