What is the Federal Reserve doing for American Markets?

What is the Federal Reserve doing for American Markets?

June 8 – Fed Significantly Expands Access to Proposed Main Street Lending Facility

The Fed Board introduced sweeping changes to the Main Street Lending Program as proposed in order to make it possible for a wider range of small and medium-sized businesses to apply. These program changes include:

Lowering the minimum loan size for certain loans to $250,000 from $500,000;

Increasing the maximum loan size for all facilities;

Increasing the term of each loan option to five years, from four years;

Extending the repayment period for all loans by delaying principal payments for two years, rather than one; and

Raising the Fed’s participation to 95% for all loans.

The Main Street Lending Facility still does not have an announced date of operation.

Conclusions

“We’re going to go in strong,” said Fed Chairman Jerome Powell in his press briefing Sunday evening, and “we will restore market functioning.” Despite Sunday’s emergency announcement and the Fed’s implementation of crisis-era monetary policy, however, all major stock indices were down after trading on Monday, with the Dow Jones seeing a 13 percent fall – the most severe decline since 1987’s Black Monday. Both the Dow and the S&P 500 closed at their weakest in three years.

Clearly it is too soon to see the actual economic impacts of the Fed’s emergency measures, but short-term investor confidence is not the most important measure of success for the Fed at this juncture. Instead the Fed will have to be judged on whether these measures, and the measures to come, have ensured the market possesses the necessary liquidity to allow business to continue with something resembling normalcy.

Read more: https://www.americanactionforum.org/insight/timeline-the-federal-reserve-responds-to-the-threat-of-coronavirus/#ixzz6OyPFmDia

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