Fed will lend up to $2.3 trillion amid coronavirus crisis

Henrietta Strickland
April 9, 2020

On Thursday, the Fed unleashed another moxie-filled emergency move, announcing that it will make up to $2.3 trillion in loans available to shore up the USA economy against the ravages of coronavirus.

The program provides loans to businesses with fewer than 500 employees.

"Our country's highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus", Mr Powell said in a statement released on Thursday.

The programs aim to help businesses, households and state and local governments facing a cash crunch as large parts of the economy have been shut down. The loans will be issued through regular banks, which will retain 5% of the loans while the central bank buys the remainder. As much as $500 billion will be offered in lending by a Municipal Liquidity Facility (MLF).

Fed policy makers are essentially signalling that the U.S. central bank has the backs of USA businesses great and small, state and local governments and American households and is prepared to do whatever it takes to get the country through this crisis and rebound successfully on the other side of it.

Other notable aspects of the plan include a Paycheck Protection Program Liquidity Facility to help boost the small business loan program created by Congress in its $2 trillion coronavirus stimulus package. The banks have said that the government has not made clear how they should process such loans, even what forms businesses are required to use. The PPP has experienced a slew of problems since its launch last week, including technical glitches that kept businesses from applying to banks not being prepared for the system.

The Fed announced the new infusion of cash on the same day the USA reported applications for unemployment benefits reached a staggering 6.6 million last week.

First-time claims for jobless benefits hit 6.6 million in the week ending April 4, a slight decrease from the previous week's count of 6.9 million, which was 219,000 more than the original tally, according to the report.

Other reports by Click Lancashire

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