Federal Reserve Chair Jerome Powell speaks during a news conference, Tuesday, March 3, 2020. (AP Photo/Jacquelyn Martin)
By Martin Crutsinger
The Federal Reserve is taking additional steps to provide up to $2.3 trillion in loans to support the economy. The money will target American households and businesses, as well as local governments besieged by the coronavirus outbreak.
The Fed said Thursday that it is activating a Main Street Business Lending Program authorized by the CARES Act, the largest economic relief package ever passed by Congress.
Federal Reserve Chairman Jerome Powell said the Fed's role was to “provide as much relief and stability as we can during this period of constrained economic activity.”
In addition, the Fed activated a loan program for municipal governments, as well as additional support for the Paycheck Protection Program, which the Small Business Administration rolled out last week. The program provides loans to businesses with fewer than 500 employees.
The Main Street lending program “will make a significant difference for the 40,000 medium-sized business that employ 35 million Americans," Treasury Secretary Steven Mnuchin said.
The government's pay protection plan for small businesses is off to a rocky start. They have had difficulty getting banks to provide the loans. The banks have said that the government has not made clear how they should process such loans, even what forms are required.
The Fed announced the new infusion of cash on the same day the U.S. reported applications for unemployment benefits last week reached a staggering 6.6 million. That means more than one in 10 workers have lost their jobs in just the past three weeks to the coronavirus outbreak.
The Trump administration has ordered the Consumer Financial Protection Bureau to stop nearly all its work, effectively shutting down the agency that was created to protect consumers after the 2008 financial crisis and subprime mortgage-lending scandal. Russell Vought is the newly installed director of the Office of Management and Budget. Vought directed the CFPB in a Saturday night email to stop work on proposed rules, to suspend the effective dates on any rules that were finalized but not yet effective, and to stop investigative work and not begin any new investigations. The agency has been a target of conservatives since President Barack Obama created it following the 2007-2008 financial crisis.
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