Fed fires up another $2.3T of loans to keep credit flowing

The Fed adds new programs to assist households and employers and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.

Actions include:

Bolstering the effectiveness of the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to participating financial institutions through term financing backed by PPP loans to small businesses;

Ensure credit flows to small and mid-sized businesses with the purchase of up to $600B in loans through the Main Street Lending Program. The Department of the Treasury, using funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will provide $75B in equity to the facility;

Expanding the size and scope of the Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF) as well as the Term Asset-Backed Securities Loan Facility (TALF). These three programs will now support up to $850B in credit backed by $85B in credit protection provided by the Treasury; and

Establishing a Municipal Liquidity Facility that will offer up to $500B in lending to states and municipalities. The Treasury will provide $35B of credit protection to the Federal Reserve for the Municipal Liquidity Facility using funds appropriated by the CARES Act.

Update at 8:42 AM: The Main Street facility will offer four-year loans to companies employing up to 10K workers or with revenue of less than $2.5B. Principal and interest payments will be deferred for one year.

Eligible banks may originate new Main Street loans or use Main Street loans to boost the size of existing loans to businesses. Banks will retain a 5%, selling the remaining 95% to the Main Street facility, which will buy up to $600B of loans.

https://seekingalpha.com/news/3559646-fed-fires-up-another-2_3t-of-loans-to-keep-credit-flowing