Fed Will Expand Municipal Lending Facility to More Localities

The Federal Reserve said Wednesday it would again broaden the number of local governments from which it will buy debt through a forthcoming lending program.
The central bank said it would allow all 50 states to designate two cities or counties to sell debts directly to the central bank’s program, creating an option for states with less populous municipalities to participate.
The central bank also said governors of all 50 states will be able to designate an additional two issuers whose revenues are derived from operating activities, such as airports, toll facilities, utilities or public transit, to be eligible to use the facility on their own.
The Fed had previously made the program available to all 50 states, the District of Columbia, and one borrower for each county of at least 500,000 people and city of at least 250,000 — or as many as 261 issuers. Those thresholds had already been revised once, down from earlier cutoffs of 2 million and 1 million.
The changes will allow more than 100 new potential issuers to access the emergency lending program, which was first announced in April.
The Fed said it expects the program to lend up to $500 billion, and that volume hasn’t changed despite the two expansions of the program. The central bank has faced pressure from some elected officials to allow smaller cities and counties to access the program.

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