For the first time since the 1930s, the Fed will provide loans to companies outside the financial system
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For the first time since the 1930s, the Fed will provide loans to companies outside the financial system
Federal Reserve Chairman Jerome Powell took part in a virtual discussion at the Griswold Center for Economic Policy Studies at Princeton University on Friday, and he acknowledged that the Fed was facing a serious problem with the launch of a direct lending program for private companies in the coming days, and this for the first time since the Great Depression.
Powell noted that the complexity of the program goes far beyond the Fed’s usual lending efforts, which typically involve buying bonds. The Main Street program will consist of unique loans to individual businesses, the first time since the 1930s that the central bank has lent to companies outside the financial system.
Powell has underscored that the United States is gripped by an economic shock “without modern precedent” and that Congress must consider providing further financial aid soon to support states, localities, businesses and individuals to prevent an even deeper recession.
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