Fed will make up to $4 trillion in loans to businesses to rescue the U.S. economy, Mnuchin says
Treasury Secretary Steven Mnuchin said Sunday that the Federal Reserve will play a key role in lending funds to businesses hurt by the coronavirus pandemic.
“Working with the Federal Reserve — we’ll have up to $4 trillion of liquidity that we can use to support the economy,” Mnuchin told Fox News on Sunday.
“Those are broad-based lending programs. … We can leverage our equity working with the Federal Reserve,” he said.
The Treasury secretary said the plan is broad-based to help small and large businesses “get through the next 90 to 120 days,” he said.
Mnuchin said he thought the bill would be finished Sunday and ready for a vote on the Senate floor on Monday.
The bill would also include:
• Small-business retention loans aimed at helping companies keep workers on their payrolls. This will cover about half the workforce, Mnuchin said. Payments will include two weeks’ worth of cash flow and some overhead. The loans will be forgiven if workers are not laid off.
• Checks for Americans. The average check for a family of four will be $3,000, the Treasury secretary said.
• Enhanced unemployment insurance for people who are laid off due to the pandemic.
Some Fed watchers expressed caution about the $4 trillion estimate.
I am worried that this $4 trillion number being thrown around is being interpreted as direct aid to the economy and the liquidity is really about deeper support for corporate and municipal bond markets. This helps to keep the wheels turning but it’s not a replacement for fiscal. https://t.co/6S462ez4rV
Mnuchin said that if the virtual shutdown of the American economy lasts longer than expected, Congress would pass another rescue package.
Emerging from a meeting with Mnuchin on Saturday, Senate Banking Committee Chairman Mike Crapo, an Idaho Republican, told reporters that Congress would appropriate up to $500 billion to the Treasury Department to provide a capital buffer to the Fed, according to the Hill newspaper.
The central bank would be able to lend multiples of any buffer, with Mnuchin’s having put the estimate at $4 trillion.
“So they can do this and get a significant boost of leverage into the marketplace,” he said.
Sen. Pat Toomey, a Republican from Pennsylvania, said the lending under the Fed program would be temporary credit that needs to be paid back. “None of this is free money. This is all going to be liquidity that is provided to fundamentally solvent companies to get them through this time,” Toomey said in an interview on NBC’s “Meet the Press.”
The bill would separately give Mnuchin funds for direct lending to “really seriously distressed and absolutely essential companies” that impact U.S. national security, Toomey said. That is going to be a short list, he added.
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.