Amid the COVID-19 crisis, the U.S. Federal Reserve on Thursday announced that it took additional actions to provide up to $2.3 trillion in loans to support the economy.
The Fed aims to assist households and employers of all sizes and bolster the state’s ability to deliver critical services during the coronavirus crisis, it said.
'Many of the programs we are undertaking to support the flow of credit rely on emergency lending powers that are available only in very unusual circumstances and only with the consent of the Secretary of the Treasury,' Steven Mnuchin, said Fed Chair Jerome Powell.
He added the Fed will continue to employ these powers “forcefully, proactively, and aggressively” until it is confident that the U.S. is solidly on the road to recovery.
Stressing that these are lending powers deployed to an unprecedented extent, not spending powers, Powell emphasized:
'The Fed is not authorized to grant money to particular beneficiaries. The Fed can only make secured loans to solvent entities with the expectation that the loans will be fully repaid.'
Acknowledging the bank’s limits, he said in the current situation, many borrowers will benefit from these programs, as will the overall economy.
'But there will also be entities of various kinds that need direct fiscal support rather than a loan they would struggle to repay,' he stressed.
These emergency measures are reserved for truly rare circumstances and when the economy is well on its way back to recovery the Fed will put these emergency tools away, he added.
On Thursday the number of Americans seeking unemployment benefits in the last three weeks topped 15 million, according to the Labor Department.
By Aysu Bicer