Fed relaunches crisis-era lending program to aid companies facing pandemic credit crunch
(Worthy News) – The Federal Reserve on Tuesday announced that it was setting up a special entity to purchase short-term debt issued by corporations to help keep afloat companies facing a credit crunch because of the coronavirus pandemic.
The program, the Commercial Paper Funding Facility, is authorized under the Fed’s powers to lend during emergencies and was approved by Treasury Secretary Steven Mnuchin. Its launch represents a return to the kinds of emergency stabilization measures the Fed undertook during the 2008 financial crisis to prevent a collapse of the financial system.
“Commercial paper markets directly finance a wide range of economic activity, supplying credit and funding for auto loans and mortgages as well as liquidity to meet the operational needs of a range of companies,” the central bank said in a statement. “By ensuring the smooth functioning of this market, particularly in times of strain, the Federal Reserve is providing credit that will support families, businesses, and jobs across the economy.” [ Source: Washington Examiner (Read More…) ]