Statement for the Record RE: Status of the Federal Reserve Emergency Lending Facilities

My remarks here concern the Federal Reserve’s Main Street Lending facilities. So far, those facilities have lent only a very small fraction of the $600 billion quota assigned to them by Congress and the U.S. Treasury. The proximate reason of this low uptake consists of strict lending terms that either exclude or are uninviting to many struggling firms. But a more fundamental cause consists of the government’s belief that, by having the Fed “lever up” a smaller quantity ($75 billion) of funds appropriated to support Main Street loans, the Government avoids much of the burden the public would have to bear were Congress to fund Main Street lending to the full extent of its assigned $600 billion limit. I plan to explain why that belief is mistaken, and how setting it aside would allow the Treasury and the Fed to offer truly effective Main Street support.