The US Fed launches a 2.3 trillion credit package to revive the economy

Jerome Powell, Fed Chairman. (Reuters)

The United States Federal Reserve (Fed) assured that it would use all the tools at its disposal to support the economy and is complying with it.

After leaving interest rates at zero in two extraordinary moves and endowing the system with enormous liquidity, the central bank has announced a new loan plan worth 2.3 trillion dollars.

These resources will go to States, municipalities and small and medium-sized companies, which are very affected by the coronavirus pandemic.

The Fed bailout, much larger than the one launched in the 2008 crisis, is underpinned by the $ 2.2 trillion Congress-approved aid program and responds to the “role of the Federal Reserve in providing as much relief and stability as we can during this period of restricted economic activity,” says Jerome Powell, chairman of the Fed, who believes that “our actions will help ensure that the recovery is as vigorous as possible.”

In order to provide liquidity to cities and municipalities that have skyrocketed spending to fight the pandemic, the Fed says it will buy short-term debt for $ 200 billion directly from states and counties with at least 2 million residents, and from cities with a population of at least one million.

For companies with up to 10,000 employees or revenues of less than $ 2.5 billion, the Federal Reserve will offer loans through banks for up to $ 600 billion. These four-year credits, which may be deferred for one year, will be subject to restrictions on the delivery of dividends, repurchase of shares and executive salaries.

“The Federal Reserve and Treasury recognize that companies vary widely in their financial needs, particularly at this time, and as the program ends they will continue to seek input from lenders, borrowers, and other stakeholders to ensure that the program supports the economy. as effectively and efficiently as possible while protecting taxpayer funds,” the statement said.