March 23, 2020
The Fed Announces Extensive New Measures to Support the Economy
Today the Federal Reserve announced a further series of measures seeking to mitigate the economic impacts of the coronavirus. AAF’s Director of Financial Services Policy Thomas Wade provides an overview of the new developments at the Fed: In addition to expanding the powers of two existing programs, the Fed announced the creation of two new emergency lending facilities designed to extend credit to large employers. The Fed also revived the Term Asset-Backed Securities Loan Facility (TALF), a targeted vehicle used in the 2007-8 financial crisis to support small business and consumers.
The Fed has moved more decisively and more quickly in the last week than in the previous century of its operation. In its most recent press release, the Fed noted that the economy will face severe disruptions and that “[a]ggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.” With six existing emergency lending facilities, a seventh on its way, all in addition to the deployment of a slew of other monetary policy authorities, the Fed has demonstrated that it recognizes the scale of the problem ahead and is moving fast in seeking to stave off the worst.