Midsize businesses and state and local governments are among the beneficiaries of the central bank's latest $2 trillion effort to mitigate the economic damage caused by the coronavirus pandemic.
Many banks were hitting their limits for lending to small businesses devastated by the coronavirus outbreak. They say the Fed's decisions to help fund additional loans and relax capital requirements will resolve many of their problems.
The maneuver could delay efforts by Senate Majority Leader Mitch McConnell, R-Ky., and Treasury Secretary Steven Mnuchin to add another $250 billion to the Paycheck Protection Program.
The Fed's actions are designed to ensure the flow of credit to midsize businesses and state and local governments hit hard by the economic impact of the coronavirus pandemic.
The bank will be allowed to exceed the limit to enable it to make more small business loans; the CEOs of HSBC and StanChart are also donating part of their pay to coronavirus victim charities.
The agency overhauled its system for the Paycheck Protection Program on Wednesday. Lenders hope it addresses the access issues and a crash that bedeviled the effort’s first week.
The Federal Reserve is temporarily altering the growth restriction it placed on Wells Fargo in 2018 so that the bank can make additional loans to small and midsize business that need funding to weather the coronavirus pandemic.
Lawmakers want to expand the two-day old small business loan program by another $250 billion; Calabria says nonbanks are exaggerating their financial woes as forbearance claims rise.
Firms that spread big-dollar deposits to community banks have seen a rush in demand as small businesses seek emergency loans to weather the coronavirus pandemic.
