Federal Reserve Chairman Jerome Powell said Friday that the central bank's small-and medium-sized business loan program is "days away" from making its first loans as companies have struggled through the coronavirus pandemic shutdown.
Powell, a graduate of Princeton University, made his comments during an interview at the college with Alan Blinder, a Princeton economics professor and a former Fed vice chairman
The highly anticipated Main Street lending facility is intended for companies with up to 15,000 employees.
Powell said the program "is far and away the biggest challenge of any of the 11 facilities that we’ve set up.”
The Fed said it will use $75 billion in Treasury capital to purchase up to $600 billion in small and mid-sized business loans, and lend around $500 billion to states and cities around the country.
“We’re days away from making our first loans in Main Street,” Powell said. “We have three facilities that are part of it. They’re meant to reach out to different parts of that broad space. In the meantime, many of those companies are finding that they can borrow from banks. Others are waiting for us to get our facilities up and running.”
Powell said that ""we have crossed a lot of red lines we had not crossed before" because of the economic turmoil caused by the coronavirus outbreak.
The Fed chairman said he was concerned that a second wave of the coronavirus, which could potentially occur in the fall, would undermine public confidence and lead to a longer and weaker recovery.
"It would be challenging," he said, "we, of course, would continue to react. We're not close to any limits that we might have. We would continue to have some authority to react, I would worry almost more that a second outbreak would undermine confidence."
Powell also addressed the impact the economic crisis is having on people in the lower end of economic spectrum.
"We know that everyone is affected by the pandemic in a negative way to one degree or another," he said, "but the burdens are falling very strongly on those who can at least afford to bear them."