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Report
The Main Street Lending Program
The Main Street Lending Program was created to support credit to small and medium-sized businesses and nonprofit organizations that were harmed by the pandemic, particularly those that were unsupported by other pandemic-response programs. It was the most direct involvement in the business loan market by the Federal Reserve since the 1930s and 1940s. Main Street operated by buying 95 percent participations in standardized loans from lenders (mostly banks) and sharing the credit risk with them. It would end up supporting loans to more than 2,400 borrowers and co-borrowers across the United ...
Speech
Prepared Testimony for the Congressional Oversight Commission
President Rosengren spoke about the operationalization of the Federal Reserve’s Main Street Lending Program, a facility authorized by the Board of Governors of the Federal Reserve System under section 13(3) of the Federal Reserve Act, with approval of the Secretary of the Treasury. The Department of the Treasury committed to make an equity investment of $75 billion in the Program – and the funds available for investment by the Treasury were appropriated to the Exchange Stabilization Fund under section 4027 of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). ...
Speech
The Economy’s Outlook, Challenges, and Way Forward
Recent economic data have been encouraging, but President Rosengren believes the most difficult part of the recovery is still ahead of us. A full recovery probably requires the availability of vaccines and more effective treatments for the virus because until then, many businesses and households are unlikely to return to more normal spending habits. While he anticipates a slowly improving economy, economic activity still faces serious headwinds. Potential financial impediments and challenges in the labor market make the recovery process more gradual than any of us would prefer. Improvement in ...
Speech
The Economy’s Outlook, Challenges, and Way Forward
President Rosengren’s comments were delivered at the Massachusetts Bankers Association’s New England Conference, and were based on a speech he delivered on September 23, 2020 to the Boston Economic Club.
Speech
Panel Remarks: The Fed and Main Street during the Coronavirus Pandemic
Panel Remarks at The Fed and Main Street during the Coronavirus Pandemic, WebEx event, April 23, 2020.
Speech
The COVID-19 Pandemic, the Economic Outlook, and the Main Street Lending Program
Unfortunately, the economic outlook is being driven by the course of the pandemic, and much depends on how successfully it can be contained, either through public health or medical innovations. The forecast for the U.S. economy this fall is quite uncertain, but President Rosengren's view is that the recent slowdown in economic activity that we have seen in high frequency data is likely to continue. Currently, we have an unemployment rate above 10 percent, and because of the continued community spread of the virus, he is concerned that the pandemic will limit the ability of the economy to ...
Report
COVID Response: The Main Street Lending Program
The Main Street Lending Program was created to support credit to small and medium-sized businesses and nonprofit organizations that were harmed by the pandemic, particularly those that were unsupported by other pandemic-response programs. It was the most direct involvement in the business loan market by the Federal Reserve since the 1930s and 1940s. Main Street operated by buying 95 percent participations in standardized loans from lenders (mostly banks) and sharing the credit risk with them. It would end up supporting loans to more than 2,400 borrowers and co-borrowers across the United ...
Speech
The Main Street Lending Program and Other Federal Reserve Actions
Today I’ll focus on two of the Federal Reserve’s lending programs being run by the Boston Fed: the Money Market Mutual Fund Liquidity Facility and the Main Street Lending Program.
Discussion Paper
Up on Main Street
The Main Street Lending Program was the last of the facilities launched by the Fed and Treasury to support the flow of credit during the COVID-19 pandemic. The others primarily targeted Wall Street borrowers; Main Street was for smaller firms that rely more on banks for credit. It was a complicated program that worked by purchasing loans and sharing risk with lenders. Despite its delayed launch, Main Street purchased more debt than any other facility and was accelerating when it closed in January 2021. This post first locates Main Street in the constellation of COVID-19 credit programs, then ...
Working Paper
Motivating Banks to Lend? Credit Spillover Effects of the Main Street Lending Program
We study the effects of the Main Street Lending Program (MSLP)—an emergency lending program aimed at supporting the flow of credit to small and mid-sized firms during the COVID-19 crisis on bank lending to businesses. Using instrumental variables for identification and multiple loan-level and survey data sources, we document that the MSLP increased banks' willingness to lend more generally outside the program to both large and small firms. Following the introduction of the program, participating banks were more likely to renew maturing loans and to originate new loans, as well as less ...