What will happen to the Federal Reserve loan program?

As Republicans and Democrats negotiate the fourth round of fiscal economic support, many of the aids and benefits that Americans had since March have ended or are about to do so. What is the future of the Fed loan program?  

These programs began to be launched in March when the first consequences of the pandemic were seen on the country's economic activity: the first state closings and warning calls about the lack of liquidity and income. Over time, these programs have been expanding.

The Federal Reserve has now said that it will maintain its package of aid programs aimed at providing liquidity to the credit market until the end of the year.

This is a series of initiatives that include credit to small companies and non-governmental organizations, among other entities, in addition to the purchase of bonds from large issuers known as the Main Street Program. Many of them were programmed to end on September 30.

Jerome Powell, president of the Federal Reserve, not only implemented these exceptional measures but also lowered interest rates to 0% at the start of the crisis. He has also been suggesting directly and indirectly whenever he has had the opportunity, to put all possible fiscal resources into action to stop the economic deterioration.

Powell is aware that not everything is solved with loans and, in fact, the program has not been used to the limit of its possibilities, in part because the stock market surprisingly continues to maintain its stability and debt issuances continue to be carried out without having to go to the Fed.

The money earmarked for these loans is around $ 2.3 trillion but so far just over $ 100 billion has been used.

The two-day meeting held by the Fed ends on Wednesday and it will be known what is its estimate of where the economy is. The country is far from controlling the surge in new cases of COVID-19 and has more than 20 million people without knowing what they will receive in unemployment insurance next week.
 

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