Powell says Main Street is “far and away the biggest challenge” the Fed has faced during the pandemic.
for the loans, which will come directly from banks and range from as little as $500,000 to as much as $100 million.
After that, the Fed will buy either 95% or 85% of every loan to ease the burden on banks’ balance sheets. Because the Fed operates under a strict mandate to avoid risky lending, the biggest challenge of the program is the potential that some loans might not be paid back if a business fails. , the Fed must balance loan terms that are strict enough to ensure that most companies pay the money back but not so strict that businesses are deterred from participating.
Speaking with Princeton University economist Alan Blinder on Friday, Powell said Main Street Lending is “far and away the biggest challenge” of any action the Fed has taken so far during the pandemic.
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