In testimony published ahead of tomorrow’s Senate Banking Committee hearing, Federal Reserve Chairman Jerome Powell noted that “public input has been crucial” in the agency’s development of the Main Street Lending Program and that additional changes to the program may be forthcoming “as we learn more” about the needs of potential borrowers in the days ahead.
Powell noted that based on public comment, the Fed has already made changes to the minimum and maximum loan sizes and expanded the size of firms permitted to borrow under the MSLP. “These changes should help the program meet the needs of a wider range of employers that may need bridge financing to support their operations and the economic recovery,” he said.
Powell also highlighted the financial industry’s performance throughout the COVID-19 pandemic. “[B]anks entered this period with substantial capital and liquidity buffers and improved risk-management and operational resiliency,” he said. “As a result, they have been well positioned to cushion the financial shocks we are seeing. In contrast to the 2008 crisis when banks pulled back from lending and amplified the economic shock, in this instance they have greatly expanded loans to customers.”
Powell will appear before the committee along with Treasury Secretary Steven Mnuchin tomorrow morning to provide an update on the implementation of the CARES Act.