The program in question will create up to $600 billion in loans for companies with 10,000 employees or less, or up to $2.5 billion in sales from 2019.
The Fed has been looking for help from investment, retail and reserve banks. The Fed has received over 2,200 pieces of feedback online, sources said, according to CNBC.
The coronavirus has put the Fed in a unique position. Rather than focusing on its usual goals of stabilizing the economy and keeping employment rates high, it is now looking at lending directly to companies. As such, it has been asking numerous and detailed questions on subjects like what loan requirements make sense for specific industries.
Lobbyists have been in contact with the Fed to ensure that their industries get support from the program. Retail and hospitality lobbyists have expressed concerns that debt requirements are too constricting. Additionally, investment professionals have sought details on aspects of the program, such as how the Fed plans to calculate companies’ earnings before interest, taxes and other factors.
Lael Brainard, a former economic advisor for President Bill Clinton, will help to head up the project. Brainard also served under President Barack Obama as undersecretary of the Treasury for international affairs.
In this new endeavor, the Fed is dependent on the banks for support on loan losses, trying to avoid risk going forward. The Treasury is going to help, too, with a $75 billion infusion into the program.
There are still questions about how the Fed and Treasury will balance more and less vulnerable businesses and industries. Treasury Secretary Steven Mnuchin said the Treasury’s funds would be used with some discretion, which may leave some vulnerable industries behind while focusing on companies more likely to survive.
It is not clear exactly when the Fed’s Main Street lending program will officially begin, although officials estimate that it should be within the next few weeks.
Last week, the Fed raised its six-per-month transaction and withdrawal limits for savings account.