April 6, 2020 / SCOTT HORSLEY
As the United States tumbles into a coronavirus recession, the Federal Reserve is using its nearly unlimited power to generate cash to cushion the fall.
“The Fed is doing everything they can to keep financial markets functioning and credit available to households and firms,” former Fed Chair Janet Yellen said during a forum organized by the Brookings Institution.
Since the middle of March, the Fed has purchased more than $1.2 trillion in Treasurys and mortgage-backed securities, and the central bank has made it clear that it will continue buying as much as necessary to keep credit markets from seizing up.
With help from the Treasury Department, the Fed is also branching into nontraditional markets. It will now lend money directly to corporations. And it’s preparing to roll out a “Main Street” program to help finance smaller firms.
“The Federal Reserve is really throwing out all the stops in an effort to contain a health crisis from becoming an economic or financial crisis,” said Greg McBride, chief financial analyst for Bankrate.com. “Issue No. 1 for the Fed is to get the plumbing of financial markets working properly again.”