Lost on Main Street
Bloomberg Businessweek|December 07, 2020
The Fed’s program to save midsize businesses isn’t working, and it isn’t clear there’s an easy fix
Christopher Condon and Catarina Saraiva
Lost on Main Street

It sounded like a great idea back in April. With the economy getting hammered by Covid-19, the Federal Reserve hatched a bold plan to rescue thousands of midsize companies that were falling into a gap between government aid programs.

Using its magic printing press, the U.S. central bank would take $75 billion appropriated by Congress and turn it into as much as $600 billion in loans to companies damaged by the pandemic.

The effort now appears to have been doomed from the start, squeezed between legal restrictions on the Fed’s emergency powers and the risk aversion of the banks that the program relied on to make loans. Eight months in, the Main Street Lending Program has pushed less than $6 billion out the door.

“There’s been bipartisan acknowledgment that Main Street isn’t working,” says Bharat Ramamurti, who sits on the congressional commission charged with supervising the spending authorized by the Coronavirus Aid, Relief, and Economic Security Act. “I don’t think anybody is under the illusion this program is solving the problems that exist.”

Treasury Secretary Steven Mnuchin announced on Nov. 19 that he wouldn’t approve an extension of the program, along with four other emergency lending facilities, past Dec. 31, but Democrats might be able to revive it. Some, including Virginia Senator Mark Warner, clearly want to. “As we’re looking at the virus actually accelerating at this point, and the potential for businesses even going into more duress, the idea that we’d end the program arbitrarily on Dec. 31—I just think makes no sense,” Warner says. “We think we need to make adjustments on both program eligibility, loans terms, and weight, so this works for more firms.”

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM BLOOMBERG BUSINESSWEEKView all
Instagram's Founders Say It's Time for a New Social App
Bloomberg Businessweek US

Instagram's Founders Say It's Time for a New Social App

The rise of AI and the fall of Twitter could create opportunities for upstarts

time-read
4 mins  |
March 13, 2023
Running in Circles
Bloomberg Businessweek US

Running in Circles

A subscription running shoe program aims to fight footwear waste

time-read
3 mins  |
March 20 - 27, 2023
What I Learned Working at a Hawaiien Mega-Resort
Bloomberg Businessweek US

What I Learned Working at a Hawaiien Mega-Resort

Nine wild secrets from the staff at Turtle Bay, who have to manage everyone from haughty honeymooners to go-go-dancing golfers.

time-read
10 mins  |
March 20 - 27, 2023
How Noma Will Blossom In Kyoto
Bloomberg Businessweek US

How Noma Will Blossom In Kyoto

The best restaurant in the world just began its second pop-up in Japan. Here's what's cooking

time-read
3 mins  |
March 20 - 27, 2023
The Last-Mover Problem
Bloomberg Businessweek US

The Last-Mover Problem

A startup called Sennder is trying to bring an extremely tech-resistant industry into the age of apps

time-read
10+ mins  |
March 20 - 27, 2023
Tick Tock, TikTok
Bloomberg Businessweek US

Tick Tock, TikTok

The US thinks the Chinese-owned social media app is a major national security risk. TikTok is running out of ways to avoid a ban

time-read
10+ mins  |
March 20 - 27, 2023
Cleaner Clothing Dye, Made From Bacteria
Bloomberg Businessweek US

Cleaner Clothing Dye, Made From Bacteria

A UK company produces colors with less water than conventional methods and no toxic chemicals

time-read
3 mins  |
March 20 - 27, 2023
Pumping Heat in Hamburg
Bloomberg Businessweek US

Pumping Heat in Hamburg

The German port city plans to store hot water underground and bring it up to heat homes in the winter

time-read
3 mins  |
March 20 - 27, 2023
Sustainability: Calamari's Climate Edge
Bloomberg Businessweek US

Sustainability: Calamari's Climate Edge

Squid's ability to flourish in warmer waters makes it fitting for a diet for the changing environment

time-read
4 mins  |
March 20 - 27, 2023
New Money, New Problems
Bloomberg Businessweek US

New Money, New Problems

In Naples, an influx of wealthy is displacing out-of-towners lower-income workers

time-read
4 mins  |
March 20 - 27, 2023