Fed not planning big changes to Main Street lending: Powell

Washington

FEDERAL Reserve chairman Jerome Powell faced questions from US lawmakers on Wednesday over the central bank's help for Americans compared with markets.

"Our actions were in no way an attempt to relieve pain on Wall Street," Mr Powell said on Wednesday in a hearing before the House Select Subcommittee on the coronavirus crisis.

The Fed chief said that, with its Main Street Lending Program, the central bank has "done basically all of the things that we can think of".

"We're looking to do more," he added but said the central bank isn't planning to make other big changes to the Main Street facility.

"There's nothing major that we're looking at now," Mr Powell said. "There is nothing major that we see now that would be consistent with opening it up further."

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Mr Powell answered multiple, pointed questions about the efficacy of the Main Street program, which has been slow to start and seen little uptake from small-to-medium sized businesses.

One of the Fed's emergency measures unleashed during the pandemic, the facility has seen low takeup - just about 0.3 per cent of its US$600 billion capacity - and has been criticised by lawmakers and companies alike.

That compares with the Fed's programmes set up to keep credit flowing to public companies, which have generally been seen as a success in stabilising job losses there and bolstering stock and bond markets.

Banks have been reluctant to apply more lenient underwriting standards to the Main Street loans, 5 per cent of which will remain on bank balance sheets after they sell the remaining 95 per cent to the Fed.

Mr Powell said that credit, via the banking sector, is pretty broadly available for the companies targeted by the Main Street programme, so those firms may be able to get lending outside of the Fed's facilities. BLOOMBERG