Fed extends lending programs as pandemic’s impact lengthens

The Federal Reserve will extend seven of its emergency lending programs through the end of the year, an acknowledgement that the programs may be necessary for longer than was first thought as the nation struggles to control the coronavirus.

The Fed announced the extension of the programs, past their original expiration dates of Sept. 30, at a time when a spike in confirmed virus cases has shown signs of slowing the economy.

The “extension will facilitate planning … and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic,” the Fed said Tuesday.

The extension applies to several programs that lend to Wall Street banks and other financial institutions to ensure the flow of credit to businesses and households as well as to the Fed’s corporate bond purchase programs. The central bank has also extended its Main Street Lending Program, which is intended to support mid-sized companies but has generated only a small amount of borrowing so far.

Two of the Fed’s emergency lending programs—one that buys state and local bonds and another that purchases short-term corporate debt—weren’t included in the announcement. The Fed’s Municipal Liquidity Facility is already scheduled to last through the end of the year, and the Commercial Paper Funding Facility will expire in March 2021.

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