Economics
Fed Could Snap Up Municipal Debt Under New Senate Proposal
- Bill would amend the Federal Reserve Act for emergencies
- Measure would allow Fed to buy municipal bonds of any maturity
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A Senate bill introduced Friday would allow the Federal Reserve to purchase municipal debt, in an effort to ease the economic strain of the coronavirus pandemic on state and local governments.
The measure from Senator Bob Menendez, a New Jersey Democrat on the Senate Banking Committee, would amend the Federal Reserve Act to allow the Fed to buy municipal bonds under “unusual and exigent circumstances.” The rule would be triggered by events like the rapid spread of a virus, other health emergencies or crises.