Fed Wants States to Try Banks Before $500 Billion Credit Line
- Require certification that market can’t meet funding needs
- Fed sees a backstop if there’s no ‘well-functioning market’
The Marriner S. Eccles Federal Reserve building stands in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The Federal Reserve is trying to ensure that states, cities and counties knock on Wall Street’s door first.
The central bank’s guidance about the details of its $500 billion municipal lending facility, released late Monday, says that states and local governments will need to provide a written certification that they’d tried to raise money elsewhere first. That may curtail its use because the municipal-bond market has largely stabilized since the Fed announced its planned intervention, allowing governments to issue more than $20 billion of debt over the last several weeks.