Economics
The Fed Effort to Save Midsize Firms Isn’t Working, and Here’s Why
The program hasn’t incentivized lenders, who’ve pushed out less than $6 billion in loans so far.
Illustration: Klaus Kremmerz for Bloomberg Businessweek
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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.