WASHINGTON (Reuters) – U.S. Treasury Secretary Steven Mnuchin said on Wednesday he hoped to announce a new “Main Street” coronavirus lending program for mid-size companies this week as part of new Federal Reserve facilities that could leverage up to $4.5 trillion loans.
Mnuchin told CNBC the Treasury has been actively working with the Federal Reserve on for the past week on the Main Street facility for companies with more than 500 employees but too small to access other corporate credit facilities activated by the Fed amid broad stay-at-home orders.
Mnuchin said there have been “daily calls with the Fed” on the topic, adding: “We hope to have an announcement this week with the details on that and get it up and running as soon as we can.”
The Main Street lending facility and support for municipal bond markets would be backed by $454 billion in new funds from the $2.2 billion economic rescue package passed in late March.
But the only available details of the program are those that were spelled out in the legislation and various interests are vying for a sufficient share of the resources.
The bill allows Treasury to make direct loans to companies with similar conditions to those imposed on airlines and national security-linked firms.
It also specifies creation of a Fed lending facility for firms with 500-10,000 employees and a facility to support the largely frozen $4 trillion municipal bond market that is the primary borrowing tool for state and local governments, school districts, hospital groups and transit authorities.
For a look at how the $454 billion could be multiplied into $4.5 trillion, see EXPLAINER.
Municipal borrowers have said they need to see a sufficient share of the funds to relaunch new bond issues, which totaled about $452 billion last year. A U.S. Chamber of Commerce official said the lending program needs sufficient capacity to support companies “economy wide” that have seen revenues severely reduced.
(Reporting by David Lawder and Doina Chiacu; Editing by Chizu Nomiyama and Alistair Bell)