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Talked with @BostonFed Pres. Rosengren today about Main St + the path ahead. Takeaways:
Businesses that debated for months whether to take on more debt pulled the trigger once Main St had an end date
"It became clear that if they didn't commit, they would lose the opportunity."
Businesses that debated for months whether to take on more debt pulled the trigger once Main St had an end date
"It became clear that if they didn't commit, they would lose the opportunity."
With the pandemic raging, companies had "to make sure they could make it to spring," especially when it was unclear what would happen with another wave of PPP.
On the borrower side, many banks were first-time lenders in December as they got familiar with the program.
On the borrower side, many banks were first-time lenders in December as they got familiar with the program.
I asked how the Fed's emergency lending powers could be tapped again, including under the new administration.
Rosengren said the Fed & Treasury would have to agree that "unusual & exigent" circumstances had been met -- and that the response didn't leave out mid-size companies.
Rosengren said the Fed & Treasury would have to agree that "unusual & exigent" circumstances had been met -- and that the response didn't leave out mid-size companies.
Rosengren proposed a hypothetical: a coronavirus variant that forced a systemic economic shutdown.
"No one is anticipating that, but were for example that to happen, then we'd have to think about what kind of emergency lending might be appropriate in that kind of situation."
"No one is anticipating that, but were for example that to happen, then we'd have to think about what kind of emergency lending might be appropriate in that kind of situation."
"These are circumstances I hope that we don't have to utilize."
"At the same time I think we have to be aware that twice in a decade we’ve had to do 'unusual' activities. And part of that is tied to how close we are to the zero lower bound and a low-inflation environment."
"At the same time I think we have to be aware that twice in a decade we’ve had to do 'unusual' activities. And part of that is tied to how close we are to the zero lower bound and a low-inflation environment."
Rosengren said he'd had general background conversations with the incoming Biden administration and transition team, including about the lending programs, but wouldn't share specifics.
"Last time it was a crisis in the financial sector, this time it was a crisis in pandemic-related industries. It's hard to know exactly what the next shock might be. But I think we should be prepared to help all parts of the economy, not just some parts of the economy."
Lastly, some background on how the emergency lending programs could become a charged debate once again, depending on how the Biden administration wants to deploy them.
https://www.washingtonpost.com/business/2020/12/20/stimulus-fed-politics-lending-programs/ https://www.washingtonpost.com/business/2020/12/18/stimulus-fed-facilities-toomey/
https://www.washingtonpost.com/business/2020/12/20/stimulus-fed-politics-lending-programs/ https://www.washingtonpost.com/business/2020/12/18/stimulus-fed-facilities-toomey/
