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Main Street Lending Program - Balance Sheet Rises Above $7 Trillion

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EDITOR NOTE: The Fed’s balance sheet rose to $7 trillion as of this week, up from $6.97 a week ago. But its new lending facility for small to mid-sized businesses remains largely untapped. A sign of potential economic recovery? Wait until the fall, when COVID cases begin surging amid a new flu season (two separate things, BTW). By then financially strapped businesses may be tapping the Fed’s facility in droves, and the central bank’s policies may prove increasingly ineffectual as our national debt increases to levels unpayable.

(Reuters) - The U.S. Federal Reserve’s stash of bonds and other assets rose for the first time in more than a month, even as many of its emergency lending facilities continued to get little use and a new lending program designed to help small and medium-sized companies hurt by the coronavirus crisis got off to a slow start.

The Fed’s total balance sheet size rose to $7.01 trillion as of July 15 versus $6.97 trillion a week earlier, data released by the central bank on Thursday showed. It was the first increase since June 10, and was largely due to continued purchases of Treasuries and mortgage-backed securities aimed at keeping financial market conditions easy.

But the Fed’s facilities aimed at steadying credit and other financial markets continued to get little traction.

Under the Fed’s Main Street Lending Program, which became fully operational last week, the central bank purchased just $12 million in loans from eligible lenders, Thursday’s data showed. The lenders are required to hold on to 5% of the balance for loans made through the program.

Fed Chair Jerome Powell has said he expects the Main Street Lending Program to come in handy in the fall, when more companies may be financially stressed enough to need to tap it.

Originally posted on Reuters

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