April 6, 2020

On March 23, the Federal Reserve announced new measures it would be taking to support the credit markets and the broader economy in the face of the economic and credit disruption caused by the COVID-19 pandemic and related governmental interventions. Those measures include expanded purchases of treasury and agency MBS securities as part of open market operations, as well as several new credit facilities to support US credit markets. 

Beyond these interventions in the capital markets, the most novel of the Federal Reserve’s announced new measures is the Main Street Business Lending Program (the “MSBLP”)—a Federal Reserve credit program to encourage expanded lending activity to small- and medium-sized businesses. The proposed MSBLP would fill the gap between (1) the small businesses that would be assisted by the Paycheck Protection Program (the “PPP”) along with other existing and expanded SBA lending activity contemplated by the Coronavirus Aid, Relief and Economic Security (the “CARES Act”) and (2) the large investment grade corporations that would be supported by the Federal Reserve’s announced primary and secondary market corporate credit facilities.

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