Connecticut congressman and treasurer praise the Federal Reserve’s rapid response to pandemic
Congressman Jim Himes of Connecticut said the Federal Reserve’s response to the onset of the pandemic may serve as a model for future recessions.
He told a House committee this week that Fed programs such as the municipal liquidity facility and the paycheck protection program have helped save the economy as businesses shut down and the stock market was suffering.
“The Fed’s commitment to supporting the economy itself has helped calm the markets. In the days following the Fed’s announcement of programs to strengthen municipal bond markets, investors returned, liquidity increased, and another catastrophe was likely averted. We learned that the Fed could play a powerful role when it has the power to make and execute plans, ”Himes said.
Himes also called on Congress to determine what improvements are needed to strengthen these programs.
Connecticut State Treasurer Shawn Wooden testified before Congress Thursday on how the Federal Reserve can best use emergency lending powers during the pandemic.
The Municipal Liquidity Facility, or MLF, was established in April 2020. It has purchased up to $ 500 billion in debt from state and local governments. Wood said this was the key to stabilizing the economy at the start of the pandemic.
“The establishment of the MLF has provided essential support to the creditworthiness of issuers by standing ready to purchase short-term bonds from state and local governments in an extremely uncertain economic environment, thereby helping state and local governments to better manage debt. pressures on customer cash flow, ”Wooden said.
The establishment stopped purchasing tickets at the end of 2020. Wood said the government should make the program permanent.