(Bloomberg) -- A congressional watchdog panel is questioning whether the Federal Reserve should continue using public money to purchase some corporate bonds, instead urging the central bank to do more for small businesses, states and cities.
The Fed’s announcement in March that it would buy corporate bonds was enough to rally credit markets, with many large companies endangered by the pandemic finding enough cash in capital markets to cushion the blow.
More than $1 trillion worth of investment-grade corporate debt sales was brought to the market by the end of May. In a typical year, that figure wouldn’t be reached until around November.
At the same time, it’s not yet clear if small business and states and municipal governments have enough access to low-interest loans, according to a report released Thursday by the Congressional Oversight Commission.
“In some areas of the economy, such as the ability of larger companies to issue debt to continue operations, the agencies’ actions have had a clear and powerful impact,” the report says. “There is less evidence that the actions of the Treasury and the Federal Reserve have been as beneficial for small and mid-sized businesses and state and local governments.”
The report is the second from the bipartisan congressional panel is responsible for overseeing $500 billion in grants and loans from the Treasury Department and Federal Reserve to help struggling businesses, including airlines, during the coronavirus pandemic.
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