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Fed kicks off Main Street lending, balance sheet tops $7 trillion

Published 07/16/2020, 05:57 PM
Updated 07/16/2020, 06:00 PM
© Reuters. U.S. House of Representatives Financial Services Committee hearing on oversight of the Treasury Department and Federal Reserve response to the outbreak of the coronavirus disease (COVID-19), in Washington

(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.

© Reuters. U.S. House of Representatives Financial Services Committee hearing on oversight of the Treasury Department and Federal Reserve response to the outbreak of the coronavirus disease (COVID-19), in Washington

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.

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