Legal constraints mean Fed's Main Street program can't help businesses that need it most

While the Federal Reserve has earned praise for many of its actions aimed at stabilizing the economy in the United States since the coronavirus pandemic began, its "Main Street" lending program — which is designed to rescue companies that are struggling to stay afloat during the crisis — has sputtered, Politico reports.

The main reason for that, Politico notes, is because the companies that need the Fed's help the most, like hotels with big mortgages, aren't eligible because their debt levels are too high. The Fed, which can't provide grants, is legally prohibited from lending to insolvent companies, and the central bank has subsequently remained cautious about when and where to step in. "It's just too hard to do this through the constraints the Fed has on it by law," David Beckworth, a senior research fellow at George Mason University's Mercatus Center, told Politico.

At the moment, borrower demand reportedly isn't especially high, but if the pandemic doesn't slow down going forward, it won't be a "very rosy picture," said Brian Crawford, executive vice president of government affairs at the American Hotel and Lodging Association. Read more about the program at Politico.

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