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Boston Fed says Main Street program now 'fully operational' and ready to purchase loans

NEW YORK (Reuters) – The Federal Reserve Bank of Boston said on Monday the Main Street Lending Program is now fully operational and ready to purchase eligible loans.

The Main Street lending facility, which opened for lender registration in mid-June, is meant to extend easy credit to small and mid-sized businesses that cannot get it elsewhere.

The Fed encouraged registered lenders to start submitting qualifying loans. The U.S. central bank also announced it intends to publish a state-by-state listing of registered lenders that are accepting new business customers under the program and that choose to be listed. 

Lenders had still not made any loans under the program as of July 1, according to data released by the Fed last week.

Large financial institutions that work closely with the Fed, known as primary dealers, slashed in half their expectations for how much take-up they expect from the Main Street lending program, according to a survey released last week by the New York Fed.

It is not entirely clear why the loans have not drawn more interest. When the Fed first proposed it, staff worked urgently on standing it up as thousands of letters poured in with suggestions for how to make it more useful and questions about where to find participating lenders.

The central bank tweaked its plan in response to many of those suggestions by lowering the minimum loan amount, making the program available to a wider range of businesses and introducing a proposal that would open it up to nonprofit groups.

So far 300 lenders have signed up to participate, Fed Chair Jerome Powell said last week. He also indicated the Fed was open to making further adjustments to the program.

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Fed officials stress need to factor in structural inequities when evaluating economy

(Reuters) – Policymakers need to keep diversity and structural racial inequalities in mind when analyzing the labor market and other measures of the economy, two Federal Reserve officials said on Tuesday.

The standard metric used for evaluating U.S. unemployment is flawed because it does not capture the experiences of different groups, and officials should be open minded about how they evaluate full employment, Minneapolis Federal Reserve Bank President Neel Kashkari said during a virtual forum on race and economic mobility.

“It’s clear that the headline unemployment is deeply flawed as a measure. It does not count so many people who are not in the workforce who may want a job,” said Kashkari.

Fed officials have become more vocal about the ways different groups are faring in the economy and the focus on racial inequities is here to stay, even if the U.S. central bank is not able to target specific groups in its policies, said Atlanta Federal Reserve Bank president Raphael Bostic.

“I think what you’re looking at is a new Fed on some level,” said Bostic. “We’re going to make sure our institutions don’t sort of slink away as things move forward.”

The two Fed officials have been among the most vocal policymakers calling attention to racism and inequality in recent months. Bostic, the Fed’s lone Black bank president, penned a letter earlier this month calling for an end to racism and laying out the ways the Fed could help to reduce racial inequalities. Kashkari leads the Fed district in the city where George Floyd died in police custody, setting off a wave of protests across the country and kicking off a national conversation about racism.

Fed Chair Jerome Powell has also commented frequently about how Black and Hispanic workers were among the last to feel the benefits of the tight labor market, and were then hit disproportionately by the job losses caused by the pandemic.

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