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Fed to buy unlimited government debt and lend to businesses

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6 years ago

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WASHINGTON (AP) — In its boldest effort to protect the U.S. economy from the coronavirus, the Federal Reserve says it will buy as much government debt as it deems necessary and will also begin lending to small and large businesses and local governments to help them weather the crisis.

The Fed’s announcement Monday removes any dollar limits from its plans to support the flow of credit through an economy that has been ravaged by the viral outbreak. The central bank’s all-out effort has now gone beyond even the extraordinary drive it made to rescue the economy from the 2008 financial crisis.

“The coronavirus pandemic is causing tremendous hardship across the United States and around the world,” the Fed said in a statement. “While great uncertainty remains, it has become clear that our economy will face severe disruptions. Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate.”

IMPACT ON THE ECONOMY:

Financial markets sharply reversed themselves after the announcement but then fell back again after the market opened. By mid-day, the Dow Jones Industrial Average was down about 4%. The yield on the 10-year Treasury bond fell, a sign that more investors are willing to purchase the securities.

In unleashing its aggressive new efforts, the Fed, led by Chair Jerome Powell, is trying both to stabilize the economy and allay panic in financial markets. Many corporations and city and state governments are in desperate need of loans to pay bills and maintain operations as their revenue from customers or taxpayers collapses. That need has escalated demand for cash. In the meantime, large businesses have been drawing, as much as they can, on their existing borrowing relationships with banks.

The intensifying needs for cash means that banks and other investors are seeking to rapidly unload Treasuries, short-term corporate debt, municipal bonds and other securities. The Fed’s move to step in and act as a buyer of last resort is intended to provide that needed cash.

The central bank’s actions increase pressure on Congress to approve a nearly $2 trillion stimulus package that stalled late Sunday. The bill includes funds that would help backstop the Fed’s lending. Many economists say that whatever financial support Congress eventually provides will likely be even more important than the Fed’s intervention. And they warn that such fiscal help needs to come soon.

The Fed’s intervention is not a substitute for fiscal stimulus,” said Joseph Gagnon, a former Fed economist who is now senior fellow at the Peterson Institute for International Economics. “Let’s hope Congress passes something quickly.”

Joe Brusuelas, chief economist at RSM, a tax and advisory firm, said that if Congress can pass the legislation and have it signed into law by Tuesday, banks could start making loans to small and medium-sized businesses, with the Fed’s support, by Friday.

In its announcement Monday, the Fed said it will establish three new lending facilities that will provide up to $300 billion by purchasing corporate bonds, a wider range of municipal bonds and securities tied to such debt as auto and real estate loans. It will also buy an unlimited amount of Treasury bonds and mortgage-backed securities to try to hold down borrowing rates and ensure those markets function smoothly.

The central bank’s new go-for-broke approach is an acknowledgment that its previous plans to keep credit flowing smoothly, which included dollar limits, wouldn’t be enough in the face of the viral outbreak, which has brought the U.S. economy to a near-standstill as workers and consumers stay home. Last week, it said it would buy $500 billion of Treasuries and $200 billion of mortgage-backed securities, then quickly ran through roughly half those amounts by week’s end.

And on Monday, the New York Federal Reserve said it would buy $75 billion of Treasuries and $50 billion of mortgage-backed securities each day this week.

“They’re really setting the economy up” to start functioning again when the health crisis subsides, said Donald Kohn, a former Fed vice chair who is a senior fellow at the Brookings Institution. “Part of this is about the other side of the valley: Make sure the credit is there.’’

Still, Kohn noted, “These things will take some time to set up. These are complicated” programs.

Just knowing that the Fed is on the case should reassure businesses as the programs ramp up, Kohn said.

“The fact that this is coming: People will know it,” Kohn said. “They know the Fed is on the job. If there are issues that come up, what you’re seeing from this Federal Reserve is: ‘We will deal with it.’ ’’

The Fed mostly creates the money it will use to buy bonds and lend to large and small businesses. But it seeks to avoid credit losses. It has been using money from a Treasury fund to offset any losses on its loans. That fund, the Exchange Stabilization Fund, has already committed most of that money to the Fed’s existing facilities. The congressional legislation could boost that amount by $500 billion.

“The steps announced today, combined with the previous ones … should substantially improve market functioning and should provide some important support for the economy,” said Roberto Perli, a former Fed economist who is now head of global policy research at Cornerstone Macro.

But Perli cautioned that the benefits won’t be felt immediately.

“The next couple of quarters will still be probably bad,” he said.

The new programs announced Monday by the Fed include two that will buy corporate debt issued by large companies. The Fed legally can’t lend directly to companies. But it can lend to separate entities, which can then make those purchases.

One program will buy newly issued corporate debt. This is an effort to revive that market, which has effectively come to a standstill. The second will buy previously issued corporate debt. Both programs will include $10 billion provided by the Treasury to offset any losses.

A third new lending program will buy securities backed by packages of auto loans, credit card loans and some small business loans. Lending in those areas hinges on the ability of banks to package those loans into securities and sell them. So the Fed’s move is critical to the ability of banks to continue to provide these loans as the economy falters.

The Treasury will also provide $10 billion to that program to offset any losses. All told, those three programs can lend up to $300 billion.

The Fed said that companies “that are expected to receive direct financial assistance under pending federal legislation” are not eligible to participate in the corporate lending programs — a reference to the airline industry and perhaps others under consideration.

Companies will have to be rated at investment grade, or above junk level, to be eligible for lending. The companies can defer payments for up to six months, the Fed said. If they do suspend payment, they are not allowed to buy back their shares or pay dividends, it said.

The Fed also said it will soon establish a “Main Street Business Lending Program” to support lending to small and medium-sized businesses. But it provided few details and didn’t say when that program would begin.

That program will likely be funded by and is intended to complement the congressional stimulus legislation, which also includes a provision to provide financing to very small companies. The Fed’s Main Street program will target medium-sized businesses, officials said.

Brusuelas noted that by announcing the Main Street lending program, the Fed had committed to something before a congressional backstop was in place, a virtually unheard-of step.

“You’re never going to see that again, hopefully,” he said.

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Florida

Florida Sen. Shevrin Jones Will Not Seek Re-Election, Fuels Speculation About Congressional Run

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5 days ago

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May 31, 2026

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MIAMI, Fla. (FNN) — Democratic State Sen. Shevrin Jones announced Wednesday that he will not seek re-election to Florida Senate District 34, ending a 13-year tenure in the Florida Legislature and fueling speculation about a possible run for Congress.

Jones, who has represented Senate District 34 since 2020, shared the decision in a video posted on social media.

“After a lot of prayer, reflection, and honest conversations with the people closest to me, I’ve decided that I will not seek re-election to the Florida Senate,” Jones said.

13 Years in the Florida Legislature

Jones was first elected to the Florida House of Representatives in 2012, where he served until his election to the Florida Senate in 2020. During his legislative career, he emerged as one of South Florida’s most prominent Democratic lawmakers, advocating on issues including education, healthcare, economic opportunity, and civil rights.

His decision not to seek another term marks the end of more than a decade of service in Tallahassee.

Speculation Grows About Congressional Bid

Jones’ announcement comes as political observers speculate that he may be preparing a campaign for Florida’s 24th Congressional District.

The seat is expected to become open following Congresswoman Frederica Wilson’s decision not to seek re-election in 2026. Wilson has represented the district since 2011 and remains one of South Florida’s most influential Democratic leaders.

Although Jones did not formally announce plans for another office, he acknowledged public interest regarding his political future.

“I know there’s been a lot of conversation about what’s next for me,” Jones said. “And there will be time to talk about that at a later date.”

Open Congressional Seat Draws Attention

Wilson’s departure is expected to trigger a competitive race to succeed her in Congress, with several current and former elected officials reportedly considering bids for the seat.

Jones’ decision to leave the Florida Senate immediately places him among the names being discussed as a potential contender for the congressional district, which includes portions of Miami-Dade and Broward counties.

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Florida

Former Air Force Colonel and Physician Rudolph Moise Seeks Florida Congressional Seat Vacated by Frederica Wilson

Published

5 days ago

on

May 30, 2026

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MIAMI, Fla. (FNN) — South Florida Congresswoman Frederica Wilson has announced she will not seek reelection to Florida’s 24th Congressional District, creating an open-seat race that is expected to draw significant attention ahead of the 2026 election cycle.

Even before Wilson’s retirement announcement became public, Dr. Rudolph “Rudy” Moise had already shifted his political focus. Moise withdrew from the crowded race for Florida’s 20th Congressional District to pursue a campaign for the seat currently held by Wilson.

Moise Brings Military, Medical, Legal, and Business Experience

Moise is a longtime physician, attorney, businessman, and retired U.S. Air Force colonel. Over the years, he has built a public profile through his medical practice, community involvement, and repeated campaigns for federal office in South Florida.

His decision to enter the race immediately positions him among the most recognizable candidates seeking to succeed Wilson in Congress.

No Stranger to Running Against Wilson

Moise is no stranger to challenging Wilson at the ballot box.

He previously mounted two congressional campaigns against the longtime Democratic incumbent but was unsuccessful in his efforts to unseat her. Despite those defeats, Moise maintained a visible presence in South Florida politics and continued advocating on issues related to healthcare, economic development, public safety, and government accountability.

With Wilson now stepping aside, Moise will have his first opportunity to compete for the seat without facing the incumbent congresswoman.

Political observers note that Moise’s prior campaigns have given him valuable name recognition and an established network of supporters throughout Miami-Dade and Broward counties.

Redistricting Could Reshape the Political Landscape

Florida’s congressional map underwent significant changes following redistricting approved by Governor Ron DeSantis. The revised boundaries altered several congressional districts across the state, including portions of South Florida.

The new district configuration could create different political dynamics than those Moise faced during his previous campaigns against Wilson.

As candidates begin to organize for the 2026 election cycle, the open-seat contest is expected to attract a competitive field of Democratic and Republican contenders seeking to represent one of South Florida’s most prominent congressional districts.

With Wilson’s departure ending an era in South Florida politics, voters will soon decide who will succeed the veteran congresswoman and represent Florida’s 24th Congressional District in Washington.

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Central Florida News

Puerto Rican Business Owner Tatiana Fernandez running for Orange County Commission District 8

Published

5 days ago

on

May 30, 2026

By

ORLANDO, Fla. (FNN) — The Orange County Board of County Commissioners recently approved a new District 8 seat to address the county’s continued population growth and expanding communities.

Tatiana Fernandez officially entered the race for the newly created Orange County Commission District 8 seat after announcing her candidacy on social media and filing the necessary paperwork with the Orange County Supervisor of Elections.

Fernandez Highlights Business, Advocacy, and Community Leadership Experience

Fernandez, a Puerto Rican-born business owner, autism advocate, and community leader, said her campaign is focused on strengthening families, supporting small businesses, and expanding opportunities throughout Orange County.

“Latinos are shaping the future of America,” Fernandez stated in her campaign announcement. “Together, we can build stronger communities, greater opportunities, and a brighter future for our children.”

Fernandez currently serves on the Orange County Commission on Aging Board, where she advocates for programs and services benefiting seniors throughout the county.

Her professional and community background includes:

• Business owner since 2015 with extensive experience in entrepreneurship and business development.

• Owner of Pantera Technical Services, a Women-Owned Small Business (WOSB) headquartered in Daytona Beach, Florida.

• On-the-job training provider for Florida Vocational Rehabilitation students since 2019.

• Autism advocate serving families in Seminole County since 2007.

• Fully bilingual in English and Spanish.

• Born and raised in Puerto Rico.

• Resident of Florida since 2004 after living in Boston from 1994 to 2000.

• Academic studies in banking, pre-law, finance, government relations, and healthcare administration.

• Volunteer with the Lake Mary High School Robotics Program from 2017 to 2020.

• Registered volunteer for former Florida State Representative Daisy Morales in both Orlando and Tallahassee offices.

• Candidate for Florida’s 7th Congressional District during the 2022 and 2024 election cycles.

Campaign Focused on Families, Seniors, and Small Businesses

Fernandez said Orange County residents deserve leadership that listens to the community and understands the challenges facing working families, senior citizens, and small-business owners.

“Our community deserves leadership that listens, works hard, and truly understands the needs of families, seniors, and small businesses,” Fernandez said. “I look forward to continuing to serve Orange County with integrity, compassion, and dedication.”

She is encouraging supporters to volunteer, share campaign information, and contribute to her effort to represent the newly established district.

Crowded Field Emerges for New District 8 Seat

Fernandez joins a growing field of candidates seeking election to the new Orange County Commission District 8 seat. Other announced candidates include Vic Torres, Jeannette Quinones-Hernandez, Isaiah Louis Anderson, Julio Rocha, and George Haas.

Candidate qualifying is scheduled for June 8-12, 2026. The primary election will be held on August 18, 2026, with voters selecting the first commissioner to represent the newly created district.

The District 8 seat is expected to be one of Orange County’s most closely watched races as candidates compete to represent a rapidly growing and increasingly diverse constituency.

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