May 1, 2020 - Economy & Business

The Fed's expanded lending looks to help fill the holes PPP missed

Dion Rabouin, author of Markets

Photo: Smith Collection/Gado/Getty Images).

While business owners have largely praised the federal government's fast response and the good intent of the CARES Act, it has left much to be desired.

The state of play: It is believed that one of the reasons for the Fed's expanded lending under the Main Street facility is the struggles of the Paycheck Protection Program.

What it means: With the Small Business Administration overwhelmed by demand and many small business owners unable to access funding, PPP has been plagued by bad news since even before it launched.

Where it stands: "PPP was the right idea but it was intended to be a short-term measure and really needs structural changes that can, in addition to a major infusion of resources, give travel businesses and their workers a real chance to survive," Tori Barnes, executive VP of public affairs and policy at the U.S. Travel Association, said during a media briefing Thursday.

  • "There are many businesses with no customers, with no revenues that are left out altogether of PPP and the CARES Act."

Between the lines: By reducing the size of the loans it offers (which unlike PPP loans cannot be forgiven), the Fed's Main Street program allows medium-sized businesses direct access to its seemingly bottomless supply of cheap capital through financial institutions that take on, at most, 15% of the risk while the central bank shoulders the rest.

  • "By lowering the minimum loan size you’re going to be able to reach a lot of companies that would’ve been in that PPP range," Amanda Fischer, policy director for the Washington Center for Equitable Growth, tells Axios.
  • "$500,000 is still bigger than the average PPP loan recipient, but this isn’t Wall Street levels of money."

Of note: The Fed also is buying PPP loans to clear them from bank balance sheets and allow more lending.

Go deeper: How many big companies got PPP loans

Go deeper

Updated 10 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 4 p.m. ET: 6,226,408 — Total deaths: 373,973 — Total recoveries — 2,672,161Map.
  2. U.S.: Total confirmed cases as of 4 p.m. ET: 1,799,747 — Total deaths: 104,702 — Total recoveries: 444,758 — Total tested: 16,936,891Map.
  3. Public health: Nearly 26,000 coronavirus deaths in nursing homes have been reported to federal health officials —Coronavirus looms over George Floyd protests across the country.
  4. Federal government: Trump lashes out at governors, calls for National Guard to "dominate" streets.
  5. World: Former FDA commissioner says "this is not the time" to cut ties with WHO.
  6. 🎧 Podcast: The virus didn't go away.

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Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

New York City will be placed under curfew on Monday from 11pm until 5am Tuesday morning following days of protests over the death of George Floyd, Gov. Andrew Cuomo and Mayor Bill de Blasio announced Monday.

The big picture: Demonstrations in New York, like in cities across the country, turned violent over the weekend as protesters clashed with police late into the night. The number of police officers on the streets of New York will double from 4,000 to 8,000.

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Police watch as demonstrators block a roadway while protesting the death of George Floyd in Miami. Photo: Joe Raedle/Getty Images

Preliminary results from an independent autopsy commissioned by George Floyd's family found that his death in the custody of Minneapolis police officer Derek Chauvin was "homicide caused by asphyxia due to neck and back compression that led to a lack of blood flow to the brain," according to a statement from the family's attorney.

Why it matters: The autopsy contradicts preliminary findings from the Hennepin County medical examiner, who found “no physical findings that support a diagnosis of traumatic asphyxiation or strangulation,” according to charging documents against Chauvin. The official examination is still ongoing.