The Federal Reserve has reached out to investment and retail banks for feedback on its Main Street lending program ahead of its formal launch, according to people familiar with the matter.
The Fed is asking a wide range of questions, including ones geared toward understanding what loan requirements make sense for specific industries, the people said. Lobbyists for various industries and sectors have pushed to ensure the companies they represent will be able to access the funds. Retail and hospitality lobbyists, for example, have expressed concern that requirements around debt are too restrictive.
Federal Reserve Board Chair Jerome Powell, however, has said the Main Street program is not a divergence from its mandate, but a broadening of its efforts under unprecedented circumstances to maintain the flow of credit to households and businesses. "The Fed doesn't have the capacity to do credit underwriting, so they are dependent on banks to do that," Chris Whalen of advisory firm Whalen Global Advisors, who previously worked at the Federal Reserve Bank of New York.
"The bigger question is whether the Fed will be willing to make modifications in the terms across different sectors," said Kathryn Judge, a professor at Columbia Law School and an expert in financial markets.
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