Fed Treads Cautiously Into Muni Market

Bloomberg Law reports that Senior Fellow Kent Hiteshew, hired by the Federal Reserve to design the Municipal Liquidity Facility, “rolled out plans to make loans in the $3.9 trillion municipal-debt market for the first time.” The central bank would lend as much as $500 billion to states and local governments to cover budget shortfalls brought on by the COVID-19 crisis, but the loans are a backstop for market liquidity, "not a first resort for governments desperate for cash to fill the growing shortfalls in their budgets."

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