Federal Reserve will buy debts of smaller towns and counties
The Federal Reserve’s support program for US municipalities, affected by the Covid-19 outbreak, is expanding considerably. Now, cities in the United States with a population of at least 250,000 and counties with at least half a million residents are allowed to participate. Cities such as Miami, Atlanta, Boston and New Orleans are now also included in the program. The program now runs until December this year instead of September.
Previously, only large cities of 1 million people and counties of 2 million people were allowed to participate in the program. The original idea was that larger cities and states would let money flow back to smaller cities and towns. That raised criticism.
Under the program, the Federal Reserve buys municipal debts up to $ 500 billion. This supports the municipal bond market, enabling cities and municipalities to borrow money there again. The program has not yet started and is part of nine different aid facilities created by the Fed to help the US economy through the crisis.
According to the latest figures, the US has 87 cities with at least 250,000 people and 140 districts with populations above half a million.