Knowledge@Wharton March 23, 2020
Over the past nearly three weeks, the U.S. Federal Reserve Bank has put up a valiant effort to protect households, businesses and the economy from the effects of the coronavirus pandemic, or COVID-19. On Monday, March 23, it announced its latest stimulus package that included expanded windows for its purchase of securities and new credit facilities for businesses and municipalities. The Fed’s earlier actions have included sharp interest rate cuts, short-term loan facilities, asset purchase windows and regulatory latitude for banks that may fall short of capital requirements as they participate in those programs.
How much further could the Fed go? Faculty at Wharton and Yale have expressed concerns over the trajectory of the Fed’s actions, arguing that it perhaps...