'Fed Unveils Emergency Lending Programs as Companies Struggle to Raise Cash' diff viewer (8/9)

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Fed Unveils Emergency Lending Programs as Companies Struggle to Raise Cash	Fed Unveils Emergency Lending Programs as Companies Struggle to Raise Cash
2020-06-15 15:22:28 UTC	2020-06-17 03:44:38 UTC (1 day later)
WASHINGTON — The Federal Reserve took a series of steps on Tuesday to prop up the American economy, saying first that it would begin buying up a type of debt that companies issue for short-term cash and then, later in the day, establishing a lending program meant to help the banks at the core of the financial system function smoothly.	WASHINGTON — The Federal Reserve took a series of steps on Tuesday to prop up the American economy, saying first that it would begin buying up a type of debt that companies issue for short-term cash and then, later in the day, establishing a lending program meant to help the banks at the core of the financial system function smoothly.
Both were efforts to keep credit flowing to businesses and households.	Both were efforts to keep credit flowing to businesses and households.
Taking a page from its 2008 financial crisis playbook, the Fed said it would backstop the $1.13 trillion market for commercial paper, a key funding source used by companies to cover payroll and day-to-day operations. That market, used by firms like Pfizer, Royal Dominion and DuPont, has started to come under strain as businesses raced to fill up their coffers in the face of quarantines, shuttered shopping centers and empty restaurants.	Taking a page from its 2008 financial crisis playbook, the Fed said it would backstop the $1.13 trillion market for commercial paper, a key funding source used by companies to cover payroll and day-to-day operations. That market, used by firms like Pfizer, Royal Dominion and DuPont, has started to come under strain as businesses raced to fill up their coffers in the face of quarantines, shuttered shopping centers and empty restaurants.
Not long after, the Fed said it would roll out a new Primary Dealers Credit Facility, which will allow banks that are key conduits between the Fed, Treasury Department and the broader financial system to get the short-term loans they need to buy and hold securities including corporate bonds.	Not long after, the Fed said it would roll out a new Primary Dealers Credit Facility, which will allow banks that are key conduits between the Fed, Treasury Department and the broader financial system to get the short-term loans they need to buy and hold securities including corporate bonds.
“The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households,” the Fed said of the new program.	“The facility will allow primary dealers to support smooth market functioning and facilitate the availability of credit to businesses and households,” the Fed said of the new program.
In backstopping the commercial paper market, the Fed is trying to protect the rest of the financial system and insulate the broader economy, where short-term pain could turn into long-term suffering if credit crunches prevent companies from obtaining the cash they need to function, forcing them to lay off workers, delay payments to vendors and shutter plants.	In backstopping the commercial paper market, the Fed is trying to protect the rest of the financial system and insulate the broader economy, where short-term pain could turn into long-term suffering if credit crunches prevent companies from obtaining the cash they need to function, forcing them to lay off workers, delay payments to vendors and shutter plants.
The Fed program will use a special vehicle to buy unsecured and asset-backed commercial paper from eligible companies, according to a statement by the central bank. The Fed is not allowed to expose itself to substantial credit risk, so the Treasury Department will protect the Fed against $10 billion worth of losses through its Exchange Stabilization Fund.	The Fed program will use a special vehicle to buy unsecured and asset-backed commercial paper from eligible companies, according to a statement by the central bank. The Fed is not allowed to expose itself to substantial credit risk, so the Treasury Department will protect the Fed against $10 billion worth of losses through its Exchange Stabilization Fund.
Treasury Secretary Steven Mnuchin, speaking on Tuesday at a White House news conference on the virus, said the central bank would be able to buy about $1 trillion worth of commercial paper “as needed.”	Treasury Secretary Steven Mnuchin, speaking on Tuesday at a White House news conference on the virus, said the central bank would be able to buy about $1 trillion worth of commercial paper “as needed.”
“We heard loud and clear there were liquidity issues,” Mr. Mnuchin said.	“We heard loud and clear there were liquidity issues,” Mr. Mnuchin said.
In recent days, buyers of commercial paper disappeared, and the ones who stayed demanded much higher rates. The funding cost for Royal Caribbean Cruises, which has been hit hard by the coronavirus fallout, skyrocketed from a roughly 2 percent interest rate last Thursday to more than 4 percent on Monday, a day before the Fed’s funding facility was announced, according to market participants. The utility company Exelon has also had its financing costs rise by a similar degree, those people added.	In recent days, buyers of commercial paper disappeared, and the ones who stayed demanded much higher rates. The funding cost for Royal Caribbean Cruises, which has been hit hard by the coronavirus fallout, skyrocketed from a roughly 2 percent interest rate last Thursday to more than 4 percent on Monday, a day before the Fed’s funding facility was announced, according to market participants. The utility company Exelon has also had its financing costs rise by a similar degree, those people added.
The Fed’s program should act like an escape valve, snapping up higher-rated notes to keep cash flowing, much as it did during the 2008 financial crisis, when credit markets largely froze. It will also buy lower-rated notes in a set of one-time purchases, offering relief for the most embattled commercial paper issues.	The Fed’s program should act like an escape valve, snapping up higher-rated notes to keep cash flowing, much as it did during the 2008 financial crisis, when credit markets largely froze. It will also buy lower-rated notes in a set of one-time purchases, offering relief for the most embattled commercial paper issues.
In order to set up the program, the central bank needed to declare that the economy faces “unusual and exigent” circumstances, allowing it to use its special lending abilities under section 13(3) of the Federal Reserve Act.	In order to set up the program, the central bank needed to declare that the economy faces “unusual and exigent” circumstances, allowing it to use its special lending abilities under section 13(3) of the Federal Reserve Act.
The Fed’s move followed sweeping action it took on Sunday, when it slashed rates nearly to zero and announced a program to buy up government debt and mortgage-backed securities. Those purchases are also meant to ease strained markets, including that for Treasury securities — which had become hard to trade, a problem because they are in many ways the backbone of the financial system.	The Fed’s move followed sweeping action it took on Sunday, when it slashed rates nearly to zero and announced a program to buy up government debt and mortgage-backed securities. Those purchases are also meant to ease strained markets, including that for Treasury securities — which had become hard to trade, a problem because they are in many ways the backbone of the financial system.
The Fed has also sweetened the terms of its so-called discount window, which allows banks to tap short-term loans from the Fed. It has encouraged banks to begin using the program and the nation’s biggest banks said on Monday night they would use the program. Regulators have also been providing limited regulatory relief to banks to keep credit flowing.	The Fed has also sweetened the terms of its so-called discount window, which allows banks to tap short-term loans from the Fed. It has encouraged banks to begin using the program and the nation’s biggest banks said on Monday night they would use the program. Regulators have also been providing limited regulatory relief to banks to keep credit flowing.
After the 2008 financial crisis, Washington forced big banks to hold on to trillions of dollars in assets that could easily be converted into cash. On Tuesday, regulators told the banks they could start to sell off some of those assets and encouraged them to use the cash to lend to struggling businesses.	After the 2008 financial crisis, Washington forced big banks to hold on to trillions of dollars in assets that could easily be converted into cash. On Tuesday, regulators told the banks they could start to sell off some of those assets and encouraged them to use the cash to lend to struggling businesses.
But investors were clamoring for more, especially as the commercial paper market seized up.	But investors were clamoring for more, especially as the commercial paper market seized up.
It was “obviously a positive step, obviously necessary,” said Ernie Tedeschi, policy economist at Evercore ISI. “The only surprising thing is that it took them this long to do it.”	It was “obviously a positive step, obviously necessary,” said Ernie Tedeschi, policy economist at Evercore ISI. “The only surprising thing is that it took them this long to do it.”
The struggle to raise cash has threatened to set off a chain reaction. Many companies, including Boeing, Kraft Heinz, and Hilton Worldwide, are now drawing on lines of credit. Money market funds — a major buyer of commercial paper — have stopped buying to keep cash on hand in case their investors want to withdraw their money.	The struggle to raise cash has threatened to set off a chain reaction. Many companies, including Boeing, Kraft Heinz, and Hilton Worldwide, are now drawing on lines of credit. Money market funds — a major buyer of commercial paper — have stopped buying to keep cash on hand in case their investors want to withdraw their money.
“For the smallest and biggest investors, the playbook says build cash in an uncertain environment,” says Peter Crane, president of Crane Data, a company that tracks money market funds. “You stock up on that even before you get to the toilet paper.”	“For the smallest and biggest investors, the playbook says build cash in an uncertain environment,” says Peter Crane, president of Crane Data, a company that tracks money market funds. “You stock up on that even before you get to the toilet paper.”
On Monday, those seeking commercial paper funding were being offered new loans with terms as short as a single day — a sign that investors are simply not willing to tie their cash up as the coronavirus stokes uncertainty and arrests cash flow, said one large commercial paper dealer, who spoke on the condition of anonymity to discuss client matters.	On Monday, those seeking commercial paper funding were being offered new loans with terms as short as a single day — a sign that investors are simply not willing to tie their cash up as the coronavirus stokes uncertainty and arrests cash flow, said one large commercial paper dealer, who spoke on the condition of anonymity to discuss client matters.
The cash clamor is in turn putting pressure on banks to keep their own money free to meet customer demand, potentially preventing them from serving as an intermediary in other crucial markets and hampering trading in everything from Treasurys to corporate debt.	The cash clamor is in turn putting pressure on banks to keep their own money free to meet customer demand, potentially preventing them from serving as an intermediary in other crucial markets and hampering trading in everything from Treasurys to corporate debt.
~~Updated June ~~12,~~ 2020~~	Updated June 16, 2020
	The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.	So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.	Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.	A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.	The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.	Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.	States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.	Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)	If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.	Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.	The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.	If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.	If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
The largest banks have agreed to make huge amounts of credit available to companies. These commitments are typically not reflected in loan totals but are tacked on to other disclosures — and can be enormous. With these loan commitments and other items, the balance sheets of the six biggest U.S. banks would have been a combined $2.8 trillion larger at the end of last year, according to regulatory filings.	The largest banks have agreed to make huge amounts of credit available to companies. These commitments are typically not reflected in loan totals but are tacked on to other disclosures — and can be enormous. With these loan commitments and other items, the balance sheets of the six biggest U.S. banks would have been a combined $2.8 trillion larger at the end of last year, according to regulatory filings.
Executives at the banks say their institutions could handle big loan drawdowns. The companies receiving the loans would put it back in the banking system, and if they pay the cash out to employees and suppliers, they too would put it in bank accounts, said one senior bank executive who was not authorized to speak publicly. And if there were temporary problems, the banks could get the funding they need at the Fed’s discount window, this person added.	Executives at the banks say their institutions could handle big loan drawdowns. The companies receiving the loans would put it back in the banking system, and if they pay the cash out to employees and suppliers, they too would put it in bank accounts, said one senior bank executive who was not authorized to speak publicly. And if there were temporary problems, the banks could get the funding they need at the Fed’s discount window, this person added.