Recent conversations have been held on how and what role the Federal Reserve can play to help those less fortunate during the coronavirus pandemic.
The Federal Reserve System, also known as “the Fed,” is the central bank of the United States, has set zero interest rate for loans, stabilized the U.S. stock market and helped buy corporate debt.
However, some members of Congress said large companies received more assistance because of the relationships with banks and financial institutions than those with limited resources.
“The Amazons of the world are making a great deal of money. They have all the relationships,” Rep. Gregory Meeks (D-N.Y.) said Monday, Sept. 21. “But when you look at the small mom and pop businesses – the barbershops, the florists, not-for-profits – they don’t have the contacts and the facilities and the relationships with these banks.”
Meeks spoke on a virtual panel during the Congressional Black Caucus Foundation’s annual legislative conference on the topic at a session labeled “Economic Justice: Examining the Financial Burdens of Inequality and Striving for an Equitable COVID-19 Recovery.”
Robert Johnson, founder and chairman of RJL Companies and moderated the 53-minute discussion which featured ideas such as the Fed institute a monetary policy that includes a racial and equity component.
“These economic issues have been exacerbated by the COVID-19 pandemic,” said the founder of BET Television and noted as America’s first Black billionaire.
According to the Fed’s guidelines, it mainly has four roles: conduct monetary policy through financial conditions that help keep employment and finances stable; supervise and regulate financial institutions to protect credit rights of consumers; ensure a stable economy and analyze risks in the financial markets; and provide certain services to the federal government and oversee the nation’s payment systems.
The Federal Reserve, established in 1913, mainly provides support to the nation’s largest and most influential banks to sustain the health of the nation’s financial system.
The Fed established he a Main Street Lending Program this year for small and medium-sized businesses at $600 billion, but so far has brought in about $1.5 billion in loans.
The program, according to the Fed’s website, was designed “to help credit flow to small and medium-sized for-profit businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 crisis, but now need loans to help maintain their operations until they have recovered from, or adapted to, the impacts of the pandemic.”
“We’re doing more today than we did back in 2008 and [2009 financial recession] …giving the severity of the situation we’re in,” said John Williams, president of the Federal Reserve Bank of New York. “We focus on how to use the best tools that we have and use them as appropriate to get the economy back on its feet…and do the best that we can.”
Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said Fed staff are experienced in homeownership, workforce development and financial literacy.
“These are all other ways we contribute to the development and stabilization of communities,” he said.