Federal Reserve Bank of Boston

As private credit tops $1 trillion, Fed researchers warn bank exposure to the sector could spark systemic risk if defaults spike.

In their latest economic forecasts, 12 of 19 Fed officials said they expect to raise rates once more this year. 

To cool inflation, the Boston Fed president said, the central bank may need to keep raising rates and then holding them steady for a while.

The work of creating a possible digital dollar inched ahead Thursday with research by the Federal Reserve Bank of Boston into the code that could eventually support such a currency.

Some policymakers in the nation’s capital have urged the Federal Reserve banks of Boston and Dallas to consider people of color and women while selecting new presidents. Republicans led by Sen. Pat Toomey of Pennsylvania say the process should be left to the local bank boards.

Sen. Pat Toomey of Pennsylvania, the top Republican on the Banking Committee, told three Federal Reserve regional presidents that a series of events tied to the impact of racism on the job market and housing systems is not within the scope of the central bank.

The central bank should consider using a tool requiring higher capital amounts when times are good rather than offering temporary regulatory relief in a downturn, said Boston Fed President Eric Rosengren.

Federal Reserve Bank of Boston President Eric Rosengren said the long period of low interest rates before the coronavirus pandemic is contributing to the depth of the current recession.

With big banks largely shunning the program, small banks see an opening to grab more market share in commercial lending.

The head of the Federal Reserve Bank of Boston said the central bank had acquired stakes in 32 business loans as of Monday, four times the amount from two weeks earlier.

At its inaugural hearing, the committee appointed by lawmakers to oversee CARES Act implementation pressed for answers about why the Main Street Lending Program is off to such a slow start.

Many big banks say they will focus on existing customers in offering credit through the Federal Reserve’s emergency lending program for midsize businesses. Complex vetting and fear of being inundated are said to be among their concerns.

But Boston Fed chief sees more interest among banks and borrowers if the economy worsens; the failed payments company is being investigated for its alleged role in a $100 million caper.

Banks participating in the Main Street Lending Program were able to register for and offer credit to businesses last month, but the Federal Reserve said Monday it was set to make the effort fully operational.

Participation in the Main Street Lending Program for midsize companies is partly about public service, but the core business rationale is building "a banking relationship that continues on for some time," the Boston Fed chief says.

Worried about a lack of demand and that some of their customers are ineligible, community banks are still on the fence about participating in the effort to back loans for businesses recovering from the pandemic crisis.

The central bank also asked for public feedback on a proposal to extend support for coronavirus relief loans to nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic.

The Federal Reserve Bank of Boston published details on the terms for lenders and borrowers to participate in the facility intended to provide coronavirus relief funds to middle-market firms.

Federal Reserve Bank of Boston President Eric Rosengren said he expects companies to begin receiving money through the central bank's long-awaited Main Street Lending Program within two weeks.

The central bank said its program to support money market mutual funds will also serve as a backstop for state and local governments.