Federal Reserve officials have not made public any new information about the three $1.2 trillion loan centers that are part of the Federal Open Market Committee’s (FOMC) rule-making process.
But the Federal Deposit Insurance Corp. (FDIC) said on Friday that it had not made any changes to the $1 trillion dollar loan facility since it was first introduced in December.”FDIC has been working with FOMC to review and evaluate its $1 Tranche II Loan Facility,” FDIC Chairman Ben Bernanke said in a statement.
“While FDIC has not changed its position regarding the availability of the $700 billion loan facility, we will continue to monitor the program and consider changes to ensure that it is aligned with current economic conditions.”
FDIC Deputy Director Robert Hegarty also said the agency had not changed how it evaluates the dollar loans.
“The $700bn loan has not been subject to any changes at all,” he said.
“As FDIC evaluates this program, we do not anticipate any change in the level of capital it provides, as the $7.5 trillion of capital currently provided by Fannie Mae and Freddie Mac remains the standard.”
Federal Reserve chairman Ben Bernay, center, shakes hands with Federal Reserve Vice Chairman Stanley Fischer (left) and Federal Reserve Governor Jerome Powell in the Roosevelt Room of the White House, on January 18, 2017, in Washington.
President Donald Trump has said the $2.5tn dollar loan program will help keep the U.S. in the global economy.
Bernanke and Fischer spoke with reporters before the start of the meeting on Friday and confirmed the Fed’s position that the $750bn loan will be used for the purposes of promoting U.K. exports and maintaining U.N. peacekeeping missions.
“The $750 billion will be fully available to support our efforts to promote the U-turning and the Upholding of the Bank’s policy,” Bernanke told reporters after the meeting.
“We’ll continue to support these efforts in the context of the world economy, but this is an opportunity to make a big difference to our global economy.”
Bernanke reiterated his view that the dollar-denominated program is “essentially the same as what the FOMc has been doing for years.”
The $750b dollar loan will provide $200bn of capital to U.M.S., plus a $100bn loan to the UBS.
Federal Reserve will also hold the rest of the loans, $450bn in total.
The $1tn loan facility is used to buy U.P. government bonds from the UAW union, and to purchase bonds from other banks and credit unions.
The program has become a hot topic in the White Houses political debate since Trump took office in January, when he called the $350bn loan program “the biggest loan in history.”
He said the program “will create more jobs than the bailout of Fannie and Freddie.”
“These are big loans.
They are going to create jobs.
And I have a lot of confidence that the banks and the investors are going, okay, we’re going to get the money out of the system,” Trump said in January.
Bernays statement was the first time the Fed has acknowledged the existence of the program, which was initially announced in December 2017.
“Although the Fed and FDIC have not yet made any decisions regarding the dollar lending program, FDIC’s recent statement is consistent with its prior statements and the views expressed by Chairman Bernanke at the FPC meeting,” said FDIC spokesman Joe Bausch.
“FDIC’s stated position has been to support the FOC [Federal Open Market Commission] program in the face of the expected adverse impacts of increased capital requirements in the financial system.”
Bernays remarks come as the Fed is looking to tighten monetary policy and support the economy.
It is also facing pressure from the Trump administration and some lawmakers to consider more measures to rein in the runaway global economy, which is now growing at an annual rate of 1.3 percent.