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Fed Expands Municipal Bond Program, Opening Door to Some Smaller Cities

Fed Expands Municipal Bond Program, Opening Door to Some Smaller Cities


Fed Expands Municipal Bond Program, Opening Door to Some Smaller Cities

WASHINGTON — The Federal Reserve said on Wednesday that it would allow states to designate some cities, counties and other debt issuers, like mass transit systems, to raise funds by selling debt to the central bank’s municipal bond-buying program.The Fed’s program, first announced on April 9, was previously able to buy debt only from cities with populations of 250,000 or more and counties with populations of at least 500,000. Those larger cities and counties, along with some entities that work across state lines, remain eligible to sell notes of up to 36 months to the central bank’s facility.The change means that states that do not have sufficiently large cities or counties — or that have only one — will be able to designate up to two city or county issuers to use the program. Governors from each state will also be able to designate two bond issuers whose revenues come from operating government activities, like public transit, airports or toll facilities.As a result, the biggest towns or counties in sparsely populated states like Wyoming, and bond issuers like New York’s subway system, may be able to sell debt to the Fed.Pandemic-related shutdowns have slammed state and local government budgets, forcing local leaders to contend with delayed income tax payments and falling sales tax receipts just as health and public safety expenses climb significantly.The Fed is using its emergency lending powers, which it can tap at times of serious economic stress, to buy state and local debt as a way to keep the markets that governments use to raise cash functioning normally.“State and local governments provide many of the critical services that people rely on,” Jerome H. Powell, the Fed chair, said last month in a “60 Minutes” interview, adding that it was a “tough time” for those governments. “So that’s one of the reasons why we’ve created a facility to lend money to them,” he said, “to get them through this period of low revenue.”The Fed’s facility seems poised to help at least some states and large local governments raise short-term funding. Illinois has announced that it is tapping the program, and the Port Authority of New York and New Jersey said last week that its board had also given it permission to apply.“The Municipal Liquidity Facility is an important and critically valuable short-term backup financial resource as the agency manages its cash flow during this crisis,” Rick Cotton, the Port Authority’s executive director, said in a statement.New York’s Metropolitan Transportation Authority, which operates the subway system, had been pushing to be included in the Fed’s program, with the authority’s chief executive officer, Patrick Foye, calling the facility a “critical bridge to helping us through the Covid-19 pandemic” in a May 21 letter to Mr. Powell.The authority could become eligible if Gov. Andrew M. Cuomo of New York designates the subway system one of the state’s two issuers.

Updated June 2, 2020

Will protests set off a second viral wave of coronavirus?
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.

How do we start exercising again without hurting ourselves after months of lockdown?
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.

My state is reopening. Is it safe to go out?
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.

What’s the risk of catching coronavirus from a surface?
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.

What are the symptoms of coronavirus?
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.

How can I protect myself while flying?
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.)

How many people have lost their jobs due to coronavirus in the U.S.?
More than 40 million people — the equivalent of 1 in 4 U.S. workers — have filed for unemployment benefits since the pandemic took hold. One in five who were working in February reported losing a job or being furloughed in March or the beginning of April, data from a Federal Reserve survey released on May 14 showed, and that pain was highly concentrated among low earners. Fully 39 percent of former workers living in a household earning $40,000 or less lost work, compared with 13 percent in those making more than $100,000, a Fed official said.

Should I wear a mask?
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.

What should I do if I feel sick?
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.

But the Fed program may be a limited fix. Many state governments have balanced budget requirements that limit how extensively municipal issuers can take on debt to fund operations.“State and local governments have to balance their budget, states do,” Mr. Powell said on “60 Minutes.” “And if they can’t do that, what they’ll do is they’ll lay people off and they’ll cut back on services.”The Fed’s purchases — which could total up to $500 billion — are protected against loss by $35 billion in backing from the Treasury Department, a portion of a $454 billion pot Congress earmarked to support Fed lending programs in the $2 trillion stimulus package.The facility purchasing the municipal notes, a special-purpose vehicle, became operational on May 26, according to a Fed question-and-answer sheet.

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