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The Fed’s Secret Superpowers to Support Cities Through COVID-19 and Beyond

The Bottom Line, March 31, 2020

March 31, 2020

The Fed’s Secret Superpowers to Support Cities Through COVID-19 and Beyond

University of California Irvine law professor Mehrsa Baradaran, author of “How the Other Half Banks,” says the Fed could go one step further and offer cities and states a bit of financial relief through the municipal bond market. It wouldn’t be a huge amount, but not insignificant in these desperate times. “The Fed could purchase muni bonds outright and by purchasing them could fix a lot of problems,” Baradaran says. “The bonds would be on the Fed’s balance sheets and all the purchased bonds’ payments could be temporarily halted.”