The Federal Reserve took unprecedented action when it recently announced that it would be intervening into the municipal bond market, scooping up state and municipal debt amid the coronapocalypse.
On Tuesday, the U.S. central bank announced some updates to the $2.3 trillion program. One of the first changes is that it would permit a larger number of cities and counties to participate in its lending program.
At first, it only allowed ten cities and 16 counties, but due to complaints about racism and that it left out a lot of places with a large black population, the Fed altered the program. The muni-bond initiative will go from cities and counties with one and two million, respectively, to all cities and counties with 250,000 and 500,000 respectively.
But what the Eccles Building is doing will only delay the inevitable: collapsing regions of the country.
The financial lifeline for muni securities will not do much for jurisdictions that had witnessed a huge drop in revenues. The only thing politicians will do is lend more, which adds to the ballooning interest costs.
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