Major metropolises including Austin, Baltimore, Boston and Detroit may struggle to access a $500 billion emergency lending program meant to shore up local governments’ cash-starved budgets under rules that limit participation only to cities with 1 million or more residents, the Washington Post reported. The program, administered by the Federal Reserve in coordination with the Treasury Department, seeks to buy short-term debt from cities, which should push down interest rates and help local leaders borrow at a time when they are facing a severe cash crunch as a result of the coronavirus pandemic. Under the rules of the program, though, only 10 cities and 15 counties are large enough to be able to sell directly to the Fed, according to 2018 census figures, which the Fed cites in its public guidance. That would include New York City, Los Angeles, Chicago, Houston, Phoenix, Philadelphia, San Antonio, San Diego, Dallas and San Jose. Counties, meanwhile, must have at least 2 million people to participate, a list that includes four counties in California, three in Texas, two in New York and one in Florida, Illinois and Washington. The local governments can still try to take advantage of the Federal Reserve’s $500 billion aid facility through their individual states. But the sheer fact they face such hurdles in the midst of an economic crisis drew sharp criticism from Democratic lawmakers. In a letter to Fed Chair Jerome H. Powell, sent Friday, Sens. Chris Van Hollen (Md.), Elizabeth Warren (Mass.) and five other party leaders called on the government to rethink the program, saying it threatens to imperil “hundreds of communities nationwide.” Lawmakers added that Congress never intended such restrictions when it adopted the $2 trillion aid package that President Trump signed into law last month. The CARES Act appropriates funds for the program targeting municipal bonds.
