The Federal Reserve said yesterday that it plans to purchase short-term debt from a wider array of cash-strapped cities and counties, responding to concerns that some large U.S. municipalities including Baltimore and Detroit might have struggled to take advantage of its new $500 billion fund, the Washington Post reported. Now, cities with a population of 250,000 and counties with at least 500,000 residents may sell their municipal bonds directly to the central banking system, according to the Fed, which initially had set the bar so high that only 10 cities and 15 counties would have been eligible to sell their debt directly. Under the new threshold, more than 80 cities and 120 counties now qualify, amounting to a major expansion of a $500 billion facility that state and local leaders see as critical as they brace for multibillion-dollar budget shortfalls in the wake of the coronavirus pandemic. It could help push down interest rates, ease borrowing and help local governments raise revenue, perhaps sparing them from debilitating cuts to local programs or their own workforces.
