Community QE: Key Provisions and a 'Game Plan' for Immediate State Action

Abstract

On April 9th the Fed announced it would be opening an unprecedented new Municipal Liquidity Facility (‘MLF') for States and their Subdivisions now struggling to address the nation’s COVID-19 pandemic. This is effectively ‘Community QE’ in all but name. Because Community QE will constitute a literal lifeline to States and their Subdivisions, and will in light of its novelty be as unfamiliar as it is essential, this Memorandum briefly summarizes what the new Facility enables now and will likely enable in future. On this basis it then recommends a three-phase ‘Game Plan’ for States and their Subdivisions to put into operation immediately – that is, April 13th.

Keywords: Community QE, Coronavirus, COVID-19, Federal Reserve, Fiscal Federalism, Pandemic Response, QE, Quantitative Easing