Fed will start Main Street lending

"We're days away from making the first loans in the Main Street" lending program, Fed Chair Jerome Powell said in an interview on CNBC.

Setting up the program was "challenging" since that's a market the Fed hasn't been involved with before, he said. The Main Street Lending Facility is for small- and medium-sized companies that don't have access to the capital markets through selling bonds or equity.

"Trying to figure out the credit products for that market is challenging," he said.

Due to the unusual nature of the pandemic economic crisis, "we have crossed a lot of red lines we had not crossed before," Powell said in the interview with former Fed official and Princeton University Professor Alan Blinder.

"We felt called to do what we could," he said, adding that it would be hard to defend not acting when the economy soured so quickly. As for lending in areas where it hadn't before, "you figure it out afterwards."

Powell also repeats his view that negative interest rates "are not appropriate for the United States... The evidence is mixed" on how effective they are.

He argues that negative interest rates aren't compatible with money market funds.

He also fears that a second wave of COVID-19 would undermine public confidence and lead to a weaker, longer recovery.

"We haven't made a lot of loans in the corporate credit facility yet," he said. The Fed will disclose the names of borrowers and how much they borrow.

The municipal facility hasn't started yet, he noted.