Fed makes Main Street lending facility a top priority

CNBC's Steve Liesman reports the latest on the Federal Reserve's efforts to provide relief to the economy as the coronavirus-driven downturn continues.

Former Federal Reserve Chair Janet Yellen thinks the central bank is not in a position where it needs to buy equities but thinks lawmakers should give it more leeway for the future.

“It would be a substantial change to give the Federal Reserve the ability to buy stock,” Yellen told CNBC’s Sara Eisen on “Squawk on the Street.” “I frankly don’t think it’s necessary at this point. I think intervention to support the credit markets is more important, but longer term it wouldn’t be a bad thing for Congress to reconsider the powers that the Fed has with respect to assets it can own.”

Normally, the Fed is only allowed to own government debt and agency debt with government backing, Yellen said. The central bank has also received special powers during the coronavirus outbreak to buy other assets such as corporate debt through exchange-traded funds. The Fed has also cut rates to zero and launched an unlimited quantitative easing program to help stabilize markets. Still, the Fed would need additional authority to buy exchange-traded funds holding stocks.

Other central banks — including the Bank of Japan — have been purchasing some of their countries’ stocks to mitigate the recent carnage sparked by the coronavirus outbreak.

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