Access to credit, economic output, and employment outcomes are intimately connected, and it was imperative that the Fed step in to prevent a negative spiral and provide a bridge to the recovery. As Chair Powell has noted, the Federal Reserve remains committed to using its full range of tools to support the economy for as long as is needed, to ensure that the recovery will be as strong as possible. Thank you. 1 I am grateful to Jordan Pollinger, Josh Frost, and Anna Kovner for their assistance in preparing these remarks, and colleagues in the Federal Reserve System for valuable  comments and suggestions. 2 Emin Dinlersoz, Sebnem Kalemli-Ozcan, Henry Hyatt, and Veronika Penciakova (2018), Leverage over the Life Cycle and Implications for Firm Growth and Shock  Responsiveness, NBER Working Paper Series 25226 (Cambridge, Mass. : National Bureau of Economic Research, November; revised September 2019). 3 Anna M. Costello (2020), Credit Market Disruptions and Liquidity Spillover Effects in the Supply Chain, University of Michigan. 4 Large companies drew down credit lines of approximately $ billion during the first quarter of 2020. Note that large firms are defined here as having $ million or  more in assets. Source: Gabriel Chodorow-Reich, Olivier Darmouni, Stephan Luck, and Matthew Plosser (2020), Bank Liquidity Provision across the Firm Size Distribution, Federal Reserve Bank of New York Staff Reports No. 942, October 2020. 5 Distressed is defined as a credit spread to Treasuries greater than 1000 basis points.

15 Using face value of ICE BofA Investment Grade and High Yield Indices. 16 Nina Boyachenko, Anna Kovner, and Or Shachar (2020), It’s What You Say and What You Buy: A Holistic Evaluation of the Corporate Credit Facilities, Federal Reserve  Bank of New York Staff Reports No. 935, July 2020. 17 Anna Kovner and Antoine Martin (2020), The Official Sector’s Response to the Coronavirus Pandemic and Moral Hazard, Liberty Street Blog, Federal Reserve Bank of New  York. https://www.newyorkfed.org/newsevents/speeches/2020/sin201020  4/5  20/10/2020  The Federal Reserve’s Corporate Credit Facilities: Why, How, and For Whom - FEDERAL RESERVE BANK of NEW YORK  18 Simon Gilchrist and Egon Zakrajsek (2012), Credit Spreads and Business Cycle Fluctuations, American Economic Review, American Economic Association. The authors  decompose bond spreads into the underlying fundamental risk of the bond and the price of risk (the excess bond premium or credit market sentiment), and find that the excess bond premium forecasts employment. They argue that this relationship is because the excess bond premium captures the supply of credit. 19 This analysis—which looks at the tails of the distribution rather than the average employment forecast—follows Adams, Adrian, Boyarchenko and Giannone (2020) to  construct the one-year-ahead conditional distribution of unemployment based on a quantile regression of the one-year-ahead conditional distribution of the forecast error for the unemployment rate and non-farm payrolls. Unemployment and payroll forecasts are sourced from the August 2020 Survey of Professional Forecasters. https://www.newyorkfed.org/newsevents/speeches/2020/sin201020  5/5