holders at the federal reserve bank of new york ( which include central banks and other monetary authorities ) can enter into overnight repos ( repurchase agreements ) with the federal reserve, temporarily exchanging u. s. treasury securities in their accounts for u. s. dollars, which can then be provided to institutions in their respective jurisdictions. all of these facilities have had a very constructive effect in calming down dollar funding markets and supporting a return to more normal conditions in global financial markets more generally. of course, as members of the fpa, you are well aware that developments in the u. s. economy do not happen in isolation from the rest of the world. we live in a globally integrated economy. with covid - 19, all countries have been hit by a global common shock, not only directly by the virus and the measures necessary to combat it, but also by the economic spillovers from those actions around the world. as in the united states, many foreign authorities have taken swift and forceful actions in response. my colleagues and i have worked closely with others — bilaterally and in international forums like the group of seven, group of twenty, bank for international settlements, and organisation for economic co - operation and development — to monitor and address the effects of the pandemic. the forcefulness and synchronized timing of actions by fiscal authorities, central banks, and regulators have helped support the incomes of households and firms and reduce market stresses that could have amplified the shock. not only is the federal reserve using its full range of tools to support the economy through this challenging time, but our policies will also help ensure that the rebound in activity when it commences will be as robust as possible. that said, it is important to note that the fed ’ s statutory authority grants us lending powers, not spending powers. the fed is not authorized to grant money to particular beneficiaries, to meet the payroll expenses of small businesses, or to underwrite the unemployment benefits of displaced workers. programs to support such worthy goals reside squarely in the domain of fiscal policy. the fed can only make loans to solvent entities with the expectation the loans will be paid back. direct fiscal support for the economy is thus also essential to sustain economic activity and complement what monetary policy cannot accomplish on its own. direct fiscal support can make a critical difference, not just in helping families and businesses stay afloat in a time of need, but also in sustaining the productive capacity of the economy after we emerge from this downturn. fortunately

expansion while they grew steadily in previous expansions ( figure 5 ). consumer credit has risen at a modest rate in this recovery – comparable to that of the last cycle ( figure 6 ). this category includes auto loans, credit cards and other consumer debts that are mainly originated by banks. but it also includes student loans where the federal government is the dominant lender. student loans have risen robustly during this expansion, and have driven much of the rise of overall consumer credit. we will have much more to say about them later in today ’ s briefing. the u. s. financial system relies more heavily on capital markets than other advanced economies. bonds and other negotiable debt instruments are an important source of funding to credit - worthy corporations. indeed, the growth rate of real nonfinancial corporate bonds outstanding during this expansion has been roughly similar to that of previous expansions ( figure 7 ). a similar pattern is evident in the commercial paper market ( figure 8 ). notwithstanding the robust performance of debt markets during this expansion, the sharper decline in outstanding bank loans to businesses that i mentioned earlier was likely a contributing factor to the slower economic recovery we have observed this time around. these developments appear to have had adverse consequences on the cost and availability of credit for bank - dependent borrowers. also, in the early years of this recovery, bankdependent firms appear to have deleveraged more and invested less than firms with access to capital markets. so, the impairment of banks ’ ability to extend credit still has the potential to hinder investment and adversely affect the overall economy. we see similar correlations when it comes to lending to households. the expansion in auto lending that commenced in 2010 coincided with a recovery in auto sales, which have now essentially regained the ground they lost during the recession. until recent quarters, overall consumption growth has been slow, consistent with a pattern of slow growth in credit card balances. the most obvious case is mortgages where – after a massive tightening from 2007 to early 2010 – underwriting standards remain very tight. this tightness, especially for nonprime borrowers, has likely been a factor behind a persistently sluggish housing market that has held back this recovery relative to earlier ones. overall, these patterns of credit growth support the idea that the weakness of banks at the end of the great recession has been a contributing factor to the slow recovery of the u. s. economy since the recession. these patterns are consistent with evidence provided