Supporting State and Municipal Borrowing Direct lending to state and municipal governments: During the 2007-09 financial crisis, the Fed resisted backstopping municipal and state borrowing, seeing that as the responsibility of the administration and Congress. But in this crisis, the Fed lent directly to state and local governments through the Municipal Liquidity Facility, which was created on April 9, 2020. The Fed expanded the list of eligible borrowers on April 27 and June 3, 2020. The municipal bond market was under enormous stress in March 2020, and state and municipal governments found it increasingly hard to borrow as they battled COVID-19. The Fed's facility offered loans to U.S. states, including the District of Columbia, counties with at least 500,000 residents, and cities with at least 250,000 residents. Through the program, the Fed made $500 billion available to government entities that had investment-grade credit ratings as of April 8, 2020, in exchange for notes tied to future tax revenues with maturities of less than three years. In June 2020, Illinois became the first government entity to tap the facility. Under changes announced that month, the Fed allowed governors in states with cities and counties that did not meet the population threshold to designate up to two localities to participate. Governors were also able to designate two revenue bond issuersairports, toll facilities, utilities, public transitto be eligible. The New York Metropolitan