On top of the $2.2 billion that the Coronavirus rescue bill now in front of the House of Representatives allocated to checks to individuals, loans and grants to companies, extra unemployment insurance and more, the bill also gave the Treasury the go ahead to backstop the Federal Reserve to the tune of $4 trillion. That means that the Treasury is authorized to offer the Fed cash to offset losses coming from a $4 trillion increase to the Fed’s asset portfolio as the central bank looks to buy everything in sight in credit markets that range from Treasuries, to mortgage backed securities, to money money funds, to corporate bonds. The latest figures already show that the Fed’s balance sheet, which hit $4.7 trillion during the recovery from the global financial crisis, has now grown back over $5 trillion.

Why does the Fed need that much buying power?

Because along with everything else the slowdown in the economy due to the coronavirus threatens to produce full-blown credit crises in the credit market, especially in specific markets where lenders, predictably deciding to forget all the lessons of the subprime mortgage crisis, have relaxed credit standards in order to make more loans.

The credit card market is a great example. (Tomorrow, I’m going to look at credit problems in the mortgage market. Yes, again.)

Credit-card balances reached a record $930 billion last year.

On past history Americans’ ability to keep current on their cards is closely correlated to the national jobless rate. Which means that card balances that were in no danger of becoming delinquent when unemployment was near a historic 50-year low at 3.5% or so, suddenly stand a good chance of going delinquent if U.S. unemployment spikes to 20% (as per Secretary of the Treasury Steve Mnuchin) or 30% (per Federal Reserve Bank of St. Louis President James Bullard.) In 2009, when unemployment topped 10%, credit card lenders were forced to write off a record $89 billion in bad debt.

Any inability to pay or bad debt surge isn’t going to be pretty for big credit card issues such as JPMorgan Chase (JPM), Citigroup (C) and Bank of America (BAC), each of which get about 15% of their revenue from their credit card business.

The damage this time around looks to be worse than in 2009 because the coronavirus has shut down so much of the U.S. economy meaning that households have lost huge hunks of income and simply can’t pay their credit card charges. And because some issuers–JPMorgan Chase, Capital One (COF), and Synchrony Financial have large card portfolios linked to retailers–the losses could be magnified. If a retailer has shuttered a store, it’s likely to negatively affect cardholders’ decisions on what card to pay in a crunch.

The typical reaction of credit card issuers in a situation like this is to cut credit lines to reduce exposure to bad credit card debt. Which, of course, can set off a classic credit crunch where borrowers can’t borrow on their cards at a time when they need to most.

The other part of the crunch, and the one where the Fed can bring the most direct leverage, is that credit card lenders try to sell the parts of their card portfolios that are most likely to underperform. If they can find a buyer for a security backed by these credit card receivables. If they can’t find the buyer, it can send the entire market for securities backed by credit card assets into a chaos of falling prices and illiquidity. The Fed would, obviously, like to avoid a credit crunch in this market.

The bank would also like to “encourage” banks to give credit card borrowers more room to manage their debts. To that end, the Federal Reserve and other regulators have told banks that they will give them more regulatory leeway to manage consumer debt. It’s not clear that all banks will listen since some fear that giving borrowers access to a hardship program will just increase the number of borrowers who claim that they need debt relief.

Credit card issuers who demonstrate a sincere interest in helping borrowers work out their problems would certainly earn consumer loyalty. It remains to be seen how many banks decide that’s worth their time and energy.

And meanwhile the Federal Reserve has to figure out how to prevent this part of the credit market from seizing up.

Big banks head up the coming earnings season with JPMorgan, for instance, due to report on April 14. Negative reports and negative guidance from the banks would set a negative tone for the reporting season as a whole.