Powell, Mnuchin promise economic support, push more action by Congress

Andrew Cummings
September 27, 2020

The Democratic-led House passed additional support.

Under Crapo's questioning, Powell agreed that some of the money - perhaps $50 billion, Crapo said - could be put to better use to help the economy, including for the paycheck protection program to help small businesses "and after that I would say, something more for those who remain unemployed".

Mr Powell and Mr Mnuchin's appearance is a quarterly exercise mandated by the Cares Act passed by Congress in March, which appropriated about $2 trillion (Dh7.3tn) to help speed the U.S. recovery. "More fiscal support is likely to be needed", he said last week.

The chairman said the primary aim of this program was to provide a backstop at a time of turbulence in bond markets, and he suggested that this and other Fed programs had succeeded in stabilizing the markets.

Rep. Maxine Waters, D-Calif., pressed Powell and Mnuchin on the lack of loans under the $600 billion Main Street lending program, despite lowering its minimum loan threshold from $500,000 to $250,000.

Powell's testimony this week comes as lawmakers are conducting oversight of the government's response to the pandemic.

The comments came as Mnuchin testified along with Federal Reserve Chair Jerome Powell before the House Financial Services Committee amid a continuing impasse in Washington over how much to spend to revitalize the U.S. economy as it struggles with the Covid-19 downturn.

"Investors continue to buy dips", he said, while "the Fed is now expected to continue the policy it has pursued since the beginning of the pandemic" including massive lending programs viewed as reassuring to traders.

Clarida said, "The economy is recovering robustly, but we are still in a deep hole".

News that Donald Trump would announce his Supreme Court nominee to replace the recently deceased Ruth Bader Ginsburg on Saturday was also in focus amid concerns around how her death will affect ongoing stimulus negotiations on Capitol Hill.

Fed Chairman Jerome Powell vigorously waved the fiscal flag at a congressional hearing, saying that more government support is necessary. But he reiterated his belief that the economy would need more help to emerge from a recession that has left millions of people still unemployed and battered major portions of the economy.

The Fed's programs aimed at Main Street companies and local governments, Clyburn noted, "have barely loaned any money at all".

"I believe there is significant bipartisan support for legislation that supports kids and jobs particularly for extending the PPP to those hardest hit industries that need a second payment", Mnuchin said, referring to the Paycheck Protection Program for small businesses.

The loans provided to small businesses through a program run by the Small Business Administration and the Treasury Department and can be forgiven as long as much of the money goes to keeping workers on the payroll or rehiring laid-off workers.

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