WASHINGTON (Reuters) – US lawmakers on Tuesday will have another chance to grill the heads of the Federal Reserve and the Treasury over the effectiveness of nearly $ 3 trillion in emergency aid granted to stem the economic fallout from the new coronavirus pandemic. .
FILE PHOTO: Federal Reserve Chairman Jerome Powell talks to United States Treasury Secretary Steven Mnuchin during G20 finance ministers and central bank governors meeting in Fukuoka, Japan, June 8, 2019. REUTERS / Kim Kyung-Hoon / Pool / File Photo
The U.S. central bank, with support from the Treasury, has launched programs to improve credit flow when economic activity has collapsed and millions of jobs have been lost, including its new Main Street loan program for mostly medium-sized businesses.
The Treasury was at the forefront of the $ 660 billion (PPP) forgivable salary protection program aimed at keeping small businesses and their employees afloat.
Fed President Jerome Powell and Treasury Secretary Steven Mnuchin are expected to testify before the United States House of Representatives financial services committee at 12:30. EDT (1630 GMT) to discuss how funds were disbursed to families and businesses.
The legislators of the Democratic Control Group are likely to wonder if the people most in need have received support.
Powell and Mnuchin testified of the economic response of the coronavirus to the Senate Banking Committee last month.
TO HAVE OR NOT TO HAVE?
In a prepared testimony released on Monday, Powell noted that the economic recovery started earlier than expected, but that production and employment are still far below pre-crisis levels, with the greater weight of the pain endured by women and minorities. And a complete recovery, he reiterated, is unlikely until people feel safe to get out and about.
“The path will also depend on political action taken at all levels of government to provide relief and support recovery for as long as necessary,” he said.
Several government programs designed to cushion the pandemic blow, including improved unemployment benefits, are slated to expire this summer. But fears that the virus was not contained added uncertainty as many parts of the country reopened their economies after blockades were implemented in March and April.
Fifteen U.S. states reported a record increase in COVID-19 cases last week, the respiratory disease caused by the coronavirus that killed over 125,000 people in the United States. [nL1N2D21WN]
Numerous Fed policymakers, including Powell, have said that more fiscal and monetary aid is likely to be needed to keep what is expected to be a slow and uneven economic recovery.
The Fed has been indicted for perceiving that it prioritized Wall Street over Main Street, helping to fuel economic inequality by raising the price of assets such as equities.
The central bank has purchased trillions of dollars in bonds and has launched nearly a dozen programs to support and extend corporate credit and promote bank lending, claiming that helping the economy as a whole is aided when companies maintain l access to fundamental finance for their operations.
Sunday’s data showed that the Fed purchased $ 428 million in individual company bonds until mid-June, making investments in household names such as Walmart Inc and AT&T Inc, as well as major oil companies, the tobacco giant Philip Morris International. Inc is a public service subsidiary of the billionaire Warren Buffett Berkshire Hathaway holding. [nL2N2E505Y]
At the same time, his loan program for Main Street has not yet granted a loan and it took three months to complete, although Powell stated in his prepared testimony that he expected it to be a “valuable resource” in the next months. Central bank programs have so far seen modest use.
Mnuchins are also likely to be grilled on the PPP. After a first round of funding has run out quickly, around $ 140 billion of untapped aid from small businesses remains.
Mnuchin agreed last week to grant Congress full access to loan-level data for the program after going under bipartisan focus for claiming that disclosing the identities of the companies that took funds could be “confidential” and “proprietary”. .
Reporting by Lindsay Dunsmuir; Editing by Paul Simao