Fed, Treasury chiefs face heat over uneven U.S. coronavirus response

Fed, Treasury chiefs face heat over uneven U.S. coronavirus response
  • Clock-gray 06:05
  • calendar-gray 20 May 2020

Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin found themselves in the hot seat on Tuesday as U.S. lawmakers grilled them about the uneven nature of the fiscal response to the fallout from the coronavirus pandemic, APA reports citing Reuters.

Powell and Mnuchin were testifying to the Senate Banking Committee as Congress considers whether to roll out trillions of dollars of additional aid to bolster an economy that was brought to a virtual standstill by lockdowns imposed in March and April.

The Trump administration has been criticized for initially downplaying the pandemic, which has now killed more than 90,000 Americans, and not ensuring that enough medical supplies were in place to battle the virus.

Essential workers “put their lives on the line for very low wages, and they’re still worried about paying their bills. Is that fair?,” Sherrod Brown, a Democratic senator from Ohio, asked Mnuchin.

When Mnuchin started to thank “all the essential workers,” Brown interrupted him. “Thanking is great, but is it fair our economy pays the essential workers so little in such work conditions?”

Senators are also expected to have sharp questions about the additional actions needed to keep the world's largest economy afloat, and missteps in rolling out some $3 trillion in aid so far. 

The hearing https://www.banking.senate.gov started at 10 a.m. (1400 GMT) and was expected to last two hours.

As more states reopen businesses, the government is closing in on the end of an eight-week program to funnel money to small businesses to avoid layoffs, prompting calls to extend the $660 billion Paycheck Protection Program. President Donald Trump said on Monday that such an extension “should be easy.”

 

Fiscal relief so far has been lopsided, with big banks getting easy access to Fed backstops, but mom-and-pop businesses initially shut out of paycheck lending programs. Meanwhile, some of the country’s lowest-paid workers are doing the most dangerous jobs.

While over 30 million unemployment claims have been processed since March, workers are reporting delays of weeks or months in getting checks, with others saying they are locked out here of claiming benefits.

Mnuchin, in written testimony published on Tuesday, said he sees high unemployment during the second quarter, but that the overall situation is expected to improve as the economy starts to reopen.

“Working closely with governors, we are beginning to open the economy in a way that minimizes risks to workers and customers,” Mnuchin said. “We expect economic conditions to improve in the third and fourth quarters.”

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