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As Democrats and Republicans squabble over what kind of coronavirus relief to provide next to millions of suffering Americans, the chairman of the Federal Reserve has a simple message: Do everything you can.
Jerome Powell, the head of the powerful U.S. central bank, plans to reiterate his message on Tuesday at a Senate hearing to explain how the Fed is helping businesses and governments to cope with unprecedented financial strains caused by the COVID-19 pandemic. Congress have given the Fed the authority to make potentially trillions of dollars in loans.
See:MarketWatch Coronavirus Recovery Tracker
Although detailed discussions about the Fed’s emergency lending will take center stage, Powell’s prepared testimony also includes a subtle reminder about the biggest victims of the pandemic.
“All of us are affected, but the burdens are falling most heavily on those least able to carry them,” Powell is expected to say. A recent Fed study indicated that almost 40% of the households making less than $40,000 a year lost a job during the first month of the pandemic.
Powell has implied several times in recent remarks that Congress has to do more to support the economy. Washington has already passed almost $3 trillion in aid, but the two parties are divided over the next step.
Democrats in the House have crafted a $3 trillion bill to supply money to states and local governments and to fund a multitude of cherished liberal goals. President Donald Trump and the Republican-led Senate say the House bill is a nonstarter. They insist on liability protection for companies that reopen and object to what they call bailouts for states.
Like prior Fed chairmen, Powell is unlikely to back specific spending proposals and get drawn into the political fray. Yet as chairman he has consistently pursued policies with an eye toward helping the most disadvantaged and distressed communities. His concern for them has become a staple of recent speeches.
“It is worth remembering that the measures taken to contain the virus represent an investment in our individual and collective health,” Powell will tell the Senate. “As a society, we should do everything we can to provide relief to those who are suffering for the public good.”
The rest of Powell’s prepared statement explained all the actions the Fed has taken to stabilize the U.S. financial system and make loans available to businesses and government. He also is promising to publicize monthly the identities of all loan recipients, the amount of money borrowed and the interest rate charged.
“We are deeply committed to transparency, and recognize that the need for transparency is heightened when we are called upon to use our emergency powers,” Powell will say.
Powell will testify remotely on Tuesday morning along with Treasury Secretary Steven Mnuchin before the Senate Banking Committee. Mnuchin’s prepared text can be found here.
