Aid from lending authorities is limited say Powell, Mnuchin

While many business and sectors continue to face financial strain and seek support from emergency lending programs, Federal Reserve Board Chair Jerome Powell and Treasury Secretary Steven Mnuchin say there are limits to current programs.

During a testimony before House lawmakers, Powell and Mnuchin direct fiscal support from Congress might be the only solution for struggling businesses, claiming the Fed and Treasury lack the legal or logistical abilities to expand certain emergency lending programs to a wider range of borrowers. 

The Fed and Treasury are facing rising pressure from both Democrats and Republicans to broaden the scope of programs meant to help businesses and local governments secure enough cash to stay afloat and prevent layoffs until the economy recovers. Those programs are backed by $454 billion allocated by Congress through the $2.2 trillion March economic rescue bill, much of which has gone unused.

“There is a lot of work to do there and our policies will support that, but it will go faster for those people if it’s all of the government working together,” Powell told the House Financial Services Committee.

Powell and Mnuchin’s appearance comes as Democrats and Republicans remain locked in a stalemate over another stimulus bill despite broad bipartisan agreement over the need for further economic support. 

Roughly 11 million Americans have not yet found work after losing their jobs due to the onset of the pandemic. Thousands of small businesses that survived the first months of lockdowns are beginning to fold, and the dining, hospitality, travel and entertainment industries in particular will likely take months to fully recover.