Mnuchin and Powell, "Willing to Bear COVID-19 Loan Losses... Active Support"

US Treasury Secretary and Fed Chair Jointly Testify Before Congress
Express Concern Over Economic Conditions and Affirm Commitment to Support

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Steven Mnuchin, U.S. Secretary of the Treasury, and Jerome Powell, Chairman of the Federal Reserve (Fed), appeared at a Senate Banking Committee hearing held via video conference and reaffirmed their stance to take additional and bold economic stimulus measures amid concerns over the prolonged possibility of a recession related to the COVID-19 pandemic.

They jointly warned that more bleak indicators will continue until the U.S. economy enters a recovery phase as early as the third or fourth quarter.

Chairman Powell said, "The scope and speed of this economic downturn are unprecedented in modern history. It is more severe than any recession since World War II," and questioned, "The question remains: were the support measures sufficient?" He added, "We will mobilize all policy tools to support the economy," and noted, "These measures are only a part of a broad response."

Powell also elaborated that they are considering expanding the population criteria for municipal bond support to prevent layoffs originating from local governments.

Lawmakers who raised questions repeatedly urged the swift implementation of existing economic support measures. Senate Banking Committee Chairman Mike Crapo emphasized, "The economic support bill is the largest in the history of the U.S. Congress. It must be executed quickly." Lawmakers pointed out that support for general industrial sectors, rather than the financial sector, has been slow.

In response, Secretary Mnuchin stated, "We are prepared to provide more funds and take risks to advance the loan programs the Fed is promoting." When asked by lawmakers if he was ready to lose money provided for corporate support, he replied, "Yes. We are prepared to incur losses under certain scenarios."

This is interpreted as urging the Fed to proceed with the execution of the $454 billion seed money provided for its liquidity programs without concern for losses.

The Treasury is known to have paid $195 billion of the $454 billion to the Federal Reserve. Secretary Mnuchin said, "We are ready to allocate the remaining funds ($259 billion) as well." He explained that the reason the allocated funds have not yet been fully disbursed is that "the loan execution agencies have just been organized and have started operations."

Chairman Powell also added that various liquidity supply programs will be operational by the end of this month.

This content was produced with the assistance of AI translation services.