The Senate Banking Committee is taking its first look at spending under the massive CARES Act, which Congress approved in March to provide assistance to individuals, businesses and local governments affected by the coronavirus pandemic.
Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin are expected to be pressed by senators about their stewardship of specific aspects of the approximately $2 trillion relief package at Tuesday’s remote hearing.
The Senate hearing is set to begin at 10 a.m. ET. Watch it live here.
Powell has said Congress could and should provide more economic assistance to help businesses and individuals cope with the economic fallout from the pandemic.
“We have the ability to borrow at low rates,” Powell told 60 Minutes on Sunday. “This is the time when we can use that strength to our longer-run benefit.”
Mnuchin, however, has been less open to new spending, saying federal lawmakers should wait to assess the effects of the four measures already approved by Congress before appropriating more funds.
The hearing comes a day after a four-member panel appointed by Congress reported that none of the $46 billion allocated in the CARES Act for loans and loan guarantees for the airline industry has been spent and that relatively little of the $454 billion in program for loans to businesses and state and local governments has been disbursed by the Federal Reserve Board.
In his prepared testimony, Mnuchin appears to dispute the oversight panel’s findings. He says Treasury has “committed up to $195 billion in credit support under the CARES Act. We have the remaining $259 billion to create or expand programs as needed, as we continue to monitor a variety of economic sectors closely.” He also says $25 billion in payroll support has been provided to the airline industry.
Democrats on the panel sent Powell and Mnuchin a letter Monday asking that they “further expand loan eligibility requirements, including quickly adopting a viable option for non-profits who are facing acute challenges as a result of the virus,” and provide greater flexibility on the loan terms.
Sen. Mark Warner, D-Va., wrote that “all taxpayers will be better off to the extent more businesses can access affordable financing, keeping doors open, workers on payroll, and avoiding costly bankruptcies, through the remainder of the public health shutdown.”
Powell, according to his prepared testimony, will tell the panel that the Fed has made changes, including reducing the minimum amount and raising the maximum amount of loans that business can ask for, changes that he says “should help the program meet the needs of a wider range of employers that may need bridge financing to support their operations and the economic recovery. We will continue to adjust facilities as we learn more,” he says.
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