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Mnuchin and Powell Offer Mixed Views of Economic Recovery

Other central bank officials who spoke on Tuesday joined him in warning that it was crucial to get the pandemic in check.

“The economy seems to have bottomed out, and we’re seeing some encouraging signs of a recovery,” Lael Brainard, a Fed governor, said on a panel at the Brookings Institution. “On the other hand, we’re seeing some resurgence of the virus. So right now, my focus is on steering through a very uncertain recovery.”

As infections persist, many areas of the economy continue to require government support. Lawmakers questioned Mr. Mnuchin and Mr. Powell about what more could be done to help minorities and businesses in rural communities. In some cases, the two policymakers are still struggling to figure out how to prop up struggling sectors.

Both Mr. Powell and Mr. Mnuchin said that they were interested in helping commercial real estate borrowers who have been hard-hit by the pandemic as tenants delay rent payments, but explained that it was difficult for them to do so.

“We have not yet figured out a way to set up a facility — it’s not out of a lack of interest, or a lack of desire,” Mr. Mnuchin said, suggesting that the next bill Congress passes may need to include some form of relief. Both he and Mr. Powell emphasized that the emergency central bank programs could provide only lending, not spending.

“More debt may not be the answer here,” Mr. Powell said. “There’s a serious problem here that needs to get fixed, and we’re racking our brains to see how — if there’s something we can do by lending.” Congress gave the Treasury Department $454 billion to support the Fed’s emergency lending programs, more than half of which remains uncommitted. But those programs can only offer loans and help companies to issue debt — they cannot provide outright grants, which is Congress’s wheelhouse.

Mr. Powell also described their challenges in funneling help to medium-size business through the Fed’s so-called Main Street lending program. Demand for the bank loans has been light, Mr. Powell said. And while thousands of banks should be eligible to lend through the program, which allows them to make associated fees while handing 95 percent of underwritten loans to the Fed, he said about 300 have registered.


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