Treasury Secretary Steven Mnuchin faces Senate questions on small-business lending effort
Treasury Secretary Steven T. Mnuchin said he plans to use all of the $500 billion that Congress provided to help the economy through direct lending from his agency and by backstopping lending programs at the Federal Reserve.
Mnuchin said he has pledged to use $195 billion of those funds so far, and will use the rest after determining how best to deploy that money to help losses associated with the coronavirus pandemic.
“We are fully prepared to take losses in certain scenarios on that capital,” Mnuchin said Tuesday during a Senate Banking Committee video-conference hearing. “I expect to allocate all the capital as needed that was given to us.”
Mnuchin called for easing social-distancing guidelines as soon as possible to restart the economy, echoing comments from President Trump. To underscore the point, he told the senators he’s willing to go to the Capitol to answer questions in person, saying it’s safe enough to do so.
“There is the risk of permanent damage” to the economy if it remains closed, he said.
Trump has pushed for states to quickly reopen their economies. Almost 40% of Americans in households making less than $40,000 a year lost a job in March, according to the Federal Reserve. In the first two months of the pandemic-induced economic shutdown, more than 35 million people lost jobs.
The unemployment rate is seen peaking at 25% by economists at Goldman Sachs Group Inc.
Mnuchin has so far struck a more sanguine view, saying he expects a rebound to begin in the second half of this year. Fed Chairman Jerome Powell, who is testifying alongside Mnuchin, sees a longer road to recovery.
Powell said the scope and speed of the downturn “are without modern precedent and are significantly worse than any recession since World War II” and reiterated that a full recovery may take until the end of 2021.
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