Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Mnuchin, Powell say some $380 billion in unused aid could help U.S. economy

Published 09/24/2020, 11:27 AM
Updated 09/24/2020, 05:26 PM
© Reuters. Senate's Committee on Banking, Housing, and Urban Affairs hearing

© Reuters. Senate's Committee on Banking, Housing, and Urban Affairs hearing

By Ann Saphir and Howard Schneider

(Reuters) - As much as $380 billion from the U.S. Congress' last big coronavirus aid package is unused and could help households and businesses if lawmakers approve, Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin said on Thursday.

That is far short of the $500 billion to $1 trillion many economists had expected in new fiscal stimulus for the flagging recovery. But rising tensions between Republicans and Democrats have made a new relief package ahead of the Nov. 3 election look increasingly unlikely.

The unused money, authorized by Congress in March as part of a $2.3 trillion aid package but not yet spent, could go a long way to tide over businesses and keep people who have lost work from losing their homes.

"It would not cost an extra penny," Mnuchin told members of the Senate Banking Committee in a hearing on Capitol Hill, where he appeared jointly with Powell. Congress would need to give permission for reshuffling the money, he said.

The Treasury still has $200 billion in unused funds earmarked to backstop emergency programs launched by the U.S. central bank after the coronavirus outbreak, Mnuchin said.

The Fed's lending programs got far less use than initially thought, in large part because their very availability helped return disrupted credit and financial markets to more normal functioning.

Separately, some $130 billion is left in the now-expired Paycheck Protection Program that could go to help small businesses, Mnuchin said.

In addition, Powell said in response to a question from committee chair Mike Crapo, most of the $75 billion allocated to backstop the Fed's Main Street Lending Program remains unused.

The program, which has so far lent about $2 billion to medium-sized companies, could extend as much as $30 billion in loans by year's end, Powell said Thursday.

With the Treasury committing $1 for every $8 loaned under the program, that would still leave idle $70 billion of the Treasury's backstop.

Under Crapo's questioning, Powell agreed that some of the money - perhaps $50 billion, Crapo said - could be put to better use to help the economy, including for the paycheck protection program to help small businesses "and after that I would say, something more for those who remain unemployed."

Despite a return to growth, after last quarter's sharpest economic downturn in the postwar period, 11 million Americans remain unemployed. Any money remaining from stimulus checks and extra unemployment benefits from the earlier pandemic relief package is quickly running out.

"The risk is they will go through that money, ultimately, and have to cut back on spending and maybe lose their home or their lease," Powell said.

Without further government aid, he said, "we will see, sooner or later, probably sooner, we will see that the economy has a harder time sustaining the growth that we've seen, that's the risk."

The focus on reallocating unused sums from the earlier relief package has emerged as Congress remains deadlocked over providing new fiscal relief less than six weeks before Election Day.

© Reuters. Senate's Committee on Banking, Housing, and Urban Affairs hearing

Mnuchin told senators that he and House Speaker Nancy Pelosi had agreed to discuss stimulus further. Asked by reporters Thursday if she had heard from Mnuchin, Pelosi said "I spoke to him yesterday. I don't know if we have a call today or not."

Latest comments

good
lol straight into the Bankers pockets. maybe the Americans will get a few pennies.
false hope till it happens with a bunch of fat cats who dont care really about us who this is hurting the longer they hold out
Powell is an insufferable jerk.
This headline from Fox News: Trump booed as he pays respects to Ginsburg at court. Crowd chants “Throw him out.”
who cares....
but trumps the bully lol
Do nothing REPUBLIUCANS, come to the table and compromise. MOSCOW MITCH why don't you vote on the bill house passed sometime ago w/ bipartisan support. Oh, I forgot. It's do noting REPUBLICAN party.
Besides sounding cute, what exactly is the connection, facts please, between Mitch Mc Connell and Moscow?
and please tells how the Republicans are holding up stimulus how about nasty nancy and the goon scuad
just give everyone $10000 that ought to do it.
Our how ‘bout some silver that you overpaid for, buggy!
Again, wake the dragon lady Pelosi 🐲🥴
Wouldn't it be refreshing for the FED to speak to the American people like they were mature responsible adults rather than obfuscate and water down everything as if we were a panicky flock of sheep near the edge of a cliff? Of course the shock from seeing that done, might do us all in right on the spot!
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.