WASHINGTON (Reuters) – Lawmakers pressed U.S. regulators on Tuesday on their efforts to help struggling consumers, oversight of massive federal bailout packages and regulatory easing as they appeared before Congress for the first time since the novel coronavirus outbreak.
FILE PHOTO: Sen. Elizabeth Warren (D-MA) speaks to media after a meeting in the Kennedy Caucus room to wrap up work on coronavirus economic aid legislation, during the coronavirus disease (COVID-19) outbreak, in Washington, U.S., March 22, 2020. REUTERS/Mary F. Calvert
With virus lockdowns plunging the United States into a recession and putting more than 26 million people out of work, regulators have scrambled to ease the pain – both for consumers and companies – with rule changes and assistance programs.
On Tuesday, Federal Reserve Vice Chair Randal Quarles, Federal Deposit Insurance Corporation Chair Jelena McWilliams, Comptroller of the Currency Joseph Otting and Rodney Hood, chairman of the National Credit Union Administration, appeared remotely before the Senate Banking Committee to defend their efforts.
“More may be required of us before the current crisis ends,” said Quarles in his opening statement. “We can only pledge to do what this moment demands.”
The regulators touted their efforts and took pains to underline that, unlike the 2007-2009 financial crisis, the current economic turmoil is not driven by weakness at banks.
Lawmakers, meanwhile, bounced between pressing regulators to do more to boost particular sectors of the economy that they felt were overlooked, and chastising them for attempting to ease bank rules on liquidity and capital during the pandemic, warning that could increase risk.
Quarles bore the brunt of the grilling early on as lawmakers scrutinized the central bank’s $2.3 trillion effort to bolster local governments and small and mid-size businesses hurt by the economic fallout of the virus.
Quarles told lawmakers that the Fed is engaged in “complicated technical work” as it works to launch lending facilities aimed at supporting larger businesses and state and local governments, noting that such efforts were uncharted territory for them. He said he hoped to have those facilities operational within weeks.
Lawmakers, including former Democratic presidential candidate Elizabeth Warren, who sits on the panel, have already criticized the central bank for handing out billions of dollars with little oversight and failing to require basic protections.
Senators on both sides of the aisle are also likely to grill officials on plans to police bank loans made under the $660 billion Paycheck Protection Program to help small businesses. Big banks drew fire after funneling some of that cash to hedge funds and public companies that had other means to raise funds.
Reporting by Michelle Price and Pete Schroeder; Editing by Dan Grebler and Steve Orlofsky