WASHINGTON (Reuters) – Lawmakers will quiz U.S. regulators this week on their efforts to help struggling consumers, oversight of massive federal bailout packages and regulatory easing when they appear before Congress this week 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, will appear before the Senate Banking Committee to discuss their actions.
The remote hearing is unlikely to spark many fireworks, although analysts still expect some points of tension.
“The regulators are likely to be criticized by some Republicans for acting too timidly and by some Democrats for using the COVID-19 crisis as a pretext for loosening banking regulations,” said Brian Gardner, director of Washington Research at Keefe, Bruyette & Woods.
Quarles is expected to bear the brunt of the grilling as lawmakers ramp up scrutiny of 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.
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. [USN]
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.
The regulators, though, are likely to use the opportunity to tout the resilience of the banking system, thanks to rules introduced following the 2008 financial crisis that have positioned lenders to support the real economy.
“Banking organizations are well-positioned to serve as a source of strength, not strain, in the current crisis,” Quarles will tell the panel, according to prepared testimony published on Monday.
“The storm, however, is not over. Banking organizations must continue to work constructively with borrowers, offering them the flexibility to weather a hardship they could not expect and did not create,” he will say.
Reporting by Michelle Price; Editing by Dan Grebler