Powell plans to say on Tuesday that the U.S.is in the midst of an economic crisis "worse than any recession since World War II" and that the Fed's "bold steps" have helped ensure American families and businesses can borrow cheaply so they don't go bankrupt before the economy can safely reopen. The program allows for banks to distribute government-backed loans to businesses that employ fewer than 500 employees, and a loan will be forgiven at least 75 percent if it is used to pay employee salaries and overhead costs such as rent.
Sen. Elizabeth Warren on Tuesday accused Treasury Secretary Steve Mnuchin of looking out for his friends on Wall Street instead of US workers after the former Goldman Sachs banker repeatedly refused to say whether he would require companies that receive coronavirus bailout funds to keep their employees on payroll.
The comments by Powell compare with remarks at the end of last month, when he dismissed concerns about ballooning federal debt, saying that "this is the time to use the great fiscal power of the U.S".
The big picture: Many of the Fed's coronavirus lending programs have yet to launch.
Mnuchin said he expects to allocate the remaining $259 billion in CARES Act capital to Fed-run credit programs once he determines where the greatest needs are.
Sen. Elizabeth Warren, D-Mass., complained that those programs - authorized by Congress with some $450 billion in seed money - do not including binding requirements that loan recipients keep workers on the payroll.
"Working closely with governors, we are beginning to open the economy in a way that minimizes risks to workers and customers", Mnuchin said.
Between the lines: Mnuchin was pressed on the eight-week period that businesses are required to spend Paycheck Protection Program funds.
The Treasury Department has not yet doled out any of the $46 billion that was set aside for airlines and businesses deemed critical to national security that was part of the $2.2 trillion rescue package Congress passed in March, according to a report released on Monday. Only a "fairly modest" amount of money has gone out through the Fed credit programmes so far.
The Labor Department in April issued public guidance on the relationship between unemployment benefits and the Payment Protection Program.
While reported to be going more smoothly than round one, the second round of PPP loans faced computer processing delays and a number of publicly-traded companies ended up receiving money that Mnuchin demanded be paid back to the government.
He said: "President Trump and the entire administration are committed to providing necessary relief to help people get through this time".
"We're going to see quickly how the reopening goes", he said, adding "Right now, we don't know".
"We are fully prepared to take losses in certain scenarios", Mnuchin said.
Federal Reserve photo via Wikimedia.