Powell to Congress: Spend More Now for a Stronger Economy Later

May 18, 2020 at 9:15 am Leave a comment

There are two questions we will know the answer to in about six weeks that will profoundly impact your credit union and its members.  The first question is how quickly can the country reopen for business without sparking a surge in COVID-19 cases?  The second question is how much additional stimulus does the country need?

Over the last week Federal Reserve Chairman Jerome Powell has made his answer to the second question abundantly clear; while the Fed has taken extraordinary steps to provide loans to banks, businesses and even municipalities, only Congress can give the country the economic lifeline it needs to not only get through the pandemic, but to make sure it comes back stronger next year.

The focus of his presentation has not simply been to explain the short term steps the Fed has taken but to stress that only Congress can spend money.  In a speech last week, Powell scrapped the maddeningly opaque language for which the Fed is known.  His concern is that without additional spending the economy could be in for an extended period of “low productivity growth and stagnant incomes”.  He went on to explain that “additional fiscal support could be costly but worth it if it helps to avoid long term economic damage and leaves us with a stronger economy”.

Just to make sure we didn’t miss the point, he reiterated many of the these same points in a 60 Minutes interview last night.  It will be interesting to see how big of an impact this media blitz has on legislators reluctant to spend another trillion dollars before assessing the economic impact of the fiscal stimulus already provided by Congress.

And let’s not forget the first question I asked; if the summer months bring about a second wave of COVID-19 cases, particularly in states not prepared to cope with a surge of hospitalizations, then none of these steps will be good enough to prevent what could become a Depression.

SBA Releases Borrower Forgiveness Form

Speaking of steps that Congress has already taken, the SBA over the weekend released the form to be used by borrowers seeking to have their PPP loans forgiven.  Hopefully, additional guidance will be coming shortly.


Entry filed under: COVID-19, Economy. Tags: , , , .

Why Credit Unions Should be Concerned About The HEROES Act    FinCEN Issues COVID-19 Red Flag Alert

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 739 other followers