SMM: in the face of questions from Congress, Federal Reserve Chairman Colin Powell defended the role and effectiveness of the Fed's emergency lending facility, saying that the Fed's lending facility for ordinary enterprises has been functioning and that there is no need to make major changes, reiterating that the US economic recovery still needs additional government stimulus.

On Wednesday, EST, at a hearing of the House COVID-19 Special Committee on virus crisis, Jim Clyburn, chairman of the committee, called on the Federal Reserve to use its power to help ordinary people and small businesses, saying that the Fed's loan programs to help small and medium-sized enterprises and local governments "provide almost no loans."

Mr Powell, who attended the hearing, said the Fed's actions were "by no means an attempt to ease the suffering of Wall Street [financial institutions]". Main Street Lending Program (Main Street), the Fed's lending facility for ordinary small and medium-sized enterprises, "has done basically everything we can imagine."

The article previously mentioned that the actual lending of, Main Street since its launch this year is very small, and the utilization rate is not high, which is controversial. The facility can lend $600 billion, and Mr. Powell revealed in congressional testimony on Tuesday that the project had received or was in the process of processing about 230loans worth about $2 billion.

Powell said on Wednesday that, Main Street would be able to take on more work if the economy performed worse than the Fed expected. Although companies rarely use the tool, the loans it can provide are already extensive. "We're thinking about doing more," but we don't see the need to make any "big" changes to Main Street to further improve usability.

When asked about the Federal Reserve's plan to lower the current minimum loan line of $250000 for Main Street, Powell replied that companies that need smaller loans may meet their demand through other tools, and that existing Main Street will not provide much smaller loans, and new instruments must be set up. (PPP), a salary protection scheme for corporate projects that have expired during the epidemic, may be more suitable for companies that need small loans.

On Tuesday, Mr. Powell also encouraged Congress to consider a PPP-like approach, arguing that providing smaller loans would require a different loan facility than the current one, adding that even if the minimum loan limit for Main Street was reduced from $250000 to $100000, it might not change much. There was little demand for loans of less than $1 million.

Call again for policy stimulus to study the performance of US debt

At a hearing on Tuesday, Powell said the outlook for the US economy was "still very uncertain" and that "the way forward depends on controlling the epidemic and policy actions taken by governments at all levels". He stressed that the Fed's ability to lend directly to companies is limited and that it is now Congress's turn to help battered areas of the economy. If Congress fails to pass the new stimulus package, the economic recovery will suffer. The combined efforts of monetary and fiscal policy will accelerate the recovery.

On Wednesday, Powell reiterated that the future direction of the US economy will depend on the federal government's ability to control the COVID-19 epidemic and must resume work in a sustainable manner. The US economy has rapidly and significantly improved, but "there is a long way to go". The continued economic recovery still needs more policy help. "with the support of both Congress and the Federal Reserve, the recovery will be faster."

Powell also revealed that the Federal Reserve is studying the performance of the US Treasury bond market during the COVID-19 crisis.

'The Fed is now resuming the actions it did during the last financial crisis,'he said. The Fed is studying where the pressure point is, how all the work has been done over the past decade, and what's new now. The Fed is doing a lot of work in this area, and the core work will be in the Treasury market. The Fed needs to understand what changes need to be made around the bond market to prevent a repeat of the bond market problem.