WASHINGTON (Pakistan Point News / Sputnik - 12th May, 2020) US banks have to lend in constructive and flexible ways to steer the economy out of the crisis brought about by measures implemented to fight the novel coronavirus (COVID-19) pandemic, Federal Reserve Vice Chair for Supervision Randal Quarles said in a congressional hearing on Tuesday.
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," Quarles told the US Senate Banking Committee.
Critics of the US government's economic relief response to the COVID-19 crisis have claimed that Wall Street was getting bailed out and individuals and small businesses have been effectively abandoned.
Banking Committee ranking member Sherrod Brown told the hearing earlier that the Trump administration was focusing on helping the biggest companies in the hope those would help the smaller firms, but such an outcome would never materialize. Planned cuts to social welfare programs were also adding to the pain of average tax payers, Brown said.
Quarles said during the hearing that the Federal Reserve has made targeted changes to capital requirements to enable banks use their balance sheets more effectively to support customers and the functioning of the financial markets.
"Because of these measures, and the strong foundations on which they were built, banking organizations are well-positioned to serve as a source of strength, not strain, in the current crisis," Quarles said. "The storm, however, is not over. Banks must still manage the challenges of operating during a public health emergency."
The US fiscal response to the COVID-19 has resulted in Congress passing trillions of Dollars in stimulus and aid, of which at least $454 billion was for the Treasury Department to specifically support Federal Reserve programs.
