Sept. 22 (UPI) -- While Federal Reserve Chairman Jerome Powell said Tuesday the agency will continue to support the domestic economy amid the COVID-19 pandemic, Treasury Secretary Steven Mnuchin said a targeted stimulus bill from Congress is still needed.
Appearing before the House financial services committee at a hearing titled "Oversight of the Treasury Department's and Federal Reserve's Pandemic Response," Powell said the Fed will provide support following up on some improvement since the start of the crisis.
"We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy," Powell testified.
"Economic activity has picked up from its depressed second-quarter level when much of the economy was shut down to stem the spread of the virus. Many economic indicators show marked improvement."
Powell said the U.S. central bank has taken "forceful action" since mid-March by lowering interest rates to near zero, where the Fed expects them to stay until at least 2022, as well as increasing asset holdings and standing up 13 emergency lending facilities.
"We took these measures to support broader financial conditions and more directly support the flow of credit to households, businesses of all sizes, and state and local governments," he added.
"Our actions, taken together, have helped unlock more than $1 trillion of funding, which, in turn, has helped keep organizations from shuttering, putting them in a better position to keep workers on and to hire them back as the economy continues to recover."
Mnuchin touted the administration's efforts to promote economic recovery, including the unemployment rate of 8.4% -- which he called "a notable achievement considering some people were expecting up to 25% unemployment at the height of the pandemic," but said that efforts by the Fed and Treasury can only provide so much improvement.
"I unfortunately think there's not more we can do," Mnuchin said.
Mnuchin said the Trump administration is committed to reaching an agreement with congressional Democrats on a new coronavirus relief package.
Negotiations have been stalled for nearly two months, with House Democrats and the administration showing few signs of a willingness to compromise on proposals that are billions of dollars apart.
"We continue to try to work with Congress on a bipartisan basis to pass a Phase IV relief package," Mnuchin said. "I believe a targeted package is still needed, and the administration is ready to reach a bipartisan agreement."
Rep. Maxine Waters, D-Calif., pressed Powell and Mnuchin on the lack of loans under the $600 billion Main Street lending program, despite lowering its minimum loan threshold from $500,000 to $250,000.
Mnuchin said he would support lowering the threshold to $100,000 but Powell said the program did not generate much interest for loans less than $1 million and suggested loans under the Paycheck Protection Program would be more appealing.
"Trying to underwrite the credit of hundreds of thousands of small businesses would be very difficult," Powell said. "I think PPP is a better way to address that space in the market."
Powell noted that a full economic recovery cannot be expected until the pandemic is brought under control and Americans believe they can resume normal activities without fear.
"A full recovery is likely to come only when people are confident that it is safe to re-engage in a broad range of activities," he said. "The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government."
Powell and Mnuchin testified before the committee in June to update lawmakers on the federal economic response to the health crisis.