As more states reopen businesses, the government is closing in on the end of the eight-week PPP program, prompting calls to extend it, which President Donald Trump said on Monday "should be easy".
Mnuchin said such terms were "discussed with people on both sides of the aisle" as the Coronavirus Aid, Relief and Economic Security (CARES) Act was being negotiated in March. Unlike the CARES Act's forgivable loan program for small businesses that keep their employees on payroll, the almost $500 billion Federal Reserve program - which Warren has criticized as a big business "slush fund" - does not require companies that receive money to keep employees on payroll.
Steven Mnuchin US Treasury secretary speaks during a virtual Senate Banking Committee hearing seen on a smartphone
"There is risk of permanent damage", Mnuchin said.
Still, Powell said the Fed is "not out of ammunition by a long shot", referring to the range of crisis response tools the central bank has deployed to shield businesses and families from the worst of the outbreak.
Mnuchin said around half the remaining $454 billion had been allocated, leaving the rest to create or expand programs as required.More news: Astronauts arriving for NASA’s 1st home launch in decade
Senator Elizabeth Warren on Tuesday pressed Treasury Secretary Steven Mnuchin to commit to requiring medium and large companies receiving loans from the CARES Act to retain their employees, and called on him hold corporate executives personally liable if they fail to meet certain certification requirements during a testy exchange in a Senate hearing. "You were not necessarily part of those discussions but these were completely discussed".
The Fed has scrambled to prepare a host of emergency lending programmes since mid-March, first to smother a selling panic that gripped short-term money markets, then to mobilise credit for distressed USA households and businesses - as well as state and local governments. The senator's question followed a separate congressional oversight panel report, which found the 13 (3) facility programs have disbursed very little of the $500 billion, which includes $46 billion in loans and loan guarantees to the airline industry.
Mnuchin also said that Treasury's base-case analysis showed at least some capital losses on the Fed loan programmes were expected, but that there could be instances where the Treasury earned a return on its capital.More news: Australian barley farmers say Chinese tariffs are a 'devastating blow'
Democrats have pointed to comments last week from Powell suggesting that spending more money might be necessary but worth it.
"What Congress has done to date has been remarkably timely and forceful", Powell said. Powell did not respond to that interpretation of his remarks.
The US Treasury and Fed chiefs faced tough questions over whether the administration's plans to quickly reopen the economy in the wake of lockdowns imposed in March and April would leave low-wage workers without adequate protections from the virus. President Trump himself plans to meet with Senate Republicans at their weekly policy lunch on Tuesday.More news: Google Chrome update beefs up online security and privacy measures