By Neil Irwin
Washington Post Staff Writer
Monday, May 4, 2009
The last time Ben S. Bernanke testified on Capitol Hill, it was immediately after the furor that erupted over bonuses paid to American International Group executives. When the Federal Reserve chairman goes before the Joint Economic Committee tomorrow, the atmosphere could be just as testy.
That may seem surprising given that the economy is looking a little better than it was then and the controversy over bonuses has died down. But unhappiness is growing on Capitol Hill over a wide range of actions the Fed has taken, and Bernanke will need to handle questions deftly if he is to defuse the tension and rebuild what has been a generally strong relationship with Congress.
In particular, many in Congress are increasingly uneasy with the Fed's multitrillion-dollar lending programs. There are worries that the Fed has used its emergency lending authority -- to lend to essentially any entity in "unusual and exigent" circumstances -- without enough oversight.
There is also some annoyance on Capitol Hill that the central bank does not disclose which banks and other firms get emergency loans and what collateral they post in exchange. That is a practice that goes back many decades -- Fed leaders worry that if they named which banks used its "discount window," for example, there would be a run on those banks.
Also this week, there will be new evidence of whether the pace of economic decline softened in April. Friday's jobs report is expected to show that the unemployment rate continued its stratospheric rise, climbing to 9 percent from 8.5 percent in March.
The biggest thing to watch, though, is the net change in payroll employment. Economists are expecting employers to have shed another 620,000 jobs, compared with 663,000 lost jobs in March. If the pace of job losses falls below 600,000, it would represent the strongest confirmation yet that the economy, while still contracting, isn't contracting as fast as it once was.
NEIL IRWIN'S MUST-READS
include a defense of Tim Geithner and the Obama administration's approach to the economy. For more, go to http://washingtonpost.com/economywatch.