with Brent D. Griffiths

Federal Reserve Chair Jerome H. Powell is poised this morning to push senators on spending more to backstop the pandemic-ravaged economy. And they are set to make the case right back at him.

Powell and Treasury Secretary Steven Mnuchin have allocated only a sliver of the $500 billion they were handed in the $2 trillion coronavirus stimulus bill to prop up a range of businesses, according to a new report from the Congressional Oversight Commission. And members of the Senate Banking Committee will press them on it when they testify remotely before the panel at 10 a.m. today.

“If it doesn’t get out in a timely fashion, it’s not going to achieve the goal behind its creation,” Sen. Patrick J. Toomey (R-Pa.), who serves both on the Banking Committee and the new oversight panel, tells Erica Werner.

The report, per Erica, "describes the lending facilities the Treasury Department has created to operate through the Federal Reserve, and says that only one of them has received funding. It is called the Secondary Market Corporate Credit Facility and is supposed to purchase corporate debt. It has received $37.5 billion.” 

Among the items still on the Fed and Treasury to-do list, according to the report: Give aid in the form of loans and loan guarantees to the airline industry; set up a Main Street Lending Program leveraging taxpayer dollars to offer $600 billion in loans to mid-sized businesses; and get money flowing through another fund that will support up to $500 billion in loans to state and local governments. 

Powell, in prepared testimony, is set to say the Fed has already taken “bold steps” to stabilize markets and the broader economy and remains “committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response.”

Senators have ideas about how the Fed should do that.

Sen. Sherrod Brown of Ohio, the top Democrat on the banking panel, is leaning on Mnuchin and Powell to focus the Main Street Lending program on small and medium-sized businesses. He urged them in a Monday letter to avoid repeating what he called “an early and recurrent flaw” in the Paycheck Protection Program, “when some banks favored a subset of existing customers over others and over new customers.”

The program is intended to help companies too large for the PPP but too small to tap debt markets for financing. The Fed has tweaked the program’s parameters even before its launch, and companies with up to 15,000 employees or that pull in less than $5 billion in revenue will be eligible.

“Under the Fed’s middle-market program, a company would get a loan from a bank, which would then sell up to 95% of the debt to the Fed,” the Wall Street Journal’s Nick Timiraos writes. “Mr. Mnuchin agreed last month to provide $75 billion to cover losses in the Main Street Lending Program, and the Fed says that will allow the central bank to extend up to $600 billion in loans. Mr. Mnuchin has said the Treasury would put up more funds if they are needed.”

Sen. Mark Warner (D-Va.) — another Banking Committee member, who consulted with Mnuchin and Powell on the creation of the Main Street program, according to Timiraos — also wrote the pair Monday.

Along with Democratic Sens. Doug Jones (Ala.) and Kyrsten Sinema (Ariz.), Warner called on them to lower the interest rate on the program's loans to encourage businesses to take them. “Should firms fail to receive affordable financing terms under these facilities, many will be left with a choice between declaring bankruptcy, posing long-term risks to the economy, or opening up too quickly, which poses significant risk to public health and the potential for long-term negative economic consequences,” the senators wrote.

The Fed is struggling to strike a balance with the mid-market lending effort.

A key challenge, per Timiraos, “is setting the terms so the Fed doesn’t become a dumping ground for bad loans — but not so onerous that companies don’t want to participate.”

And as lawmakers lob in recommendations for how it should function, they are also anxious to see it launch. “I’m concerned about it taking weeks to get it up and functioning,” Rep. French Hill (R-Ark.), another member of the Oversight Commission, tells Erica, adding he hopes the hearing will be an opportunity for Powell and Mnuchin to “tell us what you need to do to put them into action.” 

Jaret Seiberg, an analyst with Cowen Washington Research Group, writes in a note this morning the hearing will add pressure on Mnuchin and Powell to speed up the launch of the lending programs. “That would be broadly positive for the economy and the financial system," he writes.

Market movers

Stocks soar on positive results from vaccine trial.

The Dow closed up 911 points: “A ‘triple whammy’ of good news” led the day, Taylor Telford reports.

“The Dow Jones industrial average surged nearly 700 points at the opening bell, then kept going, after Moderna announced that an early-stage human trial for its coronavirus vaccine successfully produced covid-19 antibodies in participants … Investors also found comfort in comments made by Federal Reserve Chair Jerome H. Powell during a “60 Minutes” interview on CBS broadcast Sunday. He said the central bank is ‘not out of ammunition by a long shot’ in its economic arsenal, even while he cautioned that recovery could stretch late into 2021.”

  • What the Moderna trial means: “The eagerly awaited data provide a first look at one of the eight vaccines worldwide that have begun human testing. The data have not been published in a scientific journal and are only a preliminary step toward showing the experimental vaccine is safe and effective,” Carolyn Y. Johnson reports. The discovery of antibodies in participants “suggests, but doesn’t prove, that it triggers some level of immunity.”

The broader S&P 500 is booming: The index closed at a 10-week high, Reuters's Chuck Mikolajczak reports.

“After rallying more than 32 percent from a multi-year low hit in March, the S&P 500 had been trading in a tight range in May as investors weighed the hopes of an economic recovery against the fears of another wave of infection as states lifted virus-led restrictions … Travel-related stocks were among the biggest gainers, with cruise line operators Carnival Corp, Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd all outperforming the broader market with gains of at least 15 percent. Airline stocks also soared as Delta Air Lines said it would resume flying several major routes in June.” 

But investor confidence in the rally remains shaky. From WSJ's Jon Sindreu

In a survey of almost 350 risk professionals, the Geneva-based group said that two-thirds identified a drawn-out downturn as the greatest risk now facing the world over the coming year and a half.

Coronavirus fallout

PPP deadline passes with no word on how much in returned funds.

Conflicting regulations may make it easier for companies to keep money: “The government gave publicly traded companies until May 7 to return the money, then moved the deadline to May 14 and finally to Monday. The government said it would also audit loans larger than $2 million,” Aaron Gregg reports.

“Now, there are questions about whether the administration can force companies that received money under the initial PPP program to return it. An April 6 regulation issued by the Treasury Department said that borrowers and lenders ‘should rely on the laws, rules and guidance available at the time of the relevant application.’ Small-business advocates say it is unlikely the government could penalize public companies whose application predated the April 23 rule. The dilemma highlights the chaotic way in which federal bailout programs were thrown together on the fly after the U.S. economy suddenly shut down in mid-March.”

More from the U.S.:
  • At least 1,502,000 coronavirus cases have been reported; at least 89,000 people have died.
  • Trump says he's taking unproven drug: “Trump announced that he is taking the drug hydroxychloroquine as protection against the coronavirus, despite the lack of evidence that it prevents individuals from contracting the illness and warnings from physicians that it can have deadly side effects,” Anne Gearan, Laurie McGinley, Lenny Bernstein and Ariana Eunjung Cha report.
  • The market for masks is riddled with fraud: “The Trump administration ignored early warnings that it needed to shore up its stockpile of masks and other personal protective equipment and has fallen behind several other Western nations in the race to secure them, documents and interviews show. Current and former government officials interviewed by The Washington Post say the most powerful country in the world should not have suffered from shortages of a basic, low-tech product,” Desmond Butler, Juliet Eilperin and Tom Hamburger report.
  • Restaurants press Trump for more federal assistance: “Trump didn’t signal whether he would provide restaurants with more cash, but he did boast that he has already ‘saved’ the industry,” in a White House meeting with industry leaders, Tim Carman reports.
  • D.C. sees reopening on the horizon: “D.C. Mayor Muriel E. Bowser (D) said that if current trends hold, she could announce a date for reopening sectors of the city’s economy as soon as Thursday. She intends to describe her plan in greater detail later this week and said the city is six days away from meeting the goals she set to safely reopen,” Erin Cox, Fenit Nirappil and Laura Vozzella report.
More from the corporate front: 
  • Home Depot and Lowe's are primed for historic gains: “Over the course of their first quarters, which run February to April, foot traffic at Home Depot rose 10 percent from a year ago, according to data from SafeGraph analyzed by Bloomberg. Lowe’s saw an even bigger spike at 21 percent,” Bloomberg News's Matthew Townsend reports. "That would be the highest for both companies in at least 15 years …"
  • SoftBank posts its worst results ever:  “The Japanese conglomerate said the Vision Fund recorded an investment loss of nearly $17 billion in the fiscal year ended in March, including more than $10 billion during the January-March quarter … that left SoftBank itself with a $9 billion net loss for the year,” the WSJ's Phred Dvorak reports. The technology giant “also said Alibaba Group Holding Ltd. co-founder Jack Ma — whose company has been the biggest investment success story for SoftBank Chief Executive Masayoshi Son — would step down from SoftBank’s board after 13 years.”
  • Auto industry returns to life: “The Detroit Three automakers and their suppliers began restarting assembly lines on Monday after a two-month lockdown,” Reuters's Ben Klayman reports.
  • Uber to focus rides as its delivery business cuts 23 percent of workforce: The ride-share giant “will cut a total of 6,700 jobs, including the 3,700 it had announced earlier this month, [CEO Dara Khosrowshahi said in an email to employees], adding that the company plans to reduce investments in several ‘non-core projects,’” Reuters's Tina Bellon and Supantha Mukherjee report.
  • Airline travel will look very different: "Many airlines are removing in-flight magazines, scrapping meal services on shorter routes, and parking the duty-free cart,” the WSJ's Alison Sider, Benjamin Katz and Mike Cherney report. “Getting off the plane at the end of the flight could take even longer than usual as airlines try to control the typical crush.”
  • Blankfein says America cannot afford not to reopen: Infection rates will inevitably rise ‘unless we are going to hunker down until a vaccine comes up or until the virus is obliterated from the face of the earth, which I think is too long to keep people on welfare,’ ” said former Goldman Sachs CEO Lloyd Blankfein, Bloomberg's David Westin and Sridhar Natarajan report.
Around the world:
  • Germany, France propose virus relief fund: The leaders of the two countries agreed “on a one-off 500 billion-euro ($543 billion) fund to help the European Union recover from the pandemic,” the Associated Press's Frank Jordans and Sylvie Corbet report. “Crucially, the money would be disbursed in the form of grants rather than loans, with repayments made from the EU budget, an unprecedented proposal that overcomes long-standing objections in Berlin to the notion of collective borrowing.”

When superpowers collide

Huawei calls latest U.S. move “arbitrary.”

The decision to curb access to global chip supplies will affect the bottom line, the company said: Chairman Guo Ping “said Huawei was committed to complying with U.S. rules and it had significantly increased R&D and inventory to meet U.S. pressures,” Reuters's David Kirton reports.

“Guo said that Huawei spent $18.7 billion buying from U.S. suppliers last year and would continue to buy from them if the U.S. government would allow it. He said customers have stood by the company, but acknowledged it had become harder to win contracts since the company was added to the entity list.”

World Health Assembly erupts over U.S.-China feud: “President Xi Jinping of China announced at the start of the forum that Beijing would donate $2 billion toward fighting the coronavirus and dispatch doctors and medical supplies to Africa and other countries in the developing world,” the New York Times's  Andrew Jacobs, Michael D. Shear and Edward Wong report.

“The contribution, to be spent over two years, amounts to more than twice what the United States had been giving the global health agency before [Trump] cut off American funding last month, and it could catapult China to the forefront of international efforts to contain a disease that has claimed at least 315,000 lives. But it was also seen — particularly by American officials — as an attempt by China to forestall closer scrutiny of whether it hid information about the outbreak to the world."

  • Trump threatened to cut funds for good in a late-night tweet: 

Nasdaq will make it harder for Chinese companies to list. “Nasdaq Inc is set to unveil new restrictions on initial public offerings, a move that will make it harder for some Chinese companies to debut on its stock exchange, people familiar with the matter said on Monday,” Reuters reports. “While Nasdaq will not cite Chinese companies specifically in the changes, the move is being driven largely by concerns about some of the Chinese IPO hopefuls’ lack of accounting transparency and close ties to powerful insiders, the sources said.”

Chart topper

Oxford Economics: Economic data points to a November wipeout for Trump. 

The macroeconomic forecaster projects the economic fallout of the pandemic shutdown will likely doom the president's reelection chances. The firm's updated, state-based election model finds that “an unemployment rate above its global financial crisis peak, household income nearly 6% below its pre-virus levels, and transitory deflation will make the economy a nearly insurmountable obstacle for Trump come November… Our national Election Model predicts Trump will lose the popular vote by a margin of 30 points – gathering only 35% of the votes – the worst incumbent performance in a century.”

Their updated national map: 



  • Powell and Mnuchin testify in front of the Senate Banking Committee
  • Walmart, Home Depot, Advance Auto Parts and Urban Outfitters are among the notable companies reporting their earnings


  • The Fed releases minutes from its April 28-29 policy meeting
  • The House Education and Labor Workforce Protections Subcommittee holds a hearing on protecting workers from covid-19
  • Target, Lowe's, Expedia Group, McKesson and L Brands are among the notable companies reporting their earnings


  • The Labor Department releases weekly jobless claims
  • The National Association of Realtors releases existing home sales for April
  • Best Buy, Hormel Foods, Intuit and BJ's Wholesale Club are among the notable companies reporting their earnings


  • China kicks off its annual legislative session, the National People's Congress
  • Alibaba Group, Deere, Foot Locker and Buckle are among the notable companies reporting their earnings

The funnies

From The Post's Tom Toles:

Bull session