The economic shutdown roiled financial markets this spring, revealing weaknesses that regulators are working to fix, said Randall Quarles, the U.S. Federal Reserve’s Vice Chair for Supervision, in a 21 October speech.
The banking system withstood the turmoil well but non-bank sectors of the financial industry were shown to be “significantly more fragile,” he said.
During the financial chaos, the Fed supplied liquidity to money-market mutual funds and commercial paper markets to keep them from seizing up.
“While swift and decisive policy action succeeded in calming markets, this does not mean our work is complete,” Quarles said.
Economic Despair
Economic disparities threaten to derail the economic recovery, economist Lael Brainard, a member of the U.S. Federal Reserve’s board of governors, said in 21 October comments to a meeting of the Society of Professional Economists.
“The recovery remains highly uncertain and highly uneven, with certain sectors and groups experiencing substantial hardship,” she said. “These disparities risk holding back the recovery.”
Noting the booming equity markets, in contrast, she cited unemployed workers, small businesses, and state and local governments as being left behind in the recovery and in particular need of help.
“Apart from the course of the virus itself, the most significant downside risk would be the failure of additional fiscal support to materialize,” she warned.
She urged targeted fiscal support and continuing “accommodative” monetary policy “to turn this K-shaped recovery into a broad-based, inclusive recovery.”
Fed officials, including Chairman Jerome Powell, have repeatedly urged Congress to pass another stimulus plan.
The Fed’s policies also must remain “dovish” even after interest rates begin to rise again, Brainard said.
TREND FORECAST: The gap between the rich and poor, which we have detailed with solid facts and hard numbers over the decades, will intensify as the “Greatest Depression” worsens. As the number of poor people swells, so, too, will violence, protests, riots, crimes, and corruption.
