World News

Senator Warren takes Treasury, Fed to task over ‘little oversight’ of stimulus programs

By Pete Schroeder

WASHINGTON (Reuters) – U.S. Senator Elizabeth Warren chastised the Federal Reserve and Treasury Department on Thursday over their rollout of massive stimulus programs designed to help businesses weather the global coronavirus pandemic, saying they were failing to protect workers.

Warren, a former Democratic presidential candidate, raised her criticism in a pair of letters sent to Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin.

“The Federal Reserve is handing out billions of dollars with little oversight and failing to require basic protections that companies retain workers and maintain payroll, failing to include protections against outsourcing, and failing to retain basic protections for union workers,” she wrote in one letter. “Absent these protections, it is not clear how these bailouts will help American families and workers.”

Warren, who is expected to have a major voice in Washington, particularly if Democrats retake the White House, said the government should require any companies relying on those relief programs to take certain steps to protect workers and taxpayers, such as prohibiting layoffs and outsourcing, curbing executive pay, and prohibiting stock buybacks.

Earlier this month, the Fed announced a broad $2.3 trillion effort to bolster local governments and small and mid-size businesses, which built on previous Fed programs launched since the outbreak aimed at soothing financial markets and ensuring capital can continue to flow.

Before becoming a senator, Warren was a fierce watchdog on a government panel created to oversee the last significant bailout in response to the 2007-2009 financial crisis.

One of Warren’s former top aides, Bharat Ramamurti, is now serving as the only named member of a new congressional oversight panel of pandemic relief programs. Earlier Thursday, he wrote in a essay published in the New York Times that the programs raised similar concerns of being too generous to executives without protecting rank-and-file employees.

A Fed spokesperson said the central bank has received the letter and will respond. A Treasury spokesperson did not respond to a request for comment.

(Reporting by Pete Schroeder; Editing by Leslie Adler)