JUDY WOODRUFF: The Federal Reserve announced today that it will push some $2.3 trillion
in loans to small and mid-sized businesses, as well as to cities and states.
That move, together with other programs, mean that the Fed's current actions exceed the
entire scope of its response to the 2008 financial collapse.
To take a broad look at the economic hardship Americans are feeling and the Federal Reserves
response, we're joined by Janet Yellen. She chaired the Federal Reserve Board from 2014
to 2018. She is now a distinguished fellow at the Brookings Institution.
Janet Yellen, thank you very much for joining us.
You have -- we -- you have seen these stories. You have heard people's stories. We know the
statistics. How does this compare to anything you have ever seen, known or studied before?
JANET YELLEN, Former Federal Reserve Chair: Well, thanks for having me, Judy.
This is completely unprecedented in U.S. history. You know, we got data this morning on new
claims for employment insurance. Over the last three weeks, almost 17 million Americans
have lost their jobs. That's more than 10 percent of the work force in three weeks.
It's a devastating blow. We have never seen anything like it. The unemployment rate looks
like it's going to skyrocket to levels we haven't seen since the Great Depression. And
they will probably exceed, probably already do, what we had during the great financial
crisis.
But this is a health-driven downturn in the economy. Very fortunately, we started with
an economy that was healthy before it was hit.
JUDY WOODRUFF: Right.
JANET YELLEN: The banks were in good shape. The financial system was sound. Americans,
at least overall, on average, had relatively low debt burdens.
So, this is a terrible situation, but the hope is that, if we can get the pandemic under
control, deal with the public health crisis, that the economy will recover much more speedily
than it did from any past downturn.
JUDY WOODRUFF: Does the government have the capacity to keep people afloat who need that
help for the duration of this crisis?
JANET YELLEN: Well, they certainly have great capacity.
And I am impressed by what both the fiscal authorities and the Fed have done so far.
It is simply essential to support households and businesses through an incredibly difficult
period in which they are facing losses of jobs and incomes and they are struggling to
meet everyday expenses for food and rent and utilities.
And this is due to no fault of their own and no problems with the job market or their businesses.
JUDY WOODRUFF: Right.
JANET YELLEN: So, Congress has passed the CARES Act, that plus two earlier acts.
We're seeing a fiscal response that is now a little bit larger than what Congress did
in response to the financial crisis in 2008. Now, if this continues, Congress will have
to do more. And they're talking about a package.
And the Federal Reserve response has been utterly heroic. My hat is off to my successor,
Chair Powell, and his colleagues for what they have announced and the creativity of
what they're doing.
JUDY WOODRUFF: And in terms of what Congress has done -- and I know you have been advising
some of the Democrats in Congress -- the people we just heard who are struggling, who have
completely lost their jobs, how confident are you that most of them are going to be
helped?
JANET YELLEN: Well, I think most of them will be helped.
Unemployment insurance, almost -- the eligibility for unemployment insurance is very broad.
Congress extended it to gig workers, to self-employed workers. And the federal government is going
to top up what the states do by $600 a week.
JUDY WOODRUFF: Right.
JANET YELLEN: So, that is very meaningful support.
You know, as you know, it's really hard, in some states particularly, to get through.
You call on the phone, it's very hard.
JUDY WOODRUFF: Exactly.
JANET YELLEN: The agencies are utterly overwhelmed.
And I know how frustrating it must be. Someone's been laid off, they need to buy groceries
and pay the rent, and they can't get through to the unemployment office. So there is a
problem, procedural problems of getting that money out.
But in the coming weeks, the money should be flowing. You know there are direct payments
coming to households.
JUDY WOODRUFF: And in terms of people who own small businesses, and I mean very small
businesses, who are worried -- and we heard some of that in Paul Solman's report a moment
ago -- between what Congress has done and the Federal Reserve as done, are they, are
most of them going to be made whole, or at least be able to survive?
JANET YELLEN: Well, you know, again, there are startup problems with very big programs.
But the Paycheck Protection Program that Congress passed and funded with $350 billion, every
business under 500 employees is eligible for that. And if they use the money to protect
their work force and keep them on, and in addition, for utilities and rent, those loans
will turn into grants.
Now, they need to go to banks to apply. The banks are absolutely swamped. Probably, the
program is going to require further appropriations. And it's probably going to be pretty frustrating
to get the money in hand. But it's there, and it's coming.
And it should be available to a wide range of businesses.
JUDY WOODRUFF: I know a lot of people are asking that question. We have already heard
about people having difficulty getting through.
But you're saying it's going to take time, but it's going to be there?
JANET YELLEN: They're trying -- yes, I think the funding is there.
And if this period of lockdown lasts for more than a month or two, Congress will have to
do more. The Fed has almost unlimited capacity, with backing by Congress, to lend throughout
the economy. So it will be possible to mainly, mainly support households and businesses through
this very difficult time.
And it's really important that they do so, because we want the economy to get back on
track when the public health situation allows it.
JUDY WOODRUFF: Janet Yellen, we appreciate it. Thank you so much.
JANET YELLEN: Thank you, Judy.