The Federal Reserve Bank of Minneapolis President Neel Kashkari said on Thursday (April 2) that policymakers should be generous with the help that is extended to small businesses.
Kashkari was the director of the U.S. Treasury Department’s Troubled Asset Relief Program (TARP) during the Great Recession of 2007-2009. TARP was intended to save the financial sector, which was crashing along with the mortgage industry.
Kashkari said TARP’s $400-plus billion budget didn’t help as many people as it could have. Policymaker makers, he said, were “too targeted” when it came to allocating funds because they didn’t want to be seen as helping people “who didn’t deserve it.”
“We didn’t end up helping many homeowners,” he said during the webinar. Now, he wants to see “a more aggressive approach” to funding that would have long-term benefits.
“We need to err on the side of being generous, helping as many small businesses, as many small profits as we can to retain their workforce,” he said. “It’s much better to keep workers attached to their businesses so that when the crisis is behind us, we can then turn the economy back on as opposed to having to reorganize the economy.”
Kashkari said the government typically offers assistance to larger companies. A more recent effort, however, turned the spotlight on the needs of Main Street businesses, which have been especially hard-hit during the shutdowns.
“I don’t think we have much experience, if any, [in] reaching out to thousands of organizations across the country at the same time. That’s why you have to go through the banking sector,” he said. “They’re already in the communities. My hope is that this program can be operationalized very quickly.”
Amid the coronavirus pandemic, restaurants across most of the U.S. have been ordered to close, with the exception of takeout and delivery.