The Mnuchin/Powell show

One takeaway from Tuesday's Senate coronavirus bailout hearing: The Treasury Department and Federal Reserve both think the worst could be yet to come for America's economy.

Why it matters: Fed Chair Jerome Powell reiterated his belief that a full recovery may not come until there's a vaccine, and Treasury Secretary Steven Mnuchin said there's the risk of "permanent damage" if states delay reopening.

• The pair gave the first of the required updates to Congress on the $500 billion fund set aside in the CARES Act.

In the virtual hearing, the Senate Banking Committee pressed Powell and Mnuchin on whether the economic programs were enough to support businesses or localities that are in need.

• Powell said the Fed would continue to adjust the terms, and possibly the eligibility, of its lending programs “as we learn more.” It’s already expanded eligibility for its medium-sized business and its state lending programs.
• Mnuchin also said the Treasury was “fully prepared to take losses” on the money it is extending to backstop the Fed’s lending programs. That’s a shift from comments last month, when he said the U.S. would recover the money.

The big picture: Many of the Fed's coronavirus lending programs have yet to launch.

• Powell said he expected all of the programs to be up and running by the first week of June.

One fiery moment: Sen. Elizabeth Warren pushed Mnuchin on whether the businesses receiving relief from certain programs would be required to keep workers on their payrolls.

• "Different facilities have different requirements," Mnuchin said. He also added that there is a provision in the Main Street Lending Program that "we expect people to use their best efforts to support jobs."

Between the lines: Mnuchin was pressed on the eight-week period that businesses are required to spend Paycheck Protection Program funds. Small businesses want it extended, but that fix would need to come from Congressional legislation, not the Treasury Department.