Fed Chair Jerome Powell during a virtual press conference last month. Photo: Federal Reserve via Getty Images

Federal Reserve Chairman Jerome Powell said during a virtual interview Friday that the economic blowback from the coronavirus pandemic is hitting those who can least afford it the hardest.

Why it matters: The U.S. economy has plunged into the worst downturn since the Great Depression at a record pace, and a full recovery may take years. More Americans are collecting unemployment now than ever before in history — and 40% of those out of work are in the poorest U.S. households, per a recent Fed survey.

"The pandemic is falling on those least able to bear its burdens. It is a great increaser of inequality. It is low-paid workers who are bearing the brunt of this and women to an extraordinary degree."
— Powell, speaking to Princeton professor Alan Blinder

Powell’s comments came in response to a question about whether the Fed’s latest policies will lead to more income inequality in America. He said "absolutely not."

  • Powell said the Fed’s recent actions were aimed at "creating an environment" where workers will have the best chance to keep their job, get a new job, or go back to their old job if they were furloughed.
  • The Fed's policies have been cited as one reason for the stock market's rebound.

Powell also said that its loan program for medium and large businesses, called the Main Street Lending Program, is "days away" from making its first loans.

  • Powell added that a full economic recovery "will really depend on people being confident that it's safe to go out," while a second wave of the outbreak would "undermine public confidence and might make for a significantly longer recovery, and weaker recovery."

The backdrop: The Fed has taken huge — and sometimes unprecedented — steps in an effort to support key funding markets and the economy.

  • "We crossed a lot of red lines, that had not been crossed before ... this is that situation in which you do that, and you figure it out afterward," Powell said.

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Banks face the stress test of a lifetime

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The Fed says several banks may not fare well if there's a U- or W-shaped economic recovery. That's why it says it’s cracking down on bank dividends and share buybacks — in a way never before seen since annual stress tests were implemented after the 2008 financial crisis.

The backstory: The Fed tested banks' balance sheets in new scenarios that might mirror what's ahead for the pandemic-hit economy. All 33 of the biggest banks passed the Fed's traditional test — but since the coronavirus crisis, the economic reality became worse than the hypothetical slump thought up by the Fed earlier this year.

Biden's doctrine: Erase Trump, re-embrace the world

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Foreign policy will look drastically different if Joe Biden defeats President Trump in November, advisers tell Axios — starting with a Day One announcement that the U.S. is re-entering the Paris Climate Agreement and new global coordination of the coronavirus response.

The big picture: If Trump's presidency started the "America First" era of withdrawal from global alliances, Biden's team says his presidency would be the opposite: a re-engagement with the world and an effort to rebuild those alliances — fast.

Robert Mueller speaks out on Roger Stone commutation

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Former special counsel Robert Mueller responded to claims from President Trump and his allies that Roger Stone was a "victim" in the Justice Department's investigation into Russian interference in the 2016 election, writing in a Washington Post op-ed published Saturday: "He remains a convicted felon, and rightly so."

Why it matters: The rare public comments by Mueller come on the heels of President Trump's move to commute the sentence of his longtime associate, who was sentenced in February to 40 months in prison for crimes stemming from the Russia investigation. The controversial decision brought an abrupt end to the possibility of Stone spending time behind bars.