Fed head who bailed out big banks in 2008, says U.S. should shut down completely for six weeks

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The head of the Federal Reserve of Minnesota bank who once paid out hundreds of billions to save big banks during the 2008 financial crisis now says the U.S. should lockdown again for another six weeks, ostensibly to control a resurgence in COVID-19 cases even as they are already receding.

“The next six months could make what we have experienced so far seem like just a warm-up to a greater catastrophe. With many schools and colleges starting, stores and businesses reopening, and the beginning of the indoor heating season, new case numbers will grow quickly,” Fed president Neel Kashkari co-wrote in a New York Times op-ed with Dr. Michael T. Osterholm, head of the Center for Infectious Disease Research and Policy at the University of Minnesota.

Kashkari essentially repeated remarks he made last week during an appearance on CBS’s “Face The Nation,” arguing that “if we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control” the virus’ spread.

The Fed president’s recommendation stands in stark contrast to the views of several state governors and President Donald Trump, the latter of whom pushed back hard when asked to comment on the Fed president’s remarks last week.

“We got hit hard and we did close up. We had to close it up and we did the right thing,” Trump told Fox Business’ Lou Dobbs.

“So we closed it down and we’re now opening it up. And it looks like it’s a V. It’s absolutely a V. But we’re not going back to shutdowns,” the president added.

“Now, we understand the disease. We understand the problems with elderly, especially elderly, with heart or diabetes or other problems. And we’re able to take care of them. We understand it now, but we’re not shutting down.”

New COVID-19 positives have been steadily declining for days, with last week recording the lowest single-day rise since July 6.

Both men also argued for new stimulus relief from the federal government.

“Congress should be aggressive in supporting people who’ve lost jobs because of Covid-19. It’s not only the right thing to do but also vital for our economic recovery,” they wrote. “If people can’t pay their bills, it will ripple through the economy and make the downturn much worse, with many more bankruptcies, and the national recovery much slower.”

After Congress failed to reach an agreement on a new stimulus package, President Trump signed a series of executive orders granting some new economic relief to Americans as well as a tax holiday.

Kashkari was widely criticized for handing out some $450 billion in taxpayer funds — $250 billion of that to the country’s biggest banks — as the 2008-2009 financial crisis unfolded via the Troubled Asset Relief Program (TARP) that he was assigned to manage during a stint at the Treasury Department.

Kashkari was ripped after one of the institutions, insurance giant AIG, used a portion of the more than $60 billion it had received to pay out $1.7 billion in bonuses and other compensation to top managers.

As for the COVID spread, former New York Times reporter Alex Berenson, who tracks coronavirus data, reported last week that spikes in the Sunbelt and elsewhere have been abating for days.

“Arizona: hospitalizations down over 50% from peak. Southeast Texas: almost 50%. Florida: almost 30%,” he wrote on Twitter. “Time for the Sunbelt governors to stop playing defense. Time to say: every death is a tragedy, but we and our hospitals weathered this virus – without destroying our economy…”

He also noted that hospitalizations in Georgia were declining.

“And btw, writers at the @nytimes and the rest of the media hysterics can scream about how we have to have another lockdown, but that’s not happening down here, not now, not ever, so they may as well save their breath,” he wrote in another tweet.


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