Transcripts For BLOOMBERG Bloomberg Markets European Close 20240712

We saw a push higher in the session when the governor of the bank of england toned down the speeches we have seen as of late when it comes to negative rates. We will see whether ultimately he has to deliver on negative rates. Apparently the mood music has improved on that for today. Politics when it comes to the btp markets, today we have seen a significant pushback for the Prime Minister against mr. Salvini in local elections. The market has taken that positively. Alix just to pipit off what i said earlier. The eu Leaders Summit is postponed as the eu councile president was quarantined. You had a Security Guard test positive. That Leaders Summit will be postponed. Movement in the market, the dollar jumping higher. Charlie evans says the fed could raise rates before inflation gets to its 2 target. Interesting to see we get that reaction before we get fed chair powell. You are all seeing Maxine Waters speak right there. Lets break down what to expect. Emily wilkins joins us now. Will the passing of ruth bader ginsburg, as well as the fight for the Supreme Court play into these to conversations today. Emily the senate has really been taken over by filling this new Supreme Court vacancy. It is something they want to have done before november 3, that is something we heard from the white house. Types ofhese nominations take about 70 days. This senate will have to buckle down to get this done. We expect it to be extremely contentious. A lot of democrats feel they were cheated out of not having mayor garland sat because Mitch Mcconnell said we need to leave it to voters tenmonth before an election and now they are saying this is in fair, republicans are saying they control the senate and president , why wouldnt they get this nominee through. Is the treasury secretary now a lameduck treasury secretary . Taking the Supreme Court precedent over stimulus it seems of than the republican party. We have an election coming up. It is by no means guaranteed they will win that. What more can the treasury secretary do at this point if his hands are tied around the politics of the Supreme Court . Emily there is the ability to continue negotiations, continue talking to mcconnell and pelosi. Speaker pelosi has gotten a bit of blowback about not doing more for negotiations. You have some members facing very difficult races and they are going back to constituents who have been really harmed by the current economy and saying we are sorry we dont have anything additional for you. Ist is something pelosi feeling pressure on. It is safe to say for the senate that all eyes are on the Supreme Court and the coronavirus stimulus is not something in the forefront of a lot of minds. Are we at risk . Of a Government Shutdown where are are we at risk of a Government Shutdown . Emily we did see a potential spending package to continue funding the government come out. There was disagreement over some agricultural funding that republicans wanted to see in there. That was not included. The house is supposed to vote on that package. We are hearing from house leadership it could be delayed. Neither party wants a shutdown. No one wants this in an election year. Both will be working hard to make sure we get something by september 30. October 1 is the deadline. Much, emilyou very wilkins. E. U. And day has started on capitol hill. The treasury secretary is speaking. Treasury debts would treasury object to removing the minimum loan threshold so that Small Businesses and minority owned businesses could access the program . I am appreciative because when we started out, when they first rolled out with the main street program, the minimum requirement for the loan was 1 million. And you did reduce that to 250,000. I am asking can you go further in the reductions so the loans can be made to smaller businesses . I would be fine lowering that to 100,000 dollars and will consult with chair powell afterwards on lowering it. Chair powell . There is very little demand in the facility below 1 million. There is not much interest at all below 1 million. It would have to be a different kind of facility. I think extending credit in those small quantities would require a facility built from the ground that would be different from main street. It would not have the same requirements, but we can talk about that. It would not look like the current main street facility. It is a different kind of thing. I am aware of how the main street facility was formulated for the midsize businesses and i am aware that they have to repay those loans. But we have so many Small Businesses still eligible for and certainly they would repay those small loans that they could get. It is not that they are absolutely looking to have those loans waived. Do you think something can be done . Chair. Powell it is possible. I think it is more appropriate for ppp loans which are in the nature of grants. I think thats a better way to approach a approach these. Trying to underwrite the credit of the hundreds of thousands of very Small Businesses would be difficult and i think ppp is a better way to approach that space in the market and i think you will are well advised to use that. I now recognize the Ranking Member for five minutes for questions. Thank you madam chair. , in the Federal Reserves data, we see there is substantial economic recovery. We see economic numbers and we have many households that are about the same as they were, a little better off in terms of savings back at the beginning of the year. But we have seen many households much worse off. So it is sort of a tale of two different recoveries if you will, or two different experiences of this pandemic. So while we see good economic , what are the areas that you see as needing further assistance . What areas of our economy do you see as needing further assistance to get us back to something more normalized given where we are with covid . Chair. Powell i guess i would point to the labor market to capture the size of the issue. We still have 11 Million People out of the 22 million who were laid off in the payroll numbers in march and april, still 11 million out there. That is good progress, we have put half of those back to work, but that is a long way to go. Thats more people who look the lost their jobs during the Global Financial crisis. Our policies will support that it will go faster for those people if we have all of the government working together. Totheres a fiscal response help support the economy for ,hose most affected by covid economically affected by covid. Chair. Powell the details of that are between congress and the administration, and not for the fed to say. I think the recovery will go faster if we have both continuing to Work Together as they have so far. There is much that has been negotiations on another cares package like we passed in march. You are the lead administrative negotiator on that package, which i think from all sources it was a very solid piece of bipartisan legislating and i want to commend you for being the administrations voice and negotiator on that project. I think we have good results from the programs you were able to set up in coordination with the fed. , what are thenes components for the next package that we need to take to support the economy to get things back going again . Sec. Mnuchin i think the next package should be much more targeted. It should be focused on kids and jobs and areas of the economy that are still hardhit. Particularly areas such as the travel business and others, restaurants. I think there is broad bipartisan support for extending ppp to businesses that have had revenue drops. I think Small Businesses are the large priority. So focused on Small Business and family support. So that would be a strong foundation. Me ask you both this. Treatment, therapeutics, massive scale testing. We are getting up to speed with some really first rate testing across the country. And getting kids back in school in a safe way. Those things are sort of foundations for us getting the economy going to the next degree. It is not going to all be fiscal or Monetary Policy that gets people back in restaurants again. Its not government regulation, it will be peoples decisions on whether or not to engage. Similar to getting on airplanes. Along those lines, do you see the capacity for us to get to a full economic recovery . Sec. Mnuchin i think it is just a question of time. I would highlight, we are extremely pleased, we have committed to 150 million points of care tests that will be delivered between now and the end of the year and we are working to deliver comparable amounts with instant results. Rep. Mchenry instant results and those are very low cost tests. Sec. Mnuchin that is correct. Rep. Mchenry thank you for your testimony and being here today. Thank you for your leadership in the midst of this. In the economic effects of covid and i want to thank you all for being there both with a Life Insurance policy and with the water to put out the flames. Thank you both. Recognize mr. Heinz of connecticut. Rep. Heinz my time in washington is bracketed by bailouts. Right before i got here we passed the tarp and a bailout of the auto industry. And now we are bailing out the airlines and businesses large and small. The government is in the business of bailouts. I would point out to my friends on the republican side that all of those were promoted and passed and promulgated by republican president s. Mnuchin, i had the opportunity to talk to chairman powell about this. I like to believe that we could do fewer rather than more. I dont like the idea of Business Managers large and small thinking every five or seven years, the government will bail them out of liquidity crises, i also like the idea as long as we are going to do these things, that the American Public be compensated for the use of their funds for private and commercial purposes. Dmire your efforts to get make sure the American Public is compensated. There is a funny hostage situation the develops. When i propose that on a caucus call i got calls saying if you make the money cost anything, they wont take it and they will fire us. It feels like a hostage situation. Give me the money for free or we will not take it and fire people. I would love to give you as much of the rest of my time. What do we need to do structurally to get out of the business of bailouts and number two, how can we get out of this hostage situation in which i think you actually worked very hard, where the american being compensated fairly for the use of their money for private purposes . I would say its a very different situation from the financial crisis. In this case, the businesses that were impacted were impacted because of covid, which was not their fault, as opposed to issues they controlled. I would say in the case of the airlines, i think we struck the right balance. I think we got proper compensation for taxpayers. It was very important, given what went on in the travel industry in the case of the National Security loan we made to the trucking company, we took a 30 equity interest in that so iroper compensation agree with you to the government should be properly compensated. I think for very Small Businesses like the ppp, the money we spent there, we saved significant money and unemployment on the others. Rep. Himes with respect to the 30 equity stake, what is your philosophy . Is your philosophy to dispose of that as soon as you can do so safely in a sound manner or is it to maximize the return to the American Public . Sec. Mnuchin i dont think it is to absolutely maximize the return, but i think the American Public should reap the benefit. My expectation is that is not something we would liquidate now , we would liquidate when the markets are more normalized and the economy is back to normal. Rep. Himes let me run an offbeat idea. I had the opportunity to talk to secretary paulson and another formers treasury secretary about it. One of the vehicles for capturing commonwealth for the citizens of the country is the Sovereign Wealth Fund. It,ka uses it, norway uses largely oil driven wealth. Should congress investigate, if we are going to be in the regular business of bailouts, should we look at establishing his Sovereign Wealth Fund in order to take the proceeds from that commonwealth and use it as an Insurance Fund or to disperse however we may choose to disperse . Is that an idea that makes sense to you . Sec. Mnuchin let me just say that most countries that have Sovereign Wealth Funds, it is typically for future generations where they are focused on, in the case of many places, energy and things like that that will not necessarily be around forever. I do not necessarily think the u. S. Should have a Sovereign Wealth Fund. On the other hand, i think taking the profits and putting them into an account that is reserved for a future emergencies is a very interesting idea i would explore with you. Rep. Himes i dont think any of us want to be in the persistent business of bailouts, but if we are going to do it, we should make sure the American Public is amply compensated. I yield back the balance of my time. I recognize the gentlelady from missouri, ms. Wagoner. Rep. Wagner thank you for being here today. I have been hearing from employers across the Second District of missouri who desperately need congress to do its job and passed Coronavirus Relief legislation so they can do their job and keep handing out paychex to their hardworking employees. Earlier this month, the senate acted to pass relief legislation that could actually be signed into law. That package would have given relief to families, schools, childcare providers, Small Businesses and those who needed most at a time when so many are struggling, we really need to put americas Families First and i am sick of the partisan politicking, the wish lists which have no place in this conversation. Congress should be laser focused on providing targeted and immediate relief. The Senate Majority supports a second round of ppp money that would keep our Small Businesses afloat. I call on my colleagues in the house to bring this to the floor. Grateful mnuchin, i am for your work in negotiating this. And what it means for the Small Businesses including restaurants, travel, a Dentist Office and so many others that keep americans employed. You talked a little bit about how passing the second round of the Paycheck Protection Program would keep america on track for a full economic recovery. How much could we repurpose from cares in order to do this and tell us again what this would mean in terms of economic recovery . Sec. Mnuchin we had approximately 450 billion dollars allocated to work with facilities. He i agreed i would reallocate 200 billion of it that is not used that needs congressional support. We would reallocate that and our priorities are kids and jobs. I think ppp, there is a strong bipartisan support. I know both committees in the house and senate have worked on revisions that are necessary revisions and we look forward to working with both parties. Could beer and that passed today and signed into law today, is that correct . Sec. Mnuchin the president would very much support signing into law ppp money immediately. Rep. Wagner it is clear that the best economic stimulus package we can give to the American People is a fully open economy. It brings people back to work, allows Economic Growth to begin and will restore our economy. Chairman powell, do you agree that reopening has increased Economic Activity and jumpstarted the process of bringing the u. S. Backed to prepandemic prosperity . Chair. Powell yes i do. We need to reopen the economy to get people back to work and we need to do it in a sustainable way. I always mentioned that a part of reopening quickly and effectively is to keep the virus under control and that takes basic measures like Wearing Masks and things like that. The two things go together. A fast reopening and maintaining these measures. Rep. Wagner absolutely. The president s plan to reopen america has enabled states to tailor their reopening plans to address the specific challenges in their state and region. Chairman powell, how does this statebystate approach ensure success, especially when it comes to states that are responding differently to the pandemic and are there any regulatory burdens you are aware of that should be removed to improve states ability to quickly and safely reopen . Ofir. Powell the question how to reopen exactly and what policies to use, that is a question that is one for elected officials at the state and local level, not for the Federal Reserve. I would not be a good judge of that. In terms of regulatory adjustments, we have made a number that have been designed to allow banks to serve their customers in we have relaxed a number of regulations temporarily and we think that has help them serve their customers in a way that does not endanger safety. We are open to doing more of that, but many we have done and frankly, the economy is healing. Rep. Wagner i believe many of the regulatory burdens we have lifted are things that can be sustained even beyond this pandemic. I hope the committee will look at that. I thank you for your answer and yield back. I now recognize the gentleman from illinois, mr. Foster. Mr. Foster, you are muted. Rep. Foster my apologies madam chair and my thanks to you and our witnesses. The fed recently announced hypothetical scenarios for the second round of Bank Stress Tests and unlike the results of the sensitivity analyses conducted earlier this year, you will be releasing bank by bank results. I appreciate this transparency and believe it is important for markets, policymakers, and the banks to have this information be public. One of the tragedies of the last financial crisis was in the months prior, as pressure built on financial institutions, they did not use the time to raise capital until it was too late. Hopefully the prospect of publicly disposed publicly exposed stress test will help this behavior if the downturn continues. You will be using the results of these tests to determine whether the restrictions on shareholder dividends and buying back shares will continue through the fourth quarter. Will you be making these determinations on a bank by bank basis, or will all of the large banks be subject to the same restrictions . Chair. Powell that is going to depend on a lot of things and those decisions we will make down the road. We are probably looking to use the bank by bank approach. Rep. Foster thank you. Given the continuing high unemployment, the failure of the senate to pass any new covid relief, and the uncertainty and volatility of the large number of economic indicators, would you air on the side of conservatism and safety in making these determinations . Chair. Powell i think the stress tests themselves always air on the side of safety. We think of very extreme scenarios, a severely adverse scenarios. That has been our approach overall. Rep. Foster will you be reanalyzing the living wills of the giant banks to ensure they could be executed properly at a time of covid pandemic when for example, host of the workforce is at home . Chair. Powell we do not have any plans that i know of to change the schedule of doing that. Banks have to resubmit those on a regular schedule and i think we will just stick to that schedule. Rep. Foster i urge you to keep an eye on that. If we have to execute them and its not possible in these conditions, we will regret that. Potential problems may not be confined to a small number of giant banks. The savingsandloan crisis was the result of losing bets made by over 1000 smaller institutions. The taxpayer ended up on the bailouts around 2 of gdp. The face fate of small banks are more closely tied to the fates of small and mediumsize businesses, which are at most risk of business should we be worried about in terms of the potential need to bail out large numbers of Smaller Banks if the pandemic continues . Chair. Powell i guess i would years and the10 banks spent 10 years strengthening their capital, their liquidity, the understanding of the risks and management of them. So far, the system has held up well. We do not know where we are in this process, so we will continue to do those things we need to continue to assess. But so far, we do not see the kinds of problems you are talking about. I think with Smaller Banks, the issue is there has been a 30 year trend, consolidation and banks going out of business. Thats not a trend we want to exacerbate. I do think Smaller Banks will theably bear too much of burden here. They have more exposure to real estate and smaller businesses, which are probably more vulnerable and have less resources to deal with this sort of stress. I think we will be watching carefully to make regulatory adjustments, to make sure that we give those banks every chance to serve their customers and make it through this difficult time. Rep. Foster thank you. One of the problems we have in Financial Regulation is we seem to be fighting the last war. We maybe should look two wars back. Youimited amount of time, introduced a new strategic framework for conducting longterm Monetary Policy. As part of that, you discarded fixed of instead you will be using a wide range of indicators. I urge you to do that very publicly and transparently. You can get different answers by choosing different measures. Both for inflation and unemployment. My time is up, i yield back. I now recognize the gentleman from kentucky for five minutes. Rep. Barr i share my friends antipathy for for what he describes as bailouts. I think it is important to point thethat a bailout implies government is saving businesses from mismanagement or excessive risk taking or the use of taxpayer funds for private use in a way that would promote moral hazard. We saw some of that in the aftermath of the financial crisis. That is not what we have here. What we have is a congressional response to many state and local governments imposing restrictions. Some of those restrictions may be warranted in response to a pandemic, others may criticize those restrictions as being overzealous or draconian. Nevertheless, this congressional response to the cares act or the ppp program where the main Street Lending program or some of these liquidity facilities seems to like a compensation. It is important to point out that distinction, regulatory taking. I want to ask chairman powell about main street. I think there is interest among potential borrowers to participate in this program. Are reporting to us in congress the program is not working for them. The fed has committed less than one half of 1 of the total available funds under the program. An argument can be made the program is not performing to its full potential. Last week the fed issues updated efforts about the program and ive heard the updates are unlikely to move the needle. You mention smaller loans for smaller businesses this program may not be right for them. It is more suited to ppp. I would offer for your consideration that some of those businesses that we need a smaller loan, the ppp program does not help them because their payroll is fairly limited and they have larger amounts of debt. My question would be is the fed considering publishing more targeted guidances, underwriting statements, documentation requirements for the smallest main street bones . Main street loans . Know, thell as you limit is 250,000 and we have little demand below one million. We are not seeing demand from very small lenders that is because the nature of the facility and the things you have tends to belify larger sized businesses. Lending at the small end, under 100,000, tends to involve a lot of personal guarantees. You are lending to a person, that person is guaranteeing a Small Business. That is not a facility we currently have. We would have to start from scratch to develop that. Barr the feedback we are getting for those loans is investors are telling us they would prefer to use their existing structures for them to get in to that smaller level of loan. I want to talk about even the restrictions ebita restrictions in the program. The restrictions we have prohibit many commercial real estate borrowers from accessing the program. Last friday you indicated the fed had studied whether to allow for collateral based allocations for assetbased borrowers, but determent conditions do not warrant such changes at this time. How did you come to this conclusions . Chair powell we have spent a great deal of time. We hear these things daily, probably from the same people. We look for places where the banking system, the lending system is not working for commercial real estate, and a big part of that is this the mbs market. We do not have an answer to that there are problems with commercial mortgagebacked securities that make it possible to make additional loans and servicers have to pay. We look at other places in commercial real estate and it is not easy to find places we could have much of an impact. Barr i appreciate our conversation where you said the fed emergency lending power was not particularly suited to cbs, secretaryeciate mnuchins communication with your team, particularly cmbs. Chair powell i am sympathetic to the issue and we have spent a lot of time try to figure out if there is a way we can structure our program with the fed. As the fed chair said, there is a structural problem with limitations and Additional Debt and prepayment penalties. The best way to help many of these is with additional ppp funds so people can pay rent so owners can pay their mortgage. Barr i yield back. I now recognize the gentlelady from ohio. Please unmute. Thank you, madam chair person. To the witness, thank you. We have heard a lot today about reopening the economy. We have also heard a lot about safety,emic health and and director powell, you even use the word they go handinhand and pointed your mask, by wearing a mask all of that is a part of it. To you, mr. Secretary, we recently learned that the white house had scrapped plans at the United States Postal Service to send approximately 650 Million Dollars worth of masks through the mail. Maybe that is because President Trump sees no value and tweets about not wearing it. You have a lot of involvement with the operations and governance with the u. S. Postal. Were you involved in that situation about scrapping the plans were aware of it . Clear,uchin just to be i think i read something in the press about that alleged situation. I never in any of my Task Force Meetings do i recall that being discussed or any plan being discussed whatsoever. It may have occurred in a different part of the government but ive not heard anything. Would you be willing to look experts,since most certainly scientists and medical have all stated that wearing a mask is helpful in preventing the spread now that we know over 200,000 people have died. Would you look into that since you had involvement with the u. S. Postal . Sec. Mnuchin i would be happy to you and we will get back to your staff. Thank you very much. My next question is certainly we know that when we talk about reopening the government, which you both agree if people are healthy and they have health care, then that goes hand in hand with reopening the economy by having people be healthy enough to go back to work, that is a yes or a no question. Director powell . Chair powell yes. Secretary . Sec. Mnuchin yes. One of the reasons we like ppp is it kept employees connected to their business and in many cases allow them to keep their health care. Year the Trump Administration submitted a brief to the Supreme Court urging them to overturn the Affordable Care act, which would strip 20 million americans of their health care in the midst of this pandemic that has already cost the lives of more than 200,000 americans. Stripping protection for preexisting conditions, taking many of our younger adults off their plans. We are also hearing about how great their numbers are. Ive been in congress for eight years and i have voted against this dozens of times. Stripping 60ould million of their health care in the midst of this covid19 pandemic bring to the economy . Want powell i would not to comment on a particular Supreme Court case. As you mentioned, health care is an important part of the support system that people need. Let me see it this way. Do you think stripping health care or not having health care would be bad for the economy . Chair powell as you started i think having Health Care Coverage is an important basis for people to go to work. It is one of the reasons people do work. Yesould you say that as a that having health care would 200ly be a plus thousand people have died. If i look at africanamericans, making up 13 of the population, but having almost 30 some percent positive results, 24 dying, dont you think health care plays into keeping people healthy . In the economy . Chair powell yes, i do. Thank you. According to a, transaction data of the secondary market Corporate Credit facility, the Federal Reserve published on funding that they had purchased Corporate Bonds of dozens of companies that are in good Financial Condition like apple, which has more than 200 billion cash in hand. How does buying corporate debt of Large Companies in good Financial Condition help further the fed mandate and how is buying corporate debt of foreignowned Companies Like bp and toyota further the fed mandate . Chair powell none of those secondary market corporate debt purchases extend any new credit to anybody. That is buying an outstanding bond. The reason we are doing that is to have a footprint in the aftermarket, which should conditions deteriorate, would enable us to continue to have good Financial Conditions, which would support companies and allow them to keep workers on staff. The gentleladys time has expired. We now recognize the gentleman from texas, mr. Williams. Iams as most of you know, i am a Small Business owner. I think both of you for coming to our committee. Both the Treasury Department and the fed have to get resources in the hands of hardworking american businesses. I applaud both of you for your efforts during these Uncertain Times and main street american thanks you. Local governments in my district are sitting on the money received from the Corona Relief fund because there is uncertainty surrounding what counts as an eligible expense. For example, one local government like to spend the money to buy food for local food pantry, has many of their citizens are seeing Food Insecurity as a result of the economic shutdowns, but they are unsure if this would be an eligible expense since the cost is not accounted for in their annual budget prior to the pandemic. Secretary mnuchin, what advice would you give these local insured as that are use can be a qualified expense so we can get the money spent . Sec. Mnuchin i will look and get back to you, but we have tried to give as much flexibility as we can, and as far as traditional congressional authorization moving forward, we are a client we are inclined to allow additional flexibility to the money that has already gone out. We will get something for you to look at. Chairman powell, i raise this issue with the vice chairman in may and i want to get your perspective to make sure everyone at the Federal Reserve is on the same page regarding Business Interruption insurance. Forcing private companies to cover Business Interruption claims for covid19 losses would be a terrible president a terrible precedent of the government stepping in and changing the terms of an agreement between two private parties and would decimate the insurance industry. In texas we say a deal is a deal. In june you mentioned you were aware of this issue as it relates to fiscal stability and i am hoping we can get more substance on this issue since the Federal Reserve is involved in ensuring federal institutions, including Insurance Companies do not pose a risk to our financial system. My question can be can you give us your thoughts on forcing Insurance Companies to retroactively cover Business Interruption claims . Chair powell i do not think ive had a conversation with that since our last visit together in june. I will check in on the Current Situation and come back to you. Thank you. Both of you have discussed the potential need for another economic stimulus package to come through congress. Money moment, much of the weve allocated in the cares act has not yet been spent. The Nonprofit Committee for responsible federal budget estimates the government has allocated or dispersed 2. 2 trillion of the 4 trillion congress has passed in covid relief. Mr. Secretary, youve been deeply involved in negotiating as we know, the next covid19 relief package. As we discussed spending new money, how should we be viewing the economy to ensure industries in most need of assistance receive it by the other money weve allocated makes its way into the system . Sec. Mnuchin we are in a very different situation than we were last time. Last time the entire economy was shut down and we had to act very quickly and in many cases that required us to do things across the board. This time it should be much more targeted to the industries that are most impacted by this situation. Thank you. I want to thank you for your efforts. From somebody who is on main street, the economy is pretty good and getting better. Attitudes of people in startups are getting better. I hope one day we can look at thank you again for your efforts, we appreciate it. I yield my time back. I now recognize the gentleman from washington for five minutes. Thank you, madam chair. Chairman powell, i want to discuss fiscal support today, but before i do i want to address the announcement the fed made to take steps to make the target more symmetric and emphasize the employment mandate , the framework referred to. Framework the most important thing that is happened in Economic Policy for this country. It will have a bigger impact [inaudible] excuse me, speak right into the microphone so we can hear you clearly. Can youe was able hear me now, madam chair . Yes. Thank you. Thank you, chairman powell, very much, for the new framework. Pandemic,set of this you declared this is the time to use the great fiscal power of the United States to do what we can to support the economy. Responded by passing the cares act and Congress Continues to deliberate further fiscal support. Edgar press conference on wednesday, you said the Federal Reserve projections for growth, inflation comment and employment inflation, and employment were assuming more physical support. What size support were you assuming . Chair powell let me say that i think a big part of the Economic News we have had results from the physical support that came iscalthe the f support from the cares act. It plays a big part in keeping Business Confidence and household confidence high. We do not agree on a forecast. Individuals make different assumptions. Something like, most privatesector forecasters are assuming some kind of a package passes in the next few months, but there is not any particular number i would give you that would come out of the fit. Out of the fed. Fed did not true the make projections as to growth and inflation and employment, and if so, acknowledging fiscal support, there mustve been some comment about the level of the support . I wish it were that simple. The way we do it is what we projections of the 17 people who are participants on the fomc. They are free to make whatever assumptions they need. We do not survey them on every little thing. Assume somemany fiscal action. We did not create a table. I cannot tell you exactly what was assumed, but fiscal action underlies many current forecasts. Let me try this a different way what happens to growth and employment if there is not chair powell what has happened lately is the economy has proved resilient, both to the broader spread of the disease over the summer and some of the southern and western states, and also did also to the expiration of the cares act benefit. I will tell you what i think the risk is. Savings are very high, that is because of a number of things. Part of it is the cares act. There are still 11 Million People unemployed. The risk is that over time they go through those savings, they have not been able to find employment yet because it will take a wild to get 11 Million People back to work. They are there spending will decline, their ability to stay in their homes will decline, and the economy will begin to feel negative effects. At the same time the economy is recovering, that is a good thing, and it is hard to have any certainty about the path forward because we do not know which of those two forces will dominate. Respect, unless you are arguing that fiscal , is its has no impact not inescapable that if there is no support, growth will be lower . Chair powell certainly fiscal, and i have said i think it will be needed. I defer to the administration and congress who have responsibility for this. Fiscal support will be needed. Thank you. The gentlemans time has expired. I now recognize the gentleman from arkansas for five minutes. Chair, andu, madam thank you secretary mnuchin for being with us today. Chair powell, it is terrific to see you. I want to associate myself with the remarks of the Ranking Member who outlined the leadership we have obtained from the treasury and the Federal Reserve, particularly in the early days of the fighting of the virus. We appreciate your commitment to our country to restore the health of the American People, renew families belief in the american dream, and rebuilt the american economy. I want to talk about this issue for smaller businesses, and i plan on signing the discharge position in the house today to bill togressman javits the house floor which extends the ppp program and clarifies the forgiveness aspects. This is something that shouldve been done at the end of july. I was pleased last week that democratic members are objecting to Nancy Pelosis leadership, or lack thereof in trying to negotiate this covid package. I hope democratic colleagues will join me in signing that discharge petition. The ppp extension secretary mnuchin outlined is 18 component to having the tools is a key component to having the tools necessary for the Small Business recovery. In my view, the proposal by mr. Rubio in the senate been in the senate bill on the 7a loan program is critical because it allows to take the embedded loss we think is coming and put it on a 20 year, at a 1 rate. It is a much better solution than the Emergency Loan Program used during this pandemic, which is geared towards a hurricane and not a national pandemic. The third point is the main street program, and both of you know my views on this as we have talked about it in Oversight Commission hearing and privately that is on friday at 1 00 come in a typical washington, d. C. Issue, the fed released its frequently asked questions and dumped to the public friday afternoon you would not pursue this asset lending type approach for a different main street term sheet. Mr. Clark did a good job mr. Pillar did a good job describing that. I think that can be done to companies on sound footing, to companies that do not credit on reasonable terms, and in the concept of a backstop. I want to press both of you that while it does not fit the main street term sheet you have today that took four months to stand up, i still believe that assetbased lending to a solvent company is important. Anothera key component, washington key component in the frequently asked question, you said at this time. I would urge you to reconsider your position on acid business loaning and i will offer you each opportunity to comment. Chair powell we have taken a close look, as the secretary indicated, but we are happy to continue the conversation and we will do that with you. I do believe it can be done in the right way and i think the three things i commented on, the 7a program and the ppp program, introduce the slower loan size the chair mentioned, but i think there is an each of portfolio loaning they can be done on the sound basis that can offer liquidity for hospitality, not cmbs, but portfolio lending or they have a gap we saw after 9 11 and we saw after the financial crisis. Slow increases in business travel. Secretary mnuchin, you commented you would Like Congress to give you authority to incur risk as it relates to the 500 billion in funding for the Exchange Stabilization fund or the 450 not related to airlines and you propose to reprogram that money for other uses. When we had a discussion of this in the Oversight Commission, we issued in our fourth report we do not believe you need any additional Congressional Authority to reprogram that and take additional risk. Could you comment on that . Sec. Mnuchin let me be clear. I do not think we need authorization to take additional risk, and let me clarify. I think the main street loans we will be taking losses, because i think this is basically being underwritten on precorona precorona ebita. We would like to focus on other areas of the economy that can be better served, kids, jobs, sba, and longterm loans. That we do need Congressional Authority to use it in other areas. As you know, we have a lot of money left over in the ppp that has been appropriated by congress that with simple legislation could allow many hardworking Small Businesses to get a second loan. Thank you both for your leadership and i yelled back. I now recognize the gentleman from california for five minutes. Thank you very much, madam chair. I appreciate it. I want to thank the secretary and also the chairman for being here. Appreciate your testimony very much. Ive heard pretty tortured language and tortured logic from some of my colleagues today, members that we are not bailing out businesses, compensation for regulatory taking. That sounds a lot like to use my words against me when you say you will not vote for Supreme Court judges on election year. When you talk in absolutes logic is twisted. The other thing i heard is we should pass the second cares act. We did that. We passed it. It is called the heroes act. It is languishing in the senate. I heard another colleague say we should do with the senate did. They did not pass anything. The senate did not pass a thing. They tried to pass something but this nothing past. I heard a pretty rosy picture of the economy. I do not want to put words in peoples mouth, but secretary you said the economic recovery was strong. Think tens of millions of americans would disagree with that and would say the stock market is not the only economy. 11 million americans are still out of work and have lost their jobs, more than in the financial crisis. I do not think they would agree that we have had a strong recovery. I do agree with what the chairman said that we will not get a full recovery until everyone feels they are safe from this virus. It is important we do everything we can to speed it. Everything we can to beat it. Until now, i think the virus has been in charge. I have been watching what has been happening in europe. It seems like they are starting to get a second wave. Im concerned we may have a second wave in our own country, and im not sure we are prepared for this. I also went back into a lot of reading on the spanish flu, and saw the second wave was the more devastating one, the second, not the first. Could you comment all of you on how impaired we are. What is our plan if this comes roaring back . I would first comment, i did say theres a stronger recovery because when you close the economy and reopen it, it is strong but there is more work to do. As it relates to being prepared, and im not a health professional, although i have set on the task force i think we have made major progress on testing, on viral, on so i think on ppe, so i think we have done a good job of being prepared for the virus. You have a plan in case it comes back . A virus usually has some seasonality, and you would expect in the winter to come roaring back. We have seen that before. Back, do we have a plan . Does the administration have a plan . Sec. Mnuchin from an economic standpoint, we do have a plan for the economy now and that is why we want more congressional approval. And thelates to Health Administration of the task force , it does have a plan and is x equating executing that plan and a major component of that plan is the vaccine developed, which is making great progress. Mr. Chairman, you said until people feel they are not at risk , the economy will not come back. Could you elaborate more on that . Chair powell there are parts of the economy that involve people getting close together in groups , and that is travel, hospitality, entertainment, things like that. Will notle everybody, but some part of the population will be reluctant to continue in those activities until they feel confident that it will be safe, that you will not get sick from doing so. That that is a piece of the economy, it is a substantial piece of the economy where a number of people, millions of people are still not working, and it will probably take some time for them to get back to work. Getting them back to work will onend on continued progress the medical front, including a vaccine. My time has expired and i yield back. Thank. I now recognize the gentleman from georgia for five minutes. Thank you, madam chair, secretary, and chairman powell. Thank you for being here. Let me also echo the thanks for early on in this pandemic, especially with the ppp program, the way our officers Work Together and the way your officers work with the bank in the community to tailor this to where it would do something for the Small Businesses. As a result of that, one of the small banks in my d