Transcripts For BLOOMBERG Bloomberg Markets European Close 20240711

Immigrants, or they can override state voting laws or let violent felons out of prison, things that have nothing to do with the coronavirus. Those are the two most important things we could do to help those who are still struggling with this virus get back to work until vaccines are approved and widely distributed. What will not help, what will not help, will is not designed to help was the 133 programs that have been so much of the point of discussion today. The 133 facilities have achieved their purpose. The reason we wrote it and members of this Committee Help drafted it was to fundamentally that the credit slowed to fundamentally credit where the businesses. It was not to subsidize failing businesses that were not going to be able to succeed before china unleashed this plague on the world. It wasnt to bailout fiscally irresponsible, mostly democratically led states and cities who mismanaged their finances for years or even decades. It was to stabilize credit markets. And i have to say, it appears at the time there was some bipartisan concern that these funds could be misused. I will just quote from a few people what they said at the time about our treasury secretary. Joe biden referred to these facilities as a 500 billion slush fund and a blank check. Ironically, senator brown, given the fact that he accused secretary mnuchin today of sabotaging the recovery or intending to drive the economy off in a ditch, set at the time billion the425 secretary of the treasury can decide is a slush fund. Senator warren said that we are at 450 billion slush fund that would go to the secretary of the treasury to help whoever he wants. Ironically, given what senator menendez just said, this bill has a 425 billion slush fund with which basically, the secretary of the treasury can say i am like you can say i like you, you get this. I dont like you, you get nothing. I guess the shoe may be on the other foot now. And it seems like the democrats, with the hope of having a new secretary of the treasury and a new administration, would like a 450 billion slush fund to reward politically favored organizations like, i dont know, abortion providers or marijuana dispensaries, or maybe to bailout their partisan allies in states and cities that have mismanaged their finances for years. That is not what the law says. That is the point that secretary mnuchin has been making all along, if im not mistaken. This is not an economic decision. This is a legal decision. This law was designed from the beginning to stabilize credit markets at the height of the uncertainty of this pandemic in the spring, and that is exactly what it did. Secretary mnuchin does not have Legal Authority to put these programs in place. He took the right action. If our democrat colleagues want is money available, they need to work with us to make more available. Senator. Is thank you. I want to thank chairman crapo for his evenhandedness and his ability to work with both sides of the aisle, and quite frankly, unlike the last senator, actually bring people together and not divide them, so i appreciate senator crapo in that regard. That we areeeling at a fulcrum here. Still is inonomy the very difficult conditions. We are not out of the woods yet. Chairman powell, i have the feeling that if we just fold up our hands and walk away, that this economy not only might, it will slip backwards over the next few months. Byt might be by design certain folks in the United States senate and the administration, but it certainly isnt michael. Isnt my goal. I would like chair powell to highlight the importance of additional fiscal support for the economy moving forward. You talked about the folks out there who continue to hurt, and i will tell you that i think it is bigger than just the ppp program extension. I think our Health Care System is, quite frankly, stressed to the max. In montana, im not sure theres any beds available for this pandemic right now. They are all full. I can tell you, i think thats the way it is in many parts of the states. When we are talking about not liking down, lets bury our heads in the sand and assume this penned mick hasnt even happened and has no importance. My wife has been in treatment for cancer, and the cancer she will survive. If she gets this covid, i am not sure she will. So i think we need to wake up in the United States senate when it comes to who is locking down what and the reasons for it. That aside, without any other comments, chairman powell, could you talk about the importance of addressing our health care business, our hospitality businesses, our working families that, as you said, are in really tough shape come our local governments . By the way, mismanaged local governments . Give me a break. The United States senate, under some of the best Economic Times ever, borrowed 1 trillion a year, and you accuse local government of mismanagement . Holy mackerel. It is hard for me not to curse. Chairman powell, could you talk about really what is needed out there . Do you see at the same way i do . Chair powell thank you, senator. I would put it a little bit in context. We have done a lot, and we really appreciated the working relationship we have had with treasury on these facilities, and thank them for the Productive Work we have been able to do together. That we woulds have left facilities in place to be backstops. We dont question the secretarys decision about the c. A. R. E. S. Act money because that is entirely his decision to make, but Central Banks generally would have done that. In terms of what more may be loted, we are hearing a from our discussions with people throughout the Federal Reserve system and across the country about Small Businesses that may struggle during this period of just the next few months, during the winter with the spread of the virus hi, and it is those people who are in public facing jobs in vulnerable industries. See what may be the light at the end of the tunnel in the middle of next year, as the vaccines come out and are widely to strip you did, but they may need more help to get to that place. So that at the way we are looking at it. We will continue to use our tools to their fullest extent, and that will include 133 facilities if appropriate, and if they meet the legal requirements. That may also include direct help to businesses that dont need to borrow anymore. As the secretary was noting, some of these businesses, what they need is fiscal policy, a grant to get them through that rathert of the pandemic than borrowing more through a Federal Reserve facility. Sen. Tester i think we all agree with that. In the end, if nothing is done, and i dont think anybody on this committee, at least i hope no one on this committee wants nothing to be done, but by the same token, i dont think we go into a job and do it halfassed either. I think there are plenty of folks out there hurting big time. Workers obviously are, that there are those looking for a job that they are actually falling off those looking for a job for so long that they are actually falling off the unappointed roles off the unlimit roles the unemployment rolls. Local governments, educational units because there are many schools doing dual distancelearning and in person. Do you see us sliding backwards if we do nothing . Or do you see the economy being static for an extended period of time . Chair powell i think there is a risk. The economy has continued to perform better than we expected. It has been more resilient to further outbreaks then we expect it. At the same time, this is a arge outbreak, and there is real risk of Small Business and people who are on unemployment for an extended period, and i think those are real risks that should be taken into account. Thankester i want to chairman powell and secretary mnuchin for being here today. Sen. Tillis thank you. Senator browns. Senator rounds. Rounds thank you. Mr. Chairman, i would like to thank you for your hard work. I would also like to thank both of our guests here today. Chairman powell and secular image and, i think you have done and secretary mnuchin, i think you have done good work under some very challenging circumstances. I would like to begin with secretary mnuchin. Housing has been one of the bright spots of our economy and we needandemic, to provide the necessary support. One of the potential threats i see is ending the conservatorship. While i agree in a Perfect World that it should have ended some time ago, i am concerned that if recent conversations come to fruition, and fannie and freddie fromrematurely released control, the strength we have seen in the housing sector could be called into question. For secretary mnuchin, in light of the pandemic, what are your recommendations with respect to the timeline for when conservatorship can be safely unwound . Chair powell sec. Mnuchin let me just say, i dont think they should be let out from conservatorship without appropriate capital. Theres obviously differ and opportunities to accumulate capital and raise capital. This is one of the areas that i will continue to try to work with this committee and others. I think there should be housing reform. I think that the appropriate scenario is for these two have real capital, and ultimately them to be released. Sen. Rounds thank you, sir. Chairman powell, the Federal Reserve is the largest investor in mortgage securities. Would you share your thoughts about the impact to the Housing Market if an end to conservatorship were to occur prior to the time when Pandemic Impact has been eased . Chair powell i would just echo the secretarys point that i like towould certainly the Housing Finance sector and system standing on its own two feet, with a lot of private capital behind it. Thatthink it is something time needs to be taken on, and i would applaud the new capital standards that have been put in place, but that capital still has to be raised. I do think it is something to do carefully, and i know that is consistent with what the secretary is thinking. Sen. Rounds thank you. I appreciate also the flux ability that are banking regulators have given Financial Institutions. We have wanted to work with experienced with the covered related hardships. No one thought that the end of it would last as long as it has, and sectors like the airline industry, travel, hospitality all still face challenges. What do we need to be doing to support the Financial Institutions who want to continue working with customers in these hardhit industries . I know we talk about targeted and specific assistance, but Financial Institutions have really been right in the middle of this whole thing, and the expectation has been that we have allowed them clicks ability allowed them flexibility. I think i would ask chairman powell to go first. Most importanthe thing is that as the economy recovers, companies are recovering, and the more they recover and the faster they recover, the smaller the losses will be. I also think we will continue to encourage banks to work with their borrowers and continue to keep in place the very targeted relief that we have provided, which doesnt undermine safety and soundness in any way, what that allows banks the room to do what they want to do, which is to serve their customers. So we wouldnt want supervision to undermine the process of working with customers where it doesnt implicate safety and soundness. Sec. Mnuchin i would just echo the chairs comments, and i think they have done a good job across regulators in providing the right flux ability the right flexibility. Sen. Rounds thank you. I will yield but my final 15 seconds. Sen. Crapo thank. Deeply appreciated. Senator warner. Sen. Warner let me echo but all of my colleagues have said. Thank you for your leadership on this committee, and let me thank helpn particular for your on putting together a plan to help black and latino businesses that have been particularly hardhit by covid. Sen. Crapo thank you. Sen. Warner this morning, a Bipartisan Group of senators announced an emergency relief framework that would help us to get through what i fear will be the worst days of the pandemic ahead. We have seen the food lines across our country. We know that Small Businesses are on their last legs. We know that many state frontline workers will soon have to be laid off. Literally we could have Million People we couldve millions of people out of their homes as early as january. It is onyx up double, and my hope is that numbers of the administration it is unacceptable, and my hope is that numbers of the administration, numbers of the congress will sit down and get it done before the holidays. It is this bridge, and it is not that therm plan secretary was negotiating with packagepelosi, but this of 900 billion does take care of health, student loan assistance, Small Business, broadband, food insecurity, and i am going to make sure ask both of you whether, without knowing the details, you think generally this is the direction we ought to head. Let me also take one more minute because this is something that tillis scott and senator , along with members of our side, have come together in this package for a 12 billion provision for capital ownedments for community Financial Institutions. We know the black and latino communities have been particularly hardhit by covid. Generation of wealth cumulate and has closed down. 40 of latino owned businesses have closed their doors. I heard from a constituent of mine who, five years ago, opened up Peoples Pharmacy and Diabetic Center in a low income neighborhood. Covid19 had her business really hard, and she said i treat folks the way i want you to treat me, and when you walk through the door, i want you to receive the Compassionate Care you deserve. That is exact at what they do. Her business is on the brink of shutting down. Articleask that her about her business would be turned into the record. Sen. Crapo without objection. Sen. Warner i will ask chairman powell and sec. Mnuchin two and secretary mnuchin two questions. One, your thoughts on the framework, do you think irrationally this kind of bridge to emergency relief is needed at thispoint do you think kind of bridge to urgency relieve is needed up this point . Chair powell it sounds like you are hitting a lot of the areas that could definitely benefit from help, and some of the areas that are going to be experiencing a challenging winter. But i cant really speak to the particulars of the bill. Sen. Warner understood. I appreciate that. Secretary mnuchin, i know that you have not seen any of this, but you are negotiating on many of these. Again, directionally, not going into particulars, using this kind of effort is needed . Sec. Mnuchin let me first say i did comment earlier to senator scott, and i applaud the work you have done on the cdfi program, so i very much support that. That could create 100 billion of lending quickly. I look forward to reviewing with you the overall package. I do think that more fiscal response is needed. I think what is more important is what we can pass quickly on a bipartisan basis to target the most difficult parts of the economy, and hopefully that will be needed and done quickly. I look forward to following up with you. I missed the press conference because i am here. Sen. Warner i understand. I promise we will share that with you immediately. I just want to appeal to all of my colleagues, this is our best effort on a framework. I hope everyone will give it a reasonable review, and again, i appreciate your leadership on this kitty. Thank you. Sen. Crapo thank you, mark on this committee. Thank you. Sen. Crapo thank you, mark. Most of our members of this committee are off voting, but i understand senator warren is with us. Sen. Warren i am. More people are getting sick during the coronavirus pandemic then add in the other, and the help that many people have relied on is about to disappear. The day after christmas, 12 million workers will lose unemployment assistance. That same week, secretary mnuchin will be shutting down the Federal Reserve programs designed to help the economy. Chair powell, you have been clear about the need for more fiscal support to help families and businesses get through this crisis. Let me ask you specifically about help to individuals that puts more money in their pockets during at, crisis during an economic crisis. If individuals have a bit more cash to spend every month, that helps them, but it also helps the economy, right . Chair powell yes. Sen. Warren ok. So there are two ways to get more money into peoples pockets. The first is providing payments like stimulus checks and unlemon insurance, which i strongly support and Unemployment Insurance, which i strongly support. The other is by canceling the debt that people owe so they can spend elsewhere. The largest category is student loans, and most of that debt is to the federal government. Those payments are paused, but the clock is running out. On new years day, the medium borrower will have to start repaying more than 200 a month to the federal government. That is the time when our economy needs people to be able to spend more money, not less. Mr. Chairman, you have said in testimony before congress that you think that rising student concern whenain looking at the overall Household Debt picture. You have also said that it is rising fast and is now large. Theres increasing evidence that shows students who cant pay that debt have difficulty having normal canonic lives normal economic lives, buying homes and things like that. Would you agree that high levels of student debt will have a negative impact on our economic recovery if millions of households have to reduce spending in order to make debt payments . And i havel others been calling out the rising student debt for years now. Sen. Warren yes you have. Chair powell we have singled out for not being able to be forgiven in insolvency with other kinds of debt, so that is a longterm problem. In terms of what a priest what relief would be appropriate in the current situation, i would have to defer to those who have the authority to make that decision. Sen. Warren i am not asking you about what congress should do. I am asking you a question about what it does to the economy, if people who, instead of spending that money in the economy, are spending it by sending money back to the federal government on the student loan payment. That is a problem for the economy, is it not . Chair powell certainly people who are way down you are way down byyou are weighed debt, that can weigh on economic activity. Sen. Warren theranos, but isaac we started fair enough, but isaac we started with but i think we started with economics 101. 200 is 200 bucks. Student loan debt makes it harder for people to qualify for mortgages, to buy homes, to start Small Businesses. Have noted that those things drag our economy down. Do you still feel that way . Chair powell yes. I think data are showing that over longer periods of time, people who take on student debt in an effort to make their lives better and brighter, if it doesnt work out that way, they dragged that debt down through their economic lives, and it can get in the way of their credit history, their ability to own a home, and their whole Economic Life for many years. Sen. Warren sen. Warren and that has an overall impact on the economy, in terms of home sales or business startups. Is that right . Chair powell yes. In effect, those people are unable to participate in the economy to the full extent that they would like to, which would weigh on the economy. Sen. Warren thank you. I know you have said you dont know how you could be clearer on pushing congress for more fiscal stimulus, and i agree with you on that, but most types of stimulus are impossible when republicans in congress refused to take action. Aid to state and local governments, unemployment enefits, checks, republicans in congress are bucking all of these. But all in his own, president elect biden will have the authority to cancel millions of dollars in Student Loan Debt using the authority that congress has already given to the secretary of education. This is the single most effective economic stimulus that is available through executive action, and as you have noted in the past, Research Shows that canceling Student Loan Debt would boost gdp, create jobs, reduce unemployment, jim start Small Business coordination, promote jobs and economic and geopolitical mobility, and increase the annual incomes of borrowers by about 4000. It would also help close the racial wealth cap. It is time to act wealth gap. It is time to act. Thank you. Sen. Crapo thank you. Next will be senator schatz. Sen. Schatz thank you for per dissipating in this hearing, and for your extra ordinary efforts during this difficult time. The first question is for secretary mnuchin. Where are we with negotiations . You have been lead negotiator on behalf of the administration when we were successful, and when we were not a successful. I want to get a sense alix we have been listening to fed chair jay powell and secretary of the Treasury Steven Mnuchin testifying to congress. In the meantime, you have a fiscal release package. The question is, does that actually get approved . Jay powell said i dont know what is in the plan. Steven mnuchin didnt know what was in the plan either. All of that has the markets flying here. Equities on the highs of the session. The dollar right around the lows. Eurodollar right at one dollar 20 cents, holding at that level, holding at that level, the highest since 2018. On the 10 year, 92 basis points is where you sit. The curve also steepening, and gold getting a boost. Lets break it down more with michael mckee, Bloomberg International economics and policy correspondent, and Vincent Cignarella of bloomberg micro squawk. We were talking about what was happening with markets. 900 billion doesnt seem like a lot, but that is not really the point. Michael it is somewhere in between what they were publicans and democrats wanted. While chair powell doesnt know the details of the package, some of it was outlined by mark warner, one of the senators involved in creating it, and powell did say he thought they were hitting a lot of the areas that need to be addressed. That is a positive for the markets. In general, the market is looking at this as may be the last best hope before we get to the end of the year, before we get a new president and we have to spend a couple of months with the virus raging and no help. The idea that there is a group that put something together and that the secondary and the speaker of the house are going to dusty secretary and the speaker of the house the secretary and the speaker of the house or going to testify, theres been a lot of work that did not go anywhere, so it is a waitandsee kind of is a wait. What is your assessment of the relationship between what we are seeing with what alix is talking about and the ism data, the data coming in strong and reinforcing the idea the Manufacturing Sector looks robust. We are seeing a slight fate. A slight fade. It seems to belie the idea u. S. Economy still has momentum going into the winter, and as we think about the vaccine it is time to get more positive. Is that the right read of the ism . Michael it is the market reaction, it is not necessarily the right read. The ism represents manufacturing and manufacturing has been the strongest sector of every economy around the world. Services have been weak. That will be the question. Drop see the ism services the way we have seen the Services Index drop in europe. If that is the case, it ratifies what chairman powell was saying. Still a lot of uncertainty, a lot of danger to the economy from the virus. Every day the story has been more and more states are shutting down or and more businesses. As that happens, more people lose their jobs and it takes another bite out of services and spending. Guy vincent, way in. We are seeing the dollar drop. How much more room is there as the headlines are crossing . Vincent interesting as this bipartisan proposal was announced, the market sold off from the highs. Yields have come off a low bit, the dollar is catching a bit. I think there is skepticism for this relief bill. I am not so sure we can continue to see the dollar sold off as or yieldsly as it has as we track towards 1 . We have been here before. We have had a higher number, which should have attracted the attention of the house. I am not so sure if the house and the speaker will agree to 908 billion. I am looking at the allocation, the Third Largest portion of the bill is for state, local, and tribal governments. It will have a little bit of something for everyone. The question is will they accept this as enough in the hopes that if they flip the senate they can do more next year . Guy in terms of the way the market is positioning right now, it seems we have busted through 1. 20 of stops, hit around on the eurodollar. How is the market set up . How much fresh air is there above that . Obviously we will play around this level for a time. If you get a convincing move through it, where can we go . Vincent 1. 22 is where you can go on the euro. Ghed the ecb having wei about the currency hampering inflation, i expect we can hear from them and the next day or the next week. Not too happy with the euro at 1. 20. We may see them try to walk that back. Typically atff, the large levels. You have options and barrier options. People try to protect it. When they felt a protected have oversold the euro in have to buy it back and they have tripped other stops above it. It is commonplace to see this type of backandforth. I would expect you to see a fair amount of positioning between 1. 20 and 1. 21, a good two way action, those thinking this can propel higher and those thinking these are good levels to sell as in the past they have been. Alix dear point on positioning, hedge funds two your point to your point on positioning, hedge funds this is pivoting off of guys question from earlier. Weve been talking about the fiscal cliff since last july. When do we see it in the data and what is the data we need to make sure we are looking for . Michael you will see it in the first of the year if we get to that cliff on december 31. The january numbers will be awful. The problem we have is there is a seasonal effect to gdp in the First Quarter where things slow down after holiday spending. We will see if we get that far. The next fiscal cliff is december 11 when the government runs out of money. If there is any kind of standoff , we do have a double whammy this year book ending the holidays. That is something to be concerned with. Itll be interesting to see come at 12 30, joe biden announces his economic team. If he gets a question, if you should say anything that should be supportive of the compromise effort for stimulus package, and we know he has said he would like to see something before he is inaugurated, watch the markets fly then. Donald trump has done nothing in public to encourage this, but if we had a president who threw his weight behind it, maybe it would get movement from both parties. Guy interesting. Will be watching for that. Bloombergs michael mckee. Vincent, stick around. I want to ask you a question about the pound. First, let show everybody what is been happening with European Equity session. Pushing up into the close. The ftse outperforming. There is the stoxx 600. Up today, but the momentum continues. Fascinating to watch the new drivers. The pound a factor in the mix. 1. 9 tse 100 rallying, up come outperforming continental markets. There is sterling. A push higher. Time we have seen the move lower in the dollar. You also have some headlines suggesting this afternoon that the talks on brexit are entering the tunnel, the intensive phase. I have to say there is a significant caution around exactly what is happening and whether or not that needs to be taken with a large pinch of salt. That is now being reflected in the markets. The timing seems to suggest we would get to a conclusion towards the back end of this week. That looking more dubious. The pound up before fading. Part of this is probably down to what we are seeing on the dollar. Market vincent, the seems to be on a hairtrigger waiting for some kind of transaction. How do you see the reaction function if we do get some sort of brexit deal . Seeent youll probably 1. 35 for the pound. Theres been a lot of buying interest, a lot of long positions. There is a great deal of interest in Downside Protection in cable that almost always means the market is positioned well long and they do not want to get out of the cash positions. 135 was an interesting level. If we do get a deal, it will be another interesting level. They were tripped around 1. 3380. You will definitely see and overshoot. I think you will see selling into a positive brexit decision as people do trim those positions. Alix it is always good to catch up with you. It has been too long. Back to theake you Senate Banking Committee Hearing on the cares act with jay powell and Steven Mnuchin continuing their testimony. Senator john kennedy is questioning them. Part of the conversation is about state and local budgets. Kennedy i am asking you, youve been pretty vocal, and im not being critical, i appreciate the advice, about the need to pass another coronavirus bill. You think we should allow the states to use the money to shore up their Retirement Systems . Chair powell i think states provide critical services. Some of them had significant hits to revenue. They have laid off more than a Million People. They are very big employers. One of the largest employers in the economy. I think it is an area where i think it is worth looking. Kennedy dont you think before we appropriate more money, we should actually make a decision on empirical data, like how much have we given each state, how much have the state money how much of that they have just sitting there . Do you think we ought to approach it as a prose dude is using anecdotal evidence . Chair powell certainly i would not recommend using anecdotal evidence. Really these questions are way off my range. We do not give we do not express views on specific fiscal questions. Kennedy thank you, mr. Chairman. Senator van hollen. Hollen thank you chairman powell and secretary mnuchin for your testimony. Listening to both of you, there is clearly agreement we need more fiscal relief. Mr. Chairman, you said on october 6 that too little support would lead to a week recovery creating unnecessarily hardship for households and businesses. More recently, as the cases from the pandemic have accelerated, you have said there has not been a bigger need for it in a long ng fiscal relief. President trump in october tweeted out go big or go home the congress. Picking up on the senators comments and others, we need to get this done. We cannot go home before the end of december without addressing painrgent needs and the american households and Small Businesses are facing. Chairman powell, i assume you agreed today with the statements youve made previously about the urgent need for substantial fiscal relief. Said thisll when i is the most urgent need, i was not talking about the whole pandemic, i was talking about the need for the cares act. I was not try to speak about the need for another full cares act at that point in time. That is what i believe i was referring to. It is a couple of months ago. Yes. My view has not changed. Ithink the risk of overdoing is less than the risk of under doing it. That is the record of pandemics and crises. People are always worried about doing too much and you look back and you say we did not do too much, we mightve done a little more and a little sooner. I think we try to live with that lesson this time, with the cares act and the things the fed did. We did act aggressively. I would just say we have come a long way. The cares act did a tremendous amount of good. We can see the light at the end of the tunnel. We had the fed will keep at it until we are done. I think fiscal support would help move the economy along, at least to guard against the Downside Risks weve been talking about. Smaller businesses, households, and others directly affected. Hollen i agree, and i was listening to your discussion with senator kennedy, and i would say one Million People who lost their jobs is not anecdotal. That is real. Those are people who no longer have an income and are relying on a safety net until we get everybody back to work. , i quotedmnuchin President Trump in october saying go big or go home. , gorecently he tweeted big and be focused, make it big and focused. You share the president s view we continue to need to go big on relief . Sec. Mnuchin i believe we need more relief and i think there is more work to be done, as i said in my testimony. Fortunately the cares act has worked at the numbers are better than they were two months ago. I would urge congress to pass something quickly to make sure we get something done in this session. Hollen i cannot agree with you more. I know you were engaged with Speaker Pelosi and others. What was the Trump Administration prepared to do in terms of its topline number at that time . The chief of staff to the president was quoted as saying somewhere around 1. 2 trillion or more. Is that accurate . Chair powell as you know, we made lots of proposals along the way. There were different proposals and different components, and as i said earlier, i spoke to leader mcconnell and mccarthy and meadows this morning, and the president , and we will continue to work with congress to try to get something done quickly. Hollen you agree it would be a mistake to allow the emergency Unemployment Insurance to expire at the end of the month. Chair powell i think there needs to be technical fixes, but i support extending it. I also absolutely support the unspent money in the ppp being authorized to be used immediately. Hollen you also supported funding for state and local government relief. I had a conversation this morning with the general manager of the washington transit system. You can read on the front page of the Washington Post metro section they will lay off 1200 people in december, and budget for next year, if they do not get any more relief contemplates another 2000 people. Recognize wel all have to do something. There seems to be a lot of running room between the two positions that have been outlined, and i think it would be shameful if Congress Goes home and the administration, if we are not able to do this before the end of the month. Thank you, mr. Chairman. Thank you. Senator jones . Ones thank you, mr. Chairman, and thank you to both our witnesses for your service. Secretary mnuchin and i have not had as much personal interaction, but i want to tell you how much i appreciate your service over some difficult times. Chairman powell, thank you very much for allowing me to get to know you and for the work we had. I appreciated the fact that even though your nomination sailed through the United States senate he made a point to visit me as soon as i got sworn in in january of 2018 to get to know me and understand the office and my work on the banking committee. Thank you for that. I would like to revisit something ive talked about on many occasions. Inequality wecial witness in this country. As the nation grapples with racial inequality, the Federal Reserve recent survey of Consumer Finance caught my eye. Longstanding substantial wealth disparities between families in different racial and ethnic groups. The typical white family has eight times the wealth, eight times the wealth of the typical black family and five times the wealth of the typical hispanic family. Bostic, president of the Federal Reserve bank in atlanta, recently published a paper arguing the countries racial economic gaps were cemented over centuries and call in the fed to reduce racial inequality and bring about a more inclusive economy. Let me say very quickly i know coming from a state of the old confederacy, most people think some of this is based on the jim crow laws of years past. In fact, we all know this is not just a southern problem, it is not just a jim crow problem. Cementedicies had been by the policies of the federal government. Laws passed by this Congress Giving some accommodation to shite southern segregationist who were in the house and senate at the time. Bill,even the g. I. Cemented inequalities that have lasted for decades. Initially to you, chairman powell. As we go forward. I do not want to look back. As we are coming out of this pandemic, we have real opportunities to address these inequalities in health care and the economy and so many areas. What can the fed do as we come out of this economy . What strategies would you recommend to address the inequality we see in the economy , whether it is minority businesses or individuals . Chair powell these are longstanding inequalities over a very long time. There is a real concern we have at the fed that the pandemic will make that worse. Overrepresented in the Service Industry jobs that were so heavily affected by the pandemic. There is a concern things will get worse. The last couple of years were encouraging because as longest expansion in our recorded history continued we saw the racial unemployment cap diminish to its lowest level since we began measuring it. It is disappointing to see that. What can we do going forward. The most important thing we can do at the fed is to take seriously the job of achieving maximum employment. We have now changed our operating framework to acknowledge maximum employment is a broad and inclusive goal. By that me by that we mean we will look at different measures of labor market conditions, including minority unemployment rates and minority participation, Labor Force Participation and wages and things like that. We look at all of those things as we try to achieve our maximum employment goal. We also enforce fair lending laws and our division of consumer affairs. We need to continue to do that rigorously. Ultimately we will do whatever we can with our tools, but it will take a broader attack on these problems than just the fed alone can mount. Mnuchin,s secretary few minutes left a few seconds. Any advice you would give to the Incoming Administration or congress about how to address these from an economic standpoint . Sec. Mnuchin i do think the cfi investments are something that can be done quickly that will particularly help minority and underserved communities. Chairman, if you would bear with me a couple more seconds. I want to express my appreciation to you and the Ranking Member and all of the members on the committee for the work we have had together over the last three years. It has been remarkable to work with you, to watch the two view work, but also the work i have done with other members of the committee on both sides of the aisle. It has been an honor and a privilege to work with the entire committee. I hope that as you move to another committee and assume additional duties that chairman toomey or Ranking Member to me as the case may be will carry on the work of this committee. Ive enjoyed my time with you over the last three years. Thank you both very much. Thank you, senator jones. Senator tillis . Thankillis i want to and senator mitch sally senator jones for their service on this committee. They were serious legislators and having the opportunity to work with both of them. I will thank you for your leadership. You will leave it in good hands but i will miss you. Thank you for being here. As i heard the discussion i had to go vote, im sorry i was not here for the hearing. March, when we were negotiating with secretary mnuchin and members of the Senate Working together, we had an underlying set of assumptions, some proved to be true, some did not. We knew we needed to do Something Big and fast we came up with the cares act. I think the Paycheck Protection Program saved a lot of jobs. I also think the main Street Lending facility, even though at the time very few of us thought it would be fully subscribed. It has proven to be true. We also made certain assumptions about how long this virus will impact the economic base. There were a lot of people thinking 90 days, six months on the outside, may the end of the year, which was the basis for the date secretary mnuchin mention. Things have changed. I think we have to provide a bridge to what should be a trending positive environment may sometime in the second half of next year. If we make certain assumptions about the Manufacturing Industry the vaccine that can be valid with the historic approval of two vaccines in less than a year , but secretary mnuchin, i have to remind everybody of what you have said. You have said you think these dates are important and Congress Needs to act. You also said we need hundreds of billions of dollars more in the Paycheck Protection Program to provide destabilization. Is that your basis . We just need to cover the window of opportunity through the second half of next year . Sec. Mnuchin that is correct. Be the First Quarter or second quarter. Powell, is chairman think you feel the same way. I do not think we are talking about something on the scale of the first cares act or the heroes act, but something that does provide some of the fundamentals for the businesses. I think they need to be grants, not loans. Do you agree with the window that we need to provide the bridge, based on the information we have today . Chair powell i think bridge is exactly the right way to think about it. I will not have a view on how much that needs to be, but we can see the end, we just need to make sure we get there. Thing of the 10 million jobs still outstanding, has there been any analysis on the length of time they are likely. In North Carolina we have 19,000 restaurants, 4000 of them have closed permanently. There is a structural element of unemployment that even when the economy comes ranging back the job creators will not come back in time to see that pickup save the second half. We have any analysis on the amount of unemployment that if we provide additional stabilization funds, if we see the trending in the right direction with the vaccine, what is our structural deficit for that remaining unemployment. How much of that is structural longterm versus likely to bounce back as the economy bounces back because the jobs are there as the business reopens. Chair powell that is the big question weve been asking ourselves. You have to make a lot of assumptions to have an answer. It is what does the post pandemic economy look like . The faster we get there, the smaller number the smaller the number of people structurally unemployed will be. We have more i would love to share with you. Sen. Tellis i want to thank you for the extraordinary leadership. I want to thank the Banking Industry for being a partner that helped make the Paycheck Protection Program a success. I believe we have to look at programs to look at the first in , last out industries. We talked about restaurants, live performances, motor coaches, transportation. I do not think anyone can criticize or suggest the cares act has been anything short of the m. V. P. For stabilizing the economy when we had the crisis. You were two people on the team that made it successful. I do not believe we should be asking secretary mnuchin to do congresss job. If congress is serious about funding paycheck protection, then get serious about passing a followup to the cares act. Thank you, mr. Chairman. Mr. Chair . Senator cortez nasa . Senator smith . Smith i want to say it does me good to see my colleague senator doug jones, and i want to thank you so much for your service. We are going to miss you. Nks to senator mick sally to senator mcsally. I know the chair is not here, but i also want to thank chair crapo for his leadership. We do not always agree, but i always feel there is a way for us to work together, which is so important. I want to add my voice to the many voices on this committee today who have said it is important we get something done to help families and Small Businesses that have been struggling through this pandemic. We have to get something done. I agree we should not make perfect be the enemy of the good. That is what i am hearing in minnesota. I have to say i have never worked any place where i heard more people talking more loudly about the need for action with less action happening. Have not had a chance to see what our colleagues have put together this morning, but i am encouraged by that and hope that will take us somewhere. I would ask my republican colleagues to bring this up with senator mcconnell when you have lunch together in a couple minutes. There is a great need for action. Something andt to have a little bit of a dialogue with you, chair powell, about this. You have used the metaphor of how we need to build a bridge to a post pandemic recovery. You point out that our economy has been responding that her than we expected, but we still have a long way to go. We also know we are seeing longterm trends in inequality, which makes it harder to generate the economic activity, the spending that will drive growth in the longterm. Oft is what we see because raising the longterm inequality holding back spending for families of color, minority businesses of color, this is something my colleagues have brought up. Chair powell, could you talk about this . In, using your bridge analogy, what are the risks of not building this bridge . What happens if we do not take this action right now. The longterm impact of this growing inequality on our economy post pandemic . Chair powell thank you, senator smith. Economicparate outcomes across racial and other lines are a longstanding feature of our economy. They have been with us for a very long time. There is a great risk the pandemic is making them worse because the people most affected were people ines relatively lowpaying parts of the Service Industry. That happens to skew more towards minorities and women. There is a concern if we do not act as quickly as possible to support those people, get them back to work, get the economy up and running, it will leave behind a more unequal situation, which is tragic, because we had been making Good Progress on these issues for the last few years. On,he long expansion went we started to see the gains go more towards the lower end of the income spectrum. We saw a racial income gaps climbing. Gaps in