Minutes. This runs an hour and 45 minutes. Sen. Crapo today, we welcome the regulators, the comptroller of the currency, brian brooks. Chair of the federal deposit insurance corporation, Jelena Mcwilliams, and rodney hood. We will receive testimony from each agency on efforts and plans since you last testified before the committee. Since the passage of the coronavirus aid relief and Economic Security act, or cares act, your agencies have taken many meaningful steps to mitigate the Economic Impact of the pandemic and provide conditions that will lead to a forceful recovery. Lead to a forceful recovery. On october 30, the Federal Reserve announced changes to its main Street Lending facility on october 30, the Federal Reserve announced changes to its main Street Lending facility including decreasing the minimum loan size for priority loan facilities from 250,000 to 100,000, and allowing borrowers to deduct any ppp loan for their outstanding debt. Loan for their ppp outstanding debt. Your agency should continue to carefully review the regulatory and supervisory frameworks, adjusting where necessary to bolster Financial Institutions to support economic recovery, which, by the way, has shown positive signs over the past several months. On october 29, the u. S. Gdp surged in the Third Quarter as the economy started to reopen. The on employment rate fell to 6. 9 in october. Cbo projectedhe we will be at 5. 9 by 2021. Since april, we have recovered more than half of the jobs lost due to the government enforced shutdowns. Over the last few months, i have sent several letters to the regulators on a number of important issues. Letter to, i sent a each of the agencies, urging the use of existing discretion to extend use provided under title iv of the cares act, and including extending the Community Bank leverage ratio, the federal debt restructuring thel january 1, 2022, and current expected credit losses methodology to january 1, 2023, while clarifying and minimizing unintended effects of midyear adoption. On october 8, sent a letter about the burden due to the rapid due to the rapid implementation of the paycheck ppp. Ction program, or many banks or Credit Unions inadvertently experienced Balance Sheet growth, which is expected to decline once they meet the terms. Instituted an interim final rule to alleviate the part or insurance requirements, participation in the Federal Reserve 133 facilities and other stimulus efforts. It is important that banks and Credit Unions are not inadvertently distant set of iced from continuing to play inadvertently this incentivized from continuing to play a key role. I urge each of you to continue to use your discretion to alleviate burdens with a variety of thresholds on both banks and Credit Unions who are currently experiencing growth from participation in recovery oriented programs. Turning to the lcc. On october 19, the senate rejected a review act of the congressional act issued. According to the lcc, the final rule improves Community Relations by clarifying what qualifies for consideration, updating how banks define the acceptance areas, evaluating performance more aggressively, and making the entire process more transparent and timelier. The framework will increase support Small Businesses and small familyowned farms, indian country, and other areas. Materially not been modified since 1995. I commend this important step. As we continue to whether this pandemic, i stress to each of you and your agencies the importance of our Financial Institutions providing access to credit and Financial Services for businesses in legal industries. It is vitally important that our countrys Financial Institutions not deny credit financing based on political preferences related to firearms, oil, gas, and others. Lending decisions should be based on credit worthiness and creditnot target industries. Forll continue to fight services in all of our legal industries. I appreciate each one of you joining us today to share your plans, including the tireless work from you and your staffs in response to covid19. You are on now. American people sent a clear message, they rejected an administration where wall street incorporations run the economy. People want a government that is on their side. The past four years, financial left everyone else in the market at the mercy of the supposed freemarket. The people watched a president ignore a pandemic, refused to even try and put in place any kind of plan to put the virus under control, and to reject any effort to support families and get our economy running smoothly. Whatever the majority leader may say, whatever damage he and colleagues are doing to their democracy with our lives and attacks on nonpartisan and hardworking poll workers and election officials, the facts are clear that 5 million more people voted for joe biden then donald trump, a decisive majority rejected what they have seen over the past four years in voted for new leadership. People are ready to turn the page, for new leadership that will give them their freedom and lives back. The work we do here in the banking and Housing Committee can be a big part of that. Ofwe as Committee Members both parties come together and choose to do so. We have the power to tackle issues that actually matter to peoples lives. Paychecks, housing, transportation, and the communities they live in. We can put Small Businesses back on their feet. We can lift up brown and black communities hit the hardest by this pandemic. We can keep people in their homes, make their homes more affordable. We can bring down energy bills. We can lead the world and the fight against Climate Change. We can seize every opportunity to create good paying jobs. We can free people from the stress of debt collectors and the downward spiral of payday loans. To do all of that, we have to take on wall street power. We know shift jobs overseas. We know who jackson drug prices. We know who busts unions. It is not our neighbors who may have a different political sign in their yard or a different Bumper Sticker on their car. It is the largest corporations of the unaccountable ceos from we spoke to well from facebook to wells fargo and their allies in washington. Wall street is all too happy to populists cause people to turn on each other as long as they can continue to play by different rules. The last four years, we have had an administration trying to blame americans who may not look like them instead of blaming a they lay off workers while they buyback stocks and cut their pay. More wealth to the already wealthy and funneling more power to the already powerful. But it did not work this time. Last week, a record 80 million americans rejected that, the largest vote in our nations history. Now we have to take on big oil and other corporate polluters who spent billions of dollars trying to convince people that Climate Changes an unsolvable problem instead of a tremendous opportunity. We have to end the corporate Business Model who treats workers as expendable in a system that perpetuates systemic racism. We have to break up the biggest banks and give that power to everyone else who has been denied a voice in our economy. Our Financial System should be a public good. Andlready is for big banks it should be for everyone else. When work has dignity, hard work pays off for everyone. When work has dignity, everyone can afford housing and transportation and they have theirover their lives and money. We know that we have great challenges, we are in a Public Health crisis, economic crisis. It calls for us to aim higher, think bigger. Mr. Chairman, i look forward to coming together with both sides of the island this new administration to get to work. Crapo we will now proceed to our witnesses. You mayirman quarles, proceed. Quarles thank you, chairman. Thank you, Ranking Member brown. The numbers of the committee, thank you for the opportunity to testify today on the Federal Reserve supervising activity. My last appearance in may followed the emergence of covid19 and the measures taken in response added a deep strain of uncertainty to the financial market. Riskier more volatile asset classes, a retreat to say for cash. The retreat demanded an the Federal Reserves intervention, a wide range of intermediaries and markets, strengthened by a decade of improvements in management, including the refinements of the past few years, an important shelter from financial stress. Thatoal is to make sure our banks could respond to the emergency. The report accompanying my ,estimony to capitaldjustments reserve measures. Importantly, they clarify beyond doubt that there are no impediments to working constructively with borrowers and others. Monetary and fiscal acts, the recovery has begun much sooner than expected. This speaks to the countrys tenacity, ingenuity, and spirit. Is challenge we face now formidable and complex. The covid event is gone, replaced by a clearer view of consequences, the burden facing households and businesses are understood but they are no less significant and not evenly born. We will Work Together to help those most hardhit and make sure that economic wounds do not become scars. A strong, resilient banking global, unexpected shock, and help customers rebuild and adapt. This can ensure that the countrys banks can continue to meet that standard. The guidance encouraging banks to work with their borrowers. An important step toward this goal. Since then, working with colleagues and other regulatory agencies, we have taken several others including credit accommodation to a clear statement on reinvestment act. Steps that make it easier for banks to participate in emergency lending programs. It also includes flexibility in our stress testing apparatus. As our reports show, that strength is still intact. Liquidity and capital remain high and have increased over the course of the covid event. They have sharply increased reserves, setting aside resources today for possible losses tomorrow. Recognizing how things might have been different, this ifndation would not exist not for a decade of work by , and to make banking officials more transparent. Ethic andesent an , even more critical during a crisis. Covid19, they work also affirms the values and priorities that remain the same. Those that will continue to guide us and support the Financial System, the economy, and the country long after the covid pandemic has passed. Thank you. Acting comptroller brian brooks. Mr. Brooks i look forward to updating you on how banks remain sources of strength for their communities. Senator, i would like to congratulate you on your tenure chairing this committee and your leadership. I look forward to working with your successor. The the past eight months, sec has supported the function of our Banking System. Historic high levels of capital and liquidity. The economy has enjoyed the longest expansion on record. Then, Economic Activity was suspended. Regulators collaborated to provide banks the flexibility necessary to use that strength, support their customers, and sustain Economic Activity. My testimony today will provide details on the action taken on that front. Onay, we monitor the effects reopening the economy. While the fundamentals are sound, we see issues ahead with assets. Banks, especially with concentration in those assets, must take a sober view of their risks and work with customers to the largest extent possible. Perspectiveal risk highlights the Compliance Risk in the system. Risk management today can avoid the need for further loss mitigation tomorrow. We also do see reasons for cautious optimism about the future based on strong gdp growth, strong consumer and Small Business sentiment, and better than expected news about the nearterm availability of betterthanexpected covid19 vaccines. Though the economy faces uncertain due to the length and depth of the covid19 pandemics trough during the social unrest that followed the killing of george floyd this summer, it became clear that the protesters were angry that too Many Americans were left out of our for too Wealth Creation long. A program to promote full, fair, and equal participation in our national economy. It is working to eliminate obstacles to credit for the americans with no workable credit score. To reinvigorate minority banks that serve often neglected communities. We have now kicked off Regional Reach efforts, including one serving the Greater Los Angeles area recently, and we have posted access to Capital Events in south carolina. I have been humbled about the community was civil rights advocates, and our staff. Project reach has become a movement to tear down barriers so that all can pursue their american dreams. Another reason for optimism comes with innovators themselves who are excited about consumers, businesses, and communities. Muchntinue to look for more efficient ways of operating. This will benefit consumers and businesses and they will have greater choice and more autonomy. We believe that consumers, businesses, and the economy can occur within the Banking System and the system is allowed to evolve as Consumer Preference evolves. We think this for several reasons. The Banking System is among our most closely regulated industries. Maye who fear innovation harm consumers should consider the possibility that innovation may be safer in a supervised environment than it is in a largely unsupervised environment. Same is true for prudential risk. Has migratedessing from commercial banks into less regulated shadow banks. Of course, we should not underestimate the risk of a status quo in which incumbents seek protection from a petition competition and delay Financial Services already available in other parts of the world. We remain committed to encouraging responsible efforts to deliver more choice, more economic actors economic opportunities, and safe, sound, and fairways within the Banking System. Thank you again for the opportunity to testify today. I look forward to your questions. Next, fdics chair Jelena Mcwilliams . Mcwilliams when i testified before this Committee Six months ago, we were confronting great uncertainty and volatility due to the covid19 pandemic and shutdown. Many parts of the economy work experiencing unprecedented declines. Also, there remains considerable uncertainty about the path of the economy. We know from two quarters of reporting that the Banking System has served as a source of strength. Banks of all sizes have supported their customers and communities, included by originating nearly 500 billion accommodatingnd 2 trillion in new deposits over two quarters. This reflects the industrys Strong Capital and liquidity position. In the Second Quarter of 2020, Equity Capital increased to more than an average Equity Capital ratio of 13. 4 . Both an aggregate and percentage basis, these capital levels were slightly higher than the quarter immediately preceding the pandemic. See see the fbi the fdic has taken meaningful actions. Today, i will provide an update on five areas that have made significant progress. Responding to Economic Risks related to covid19, solution readiness, communities in need, encouraging innovation, and finally outstanding rulemaking. Greater detail is provided in each of these areas but i would like to briefly touch on each of them started with the response to economic risk with covid19. Starting in early march, the fdic and regulators undertook a period of action to maintain stability in financial markets. In addition to providing flexibility, we made many targeted, temporary, regulatory changes to facilitate lending and other financial mediations. Over the past six months, we have taken additional regulatory and supervisory action in support of these objectives and the economy. We continue to monitor feedback and we will continue considering Additional Guidance as appropriate. Responded to the Immediate Impact of the pandemic, we also focused on improving our readiness in several ways. We recognize that the absence of failures could not last forever, even before the pandemic. Team improved a new approach to Bank Activities to help protect the health of our employees should banks fail during the pandemic, coordinating with our counterparts on crossborder, facilitating capability testing with select firms on an as needed basis, regularly reviewing data to prepare for potential surge activity if necessary. Finally, resolutionrelated activities. We have been mindful of all the communities of need at this time in particular. As the pandemic continues to disrupt the lives of all americans, we know that minority communities have suffered most specifically. Community banks including minority deposit institutions, the fdic plays an Important Role in helping these institutions meet the needs of their customers. Shaped by experiences and guided ,y a commitment for inclusion the chairman has been extending our engagement and cooperation in support of mdis. Part of what we are exploring is a framework that can match mdis with challenges facing these institutions and communities. We are in a process and providing a vehicle which would be channeled to make investors in mdis and cdfis. Expect us to release more information in the near future. As we consider additional ways to create a more inclusive Banking System, we must recognize the tremendous benefits that can be delivered to consumers. The opportunities to bring more people into the Banking System and lower the cost of credit. Of banking andey Financial Services shows that individuals are increasingly moving to digital banking. As these trends continue, regulators should aim to improve the way banks operate and how they are able to serve their customers. We established an office of offeringn and begin services. Feedback on a groundbreaking approach. A standardsetting program and uncertainty with the introduction of new technology at the institution. We do think that these barriers are important for Community Banks. We look forward to reviewing recommendations from interested parties. Our first hack athon to develop new technologies that will streamline reporting, costs, and improve the abilities to avoid risk at banks and across the system. Lessons learned in these events will not only increase the effectiveness of the fdic but will also lay the foundation for streamlined tech innovation. We continue to focus our efforts on modernizing and improving the resiliency of the financial business. We finalized two rules in section 19 of the fdi robin ac in the fdi act. In addition, we engage with fellow regulators for new rules, modify requirements, and establish a longterm liquidity metric for the largest banks. Among upcoming actions, we intend to finalize two additional rules in the near future. Sen. Crapo i will have to ask you to wrap up soon if you could. Opportunity for the to testify today. Finally, chairman hood. Hood thank you, good afternoon, chairman, Ranking Member and members of the committee. Thank you for the opportunity to provide an update on the state of federally insured credit said Credit Unions and efforts to assist in the pandemic. Today, high levels of net worth and an liquidity. This has allowed Credit Unions to adapt to challenges from the pandemic. Assets and Credit Unions rose 15 over the year to 1. 75 trillion. Shares and deposits rose by 17 to more than 1. 49 trillion. Since midmarch, the ncua has worked to provide Credit Unions with regulatory relief and flexibility so they could continue to safely serve member owners. We have also adjusted our program to protect our staff and we all continue to work remotely and effectively. We have issued 11 interagency statements and 20 guidance letters for the industry to date, helping Credit Unions address the risks and changes that have been made in response to the pandemic. Provided technical income,ce to small, low and technical Credit Unions. It went directly to covid19 assistance. The Credit Union Systems network increased 6. 8 to 182. 9 billion. The aggregate network ratio for the system stood at 10. 46 percent, well above the 7 statutory requirement. The fund is also strong in the ratio remains well within the statutory range under the federal credit union act. Accordingly, we believe there is no need to assess a premium at this time. Credit unions have continued to provide needed services, with lending rising to an alltime high of 1. 5 trillion in all major categories. Collectively extended 8. 4 billion in loan s under the Paycheck Protection Program within an average loan amount of 49 dollars. Like capital, liquidity is a pillar of strength upon the bedrock of which the system rests. Congresss decision to increase the flexibility of an borrowing ability for the cares act have contributed greatly to bolstering availability of liquidity in the system. Since the act was signed into has successfully encouraged Credit Unions to join the clf. Today, the Borrowing Capacity has exceeded 32 billion. It provides access to nearly 80 of all Credit Unions. I am grateful that congress provided muchneeded authority in the cares act. However, i respectfully request these changes be extended for the pandemic duration so they can respond effectively should the need for emergency liquidity to arise. One important lesson is the need for greater Financial Inclusion. Recent events have revealed many inequities in society, not the least of which is that pandemic has had a more deleterious impact on communities of color. Since becoming the 11th , i have of the ncua made Financial Inclusion a priority within the agency and the Credit Union System as a whole. I recently reinforce that commitment with a launch of a new initiative called access. Advancing communities through credit, education, stability and support. And initiative will refresh modernize regulations, policies, and programs that all support within the agency and system and address the specific needs of diverse communities. I look forward to working in partnership with members of this committee. In closing, i would like to thank the committee for the opportunity to appear before you today and discuss how they are discuss how the ncua is working to protect our Credit Union System and the 1. 4 million members, how they are all working to help them during this challenging time. I look forward to answering your questions. Thank you for the opportunity to be here in thank you, chairman crapo, for your leadership. It has been an absolute pleasure. Sen. Crapo my first question will be directed to the fdic and occ. I would like you want to keep your responses to about 30 or 45 seconds because i would like to get a question to the ncua as well. The ncua, thed, fbi see in october asking each of you to use your discretion to minimize the regulatory effect. I know that some of you have taken important actions in that regard. I believe, however, there are still a litany of rules that impose a burden on our institutions simply from passing assetbased regulatory thresholds based on participation in ppp and other government support. The question i have first is what additional areas can you use your discretion in, to provide relief to banks that are subject to significantly more burdensome regulation different regulation simply from participation in the ppp and are expected to revert in size eventually . I am happy to start with an answer to that. We do have some flexibility in our Regulatory Framework with respect to some of the measures that increased stringency. As banks increase in asset size, to make temporary exceptions. We have done that and we are continuing to look as to whether we should extend with respect to extend some of that relief. With respect to some of the measures, we are not currently seeing they are going to pose a problem. It is principally an issue for Smaller Banks being pushed up than the larger banks being pushed into the next category or other. We are not seeing with the larger banks that that is happening yet. Smaller banks can be put in some materially more difficult areas and i think we need to look at what we need to do there. I would begin by echoing the statement in the recent remark that members of the board of directors, myself included, approved a new position that would exclude those from audit requirements that are subject to asset size thresholds. Bank regulators on an interagency basis are currently working on a set that would relieve for a time certain asset thresholds being tripped that trigger heightened scrutiny. And heightened compliance requirements. Things that kick in the 500 million for certain things, 600 million for certain things. I think the direction of that discussion is something that cap out at 10 billion dollars. I think vice chair quarles has it right that larger levels, banks are capable but it is Smaller Banks that have difficulties. There are questions among agencies about what the appropriate period. I would just close by saying that one thing that is important is we must accommodate the dislocation created by the covid19 pandemic situation and at the same time, it is important that those things be wound down as soon as the pandemic ends. As mcwilliams, weir are down to about a minute. Cheated on au got little bit of time. That is ok. I cheated a little bit earlier. I will yield the time for chairman owed. Small banks have done a disproportionate amount of lending. It is only appropriate they look appropriate that you accommodate them because they are temporary. Chairman hood, my specific question to you, to see if you can focus on the comments youve heard. Hood one of the things it really is important. One of the things i wanted to note is that credit union shares already alltime high as our loans. The last thing we need is for a third of americans to not have access to credit during this time. If we could provide any kind of relief from prompt corrective action, it would be greatly appreciated. It allows management to focus solely on meeting the needs of member owners. As opposed to the corrective action frameworks in place. I think if we can provide the a temporary basis, safety and relief on a temporary basis, safety and fairness will still be preserved. I did write about this on my response to you. So any relief we can get would be greatly appreciated. Sen. Crapo senator brown . Sen. Brown you have all had an opportunity to serve the country at the highest levels. As this administration winds down, i would like to thank you for your service. Looking back over each of your terms, i do not think you have left your agencies, much less American Families and businesses, better off than when you took office. Each of you could have done much more to improve americans lives during these difficult last months especially. Instead, you finalized a wall street wish list. Es, your job isl one of the most important in the country to avoid a banking crisis. In 2006, you painted an optimistic picture of the economy, saying your offering quote perspectives on risk and offered media attention. It sounds to me like an economist version of shouting fake news. The 2008 crisis was very real, and as far as i can tell you learned nothing from it. Just like last time, you now insist that even though millions are struggling to stay their jobs at houses, the future is bright because the stock market is up. Willeal economy, it inevitably cause enormous losses for banks. For almost a year, you have ignored the pleading from me and others to stop Bank Dividends and protect the Financial System. I applaud the feds recent recognition to address racial inequality. Another lesson from 2008, that a financial crisis would disproportionately destroy wealth and opportunity for people of color. If the fed is going to take the racial wealth gap seriously, it must take Financial Stability seriously. You simply have not. Last week, 80 million voters rejected that thinking. Chair mcwilliams, the fdic was supposed to ensures the viability of small banks keeping your deposit safe so they can be put to work in our communities. Instead, you gutted rules that were meant to keep megabanks from crashing the entire system, risking a repeat of the hundreds of failures that happened in the last crisis. You approved a merger that created yet another too big to fail bank that will likely muscle smaller Community Banks out of existence. Most recently, you decided to distort data that proves millions of households dont have all the Banking Services they need. You did it by literally erasing those families from the fdic it report. Those under banked households are many of the same people who would suffer if you got your way and gutted the Community Reinvestment act. Your tenure has made life easier for big Bank Executives but it is going to hurt the communities your agency is supposed to serve. Last week, 80 million voters rejected that thinking. Young comptroller brooks, the bank that you and secretary mnuchin worked at was known as a foreclosure machine. It makes no sense that the outgoing president handed the wheels even though you are running the occ without the approval of the senate, you made sweeping changes to regulations to benefit the same corporations you used to lobby for. It is exactly this kind of selfdealing that has eroded so much trust in the government and economy, and last week, 80 million American Voters rejected that thinking. Chair hood, you are the only one i voted for for confirmation. You are in a unique position to help americans left out of our Financial System, but instead of standing up for them, it seems like you are more focused on currying favor with the outgoing president. Last week, 80 million voters rejected that thinking. We now have an opportunity for the financial regulators to do what they should be doing to help. Elections have consequences. The wall streetfirst attitude of the Trump Administration is over. Fear i suppose keeps them from saying it. President elect biden will have the opportunity to install watchdogs at these agencies that will put American Families first and give americans confidence that government is on their side. Thank you. Sen. Toomey thank you very much, mr. Chairman. I would like to begin by congratulating each of our witnesses. I want to congratulate you on doing some outstanding work during an incredibly different time. When we think about what we have been through as a country, the worst pandemic in 100 years and the first time in the history of the republic that governments intentionally closed our economy. Its never even been contemplated before, much less taken place. The economy was shut down. It was illegal to operate a business, and we understand why, but what i find extraordinary as we look back at the several months, despite that unprecedented elimination of our of time,or some period yet almost no bank failures, and in fact, the Bank Industry of small banks, mediumsized banks, provided credit to Small Businesses and consumers on a scale that most of us never imagined. The Financial Institutions weathered the storm because they were well regulated, ready, able, and willing, and they did respond to the needs of their customers, the men and women who run Small Businesses and employ so many millions of americans. It is a remarkable story. Possiblehat made that was the cares act. This iso stress, and for vice chairman quarrels, because this is relevant to the fed i believe those facilities were a remarkable success. To restartntended the private lending of americas backstopto provide a so private capital could flow and businesses could borrow and therefore stay alive and keep their workers in place, and we would have an economy when we got to the other side. Those programs were authorized and set up, capital started flowing like never before. Market, aste bond well as highquality credit, alltime record issuances. Bank lending, off the charts. Liquidity was available and available quickly. Thats a big part of the reason the economy has recovered as rapidly as it has. Weve got work left to do, but how many economists in the world thought we would have an Unemployment Rate below 7 at the end of october. People thought it would be 10 at the end of and of december, and its not. The private sector is providing capital that is needed. Its time to terminate these programs, which is contemplated by the legislation, and take a victory lap that we have gotten our economy back on track. It is definitely headed in the right direction. I want to follow up on a question raised by the chairman. I will start with vice chairman quarrels. Aboutwas a discussion some of the increased Regulatory Burden on banks, especially small and mediumsized banks, for no reason than the fact that they stepped up providing credit. That swelled their Balance Sheets, and that has triggered a number of costly regulatory provisions. One of the most problematic of which is the governmentmandated pricefixing of the interchange fees. I would urge you to consider ways in which you might ensure that we dont punish banks that did exactly what their communities needed when they needed it. Also aboute to ask the transition away from libor. Those contracts that have existed in some cases for years, index isme the libor available for ongoing payments. What are we going to do about these orphan contracts if they dont end until after the date on which we expect libor to no longer be operative . Hood i think we need to consider a mechanism that would allow the socalled legacy contracts to mature on their existing basis without having to be renegotiated. Without allowing the continuation of the writing of new contracts in the period that legacy is laying off. I think there are a variety of ways to do that we have been discussing that with the banks. Within the next month or two, we have a plan this year that will address that. Obviously, libor is a rate based on the eurodollar deposit market. Would it make sense to have a different mechanism to establish what that market is . Hood we could think about that. It would be a synthetic libor that the bank of england and the fca in the u. K. Have thought about. In the u. S. , because of our ,ifferent litigation framework i would like to find other ways to address that. I apologize and i will yield. Senator reed . In a speech in september 2020, you agreed with chairman powell we will take continuous support to stay in a robust recovery which implies a second major covid bill. Is that still your position . I would say that if there is to be another active cares act stimulus is ultimately a question for congress as we look at the evolution of the economy as the senator noted, the economy is recovering more robustly and rapidly than we had expected the spring, even then we expected a couple of months ago. Even when we get reports out, the numbers improve. I think probably the most accurate thing to say would be that Additional Support the recovery underway but i would not want to say this point that it was necessary. Going back to what you and the chairman said not too long ago one of the major aspects of the cares act could support the local government. It is, i think, critical to do that they are running into really difficult choices in terms of praying Public Services and raising taxes. And without Additional Support, they will have to do that, which i dont think will help stimulate the economy or aid the recovery so one thing we did so its something we did in local assistance that we did not do in the cares act. You need to draw a distinction between the type of support the fed provides, which is backstop lending, which for many state and local governments may not be the answer to their issues, for them to acquire more debt. There are limits to how much debt they can acquire for almost all of them, and our terms will require our policies that they are made on certain terms that the Congress Might make to extend additional fiscal beport, and the latter would something is a decision the congress would make and would require different tools than the Federal Reserve has. Sen. Reed right now states are prevented from using their revenue, to cover lost which for many states is a critical problem that they have. The chamber of commerce pointed that this would lead to replacing revenue with tax increases, which is not stimulative, so do you think the flexibility is needed . Mr. Hood with respect to municipalities, i would point to what the Federal Reserve can do, and that would be something for congress to decide. Eed in the 50 seconds, this might be more of a final point. We are facing a housing tsunami. Indicatesing agencies renters will owe up to 34 billion in past owed rent in january, imposing punishing Financial Hardship on millions in a few months. January hundreds of thousands of people being evicted or foreclosed, and in the midst of the pandemic, we are sleeping five in a bedroom, which is not the best medical advice. Indeed, i think we have to do something. I would hope you and your colleagues will be thinking about supporting efforts to provide relief to these renters. If they foreclose on mom and pop landlords, they will have a lot of property on their hands, which might not be very valuable. I hope you would do that. Sen. Scott thank you to the panel for being with us this afternoon. Comptroller brooks and chairman hood, since this committees last oversight hearing, your agencies have launched initiatives aimed at promoting broader financial. Nclusion as someone who spends most of my time working to identify and reduce barriers to economic mobility and opportunity and to expand access to credit and capital, especially for underserved communities, i was encouraged by these initiatives. I would love to have an update both on a reach as well as access. Mr. Brooks thank you, senator scott, and thank you for your continued engagement. Event in south carolina. I think this is a terrific dialogue. On project reach, i think most of you are aware it has three major components at the national level. One is to convene bankers, tech executives, and civilrights to build a synthetic credit score for those who do not have one. The principal way most Families Build wealth generally shall he generationally is homeownership. This is a major civil rights issue for our time, and yet it turns out giving those people credit for their rent payments, utility payments, and cash have, which most of them is relatively easily doable. I think we are not far away from an announcement of a version 1. 0 of a new kind of credit score where we allow those people the opportunity to be considered for a home mortgage. That would be a game changer. The second piece has to do with the 20 down payment requirement that most americans face buying houses. The percentage of people who inherit money to make a payment is disproportionately favoring whites and asians and disfavoring blacks and hispanics. Down payment assistance programs have offered some support. Various participants of project reach have talked about different ways of closing the down payment gap. One of those ways has to do with the possibility of equity financing, as well as financing for homeownership. One of the most important things we are working on here is reinvigorating large banks to depositoryority institutions in their communities. The other part of project reach is the pledge in which big banks will not only support mds financially, but also engage in executive Training Programs and business partnerships designed to make them successful. Lot,eason that matters a they are the reason why many africanamericans who dont feel comfortable interacting with big banks who they may have felt scammed them in the past to feel comfortable approaching mdis. Thats an important entry into the Banking System. Hood ive long advocated that Financial Inclusion is a civil rights issue. To that end, i was pleased to work with my agents and colleagues to launch access that is advancing communities through credit, education, stability, and support. We are going to need to continue to have small dollar loan products. Percentage grows to 60 in communities of color and 90 in disabled communities. We want to work to make sure that individuals will have access to small dollar loans. I am pleased that Credit Unions have made 171,000 loans that are helping to provide small dollar loans. Piece is education. How do we provide the educational coaching and help the Financial Wellbeing . How do they remain in it sustainably . We are working with operation , which can help propel individuals into the mainstream economy. Minoritys spoke about depositories. We want to do more than strengthen them. We want to make sure they are empowered to succeed and touch communities of color. We are continuing to provide mentoring relationships, grants. In addition to stability with mdis, we want to support our low income designated Credit Unions, as well. Support is looking at employment opportunities. If people are going to have mainstream success, they are going to need to have jobs. We implemented the Second Chance initiative so that when people who have noncriminal offenses can work, and we are providing opportunities for students of color and others to enter into the Financial Services industry. That is operation access. Thank you. I know i am a minute overtime. Im going to close with these comments. Im going to submit more questions to the record for vice chair quarles. Mr. Brooks, think you for your approach coming to charlston and willing to go across this country promoting ways to help the credit invisible, as well as lower the challenges or hurdles around downpayments. Your work has been some of the most nonpartisan work. Thank you very much. Menendez earlier this year, the house select subcommittee on the Coronavirus Crisis found the Treasury Department privately encouraged lenders to prioritize existing customers when issuing Paycheck Protection Program loans, leaving many minority owned Small Businesses without access to important federal aid. Comptroller brooks and cher mcwilliams, were you aware that treasury encouraged banks to focus on their ppe lending to existing customers . A simple yes or no will do. Thank you for that question. I was not aware there was such a thing. I do6 know there were issues around compliance, which led some banks to make those judgments themselves, but i am not aware of what you suggested just now. Mcwilliams i was not aware, but initially, banks, we were asking them to initiate loans quickly into the economy so people could get paid and make their payments, and as a result of that, reaching out to existing customers alleviated some of the burdens. Menendez treasury would like banks to go to their existing Customer Base, and j. P. Morgan corroborated this account, explaining from early on, there was an understanding from treasury that banks would be working with existing clients. Wasmustve known that this unofficial guidance. Did you push back in that regard . Start with an answer to that. Early on in ppe rollout, one of the things we identified across our banks is not that they were favoring existing customers. They were having trouble doing complaints for new clients in the door. One of the things we did at the occ was we convened a listening session with the banks having to allow them to quickly originate loans to those who werent already in their system. We know anecdotally that that had some results. There were some partnerships that resulted in that inside of the occ. They were able to ramp up customer support. Mcwilliams Community Banks were reaching to their customers, and to the extent they had new inquiries to their new customers, they had to go through the Due Diligence either of you did tothe fcc encourage banks extend loans beyond their Customer Base . Absolutely. That was the purpose of those listening sessions. Themmenendez did you urge to extend beyond their Customer Base . We wanted to help them overcome the hurdles to get to new customers. Manymenendez minorityowned Small Businesses do not have existing relationships, and treasurys decision to encourage banks to extend loans to existing customers, the actions have had devastating consequences on our nations minorityowned Small Businesses. Limiting loans to existing customers left about 600 70 billion of federal aid 41 of blackowned Small Businesses, 33 of latinoowned Small Businesses are permanently closed because of the pandemic. Its avoidable, and its a shame that that is what took place. Let me ask you, comptroller brooks. In may, i asked about your agencys work on the Community Reinvestment act. At the time, it was stated that despite the pandemic and evidence that the ppe lending was failing to serve minority communities, the occ should accelerate its work on implementing the cra rule that most of the Civil Rights Community opposed. Since then, the Federal Reserve issued its own rulemaking that invents invites comments. When the fed issued this, you stated i am told the fed gets good comments in response to the rulemaking. We are not beyond the prospect of finding ways of improving it more. Can you clarify what you meant by that . It seems the fed is going to receive comments from the Civil Rights Community and other comments that track with what they stated in response to your rulemaking. The occ disregarded a lot of that. What would lead you to change your mind . The first thing i would say sothat the am pr is somewhere to the occs final rule as to be almost indistinguishable in terms of their inclusion of native american country, small family farms, and other things originated in the occs rule. Themain difference between two is the fed continues to support discretionary performance assessments. Think really meant was i both the fed and occ recognize that the status quo is simply untenable. The status quo had been tied to Bank Branches as the only areas incentivized to look for investments. Our basic deal was, we need to make the system better, and if theres a way of making it better, we are happy to do that, but letting it sit in the current status quo was in our view an unacceptable option. The entire Civil Rights Community has a different point of view. Thank you, mr. Chairman. Rounds to all of our panelists, thank you for participating today. Vice chair quarles, as ive said, we shouldnt be making it harder than necessary for banks to do their jobs considering we are relying on banks to lift the economy out of the covid slump. As we look ahead, im worried that unnecessary regulatory. Urdens will only increase made sensections given the flight to cash that took place at the onset of the coronavirus pandemic. Im concerned not providing a similar adjustment for the surcharge could prevent institutions from doing their jobs when we need their help the most. Would you agree with me that it would make sense to extend the fromisk asset exclusion the ratio since the surcharge is eminent imminent . I think there is a logical analogy. I think what we have seen with respect to the surcharge calculation is that we are not hearing from the large firms that are affected by them, that the changes in their Balance Sheet over the period of the covid event are leading them to possibly being pushed into a higher bucket. In general, my view on the calculated our surcharge at the high level, and as we look at the final implementation of the basil three framework, which i intend to accomplish over the course of the next year, we should look at the overall package of measures that were put in place before these last measures we will implement. That includes the surcharge and to ensure they are leveraged so the amount of capital remains the same as we put these new measures in. I think that is the right time to look at the calibration of the surcharge. If we were hearing from a lot of firms that there was a real problem that was arising, as we are hearing, that might be a different story, but at the moment, we are not. Sen. Rounds thank you for that. Month thelliams, last fdic released its latest annual survey on the household use of banking and Financial Services. I was surprised to see that there was actually an increase in the percentage of American Indian households that are unbanked from 2015 to 2019. Roughly 10age is times as high in a household making the average income for a family in south dakota. Native american reservations, not only are the people of color, but youre talking about living on reservations, as well. Providing credit is going to be critical in the months ahead. What more can we be doing to reduce the number of unbanked and under banked native americans in the future but also longterm . Chairkel williams it mcwilliams its an issue that is close to my heart, had to get more people part of the Banking System, and the native American Community has been particularly impacted in this area. This is where innovation and encouraging banks to work with them is going to be pivotal to be able to ensure that they have access to credit, access to banking accounts, and also, trying to help minority deposit institutions, especially native s, and specifically to have access to capital. Creating an unprecedented fund. This will be managed by an that others can invest in. We hope quite a bit of help will. O to native americans we are heavily focused on this, and i am happy to brief you on some of the other efforts. I suspect my time has expired. Very good. Thank you for your response. Ter i thank all of the folks who are here testifying today. I appreciate it very much. I am going to start with you vice chairman corals. I want to go back to a question jack reed asked you, and it revolves around the need for additional dollars in the ,conomy, what powell had said and you agreed with that statement a wild back. I just want to give you an opportunity to clarify. I want to preface this question 125,000g, we have sectionals a day. Experts say it will be beyond 200,000 by the end of this month. Hospitals are full all over the place. The fact that my wife had major surgery last week, and her recovery was in the pediatric unit. I said, why she in the pediatric unit . They said because they said because the wife is full of covid patients. This was the only bed they had. Municipalities, working families, Small Businesses. There are a number of folks out there that are still in a world of hurt. I had a doctor tell me three weeks ago that january, february, and march might be the toughest months this nation has ever endured. If you really meant that, that there isnt a need for additional stimulus, or what exactly did you say . Quarles i think senator reeds question was in regard to municipal facilities and what could be done. Ithink we are with each wouldnt want to understate at manyhe degree to which people in the country continue to struggle as a result of the covid event. That i was trying to respond to was with regard to the type of support that would be appropriate for them and drawing the distinction between quarles let me cut to this. Thinkstion is, do you that there needs to be another stimulus package generally speaking focused on the economy of this country, whether it is municipalities, schools, Small Business, unemployed families . Do you think that there needs to be another package . I think as aarles central banker, i should leave those decisions to the congress. Come on. Er a month ago, you gave us your two cents on of this deal. I voted for you. I thought you wouldnt have politics into this. It seems since the election there is a different point of view now. That kind of drives me crazy. Is achair quarles it result of the fact that the economy is recovering faster than any of us expected. Sen. Tester i got it. So from the very getgo on this pandemic, the economy has followed this pandemic right down the line, and we dont have to shut down any businesses. I guarantee you that when hospitals are full and people are dying in record numbers, that information gets out there, and people dont go out. Period. Ive got two brothers older than i am who go out very seldom because of this pandemic. Answer is no, we dont need any additional money infused into the economy, and if it is, thats fine. My answer isarles as a central banker, i shouldnt try to subsume the role of congress. Tester vice chairman corals, when powell said it, you said, i agree. Now you are saying, i dont want to make a statement on this. You do have major impacts on the economy, and decisions you make and what you advocate for, people actually listen. Saying, not my problem anymore. There will be a new administration in two or three months, and that is what happens. Is that right . Vice chair quarles that isnt what i am saying, senator. Sen. Tester it certainly not an answer to the question if we need more money in the economy or not. I have to say im very disappointed in that perspective. You were very different a few months ago. Thank you, mr. Chairman. Time isnow when my getting close. Of quarles, what percentage small and mediumsized american businesses in your judgment are losing money right now . Vice chair quarles i dont know that percentage, senator. I could find it out. Sen. Kennedy i am not trying to trick you. Im just trying to get your sense for the economy. Do you think it is more than half, less than half . What is your hunch . Vice chair quarles the number of businesses losing money sen. Kennedy small and mediumsized. Vice chair quarles probably less than half, but i would want to get an Accurate Answer for you. Economisty the had a piece yesterday that its best forecast is between one third and 40 . These are small and mediumsized businesses, but that is most businesses in america in terms of jobs. What is your sense of the economy in terms of whether we have recovered from the coronavirus economically, and how long is it going to take us to get back to our previrus gdp . We have notuarles recovered. Unemployment rates are still elevated, and i may have over obsessed on the question of whether it is half or not. There clearly is a lot of stress among Small Businesses. There is a great deal more recovery to be done in the country. The length of time that would take is hard to tell. Sen. Kennedy what is your gut . Next year this time, will we have recovered to our precoronavirus gdp . Mye chair quarles projection is that it would take longer than a year. I would expect us to be towards our precovid levels in 2022, maybe early 2023. Did moreedy if we stimulus and it was targeted in the right way, suppose we did more ppe, would that help . Vice chair quarles it would accelerate the speed of the economic recovery. I think that is unquestionable. Kennedy let me talk to you for a few minutes about the treasury market. Did it not . Oze up, vice chair quarles for a period in march, yes. There was severe distress. People throughout the world were trying to dump treasuries in exchange for dollars, were they not . Vice chair quarles yes. They were selling in many different quarters all around the world. Sen. Kennedy we had the meltdown in 2008, 2009. Everyone was running to treasuries as a safe haven. This time, they didnt want treasuries. They wanted dollars. Vice chair quarles that is correct. Want tonedy if you unload treasuries or buy them, you have to go through a primary dealer, do you not . Is the proper term primary dealer or primary broker . Vice chair quarles primary , sort of the central dealers in the treasury market. ,reasury securities can be sold and cash can be obtained from securities in other ways. Sen. Kennedy how many primary dealers do we have . Vice chair quarles its about 29. Sen. Kennedy why do we have to go through primary dealers . . Hy dont we set up a system the primary dealers were part of the problem, which is why you guys had to step in. Set up a system where we dont use primary dealers or people can trade with . Ach other we are having trouble with thequarles audio at beginning, and it looks as if we might have lost him again. Sen. Kennedy can i have my time left . Hes gone, right . He may be able to hear us. Sen. Kennedy thats pretty convenient. You hit the disappear button. Well played, randy. Let me ask another one. Systemt we set up a where people can trade with each other . Whomever. Vice chair quarles i am back. Did it fail again . No, i am back. And it was not strategic. I do want to answer the question. I think it is fair for us to look at secondary market trading of treasuries going forward. That is a lesson learned. We have an Interagency Group together to look at alternatives. Sen. Warren thank you, mr. Chairman. Thank you to our witnesses for being here. All of you are in charge of making sure that regulating the banks and Credit Unions, making sure when the economy is in trouble, our Financial System is going to be able to weather this storm. Americans jobs and livelihoods depend on you getting this right. One way to settle the soundness the Federal Reserve monitors the soundness of the Financial System is to conduct stress tests of the largest banks to see if they are going to be able to handle a severe downturn. In a recent analysis, the fed noted that tests tend to be dependent on the assumption that there will be additional grounds of economic stimulus. In other words, the banks are in good shape if the federal government passes a strong stingless bill to help the people in and businesses struggling with this pandemic. The feds analysis was released in june. The assumption that was built the only republicans name i see left is cotton. Vice chair quarles the answer to that is no. so there has been no economic stimulus since you released that report saying how much banks needed economic stimulus. Six months ago, House Democrats pass a comprehensive relief valve. For six months, Mitch Mcconnell has refused to let the senate vote on that bill. In the meantime, Unemployment Benefits ran out, evictions resumed, state budgets cratered, and a black and Brown Workers paid the highest price. I am worried because this creates a very dangerous cycle. When families and Small Businesses lose help and cant pay their loans, then the banks and our entire Financial System is at risk. Sure enough, the banks are reporting they anticipate higher loan default rates. Without stimulus, to the banks and the Financial System do the banks and the Financial System run more risk . Have we lost the vice chair . It sounds like we have lost the vice chair again. Im sorry, senator warren. Warren this is something that only works for the vice chair. I need the feds. He is the only one weve had the problem with. It was there at the beginning of the hearing. I am not suggesting this is strategic. Do you want to let somebody else go and have me finish my question . The next on my list is senator schatz. Do you have questions for someone else . All of my questions are for mr. Quarles. Next after you is senator van hollen. He may not be with us. He is signed in. Senator cortez masto . Senator van hollen is here. Hollen the bad news is i have questions for mr. Quarles. Senator jones . I dont know what to do, folks. Cortezmasto i do have some questions. Let me start with the true lender rule. Do you intend to move forward with the true lender rule . We do, as you know. We just finalized that rule, and we believe it is important for a wider variety of reasons, the most important of which is solving the ageold problem of charter where banks were cleaning responsibly for loans they originated. One of the purpose is to focus on compliance obligations where it belongs, which is the bank that holds itself out as the lender. Masto there are 13 consumer and civil Rights Groups that have submitted, later is that your rule would facilitate otherwise schemes and undercutting the Interest Rates that states have set on some of these loans. How do you address that . Of adjectivesot and adverbs in that accusation to unpack. There are two main things going on, the issue of Interest Rates and the issue of all the Consumer Protections out there. When it comes to Interest Rates, the congress and Supreme Court decided in the late 1970s and early 1980s to allow both National Banks and state banks to export their home state Interest Rates to other states. If you think back to that era, there was rapid inflation. In many states, it was difficult to get a loan. That was one of the ways we got through that financial crisis of the late 1970s. All that is going on in our true lender rule is the idea that banks can originate these loans and they can sell those loans on the secondary markets as they always have without questioning the legality of the original Interest Rate authority. Yoshi Interest Rate authority. The innovation of true lender is to make sure somebody is responsible for the Consumer Protections associated with that loan. In the last 25 years, nobody has been responsible. We facilitate banks doing what they have had the authority to do since 1978 and we make clear if they enter into these partnerships, they are responsible for the fair lender law compliance. And every other thing that neither the banks nor their partners have taken accountability for in the past. The point is to bring more credit to more people and to create accountability where there was none. Masto i appreciate that. I would ask that you continue to watch it. As a forming attorney general, i know this now. There are several lawsuits because you have lenders like elevate, that have just been sued from the district of columbia. You have loan mart which is being sued by california and others utilizing this opportunity to circumvent the Interest Rates that have been said by 45 states and the district of columbia, which are predatory loans with higher Interest Rates. I would ask that you consider taking a look at that. The biggest concern particularly now during covid19, somebody people are struggling. They are going to look for these loans and there are going to be predators out there. It would be the worst to see that your new rule has opened the door for those types of predatory loans. I would say absolutely. The good news is it gives us the authority to police those from the banks side. Masto let me jump back and talk about total debt restructuring. In some parts of nevada and across the country, farmers have begun repaying their loans. Where we rely on hospitality and Tourism Business , owners do not have the income to pay their loan in full every month. Let me ask chair hood, do you think some Credit Unions and banks are at the risk of failure . Hood Credit Unions have a long history of helping members in times of adversity. The data we have today, Credit Unions have entered into covid with very Strong Capital, while bill well above our requirement. From what we are seeing in looking at call report data, they are doing relatively well in the sense they are continuing to provide forbearance. Credit unions have already loanded one 7 million forbearances. Almost 50 of our Credit Unions are providing some type of forbearance. We do believe we have the tools to keep the Credit System safe and sound. If there is one ask i would have it is to continue working with you and your committee. Liquidity is a major pillar of our industry. While we have solid liquidity now, i think in the future it would be nice to know that we do have that extension beyond december 31 of this year. I think the Credit Unions are in a position to continue doing what they have always done and that is providing member service. I believe we have been able we have been trying to hook up with vice chair quarles by phone. Do we have you by phone . Vice chair quarles yes, if you can hear me. We can hear you. Elizabeth, we can go back to you now. We wont have his picture, but we have him and his voice. Warren its ok. I will try to pick up where we were. The fed conducted stress tests on the largest Financial Institutions so that the Financial Institutions are helping if but the capital forecast tends to be based on the assumption there will be additional rounds of economic stimulus. Established that was five months ago. There have been no rounds of economic stimulus. In the meantime, weve seen a lot of negative economic indicators, and the banks are now saying they anticipate higher default rates. The question i had been asking is, without stimulus, do these big banks and ultimately the Financial System run more risk . Vice chair quarles i should note that as you noted in your original question, the banks projections themselves assume stimulus. Warren that is not the question i am asking. Also, the question about how much capital they have got obviously goes to the heart of your stress test. You said in the stress test the projections on capital depend on there being a stimulus. Families need help. They have needed it all summer, Mitch Mcconnell has stubbornly crossed his arms and refused to let us vote. Now the Senate Republicans are doing even more damage to our economy if they do not put a relief bill out that is big enough to get the job done and up for a vote. This is a problem obviously at the senate level but the fed itself is not powerless as well. You could act right now. You are allowing the big banks to continue to shovel billions of dollars out of the door in dividends, money that could be used help survive and historic downturn. You could stop this outflow of money right now. So at one point, mr. Vice chairman, will the fed actually do its job and suspend all Dividend Payments . Vice chair quarles capital ratios have been rising over the last six months. Warren that is not the question i asked you. What i asked you is what data are you going to need to see in order to take action here . We are watching a downturn in this economy. The stress tests say they are based on the assumption there is going to be stimulus. Mitch mcconnell has refused to let us get stimulus. I am asking about the billions of dollars the banks are still pushing out the door in dividends because ultimately, the american taxpayer is going to be on the hook if these banks are not going to be able to meet their requirements going forward. Vice chair quarles and so we are running stress tests currently and the stress tests do not assume any stimulus. We are running stress tests currently to determine the resilience of the banking sector. We ran them in the spring. We are now running additional stress tests taking into account what happened in the spring and the condition of the Banking Industry and the economy as a result of that. We will have the results of those stress tests revealed publicly at a bank by bank level at the middle of september and we will use that information to inform our determination whether we would continue the suspension of the 70 of capital distributions we have already imposed on the banks. Sen. Warren let me just stop you there because we have already had to do this for a long time. Your job is to protect the american people, not the bank investors. I do not believe you are doing your job. Mitch mcconnell has changed his tune. He says he wants to pass a relief bill before the end of the year. America needs a real relief bill, not a fig leaf. There are not enough fig leaves on the planet to cover up the republican partys monumental failure to take this coronavirus seriously. Americans are falling sick at the fastest rate since the pandemic began. It is time for you to stop letting these banks shove money out the door, stop making excuses and do your job. Thank you, mr. Chairman. Chairman senator schatz. Sen. Schatz thank you, mr. Chairman. Vice chair quarles, about a week ago, new yorks financial regulator said it would start integrating Financial Risks into the supervision of new york charter banks. The banks will conduct enterprisewide risk assessments on how Climate Change impact to credit risk, market risk, and other core business risks. Are you following what is going on in new york and do you agree with the new york regulator that banks should integrate Financial Risks into their portfolio, into their Risk Management frameworks . Vice chair quarles the supervision of the banks is a board responsibility that is delegated to the reserve banks. So yes, of course im following that and of course i would agree with it. Sen. Schatz i want to follow up on the conversation we had in december on the feds joining the network for the greening of the Financial System which now consists of 75 members and routine observers. You told me the fed had been auditing the class before formally registering. Chair powell said the fed was in the working groups. Where are we on formally joining the network for the greening of the Financial System as a full member or observer . Vice chair quarles that is really up to the ngfs. We have requested membership. I expect that it will be granted. Sen. Schatz do you know what the timeframe is . Vice chair quarles i do not. I guess i would say they have an annual meeting that is in the spring, which was the last time there was a lot of work around this. I suspect we could join by the spring. I could get the answer for you. Sen. Schatz could you please . And to the extent any of this has been reduced to writing in terms of a formal application, could you provide that to the committee please . Vice chair quarles absolutely. We will get you information on that. Sen. Schatz you also said in december you were closely engaged with the bank of england on how they are looking at Climate Change and regulation and supervision. Are you still engaged with the bank of england and could you share with us what you have learned or what you are working on . Vice chair quarles we just had excuse me a meeting last week with the bank of england. And the ecb on questions of regulation and supervision, Climate Change is something we discussed. We have been particularly monitoring how it is that they are thinking about their inclusion of Climate Change in their stresstesting process. Its a different process from hours and they are at a very preliminary level still in the process of thinking about it, but we are definitely involved with them so that we understand that as it evolves. Sen. Schatz as a point of clarification because i and others have introduced legislation to this effect my understanding is the fed has the full authority to move forward on this because risk is risk. It might be helpful to clarify this through a change in statute, but you do not need a change in statute to do any the things you need right now as it relates to climate risk. Is that your assessment . Vice chair quarles that is correct. I dont need a change in statute. It may be the supervision report we published last week does include a section on Climate Change. That goes into more detail about how were thinking about this and incorporating it into our supervisory activity. Sen. Schatz just to point out, will have different views about Climate Change and solutions that should be undertaken, but risk is risk. And the charge for the fed and other financial regulators is to measure that risk, whether it has an ideological argument behind it or not. Risk is risk. I also want to thank the fed for lowering the minimum loan size threshold to encourage more Small Businesses to participate. There appears to be very little uptake. What can we do to push money out to these Small Businesses who appear to not find this to be a particularly Attractive Program . Most of theuarles fed programs, and the main Street Program is not different in that respect, the fed facilities operate as backstop. They achieve their function when they restore confidence to the private financing markets. I think you can say that has happened with the main street facility as well. I do not actually view the limited take up so far of the mainstream facility as necessarily a sign of its failing. You could view that as a sign of its success if needs are being set aside by the private sector. That is ultimately what we want as opposed to being satisfied by the fed. I think it is useful to have bit it out there showed the economy develop in an adverse way. Sen. Schatz thank you. Chairman thank you, senator schatz. It appears that senator van hollen has left the meeting. Mr. Van hollen, are you with us . I think he may have had to leave the hearing. Senator jones . That appears to be all of the senators who are available. Do you want to make a final, and final comment before we conclude the hearing . I do not. Thank you for asking and thank you to the four witnesses. Chairman thank you. With that, that will conclude our questioning for todays hearing. For senators who wish to commit questions for the record, those questions are due to the committee by tuesday, november 17. To each of the witnesses, we ask you respond to those questions as promply as you can and thank you for joining us at th [captions Copyright National cable satellite corp. 2020] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] washingtons journal. 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