Comptroller of the currency, the Senate BankingCommittee Received a 6month update on the state of Banking Systems, the impact of covid19 and support for Small Business owners in communities of color. This runs an hour and 45 minutes. Today we welcome to this virtually hearing the federal prudential regulators, Federal Reserve vice chairman Randal Quaries, office of the comptroller, brian brooks, chairman of yellen and mcwilliams, chairman of the National Credit administration rodney hood. We will receive testimony from each agency on efforts, activities, objectives and plans since we last testified before the committee. As well as an update on covid19 related actions. Since the passage of the coronavirus a relief and Economic Security act or cares act your agencies have taken many meaningful steps to ameliorate the Economic Impact of the pandemic as you provide conditions that will lead to a forceful recovery. On october 30th the Federal Reserve announced changes to its facility including decreasing minimum loan size and priority loan facilities, 50, 000 to 100, 000 and allowing borrowers to deduct ppp loans less then 2 million for outstanding debt for purposes of the leverage test. Your agencies should continue to carefully review regulatory and supervisory frameworks adjusting where necessary to bolster Financial Institutions ability to support economic recovery. Which by the way has shown positive signs of recovery the last several months. October 20 ninth the United States gdp, record 33 in the Third Quarter as the economy started to reopen. The Unemployment Rate fell to 6. 9 in october. Last spring cbo projected we would be 9. 5 by the end of 2021. Since april around 12 million jobs have been gained meaning we recovered half the jobs lost due to the government enforced shutdowns. Over the last few months i sent several letters to you later is on a number of important issues. On july 30 first i sent a letter to each of the agencies urging the use of discretion to extend relief provided under title 4 of the cares act including extending the Community Bank leverage ratio to december 30 first 2021 a troubled debt restructuring to january 1st, 2022, and the current expected credit watch to january 1st, 2023, while clarifying admin amazing unintended effects of midyear adoption. October 8th i sent a letter, sent the regulatory agencies a letter regarding increasing regulatory business for banks and Credit Unions simply due to their rapid implementation of the Paycheck Protection Program or ppp. As a result of their Critical Role in ppp and the economic recovery many banks and Credit Unions inadvertently experienced Balance Sheet growth which is ultimately expected to decline as borrowers meet the ppps forgiveness terms. The fdic took an important step in issuing an interim final rule to alleviating increased 363 audit and reporting requirements for insured depository institutions that have experienced growth in ppp and participation in the Federal Reserve facilities and other stimulus efforts. It is important that banks and Credit Unions are not disincentive eyes from continuing to play a key role in the economic recovery or participate in future efforts. I urge each of you to continue using your discretion to alleviate the Regulatory Burdens associated with a variety of assetbased regulatory thresholds on Credit Unions who are temporarily experiencing growth from participation in recovery oriented roadmaps. Turning to the lcc. October 19th the senate rejected a congressional review packed of Community Reinvestment issued by the occ. According to the occ the final rule improves Community Reinvestment regulations by clarifying what qualifies first consideration, updated how banks define their assessment areas, evaluating Bank Performance more objectively and making the process more transparent and timelier. The final rule framework will increase support to Small Businesses and small familyowned farms in distressed areas and accommodates banks of all sizes and Business Models. The cra has not been materially modified since 1995 and i commend the occ for taking this important step. As we continue to whether this pandemic i stressed to each of you and your agencies the importance of our Financial Institutions providing access to credit and Financial Services to credit worthy individuals and businesses and legal industries. It is slightly important our countrys Financial Institutions especially the largest not deny credit financing based on political preferences related to firearms, oil, gas or others. It should be based on credit worthiness and should not target specific industries especially as we work to restore our economy to prepandemic strength. This will remain an incredibly important issue for me and i will continue to fight for access to credit and Financial Services for all of our legal industries. I appreciate each of you joining us to share your agency acceptable use and plans and the titles work you and your staff respond to covid19. Senator brown. You are on now. Thanks was the American People sent a clear message in this election the rejected and administration were wall street and corporations run the economy. People want a government that is on their side. The past four years the Trump Administration, financial regulators, on the scale for corporations and their wealthy friends while leaving every one else at the mercy of the supposedly free market, americans watched the president ignore a pandemic, refuse to even try to put in place any plan to bring the virus under control and to reject all our efforts to support families and get our economy running smoothly. Whatever the majority leader may say, whatever damage he and my colleagues of the outgoing president are doing to our democracy with their lives and fabricated attacks on our nonpartisan and hardworking poll workers and elected officials the facts are clear. A decisive majority of the public in a 5 million more people voted for joe biden than donald trump, decisive majority rejected with a have endured over the last four years, voted for new leadership that would restore faith in our government, people are ready to turn the page, ready for leadership that will give them their freedom and their lives back. They are ready to heal and rebuild, the work weve done in the banking and Housing Committee could be a big part of that and make a real tangible difference in peoples lives. Of Committee Members of both parties come together and choose to do so. We have the power in this committee to tackle the issues that matter to peoples lives, their paychecks, housing, transportation and the communities they live in. We can put Small Businesses back on their feet and lift up brown and black communities that were hit by this pandemic, key people in their homes, make homes more affordable, bring down Peoples Energy bills, lead the world in a fight against Climate Change, we can seize every opportunity to create good paying jobs, free people from the stress of debt collectors and the downward spiral of lenders and reorient our economy from wealth to work, to do all that we have to take on wall street power. We know who ships jobs overseas, who jackson drug prices, we know who spends trillions on stock buybacks instead of higher wages, we know about unions. It is are not our neighbors who have a different political sign in their yard or different Bumper Sticker on their car. It is the largest corporations unaccountable to ceos from facebook to wells fargo and their allies in washington, wall street is all too happy for a populist turn against each other as long as it means they get to keep exploiting workers and playing by different set. We had a president trying to convince people to blame their fellow americans who may not look like them or worship like them instead of blaming a system that rewards executive stock portfolios when they lay off workers or cut their pay. Divide to distract was the playbook, from all the ways he and his followers in congress funneling more wealth to the already wealthy and more power to the already powerful but it didnt work. This time last week a record 80 million americans rejected that, the largest vote for any president ial nominee in our nations history. Now we deliver results. Big oil and other corporate polluters spend billions of dollars trying to convince People Climate change is an unsolvable problem instead of a tremendous opportunity. We have to end corporate Business Model that treats workers, especially black and Brown Workers as expendable and a system that perpetuates systemic racism. We have to break up the biggest banks and give that power to everyone else who was denied a voice in our economy. Our Financial System should be a public good. We need to make it work for everyone else and create a better system centered around the dignity of work and hard work pays off or anyone the matter who you are or where you live or what kind of work you do, the work has dignity, everyone can afford housing and transportation and have power over their lives and their own money and work has to have a strong growing middle class, everyone can reach it. We know we have great challenges. We are in a Public Health crisis, and the climate crisis, extraordinary times call for us to aim high rent think bigger to meet this moment to restore peoples faith in our government. I look forward to coming together with senators on both sides of the aisle and the new administration to get to work. Thank you so much. We will proceed to the testimony of our witnesses and have you speak in the order i inoduced you. You may proceed. Thank you, chairm. Thank you Ranking Member brown, members of the country, for the portunity to testify. Last appearance in may folled up period of the emergence of covid19 and measures taken in response, added strain ouncertainty into the financial mart, from riskier or more volatile Asset Classes and the safety of cash. This demanded immedie, extraordinary and concerted public intervention to ensure stabity, restore call and see the nation through aunfolding crisis was the Federal Reserve intervention span a wide range of markets inclung the banks, strethened by a decade of improvement in capital liquidity and Risk Management inuding refinements of recalibration the last tee years, banking organizations became a shelter from financial distre which our goal was to ensureanks could respond to the emergency and community needs. The repo accompanying my testimony lists these action in detail and we extended sevel of them as the covid19 event has continued cluding temporary adjustments to capital and reserve measures and examination activities. Importantly th clarify the impediments to working constructively wh borrowers and other customers in times of strain. Toather with fiscal action these measures help lm a lot. The initial wave of market stress, threcovery has become sooner than expected. This speaks to the countrys tenaty, ingenuity and spirit in responding to the greatest risks. The challenge we face is distinct for minimal and mplex, the surprise that the covid19 event is go replaced by economiconsequences and burdens facing household and business is better understood but no less significant, not evly born. I am confident we will work through them together, support those hardest hit and ensure our economic wounds dont become scars. The Federal Reserve mains committed to using full range of tools to support the economy, strong resilient baing system is an essential element of such rert, the durable recovery demand banks to lend active confront gains and losses honestly, stand on unexpected shocks and help custers rebuild and adapt. Our supervisors ensure t companys banks meet the exting standard. Covid19 related guidance encouraging banks to work with their borrowers,n important step toward this goal. Since then working with our colleagues and oer financial regulatory agencies have taken several others ranging from principles to credit accommodations to a clear statement Community Reinvestment of covid19 related activities, make it easier for bks to participate in emergency Lending Program and the use of flexibility in our ress testing apparatus to understand the effects of the covid19 affect. As our report shows that strength is stilintact. Liquidity and capital remain high and increas over the course of the covid19 event. They have increased reserves setting aside the soces against this tomorrow. Bankare positioned to serve against broader nancial and economic stress. It worth recognizing how things might have been different. The foundation would not exist if not for a decade of work by officials and the banks themselves to make ban stronger and me stable and make banking supervision fairer, more efficient and transparen those values are not contingent on an economic boom, addressing the most pssing regulatory ways. In the last 7 months for the guidance to the recovery. Simon Sebag Montefiore for changed many aspects of the Federal Reserves work and also afrm the values and priorities the remain the same and will continue to guide us in support of the Financial System, the economy in the country long after the covid19 event has passed. Thank you for your time, i look forward to answering your questions. Brian brooks. Thank you, chairman crapo, appreciate the opportunity to update you on work on federal banks operating in a safe zone remaining sources of strength for their communities. I would like to congratulate you and thank you for your leadership as we Work Together and i look forward to working with your successor. The occ has reported orderly function through an extra ordinary time. Fortunately banks and savings associations introduce period with nearly historic high levels of liquidity, asset quality is strong and the economy enjoy the longest expansion on record. As part of the National Response to covid19 Economic Activity was suspended. Regulators collaborated to provide banks flexibility to use that strength to support customers and sustain Economic Activity. My testimony today provide what this action has taken on that front and continue to monitor the effects of shutting down the economy. Banks remain sound but we see potential assets for commercial Residential Real Estate and Small Business and Consumer Lending and hospitality sectors in particular. Banks particularly concentrations of those assets take us a review of the risks and work with customers to the maximum extent possible. The recent semiannual risk perspective highlights credit operational and Compliance Risks in the system which focused supervisory efforts in the months ahead and avoid the need for more extreme loss mitigation tomorrow. We see reasons for cautious optimism about the future based on gdp growth and continued reduction of unemployment and Small Business sentiment and betterthanexpected news about nearterm availability of effective vaccines. The economy faces uncertainty to the length and depth of the pandemic i also want to highlight optimism for the future of banking. During the social and rest following the killing of george for december it became clear the protesters were angry that too Many Americans have been left out for far too long. The occ found a project to convene bankers, civil rights leaders, innovators and businesspeople to promote, fair and equal participation in the economy to eliminate credit for the 45 million americans of no usable credit score to expand Affordable Housing for those who cant afford payment requirements and reinvigorate minority banks that serve often neglected communities which weve kicked off regional efforts including one serving the Greater Los Angeles area very reasonably and access to Capital Events in South Carolina and colorado. Im humbled by momentum among the industry, community and civil rights activists, project reach has become a movement to tear down barriers so that all who pursue american dreams, and Financial Services to consumers, businesses and communities which we are seeing new products and better ways of delivering them in more efficient ways of operating. Ultimately this progress will benefit consumers and businesses and they will have greater choice and poor autonomy. At the occ we believe consumers, businesses and the economy are best served where innovation can occur in the Banking System and the system is allowed to leave all, the Banking System is among the most strict deregulated and closely supervised industries was those who fear innovation may harm consumers and consider the possibility innovation might be safer as supervised environment than it is under the currently unsupervised environment. The same for those focused on prudential risk. For the last decade large market shares of lending and Payment Processing migrated to commercial banks, less regulated shadow banks, and to manage issues early on, we should not underestimate the risk of a status quo including incumbent seeking protection from competition, delaying the innovative Financial Services that are already available in other parts of the world. The occ has been a leader in this area of responsible innovation in 2015 and we encourage responsible efforts to deliver more choice and Economic Opportunities in a safe, sound and fairway in the federal Banking System for consumers and businesses across the country. Thank you for the opportunity to testify. Im proud to serve with the acting comptroller of the currency with the important mission. I look forward to your question. Next, fdic chair yellownd and mcwilliams. Members of committee and staff, thank you for the opportunity to tesfy today. I hope you and your families are staying healthy and safe. When i testify before this committee 6 months agoe were confronting uncertainty and volatility due to the covid19 pandemic a related government shutdown. Ny segments of the economy were experiencing unprecedented declines in acvity and this was reverberating through the Financial System. There remains coiderable uncertainty about the economy we know from two quarters of industryde reporting that the Banking System has serveas a source of strength throughout this period, banks supported their customers including originating 500 billion in ppp loans and accommoding 2 trillion over two quarters is theanking systems ability,o this critical position. The Equity Capital increased to 2. 1 trillion which translated to tier 1 capital rat of 13. 4 , with percentage basis, ese capital levels were slightly hher in the quarter preceding the pandemic. Supporting banks to work nstructively with customers the fdic has taken meaningful action to provide bank flexibility while maintaini safety and soundness and prection. Today i will provide an update in five areaof significant progress responding to Economic Risks related to covid19, enhancing resonance, supporting communities need, Technology Solutions encouraging innovation and finally outstanding ents. My statement provides greater detail in each of these areas but i want to talk to each of th staing with our responsive Economic Risks related to covid19. Beginning early march the fdic and fellow regulators undertook actions to mntain stability and financial markets. In addition to providing flexibly for banks we made many targeted temporary regulatory anges to facilitate lending and other financial mediation. In the past 6 months we have tan additional regulatory and supervisory action in support of these objectives as we monitor conditions for supervised institutions and we will consider ditional guidance is apopriate. On to resolution readiness, the fdic responded to the pandemic, enhance resolutn readiness in several ways. We entered the pandemic with Historic Bank as we recommended the absence of failures cannot st forever even before the pandemic. Accordingly the fdic approd the solution by centralizing resolution activities, establishing a new approacto protect the health of our employees should banks fail during theandemic coordinating with International Counterpart for global systemically iortant banks carrying out targeted engagement and capabilities selecting firms on an asneeded basis, regularly reviewing this da to inform resource magement to prepa for potential activiti if necessary and finalizing goals that improve resolutiorelated activities. We have be mindful of all the pots during this time in particular. Is the pandemic destroys the lives of amecans we are particularly mindful that loincome communities have suffered disproportionely. As the primary supervisor incling minority institutions armdis the fdic plays an Important Role helping these institutions meet the needs of their customers and communies. Shaped by personal experience and guided by increasing Financial Inclusion in tradionally underserved communities one of my priorities is expanding on engagement and cooperation in support of mpi. One ofhe options is a framework that would match cdf is witinvestors interested in the challenges and opportunities facing the stitutions and their communities. We are creating a vehicle to reach investorfund would be channeled to makinvestments in or with the advice. We are still developing details but expect to release more information in the near future. As we consid ways to create this system we recommend the tremendous benits financial innovation can deliver. Chnologies could bring more people to e Banking System and access to more facilities and seices and lower the cost of credit. Ourecent biannual survey on helpful use of banki and Financial Services shows individuals are moving to Digital Banking and these trends continue regulators should aim to the development of technologs that improve the way they operate and serve their customers. To enable this office of innovation, begiworking with several initiatives. Notably more recently feedback on a groundbaking approach to fulfill the technology partnerships, our requts for information propose a public, private partnership and voluntary search pgrams to review the cost and uncertainty for the introduction of new tenology. Reducing these barriers to innovation particularly important for Community Banks. And the review of t next step. And to begin theext generation supervisory reporting, reduce regulatory costs and improve abity of regulators to quickly identify emerging risks at banks or across the Financial System, they will not only increase t effectivenesof the fdic but also to streamline innovation in our nations banks. We connue to focus efforts on modernizing the efficicy and resiliency of the Financial System. Finalize federal Interest Rate authority in ction 19 of the fbi act would codify existing guidance and bring clarity to t markets. In addition we engage with fellow regulators for overly Restricted Fund provisions, modify requirements for initial markets from affiliates and establish longterm liquidity metrics for the largest banks. Among upcoming actions we final two additional rules and Industrial Loan Companies in the near future. Rep up soon if you would. Thank you for the opportunity to testify and i look forward to questions. Finally, chairman hood. Good afternoon Ranking Member brown and members of the committee. Thank you for the opportunity to provide an update on the state of federally insured Credit Unions and efforts to assist during the ongoing covid19 pandemic. Our nations Credit Union System was capitalized at the start of the pandemic and remains so with high levels of net worth and ample liquidity. This trend has allowed Credit Unions to adapt to the operational challenges related to the pandemic, federal assets and federally insured Credit Unions rose 15 in 2020, to 1. 75 trillion. Credit union shares and deposits by 17 , to 1. 49 trillion. Since midmarch, the mca his looks for regulatory relief and muchneeded flexibility so they could serve their owners. We adjusted our Examination Program to protect our staff and we continue to work remotely and effectively. We should 11 interagency statements, 20 guidance levers to the industry hoping Credit Unions to address emerging risk and implement regulatory and statutory changes that were made in response to the pandemic. This provided 3. 75 million in Technical Assistance to small, low income and minority Credit Unions and Community DevelopmentRevolving LoanFund Allocation which went directly to the covid19 assistance. The network increased 6. 8 to 182. 9 billion. Aggregate network stood at 10. 46 well above the 7 statutory requirement. The fund is strong and it is well within 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 services with lending rising to an alltime high of 1. 5 trillion in all major categories. Credit unions collectively extend 8. 4 billion in loans in the Paycheck Protection Program with an average loan amount of 49, 000. Live capital liquidity as a pillar of strength and the bedrock on which safety of the Credit Union System rests. The decision to increase flexibility 3 sensual liquidity facility in the care act contributed greatly to bolster availability of liquidity in the system. Since the act was signed into law, if this encourage natural Credit Unions to join the cls. Today the facilities barring capacity is exceeded 32 billion and provides access to 80 of Credit Unions. Im grateful congress provided muchneeded authority in the cares act forever. I respectfully reflect these changes to extend to the pandemics duration so the credit union can respond effectively should the need for emergency liquidity arise. Lamentably recent events revealed in our society not the least of which is the pandemic had a deleterious impact on communities of color since becoming the eleventh chairman i made Financial Inclusion a priority within the agency and the Credit System as a whole. I recently reinforced that commitment with the launch of a new Financial Inclusion initiative called access, advancing communities through credit, education, stability and support. This initiative will refresh and modernize regulation, policies and programs that support greater Financial Inclusion in the agency and Credit Union System and will address the specific needs of diverse communities. I look forward to working in partnership with members of this committee towards this worthy endeavor. In closing i would like to thank the committee for the opportunity to appear for you today and discuss how to protect our nations Credit Union System and 122 million members, how they are working to help in this challenging time. I look forward to answering your question, thanks for the opportunity to be here and thank u for your leadership. It has been a pleasure working with you. I will go with the first questioning. My first question is to the Federal Reserve, fdic and occ. I would like you to keep your responses to 30 or 40 seconds because i want to get to a question to the ncua as well. The ftc and the ncua and the cfpb in october asking you to use your discretion to minimize the Regulatory Impact on banks and Credit Unions resulting from participation in the ppp. Some of you have taken important actions in that regard. I believe that there is still a litany of rules that impose a burden on our institutions from passing assetbased regulatory thresholds based on their participation in ppp and other government support. The question to chairman Jelena Mcwilliams and Randal Quaries, what additional areas can you use your discretion to provide relief to banks that are significantly more burdensome regulations from partipation in the ppp and able to revert in size eventually . I am happy to start to answerhat question. We havsome flexibility in our Regulatory Framework with respect to some of the measures that incase asset size to make temporary exctions. Weve done that and we are continuing to look at whether we should extend some of that relief. With respect to some of the measures we are not rrently seeing that they are going to pose a problem. It is principally an issue for Smaller Banks being pushed over levels than larger banks that might be bei pushed to the next category. Are not seeing that with larger banks actually happening yet but Smaller Banks could be pushed to some materially more difficult areas and we need to look at what we can do. I am happy to go next. I would echo Jelena Mcwilliamsstatement the recent ftse Board Meeting members of the board of directors myself included approved a new position that will exclude those kinds of assets from audirequirements and i would also say the bank relators are currently working on a set of ruleto relieve certain aet thresholds being tripped the trigger heightened security and compliance aoss different levels. There arregulatory requirements that kick in at things like 500 million for certain things, etc. Diction of that discussion is something that wil out at 10 million. I think Randal Quaries has it right that at certain levels it is incapable of managing tho risks and there will be time litation on that a to what the appropriate effort is. I will close by saying one thing th is important is on the one hand we must accommodate what is created by the ndemic situation but it is important they are brought down as soon as the pandemic ends because it important to have real visibility in the balance she created by assets over time. We are down to a minute, you only have a little bit of time. I cheated a little earlier. I yield the time to chairman hood. Small banks have done disproportionate amount of lending to the Banking Industry share. 15 of total assets so it is only appropriate as mentioned in accommodating them because they are temporary. My specific question, focus on your comments in your evaluation of the pca framework in this context. That is importa. One thing i want to note is credit unionhares at an alltime high as our lows and in the current framework is pressuring Credit Unions to reduce lending activities during this pandemic and the lasthing we need is for a third of americans not thave access to credit during this time so if we could provide relief from coective action it would be greatly appreciated because it allows management to cus solely on the needs of owners as opposed the framewor we have in place. Safety and soundness would be preserved. I did write about this in my april 20 ninth response to you so any relief would be greatly appreciated. Thank you very much. Senator brown. You have had an opportunity to serve your country at the highest levels. I want to thank you for your service. Looking at each of your terms i dont think your agency is much less american families, communities and Small Businesses, i dont think you left them better off than when you took office. Each of you could have done more to improve americas lives during these difficult months. Instead you finalized the wall street wish list. Place chair Randal Quaries, yours is one of the most crucial in our country when it comes to preventing another banking crisis. In 2006 you paint an optimistic picture of the economy said you were offering perspectives on risks in the Financial Sector and rick garnered a great deal of media attention, sounds like an economists version of shouting fake news. The 2008 crisis was very real and you learned nothing from a just like last time, you know insist even though millions are struggling to stay in their jobs and stay in their houses the Economic Future is great because the stock market is up. Experts of all backgrounds say the collapse of the economy would inevitably cause enormous losses for banks. For almost a year you ignored the meaning from the end others and 4 of said chairs to stop Bank Dividends in the Financial System. The recent recognition needs to address racial inequality. Another lesson from 2008 is the financial crisis would disproportionately destroy the wealth and opportunity for peoples of color. Of the fed will take the racial wealth gap seriously it must take Financial Stability seriously. You simply have not. Last week 80 million voters rejected that thinking. The fdic is supposed to ensure the viability of small banks keeping your deposit safe to be put to work in our communities. Instead you good rules meant to keep megabanks from crashing the entire system risking a repeat of hundreds of Community Bank failures, approved the merger that created another too big to fail banks it will likely muscle smaller Community Banks out of existence, you attempt to force banking experts in the economic crisis most recently decided historic data that provides, proves millions of households dont have the Banking Service they need by literally erasing those families from the fdic report, those households where many of the same people who would suffer if you got your way and gutted the committee reinforcement act. This made life easier for big Bank Executives but is going to hurt the communities your agency is supposed to serve. Last week 80 million voters rejected that thinking. The bank that un secretary mnuchin work that was known as a foreclosure machine, makes no sense the outgoing president handed the wheels of the economy to so many who had a hand in crashing it in 2008. Even though you are running the occ without approval of the senate you made sweeping changes to regulations to benefit the same corporations you use to lobby for. This kind of soft dealing has eroded so Many Americans trust in their government and the economy and last week 80 million americans voters rejected that thinking. Rodney hood, youre the only one i voted for for confirmation, is providing credit in black and brown communities and smalltown general america. You are in a unique american help americans with the Financial System but instead of standing up for them it seems you are more focused in carrying favor with the outgoing president and the photo ops that come along with it. Last week 80 million voters rejected that thinking. We have an opportunity for the financial regulators to do what they should be doing to help. Elections have consequences. The wall street first added to the Trump Administration is over. President elect biden, my colleagues on the use committee, fear i suppose keeps them from saying it, president elect biden has the opportunity to install watchdogs of these agencies for working families and communities first and give americans confidence their government is on their side. Thank you. Thank you. Weill turn to senator toomey. I would like to begin by congratulating each of our wiesses. I want to congratulate you on doing extending work during an incredibly difficu time. Think of what weve been through as a country. The worst pandemic in 10years and the first time in the history of the republic, state governments mostly but also to some dege the federal government intentionally closed our economy, never contemplated fore much less actually taken place so the ecomy was shutdown. It was illeg to go to work, illegal to operate a business and we understand why but what i findxtraordinary as we look back on the lasseveral months, despe that unprecedented catastrophic elimination almost of our economy for someeriod of time almost no Bank Failures and in fact the Banking Industry of america rose to e challenge small banks and mediumsized banks providing credit to small busisses, mediumsized businesses, consumers on a scale that most of us probably never imagined, Financial Institutions weathered the orm because they were well regulated, ready, able, willing and did respond to the needs o their cuomers, men and women who run the small businees and employees so many millions of americans. It is a remarkable Success Story and leads me to the point want to stress which is part of what made that possible with the cares act and the lending facilities. I want to stress, this is relevant for the fed. I believe those facilities were a remarkable success by any reasonable measure. They were tended to restart the lending of americas economy, to provide a backop so that private capital could flow and businesses could borrow and staalive, keep their workers in place to the extent psible and we have an economy when we got to t other side. What has happed is as soon as those programs were authorized and set up capital started flowing like never before. The Corporate Bond market, high yield and highquality credit, alltime record issuances, bk lending off the charts, liquidity was available and available ve quickly and that is part of theeason the economy has recovered as rapidly as it is. We know it is not done y. We have work left to do but how many economists anywhere in the world thought we would have an unemployment re of 11 at the end of october. People thought it would be 10 at the end of cember and it is not. So this series of programs did their job. The private sector is providing the pital that is needed, time to terminate these programs which was contemplated by the legislation and take a victory lap thateve gotten our economy back on track. It is not done yet but it is definitely heading in the right direction. A couple quick qutions, raised by the chairman and i ll start with vice chairman Randal Quaries, the increased Regulatory Burden on banks especially small and mediumsized banks for no reasonther than that they responded to this crisis by providing credit, eir Balance Sheets, that is triggered for those across the 10 billion threshold a number of costly regulatory provisions, one of the most problemic of which is the government mandated pricefixing of the intehange fees so i would urge you to consider ways in which you might ensure we dont punish banks that did what their communityse needed when they needed it. I would like to ask also about the transition away from libor. Thoscontracts that have existed in some cases for ars and extended into the future and sumed a libor index available for ongoing payments. What are we going to do about these contracts that dont end until after the date we pect libor to no longer be operable . We need to consider a mechanism those socalled legacy conacts, the bulk of th to mature on their existing basis without havg to be renegotiated or shifted to a new rate without allowing the writing of new contract during the period that legacy is running off. There are a variety of ways that whave discussed with the banks. It is an International Issue we ha discussed with the uk which has a special responsibility for libor andn the next month or two we should have a plan share that would address that. Obviously libor is a reference based on the euro llar deposit market that continues. Would it make sense to have a different mechanism for that side othe market . We could think about that, synthetic libor, synthetic reference rates are something the bank of england and f have thought about, in the us becae of different litigation frameworks, other ways to address that issue. I dont see 00. Am i out of time . You are a little over. I will yield. Senator reid. Thank you, mister chairman for your testimony. Randal quaries, in september 3rd, 2020, you agreed for continued support for a robust recovery which implies second major covid19 bill on the lines of the car act. Is that still your position . I would say thawhether there is to be another round of cares t stimulus is a question for the congress. As we look at the evolution of the economy, as senator toomey noted the recovery is more robust and more rapid than we had expected, even than we expected a couple months ago. Each time we get new reports out the numbers improved. Probably most accurate thing to say is the Additional Support would accelerate a recovery that is underway but i wouldnt want to say at this point that that was necessary. That is essentially what chairman powell said and you said not long ago. One major aspect of the cares act was to support state and local government. It is critical to do that because i hear not only from my governor but governors across the nation that they are running into difficult choices in terms of cutting Public Services and raising taxes and without Additional Support they have to do that which i dont think will stimulate the economy or recovery so what is your view with state and local assistance as we did in the cares act . You would need to draw a distinction between the types of support the fed provides is backstop lending which for many state and local governments may not be the answer to their issues to acquire more debt. There are limits on the amount of indebtedness and our terms require our policies that they me made Uncertain Terms from a decision the Congress Might make to extend additional fiscal support. The latter would be something a decision the congress would make. 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 do you think the flexibility i needed . Again, with respect to municipalities i think i can speako what the Federal Reserve can do, and a decision to provide t broader range of support would be somhing for the cgress t decide. Mr. Chairman, do i have additional time . I have one more question. You have 50 seconds. Chairman mcwilliams, and 50 seconds, this might be more of a final point. Weth are facing a housing tsuna. The National Council state housing agencies indicated they will go up to 34 billion in past your rent bywe january increasing additional filings, imposing hardship in just a few months. We would have been january, not too away, hundreds of thousands of people being evicted or foreclosed and in the midst of the pandemic where sleeping five in the bedroom is not the best medical advice. Indeed, i think we have to do something so i i would hope you and your fellow in the Housing Committee would be thinking hard about supporting efforts to provide Financial Relief to these renters. Eventually they will hit the banks because as they foreclose, the mom and pop landlords, they will have a lot of property on their hands which might not be very valuable. I would hope you would do that, and respecting the chairman at his graciousness, thank you very much. Thank you. Senator scott. Thank you, mr. Chairman. Take it as panel for being here with us this afternoon. I will start with acting comptroller brooks and chairman hood. Since this committees lessro oversight hearing your agencys have launchedd initiatives aimed at promoting broader Financial Inclusion. Ot project reach and Access Initiative at ncua. Someone who spent most of my time in congress and now in the Senate Working to identify reduced barriers to economic mobility and opportunity and to expand access to credit and capital especially for underserved communities i i was deeply encouraged by these initiatives. I would love to have an update both on reach as well as access. Perhaps, mr. Brooks. Thank you, senator scott and thank you for y your continued engagement on these issues. I enjoyed our events together in South Carolina will be looked at the intersection between project reach, cra and your Opportunity Zone so this was a terrific dialogue. On profit reach mostly aware project reach has three major components. Convene bankers, teh 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 kw i am a minu overtime. Im going to close with these commen. 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 thchallenges or hurdles around downpaynts. 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 cpliance, which led some banks to make those judgments themselves, but im not aware of what u 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 paynts, and as a result othat, reaching t 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 at. 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 doi complaints for new cents in the door. One of t things we did at th occ was we convened a listing session with the ban 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 rulted in that side 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 thei 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 alst indistinguishable in terms of their inclusion of native american country, small family farms,nd other things originat in the occs rule. Themain difference between two is the fed continues to support discretionary performance assesents. Think really meant was i both the fed and occ recognize that the status quo is simply unnable. The status quo had been tied to bank bnches as the only areas incentivized to look for investments. Our basic deal w, we need to makehe system better, and if theres a way of making better, we are happyo 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 s 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 americs 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 banng system, d the native American Community has been particarly impacted in this area. This is where innovation and encouraging banks to work with them is going to be pivotal to be ae to ensure that they have access to credit, access to banking accounts, and also, trying to help minority deposit stitutions, especially native s, and specificall 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 nativemericans were heavi 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 withach wouldt want to understate at manyhe degr to which ople in the country continue to struggle as a result of the covid event. That i was trying to respond to was with regard t the type of suprt that wod be appropriate for them and dring 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 mucipalities, schoo, Small Business, unemployed families . Do you think that there nes to be another package . I think as aarles central banker, i should leave those decisions to theongress. 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 th any of us expected. Sen. Tester i got i 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 . Ce 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 dt 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 yourunch . Vicehair quarles e 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. Unployment rates are still elevated, and i mayave over obsessed on the question of whether it is half or not. There clearly is a loof stress among Small Businesses. There is a great deal more recove 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 dealerin 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 w not strategic. I do want to answethe question. I think it is fair for uto look at secondary market tradi 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 washere at the beginning of the hearing. I am not suggesting th is strategic. Do you want to let somebody else gond have me finish my question . The next on my list is senator scha. Do you have questions for someone else . All of my questions are for mr. Quarles. Nexafter you is senatovan 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 loa they originated. One of the purpose ito focus on compliancobligations where it belongs, which ishe bank thatolds 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 adctivesot and adverbs inhat accusation to unpack. There are two ma things going on, the issue of Interest Rates and the issue of all the consumer proteions out there. When it comes to Interest Rates, the congress andupreme 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. Inany states, it was difficult to g a loan. That was one othe ways we got through that financi crisis of the late 1970s. All that is going on in outrue 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 intere rate authority. Yoshi Interest Rate authority. The innovation of true lender to make sure somebody responsible for the consum 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 since 1978 and we make clear if they enter into these partrships, they are responsie for the fair lender law complice. And every other ing that neither the banks nor their partners have take accountability for ithe past. The point is to bring more credit to more people and to create accountability where there was none. Mto i appreciate th. I woulask that you continue to watch it. As a forming attorne 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 andalk about total debt restructing. In some parts nevada and across the country, farmers have begun repaying their loans. Where we rely on hospitality and Tourism Business , ners do not have the income toay 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 month 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 you noted in your original question,he banks projections themselves aume stimulus. Warren that is not the question i am asking. Also, the question about how ch capital they have got obously goes to the heart of yo stress test. You sa in the stress test the projections onapital 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 enou to get the job done and up for aote. This is a probleobviously 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 us help survive and historic downturn. You could st 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 capal ratios have been rising over the st six months. Warren that is not the question i asked you. What i asked you iwhat data are you going to need see in order to take action here . We are watching a downturn i this economy. The stress tests say they are based on the assumption there is going to be stimulus. Mitch mccnell has refused to let us get stimulus. I am asking about the billions of dollars the banks are still shing out the door in divides because ultimately, the ameran taxpayer is going to be on the hk if these banks are not going to bable 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 t spring. We are now running additional stress tes taking into account what happened the spring and the condition of theanking industry and the econo 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 imsed 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. Mitcmcconnell has changed his tune. He says he wants to pass a reef bill before the end of the ye. America needs a real relief bill, not a g leaf. There are not enough fig leaves on the planet to cov up the republican partys momental failure to take this coronavir seriously. Americans are fallingick 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. N. Schatz thank you, mr. Chaian. Vice chair quarles, about a week ago, new yks financial regulator saidt would start integrating financiarisks 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 riskinto their portfolio, into their ri 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. Satz i want to follow up on the conrsation we had in december on thfeds joining the network for the greeng of the Financial System wch now consists of 75 members and routine observers. You told me the fed had been auditing the class before rmally registering. Chair powell sd the fed was in the working grou. Where are we on formally joini the network for the greening of the Financial System as a full member or observer . Vice chair quarles that is really up to thegfs. We have requested membership. I exct that it will be granted. Sen. Schatz do you know what the timeframe is . Vice chair quarles i do not. Guess i would say they have annnual meeting that is in the spng, which was the last time there s a lot of work around this. I suspect weould 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 wilget you information on that. Sen. Schatz you also sa in december you were closely engaged with the bank of engla on how they are looking at Climate Change and regulation and supervision. Are you still engaged with t 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 euse me a meeting last week with the bankf england. And the ecb on questions o regulation and supervision, clate change is something we discussed. We have been particularly monitoring how it is that they are thinking about their clusion of Climate Change in their stresstesting process. Its a differt process from hours and they are at a very priminary level still in the process of thinking abouit, but we are definitely involved with them so that we understand that as it evolves. Sen. Chatz as a point of clarificion because i and others have inoduced legislation to ts effect my understanding is the f has the full authority to moveorward on this because risk is ri. 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. That your assessment . Vicehair 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 pervisory activity. Sen. Schatz just to point out, will have diffent views about Climate Change and solions that should be undertaken,ut risk is risk. And the charge for the fed and other financial regulators is to measure that risk, whether it has ideological argument behind ior not. Risk is risk. I also want to tha the fed for lowering the minimum loan ze threshold to encourage more all businesses to participate. There apars to be very little uptake. What can we do to push money out to these sll businesses who appear to not find this to be a particularly attraive program . Most of theuarles fed programs, and the ma Street Program is not different in that respect, the fed facilities operate as backstop. They achieve their function when they restore confidencto the private financing markets. I think you can say that has happened with the main street facility as we. 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 seaside by the private sector. That is ultimately what we want as opposed to being satisfied by the fed. I think it is usef 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. That appears to be all of the senators who are available. Do you want to make a final comment for we conclude the hearing . I d not, mr. Chairman, thank you for asking a thank you to you and the witnesses. Thank you. With that, that will conclude our questioning for todays hearing. For senators who wish to submit questions for the record those are due to the committee by tuesday,te november 17. To each of the witnesses, we ask you respond his q questions as probably as you can. And thank you for joining us at the committee tay. This hearing isdjourned. Today, twitter Ceo Jack Dorsey and Facebook Ceo Mark Zuckerberg testified about allegations that the companies centered and suppressed the news leading up to the elections. Live coverage begins at 10 a. M. Eastern on cspan3. Cspan3. Live at ondemand at cspan. Org or listen live on the cspan radio app. The ambassadors of israel, the United Arab Emirates and kingdom of bahrain look at the abraham accords, dealo