Transcripts For CSPAN2 Treasury Secretary Mnuchin Federal Reserve Chair Powell Testify Before... 20240711

[inaudible conversations] [inaudible conversations] the cs authorized to declare a recess at the committee at any time. I want to remind members of a few matters including some required by the regulations accompanying the House Resolution line 65 which established the frameworks were removed committee proceedings. I dont know if we have gone through this already but i would ask all members on the platform to keep themselves muted when they are not being recognized. This will minimize disturbances while members are asking questions of the witnesses. Members on the platform are responsible for muting and on muting themselves. The staff has been instructed not to mute members except where a member is being recognized and theres inadvertent background noise members on the platform are reminded that they may only attend one hearing at a time. If you are participating today, please remain with us during the hearing and members should try to avoid coming in and out of the meeting particularly during the question period. If during the hearing members wish to be recognized, the chair recommends members identify themselves by name so as to facilitate the chairs recognition. I would also ask members be patient as the chair proceeds given the nature of the Online Platform the committee is using in addition for the members participating in person the attending physician provided guidance. Has that guidance been given . Has the mask information been given . I recognize myself for four minutes to give an opening statement. Today the committee convened to conduct oversight over the Treasury Departments and Federal Reserves Pandemic Response. This pandemic continues to have a terrible impact across the nation. Thereve been over 13. 4 million coronavirus cases in the u. S. Which is almost double the amount of cases when the secretary and the chair last testified in september and over 267,000 people have lost their lives to the virus. Hospitalizations and deaths are surging as the crisis spirals out of control. Small businesses are shutting their doors permanently and millions are at risk of eviction, foreclosure and being laid off. A historic number of americans resoundingly voted for a new direction last month overwhelmingly voting for president elect to joe biden and Vice President elect harris. The American People have made it clear they want a government that will fight this virus and protect their families in a Small Businesses from the impact of covid19. So, on a call last month Many Committee democrats committed to not going home until we have a deal or stimulus package that is desperately needed across the country but as the negotiations continue, i am appalled you would knowingly make matters worse by permanently ending a Central Emergency lending programs leaving state citizens Small Businesses out for dry as the nation faces a worsening phase of the pandemic crisis. There is simply no justification or justifiable reason to take the tools away with the pandemic crisis worse than it has been. Arriving in january and chair paul im also concerned that the Federal Reserve seceded to the request after publicly indicating the importance of extending these facilities. Secretary, im also very concerned that the Treasury Department may be taken actions that will undermine the Housing Markets during the pandemic. By reportedly working with the Housing Finance agency to rush to the governmentsponsored enterprises, house conservatorships before they get above the trum trump administra. And so, these actions follow the trump administrations obstruction of the transition process delaying Important Information sharing about the Pandemic Response and National Security between the Biden Transition Team and the current administration. So, today you will be held to account where your misguided actions. Before recognizing the Ranking Member of the committee the gentleman from North Carolina who is with us today. Im going to make sure that the witnesses are received responsibly in a way that they should be received and thank them for being here. So, prior to that i would normally recognize them i suppose at this point, however i think as the agenda has been laid out today, im going to go ahead and recognize the gentle man frogentleman from north car, mr. Mchenry, for four minutes. Thank you, madam chair. I know theres been a lot of partisan talks on the democratic side of the aisle attpting the treasury secrery and even Federal Reserve. And i know committee democrats, a lot of democrats in Congress Said they wouldnt go home until they had a deal. And then they went home for ten days. So, theres not a whole lot of believability coming from our politicians on capitol hill right now so im frustrated. But i want to thank you for being with us today and being so available. I also want to commend you for the quick work that you both have taken, and i think that is something that we should commend you for. But today i think that there is also a reason for optimism. The coronavirus vaccines are moving at an unprecedented case and last month they announced its 95 effective and they are seeking regulatory clearance. Moderna announced it is 91. 4 effective with regular a clearance. Clearance. The british announced today that they are moving forward as well with their vaccine distribution. This is proof the publicprivate partnerships like those and operation warp speed can lead to success in record time. But we know in the full economic recovery it will occur only when americans can go back to work safely, send their kids back to school confidently and have easy access to testing and treatment. There is still more work to be done. So, i do want to go back to our committee jurisdiction, the treasurys decisive actions back in march and april to prevent the worst of this economic crisis and saving millions of jobs. Chairman powell, the Federal Reserves lending facilities continue to serve as a strong bastop to the Financial Market and prent disorder in the Financial Market from impacting the econo. Those programs stipulated billions of dollars from private sector lending and successfuy operated as a lender of last resort and now they acted as a necessary source of liquidity and thosergentines earlier this year. They ensured the credit and functioning of markets of all sizes including supporting workers and communities across the country so i want to commend you for that but there are emergency facilities only and they are backstops designed to support the functioning of the private markets and intended to be a lender of last resort, not to replace the private markets and from the start i said that we need to do forward thinking and have a plan to wind down these measures when appropriate. So i want to thank both the fed and the treasury for having a plan to wind those measures down appropriately inccordance to the cares act law. And i also know that i will ask you specifically about this, about the additional capacity that you would have with the cares act expiring on december 301st. Additionally, thank you for your quick work on the pient Protection Program supporting millions of Small Businesses. And i know we still need additional relief for more sll businesses into different segments. Thank you for continuing to work for a bipartisan agreement here on capitol hill and to not play the partisan games. Thank you for rising above that. But there is still work to be done. I look forward to us coming together and having the packages to do responsible things to help the economy and protect american citizens. Thank you so much for being here today and we look forward to your testimony. I now recognize the chair of the subcommittee on oversight and investigations mr. Green for one minute. Thank you madam chair and i think the witnesses for appearing as well. [inaudible] indicating that the markets have recovered. The free food market, the supermarkets have gone up 3. 9 . The stock markets have not measured [inaudible] the working class uncertainty and my concern today is what is your agency doing and i look forward to hearing that and will yield back. Thank you very much and i now recognize the Ranking Member for one minute. Thank you madam chair and to the witnesses for being here today. The fed and treasury acted in the economic turmoil brought on and showcased the true reach of the federal governments response. Through congresses Fiscal Policy Authority and the emergency lending facilities, we were able to stabilize markets to keep workers on the jobs and ensure the continued functioning of corporate markets. As we continue on the path of economic recovery it is important that we take stock of the tools used. We must evaluate which were effective and which were not and which can be wound down. Which ones are set to expire and which programs should be reauthorized. Thats the role of the committee with oversight of the u. S. Financial system. I look forward to hearing from the witnesses to help inform the congress continued response to the pandemic. The secretary and chairman powell, i commend you on your work to promote economic stability in Turbulent Times and i thank you for your service. I yelled back. I want to welcome todays witnesses to the committee. First i want to welcome the honorable secretary of the United States department of the treasury. He served in his current position since 2017. Hes testified before the committee on previous occasions and i believe he doesnt need any further introduction. I also want to welcome our other distinguished witness, the honorabl jerome powell, chair man of the board of governors of the federal reser system. Hes served on the board of directors of governorsince 2012 and as the chair since 2018. Chair powell has previously testified before the cmittee and i believe he does not need any further introduction. Without objection your written statements will be made a part of the record. Each of you will have five minutes to summarize your testimony. When you have one minute remaining, the yellow light will appear and at that time i would ask you to wrap up your testimony so we can be respectful of the Committee Members time. You are now recognized for five nutes to present yourral testimony. Ranking members of the committee, i am pleased to join you today to discusshe department ofreasurys unprecedented response to separatsupport the american pple throughout the pandemic. We continue to work to impment the act with speed, efficiency and transparency but our job will not be complete until we get every american back t work. When i last testified before you in september, i stated america was in the midst of the fastest economic recovery from any crisis. Im proud to say while there is a lot more work to be done, that statement is true. In the Third Quarter gdp grew by 33 annuay, meeting all expectationsn the previous record of 10. Americans are gettingack to work. The october jobs report showed the economy gained back 12 million, more than0 of all jobs lost due to the panmic. The Unemployment Rate has decrsed to a rate not expected by the Fourth Quarter of 2021. The historic a bipartisan cares t provided the Economic Relief that is critical to supporting theconomy recovering. Adtional economic slowdowns, however, continue to impair and cause great harm to american siness and workers. They spun the recent Economic Data and i continue to believe at a targeted fiscal package is the most appropriate federal response. I songly encourage the congress to use the 455 billion and unused funds from the act to pass an additional bill with bipartisan support. The ppe has unused funding of 140 billion that could be sent out the door immediately to support many Small Businesses. The administration is standing ready to support congress in this effort to help American Workers and Small Business that continue to struggle with the impact of covid19. The treasury has been working hard to implement the act in a transparent and efficient manner. Weve released a significant amount of information on the treasury and usa spending. Gov. We continue to cooperate with the various oversighvarious ovee new special ig, the treasury ig for tax administration, the new congressional oversight commission, the gao. We provided regular updates to congress marking this my ninth appearance before congress for the cares act hearing. Weve also got significant resources from the numerous congressional committees and individual members on both sides. We appreciate your interest on these issues and remain committed to working with you to accommodate congresses legislative purpose to advance the whole of government approach into beating covid19. I do want to just respond to your comment where you said i had no justification and made matters worse on my termination and the facilities. I just want to emphasize this was not a political decision. I was merely implementing the act and im happy to walk you, your staff and other members through section 4029 which makes it very clear. I find it in plausible any member of the committee believed in voting for the act that you are authorizing me to invest 500 billion in Federal Reserve facilities to make the loans and purchase Corporate Bonds in perpetuity with no expiration date. That is exactly what you would have to believe if you disagreed with my interpretation of congressional intent on the issue and since i was personally there and negotiated most of these documents, im very familiar. But if Congress Wants to extend the money for federal purposes for the facilities, congress can and that to the new legislation. Id like to thank the members of the committee for working with us and im pleased to answer any additional questions. Thank you very much. Thank you. Secretary powell, chair powell, you are recognized for five minutes to present your oral testimony. Chairwoman waters and other members of the committee, thank u for the opportunity to update you on our ongoing measures to address the hardship brought on by the pandemic. Our Public Health professionals continue to diver our most important response, and we remain gratefulor their service. The Federal Reserve along with others and in th government in using its policies to help alleviate the economic burden. Since the onset youve taken forceful actions to provide relief and stability and ensure the recovery will be as strong as possible and to limit the lasting damage to the economy. Economic activity has continued to recover from its secondquarter level. The reopening of the economy led to a rapid rebound inactivity and gdp rose at an annual rate of 33 in the Third Quarter. In the recent months however the improvement has moderat. Householspending on goods especially dable goods has been strong and its moved above its the pandemic level. In contrast, spending on the services remains low largely because of the ongoing weaknesses in the sectors that require people to gather closely including travel and hospitality. The overall rebound is due in part to federal stimulus payments and expanded Unemployment Benefits which provided essential support for many families and individuals. In the labor market more than half of the 22 million jobs that were lost have been regained as many people were able to return to work. As with the overall activity, the improvement in the labor market has moderated. Although we welcome this progress, we will not lose sight of the millions of americans who remain out of work. The economic downturn does not fall equally on all americans and those least able to shoulder the burden have been the hardest hit. In particular the high level of joblessness has been especially severe for the lowwage workers in the Service Sector for women and for africanamericans and hispanics. Economic dislocation has offended many lives and created a degree of uncertainty about the future. As weve emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend in large part on the success of efforts to keep the virus in check. The rise in new cases both here and abroad is concerning it could prove challenging for the next few months. The full economic recovery is unlikely until people are confident that its safe to reengage in a broad range of activities. Recent news on the front is a very positive for the medium term. We are now significant challenges and uncertainties remain including timing, production, distribution and efficacy across the different groups and remains difficult to assess the timing and scope of the economic implications of the developments with any degree of confidence. The response has been guided by our mandate to promote maximum employment and stable prices for the American People along with response abilities to promote stability in the Financial System. Weve been taking broad and forceful actions to directly support the flow of credit in the economy. The actions taken together have unlocked almost 2 trillion to support the businesses large and small, nonprofits and state and local governments since april. In turn this has helped keep organizations from shattering and put employers in both a better position to keep the workers on and hire them back as the economy continues to recover. They serve as a backstop to the credit markets and restored the flow of credit to the normal channels who deployed these to an unprecedented extent. The powers have approval of the treasury and are available only in very unusual circumstances which is those we find ourselves in today. Many of these have been supported in the cares act and i have included detailed information about those in my written testimony. The act as signs Sole Authority over the funds to the treasury secretary subject to the statutes and the specified limits. The secretary indicated that these limits do not permit the funded facilities to make new loans or purchases or purchase new assets after december 301st of this year. Accordingly the federal return the unused portion of the funds allocated to the lending programs that are backstopped and in connection with the termination of the end of the year. As the secretary noted in his letter, the funds in the Exchange Stabilization fund are able to support the emergency lending facilities if they are needed. Everything the fed does is in service to the public mission. We are committed to using the full range of tools and assure this difficult period will be as robust as possible on behalf of communities, families and businesses across the country. Thank you. Thank you very much, chair powell i now recognize myself for five minutes for questions. Secretary and chair powell, last month the open Market Committee and according to the minutes a few participants noted that it was important to extend the emergency lending facilities beyond the years and. A few days later you requested the fed eliminate its act and the lending facilities at the end of the year and return 419 billion so that it couldnt be used in the future. Initially it resisted publicly that the next day you acquiesced. Your own office of Financial Research warned that we should expect severe losses from the defaults and bankruptcies. Moreover the states, cities, airports and hospitals its not good and despite what the president suggested, it is not limited to the blue states or for example the day after new york States Credit was downgraded, mississippis credit was downgraded within the pandemic worse than at any point since it began. It is foolish and reckless to take away emergency lending options at this time. You agree, you argue, rather, it was congressional intent for the facilities to be shut down at the end of the year. But it doesnt say that. And even the actions of my republican colleagues show that a novenovel interpretation. Senator mcconnell filed a bill that would change the law to require the fed to close all of its facilities after january 19, 2021. If it already required this, the bill wouldnt be necessary. The act was passed to stabilize the economy during the entirety of the pandemic, not until the end of your tenure as the treasury secretary. It was reported last week you intend to transfer the unused portion of the act, 500 billion appropriations to transfer as general funds so that the next secretary can have access. However, section 4027 of the act explicitly states the funds may only be transferred on january 1st, 2026. Not before january 1, 2026. What you are doing is contrary to what is lawful and it puts out the entire economy in jeopardy and its also been reported that you are working with the director of the federal Housing Finance agency to sell off the government stakes in the Housing Giants fannie mae and freddie mac. Likely destabilizing the entire Housing Market in the next few months. As i understand it, the Obama Administration showed you every courtesy when your team was taking the reins. Similarly the Bush Administration worked closely with president obamas incoming team during the financial crisis even before he was sworn in. They did so because they were honoring the decision of the american. Tell me secretary, does the secretaries expected successor support what you are doing, does she agree that emergency lending facilities are not needed even though thousands of people are dying each day, millions more affected each week, tens of thousands of Small Businesses are closing permanently and our citizens states are struggling. Do you support the plans to fundamentally remake the Housing Markets where millions of people are struggling to pay their mortgage and rent each month . So again, let me first comment and then in all due respect, i believe i am following the law. Section 4029 makes it clear on december, 2020, the authority provided under the new loans, guarantees or other investments shall terminate. I will reclaim my time. Do you agree again, let me just continue, the transfer of the funds is not up to me. When the funds come back they going to reclaiming my time, i need an answer. Do you agree with secretary mnuchin . He has authority under the act the fed is not involved in his reading of the law thus is the authoritative one and we accept it. I would also say if i were politically motivated i wouldnt have extended in deference to the view that were lawn care act facilities. So trying to be political my time is expired. I recognize the distinguished Ranking Member for five minutes for questions let me just give you a moment to answer. The ac expires on december 301st of this year. That is in the law so lete give you the opportunity to give a full answer on your decision with the exchanged Stabilization Funds. Thank you very much. There are three sections i direct people to. 4029 which is the termination date of december 301st of 2020 to make the new loans guarantees or others to terminate. That is perfectly clear. Section 4003 which references the proceeds so when they come in we allocate whether it is the return of an airline loan or money from the fed, we allocate it very clearly in section 4003. There is also section 4027 which references if there was money left over and there is limited usages of what that money can be either expenses or followup investments to existing loans, so if we had to make an advance that is under 4027. And any money on 2026 will come back. So again, section 4003, 4027, 4029. And again i would personally negotiate this language and again, congress has the ability to change this if they think that the money should be spent otherwise. You and i talked regularly during those negotiations. I was a strong advocate for the Stabilization Fund dollar amount as possible so that both the treasury and Federal Reserve will have maximum firepower to put out what we didnt fully understand would have been in the coming weeks or months with the nature of the virus. And so, we in the midst of this negotiation had a very large exchanged Stabilization Fund. Absent the 454 billion in the Exchange Stabilization fund, how many dollars are allocated to the Exchange Stabilization fund . We allocated Something Like 20 billion for the facilities prior to the cares act. As i said in deference to the fed, the facilities dont have this restriction and still exist. And they aretill Something Like an adtional 50 billion that could b used in the future for emergencies which would support another 500 billion. And again i want to thank the congress for giving extraordinary thority to the secretary of the treasury for 500 million. As peoe noted, many people criticized that authority, and im merely flowing the law in returning that authority back as the congress intended. So, chairman powell, these facilities served a very important purpose in the early days, the utilization in recent months didnt significantly change the dollar value of the lending facilities. So the four remaining facilities are so important as a lender of last resort facility of course. So i want to thank you for your work, and your work in the last eight months of this year than those that were set up in the financial crisis in 2007, 2008, 2009 and 2010. More facilities and eight months. So, thank you to you, the staff of the Federal Reserve for their solid great work to support the economy and to ensure that this has become in a economic crisis isnt a financial crisis i want to commend you for that. Finally, i want to note i have consistently been an advocate of the independence of the Federal Reserve for making monetary policies and supporting the economy. I do think its important whether it was chair yellen or your service as the chairman of the Federal Reserve that we are the independent policymaking and Monetary Policy decisions of the federareserve and i want to thank you for your leadership and i will yield back. Thank you very much. The gentle man from guam who is also the vice chair of the Financial Services is recognized for five minutes. Thank you, madam chair and secretary, thank you for making time to be with us here today. I wanted to open with some questions regarding the main Street Lending program, mr. Chair man. Are you familiar with how much has been authorized . We made about 5 billion. So those programs are administered by participating [inaudible] we work through the Banking System and access borrowers through the Banking System. We administer the Overall Program but the banks are facing up against the actual borrowers. So these that are receiving the funds, are they required to be Investment Grade borrowers . No. That brings me full circle because the liquidity facility and the ability to allow the municipalities below Investment Grade to be able to access that liquidity and it was mentioned in the hearing that the Federal Reserve does not provide funding to the non investment entities and yet indirectly the Federal Reserve as you mentioned the territories there are no Investment Grade overall sovereign Investment Grade but we work with you andour office to work with the facilities and the name of it doesnt come to mind. We als work with you to get in touch with of the Treasury Department under various programs that might be useful. The overwhelming mority of the municipal borrowers are Investment Grade and we did limit the facility to that. The reason im reading this point mr. Chair man is because i want to highlight the interest because if it is the requirement for the Federal Reserve to be providing Financial Support as a lender of last resort and its not opposing the same requirement on the private sector entities accessing why are we doing so for those trying to access i appreciate your staff trying to work with us for workarounds but its so glaring that these private companies are not Investment Grade and able to access the support. Im glad they are. I want them to but we are not allowing them that are not Investment Grade to be able to access the specific circumstances so i just want to put that on the record and im hoping that again you can go back to the table and reconsider this given the issues we are bringing to light. At the end of the day we need a solution for our municipal entities below Investment Grade but in the same boat as all of the private sector entities able to access capital. Thank you madam chair and i will yield back. Thank you very much. The gentlewoman is recognized for five minutes. Thank you madam chairwoman, and welcome, secretary and chairman powell. First id like to thank you both you and your staff for your service to the nation and tireless efforts during the pandemic to implement the cares act and for propping up the Federal Reserve emergency lending facility. While the Economic Data continues to trend in a positive direction and we do know that a credible and safe vaccine are weeks away, the surgeon cases and lockdowns occurring across the country could result in our economy backsliding again if we do nothing. I want to reiterate the urgency, the overdue urgency in congress to provide immediate targeted relief now. It should have been months and months ago. The nations hospitals, Small Businesses, schools. Many of our hardest hit industries and certainly the unemployed cannot continue to wait any longer. Just this week, st. Louis county that i have the privilege of representing reported an average of 660 new cases being added every day for a total of 51,324 confirmed coronavirus cases. Many of my constituents in the district are under mask mandates and restaurants and bars are shuttered and closed down. Gatherings are down to ten. Our families and businesses are asking congress fordditional reliefo combat this health crisis. Hospitals are filling up and many businesses are worried that they will not survive. They are reaching a desperation point. They must stop playi partisan politics and comeo a bipartisan agreement to provide select covid related support now. Chairm powell, according to the data that you are seeing, what parts of the economy are most in need of the fiscal stulus measures provided by congress . There are many sectors and of course those decisions are up to you and the administration, but i will mention quickly im still at the labor market and i think we ought to remember that despite the rapid progress and getting people back to work, which is so welcome, there are still 10 Million People that are out of work because of the pandemic and that is more than have lost their jobs and all of the financial crisis ten years ago which at the time was the biggest recession we had in a long time so theres a lot of work left to do. The programs are expiring at the yearend and that is an area i would certainly look. Another that comes at all the time is the smaller businesses and we met with a group of Community Bankers a week or so ago and theres a lot of smaller businesses in the communities that will struggle to make it through this winter because as you said in the Second District it is true all over the country. Covid19 is moving up and the cold weather people are moving up and its last, i do think state and local governments, and it differs from state to state but theyve had revenues down and maybe not so much in some states but costs going up and i think that they deliver Critical Services and they are living under a balanced budget requirements so they lay off people and theyve laid off more than a million already so that is another area that it would be profitable to look. Thank you. I appreciate that. I will ask you a similar question. You mentioned the need for a targeted fiscal package with 455 billion in unused funds from the cares act that did need to be returned to treasury given the law but how do you suggest we appropriate this money to support . My single highest priority would be to activate the 140 billion in ppp funds that are not spent that we could immediately send out to the hardest hit Small Businesses whose revenue is down dramatically. I also think the congress should consider extending some of the Unemployment Insurance programs that expire at the end of the year. I appreciate that. Thpaycheck Protection Program is estimated to save me tha 50 million jobs across the Congressional District. Im sorry it took a little time to get up here. Thank you very much. I appreciate you being here today. It identified Climate Change as a risk to the Financial Stability. The report stated different sectors face different risks that will diverge from historical patterns. It also said the Financial Institutions may be exposed to losses from disasters made more likely by Climate Change. Chairman powell, while there is more to explore, do you think its appropriate to incorporate the climate risk and do credit risk assessments . Let me say this for starters. If it is an important issue we want to say that the broad response to Climate Change has to come from the elected representatives and we are working our way through understanding what that will be but one thing is the public will expect in the supervision and regulation of the Financial Institutions and Financial Market infrastructure that they will be resilient and make sure they are resilient to Climate Change risks and i do think that it does fall on making institutions and other Financial Market infrastructures to evaluate that and incorporate in their own operations and also i would think ultimately in the credit at that extent. I will take that as a yes to incorporate. I certainly have been concerned with the latest rule that would prevent them from th risks and the credit assessments despite the fairly significant risk poses. It specifically says the risk of lending, quote, wouldnt change based on the sector in which the firm operates, which is categorically false. I dont know how you would tel the banks that they need to ignore the dynamics of the sector without posing a significant risk on the bking sector allowing t banks to account for the sector of the economy where it fits into the loc and the fundamentals. The report also stated that within theinancial system, increased transparency and measurement disclosure would prove the pricing of climate risks. What additional transpancy would be helpful to appropriately assess the overall risk due to the Climate Change . As you can tell im glad you read that box in the Financial Stability report. We are at the beginning of the process of fixing our way through these and other market regulators and Financial Institutions around the world. So the point was we are going to need transparency about how the Financial Institutions are thinking about the risks and incorporating the business model. We dont actually regulate the transparency. Thatsore of a market regulator job. What does it require in the disclosurend i think we are all moving in that direction but it is in terms of interaction between financial regulators and institutions we are at the beginning of the work. Would the standard climate related risk disclosure from the companies be useful in order for you continue that work . That is wherwe are headed over time, but again thats not our rponsibility. It would be the market gulators but i do think that is where we will beoing. Thank you and i will yield back the balance of my time. The gentleman from kentucky is recognized for five minutes. Chairman powell summoned the press this morning and some of my colleagues have seemed to try to make the argument that you and the treasury secretary are in a disagreement about the Stabilization Fund. I do not detect much. What i hear the secretary say is that his decision to not extend the 400 billion in the Stabilization Fund is rooted in his interpretation of the statute of the cares act, and what i heard you say is that you believe that the secretary under the law has the authoritative interpretation and you accept that. Now obviously you stated yesterday you think its premature to be pulling back from these programs but i hear the treasury secretary say that thats within the congresses ability to authorize so i dont see a disagreement. But given the modest take up particularly in main street, wodnt it be wise to repurpose at least some of the 430 billion towards what admittedly has been an effective program, the paycheck Protection Program. I hope you dont mind if i use a couple seconds to clarify what is going on. As i said earlier, the secretary has authority over the funds and reads the statute and he reads it to say that theres no support for lending after december 301st. So thats one thing. Our thinking isnt about the cares act money but more about support for the economy. We were concerned the public might misinterpret this as the fed stepping back and thinking that our work is done and that isnt the case. We needed to send a signal to the public to that effect and as the secretary pointed out in the letter theres Exchange Stabilization funds to support the reestablishment of the facilities or other facilities if they are needed and they meet the legal requirements. Wouldnt it be wise for the congress at this point before the end of the year to repurpose some of the funds to the paycheck Protection Program given the concerns of the Small Businesses that you referenced . I would say what im hearing from across the aisle on both sides of the hill is the desire to do something and fund. I think that would certainly be helpful for the economy. Where it comes from is up to you. One area there is support is for streamlining the forgiveness process. A recent survey in kentucky found 27 of the Community Banks wouldnt participate in the new round of ppe without the streamlined forgiveness and rules of the road. Many of the businesses in my district who have applied for forgiveness tell me that the process is slow and cumbersome. It is a big problem if the lenders will not participate in a second round because of inadequate streamlining of the forgiveness rules. Secretary mnuchin, you indicated the support to streamline ppe forgiveness. Is this still the case and what can we do to ensure participation by the Community Lenders and a new round of ppe . I do support that and we have created three different forms of forgiveness. Using what authorities we have and making it as simple as possible for those that are less than 50,000. But i know that there is bipartisan support to pass the bill and its all 150,000 or less and we fully support that subject. Chairman powell, the language in the cares act suspends the rules related to the restructurings and that expires on december 301st. Its Important Congress extended this important tool to allow the lenders to continue to work with customers. What authorities do you have to exte the release administrativelreliefadministrat Congress Must do to continue to accommodate the borrowers . We dont have the authority to extend. Its an accounting rule. We have a lot of authority though and we will make it so they continue to encourage them to do so i should say. There is some uncertainty among the community about whether Life Insurance would qualify for relief under cares. This is a problem because insurance makes up over 13 of the Real Estate Lending market deeply impacted by the pandemic and do you agree life insurers given the participation in the commercial Real Estate Market should qualify for relief . I would have to check on that one. A. We think thats an important thing to look into. My time is expired and i will yield back. The gentl gentleman from newy is recognized. Thank you for being her today. The pandemic as we he been talkg about has caused ongoing economic crisis. Certain aspects are recovering millions of americans and thousands of constituents are in dire need of help. We cant go home from washington with even with whats going on without risking a double dip recession. As you said for their support and likely to avoid another spread of the virus and help individuals. The American People have waited long enough. Families, businesses, communities are suffering to walk away from so many that are hurting right now. The Problem Solvers Caucus joined a group of senators and releasing a 980 billion emergency shortterm stimulus package intended for a critical down payment over the next months. If i could start with you, have you had a chance to review the framework by chance . First let me say i appreciate the work that you have personally done and that the problem solvers have done to reach bipartisan solutions. I did review it briefly yesterday after my testimony and i will be spending more time on it today. Again i would urge congress to move quickly which there seems to be enormous bipartisan support but thank you for your efforts. Thank you mr. Secretary, and i appreciate the work weve done together on this and i hope this is something we can get the support here the administration might support. If i could turn to chairman powell, would you speak to the urgency for the Fiscal Relief and for those that dont get the emergency package done in the next weeks. My view would be it would be helpful and very important that there be additional fiscal support for the economy to get us through. Weve made a lot of progress faster than expected and now we have a big spike in cases and it might weigh on the economic activity. People might pull back from activities they were involved in or not engaged in the new activities, so i think it would be helpful if we can get that done, if you could get that done. Thank you so much, mr. Chairman. Obviously local governments are struggling through no fault of their own and what would the impact be . These are decisions for you but i would say the state and local governments provide Critical Services. You mentioned them and state and local governments live with balanced budget requirements, some like the federal so what happens when the revenues soften and expenses go up is you see layoffs and that was a big part of the story. We now have a little more than a million in the layoffs so far so i think that it would be important to provide those Critical Services. I think that is a worthy place for you to look in terms of where the support might be appropriate. Do you see it as a Ripple Effect where a third of the Small Businesses are out when you a that with the revenue declines for the government what you see on the other side what could be the economic this brings a long after the virus is behind us . It suggests we have a nearterm and mediumterm difference. It doesnt look challenging. Small businesses we are hearing all over that they are under pressure. And then sometime in the middle of next year it really doesnt look like that may be the light at the end of the tunnel. We all hope so and that the economy could be very healthy. The problem is of course people lose their homes now or businesses go out of business. These are sometimes Small Businesses that might have generations of sort of Human Capital built up in their activities and once they are gone they can just be recreated. I sincerely believe he will look baca decade or two decades from now and the work you to do it together will be looked at in the most favorable light i cannot be more great your service. Thank you for that. But we can see the light at the end of the tunnel with two vaccines waiting up and that page comment is correct we are looking to purge from now until april 1st or whenever that is. And with the bipartisan and bicameral bowl on bicameral members yesterday to we provide the bridge and i hope in german powell going back to the main focus was to provide liquidity in the Financial System to stabilize. And as these programs expire , do you see theame or similar risks of liquidity in thFinancial System from march or april . Ware currently in a much better place. Most of these facilities are very low. We see them as surveying a backstop and a function a central banker would want that function in place for some additional period of time. Not forever. Look at the obal financial crisis we left them out until we were well past the difficulty and then put them in the attic and put them away. None of them was a permanent feature of the landscape. Thats how we think abou it. As we debate the next package the secrery mnuchin we have heard Speaker Pelosi and multiple occasions state that nothing is better than something with respect to additional relief and in your estimation is Nothing Better than and something for my constituents back home . No. Something is clearly better than nothing. I would urge congress to do something of just the ppe or more. Thats an obvious statement but as the speaker has chosen not path. My understanding is you have continued dialogue with her known as the specifics but you been involved with a lot of deals in your life as treasury secretary. As you have these discussions, how would you characterize them and people like to talk on here but when it gets down tot they dont do that much except for closing the deal how would you characterize tha discussion. The good news is when we really needed to get this de got done with overwhelming bipartisan support as they came together in the unprecedented response when we needed to extend the ppe people came together. Unfortunately, sce that period of tim, things i my opinion should have been absolu bipartisan support. Unfortunately ha a loaf is not good enougand wanted a loaf so i would encourage congress so lets get something done. I could not agree more and to state another obvious point my colleagues on the other side of the aisle know that for this to get done will have to come together to do up the pressure needs to come from them and i hope they will use the leverage that they have to encourage the speaker to put a real bipartisan bill forward. There are people struggling and people are unemployed that are struggling i can almost guarantee everybody will do something to nothing and i hope that this would come to common sense and get that done and i yield back. Thank you i object to all that being put on the speakers back i wou advise the president to get off the golf course you recognize for five minutes. Thank you chairwoman for being here. As we know we are in dire straits right now i will has increased seeing unemployment claims over six and a weeks and i would like to remind everybody we need to Pay Attention to unemployment and the direction. This is happening with when we have claims higher at 36 weeks in a row for the record unemployment claims across this country meanwhile estimating Million People with those Unemployment Benefits the day after christmas if we dont act. That seems to be terrible for this country. What are the Economic Impacts of removing at support at a time when the recovery is so fragile . This is if it is running out at the end of the year we would be concerned the Unemployment Rate is about 20 percent and those a people relatively low savings and we are concerned they uld be vulnerable to losing their houses orheir rental and just being in a very difficult place. I think thats an appropriate place to look for further help as we know one out of eight americs are going hungry and were approaching 100,000 people hospitalized wi covid. So does seeing this ed show the imptance of the covid aid packe and how quickly we need to get that done. I would urge as a secretary has done with the second half of the economy through the winter months and beyond and again, we can see the vaccines coming but we have a bit more of the bridge to build the economy to receive that help. Secretary mnuchin with a moratorium that currently expires on december 31st recently shong 430,000 cases of cocacola more than 10000 with the earlier sta and local affection moratorium. Are the plans to extend that to protect 10 million households from election this january quick. That wasnt the first oice the first was giving assistance to those people by discuss that with the president. I happen to speak to him every day to update him on the state of negotiationfor additional fundin. I hope we can get that done quickly so we dont have a 20 day gap where millio of people will be affected so what can we expect from that. I would also likeo discuss we are doing with the 450 blion of funds for the c. A. R. E. S. Act i know we had a discussion setting aside if you are doing is legal i want to get into why you are doing you say congress should use this for fiscal aidut the problem is that Congress Wants toe appropriate we can do that the same ashe general fund the only real difference is that there makes it easier for future treasury secretary to use the money quickly to provide for economic support why are you choosing to make it harder to support the economy in the future . There is a bunch of confusion when results in the general account or the esf come all of this is governed by the law. That to deference to the chair i extended the p c. A. R. E. S. Act facilities i was looking to do something political i would have extended those the result is merely the administration of my obligation it doesnt matter what account it is in the money is administered pursuant to the law. Of congress was change the law thats fine and the reason why i believe Mitch Mcconnell has been a ne language and with my interpretation of the law is because many of you. Reclaiming my time. Thank you secretary but thats not accurate it is very clear existing investments can remain there thats what you made happen with the fed facilities so the answer is not acceptable why are looking for a way not to help American People right now . This is taxpayer money and should be available to American People right now. I see undermining the American People you need to first those decisions. Your time has expired. Thank you for your service. Thank you for your service thank you chairwoman waters and Ranking Member mchenry thank you for being here today for the third oversight hearing also for the great work by the department of the treasury and Federal Reserve that Pandemic Response that has allowed businesses in my district in tennessee and across the country to keep the doors open and employees on the payroll i want to underscore the importance and impact of the c. A. R. E. S. Act to stabilize the economy we see strong economic recovery and i hope i can continue that trend as we worked for the Great American comeback. Congress provided approximately 1 trillion Bipartisan Legislation to stabilize states and local economies and support economies of frontline workers and teachers and School Employees in your testimony pointed out 455 billion of unused funds remain from the c. A. R. E. S. Act back in tennesse folks are talking about how they sit uned while House Democrats continue to spending an additional three. 4 trillion and that he was act there have been several industries enjoying their best year ever while others have been completely devastad by the governments imposed shutdowns due to the coronavirus pandemic. The motcoach industry plays a vital role how to voters in the Music Industry can provide nearly 600 million passenger trips per year. In the wake of the pandemic nearly all of the 3000 companies in the industry were completely shut down. The most of the 80000 these were laid off and then this industry still needs relief secretary mnuchin can you say what youan do for this devastated industry. And there is more than 150 biion the session other hundred 30 billion on ppe on top of that i would take that ditional money and support to the alines ideical to what they have done before in the c. A. R. E. S. Act that is very meaningful in terms of employment and saving the industry. I appreciate that but it didnt reach the motorcoach industry so they did not enjoy the same targeted relief we saw go to the airline industry. What about the package quick. Im sorry about your asking about the airlines so yes i would support additional aid to motorcoach as well. Thank you. Can you say why the treasury could provide targeted assistance to the motorcoach industry using any existing funds . We would be happy to unfortunately i dont think we can use existing funds but we uld be happy to go through that with your staff. Thanks to president trumps operation and warp speed and the Innovative Industries were closer to distributing a vaccine of the fda optimizes emergency use were expecting distribution middecember. Chair powell could you speak to the effts the distributing effective vaccine wod have on our economy . In the medium term in the middle of next year we are not wellpositioned to give a precise estimate when that might be a paper will we gain confidence to regain tivities that are now seem to rescu with covid on spending or hiring somebody to see very positive things coming but i would just add as i did in my testimon testimony, the path is uncertain because we is still learning of the efficacy of the vaccines and the speed of the rollout and the effect on the public we see a very positive set of developments comingn a somewhat uncertain time. The gentlewoman is recognized for five minutes. Hankou. Would you say that the crisis is over . Would you say the economic crisis caused by the pandemic is over . No i would not. How long do you think it would take before we know . Before we know . I think we know why in the next four to six months with the vaccine but the real issue is whether the effects of peoples jobs may have changed over gone away. The first pandemic economy will be different and we learn a lot about that in the second half of next year and those people will need help. Some of them. Thats a fair answer we dont know this may have a crystal ball so secretary mnuchin apparently disagrees with you in fact secretary mnuchin is so certain the economic crisis is over, that he wants to be in the fed from using any more of the hundred billion dollars that congress set aside in the c. A. R. E. S. Act to help the economy. Two weeks ago he wrote you to request return the remaining 455 billion because our economy, in his opinion doesnt need it anymore. In response, you, chair powell, powell, said the outlook for the economy is extraordinarily uncertain. The Federal Reserve will are the emergency facilities established during the pandemic is backdrop for the economy. So that the two people to stabilize the economy do not agree if the markets are several but it doesnt matter secretary mnuchin doesnt have the authority to recall the 45billion. Now im leaving out loud so secretary mnuchin were about 2026 . I do believe. No no no. I am reclaiming my time. Second of all with authority 27. Reclaiming my time. Answer my question. Is today the year 2026 . Yes or no. Of course its not. How diculous to ask me that question and waste our time. Secretary mnuchin i think it is ridiculous you are playacting to be a lawyer. I have plenty oyears at the department of treasury to advise me. Im happy to follow up with the chair to explain the legal provisions. But secretary do you have a legal degree . I do not to me. Chair powell you a lawyer . I am a criminal lawyer a recovering lawye you have a legal degree . I do. Okay. Secretary mnuchin you are trying to tell chairman powell to send over anyemaining funds right now the claiming falsy in my opinion that is what the law states. And then someone new disagree with someone who is actually a lawyer. A lawyer . The Congress Actually with the law. I will the law with congress for what its worth. Its not hundred 50 billion i think its approximately 175 billion. Secretary mnuchin. Section 4027 it says you have to stop making new investments. Doesnt say to stop you are making a decision from congressional intent. The gentle it is time is expired. The gentle man from wisconsin is recognized for five minutes. Thank you for being here secretary of would you le to clarify your comments and the rationale . I got caught off. Thank you very much. Think that will do is follow up wh bad chair and Ranking Member so we clarify 4027 and 4029. I have had these discussions with the senate and again if there is any misunderstanding, again it can be changed. Thank you very much. So the Balance Sheet stands at seven. 2 trillion dollars more than 3 trillion above all we start at theeginning of the year so on june 17 i asked how the fed will manage the Balance Sheet Going Forward with those inflationary pressures and we need to keep this issue in mind with the monetary and fiscal taics been required to employ with the rules and inabilities we have had. You commented during the last recovery the fed waited until it was on the path of recovery before decidinwhat too. So the Balance Sheet doesnt present issues at the current time to address the Balance Sheet ze is not apparently know six months later the economy has begun to rever and the Unemployment Rate has fall from 10 percent to closer at 7 percent. Multiple vaccine trials have been successful were expecting distribution and then non distant future. We are not out of the woods but there is cau for optimism with the economic recovery can you comment on those indicators can you consider taking steps to restore the fed Balance Sheet to the pandemic levels . Our priority means supporting the economy and told me are through this. Will keep our rates low and to is working until we feel we are clearly in half a danger presented from the pandemic. We are not considering going back any support and we will not enter we feel very confident it is no longer necessary. The time will come to start thinking about Balance Sheet issues and we have a model for the last recovery that was at the fed during those years. That time will come well into the future. We know how to do it and we have seen the large Balance Sheets and understandably people were concerned that it would be inflationary pressures we dont want the Balance Sheet to be any better than it needs to be but the main thing is to keep the support the economy needs. And if we can shift gears the most i am especially concerned and that reference libor and the unchangeable. And the occ issued statement recognizing some of these developments to reiterate animation transition away as soon as practical. And with those Financial Market participants even after the relative phaseout date . As you know we provide guidance to market dciplines and strongly discourage the e of libor for new contracts after 2021. There is a possible that libor would cease to be publisher exist its very important that libor should not be assumed to be publisher after that it does mean thats a hard tail and that will take legislation and we are working with congress and the new york state level. Its important that are from a timestamp able to get it done. I yield back. The gentile woman from massachusetts is recognized for five minutes. Thank you madam chair. So to participatfor greater fiscal aid at the risk of erdoing it at the risk of under doing it i agree wh you chairman it is not a question of either or we need stimulus congress has also provided the fed 50 billion to support lending. Noon the press relea announcing the emergency lending facilies, you state three times the fed is commitd to using tools in less than 24 hours you give u any resistance to shadow the facilities including the Municipal Liquidity with that main streelending facility. So to program my colleague with this landscape Going Forward with the ongoing pandemic do you expect the number city and states having a budget shortfall to continue to rise . I dont he a strong expectation but that may be right. I will take that as a yes. Do you expect downgrades making it more difficult for state and local governments to borrow acceptable 337 downgrades so far. I think its probable. Okay. I will take at as a yes i have an unprecedented way for Small Business closures . I think that is uncertain i dont know if its unprecedented i dont know if we know that. Is the rescue of Small Business essential to any longterm recovery . Yes it is important. Before your trip i believe to city estates and Small Businesses widening those inequalities but not limited to the racial and gender gaps. I think it is. Im so yes or no questions i will just answer you which i think it is important. Reclaiming my time. Pleasdont filibuster here because the issues are eat importance of part of ur job is forecasting so im waiting on your expertise so yes or no will this exacerbate the racial and gender cap for cities and state states. There is a risk of that, yes. With the racial ten one so with hundred billio dollars to cover any potential losses you can lose up to how much . What is that amount . Order for the ten times that the amount o equit that would be trillion of course that better weighing happens. So for billion dollars. You ve a responsibility to support unemploynt in the midst of the global panmic you have been complicit for ten doars every to city state and Small Business and adding insult to injury to move it to the general fund average with the Incoming Administration and direct violationf the c. A. R. E. S. Act. Another has been a Jedi Mind Trick we kno our intentions and for the funds to be available to five years. But i do wanted to ask about for a ment turning to secrety mnuchin trying on the line farm coresswoman porter so what is at stake what ds it state in the a. R. E. S. Act . It lows to the extent wanting to line if we need to enhance additional money to the airline and a cup protective capacity have expenses that isour oh 27 applies to. And it says very clearly there are certain funds that could be used to 2026 and will continue to be available for 27 and four oh 29 Work Together for 29 has through december 21st 2020. Mr. Secretary section 4027. Your ti has expired thank you. You are recognized for five minutes. Secretary mnuchin thank you for your support, Risk Transfer to express treasury and the Administration Housing reform plan. Does that support still exis and is treasury and the administrationupport cert for the gse and bad you risking of fannie mae and freddie mac to protect taxpayers . Would like to elaborate . A very effective mechanism am supporting the institutions. I think capital accumulation is something that is very important so that taxpayers are not at risk so that taxpayers are not at risk me my colleagues in both chambers of congress and stakeholders have urged a hfa to have a robust market and in the capital framework for the gse so i have concerns about the impact of the cap will the crt market treasury provided a for page review of the 400 those cap will with no access on the market or mortgagebacked securities do you think shf a gears adequate relief for crt for the office of Financial Research examining t effects on the market for access to mogage credit quick. We have done work andhen we would be happy to follow up with you. You are the fibuster you mr. Powell do you have any comments . I will just say for example e facility that level of municipal borrowing is set to exceed the alltime in your record this year because of the backstop the facility dont measure the success by the amount of lending succeeded in restoring borrowing in the markets at levels of municipalities and other state and local governments across the spectrum so i think it has been a success. I yield back. The gentleman from new york is recognized for five minutes. Thank you both so much f coming to offer your testimony today and expertise. Secretary mnuchin i would lik to one not belabor the point but section four oh 27 and four oh 29 i do think its important to dcuss this because you bring it up as the main rationale as to why you bring these funds back into the general funds. Section 4027 with the unused funds with the Stabilization Funds on january 21st 2026. That is correct andhat will occur. Thats with respect to those funds. It the unused funds in the esf at that time. Yes. Section 4029 refers to the authority to making loans. And it does contemplate what that new place has a 2021 to restructure that modification is that right . So im wondering if i could give youhe opportunity instead of choosing to be turn those fund funds, and you are saying that quick. I am not choosing to return them if they returned or not 4029 is both direct and indirect. I couldve allocated all 500 billion on day number one to the Federal Reserve i allocated 200 billion. It is irrelevant. 4029 governance the same vision whether it is sitting in any of the accounts for the purpose of 4029 if you dont read it that way from 4029 then it should not have existed. There was no rson to have the december 21st date. I rsonally negotiated these documents. I understand. I am trying to seek clarifation because we are in a desperate position given the unfortunate gridlock. And then to have maximum flexibility so instead of choosing returning these fans so the interpretation could use this modification statute to recapitalize loans . Recapitalize existing loans . Yes. In my example we have made alignments of paper focusing on this governance the direct lines and indirect loans. In the case of there is an airline mode we have already made and we need to make protective advances after decemt 2020, this statue allows us to do that. To put this into perspective of the 190 billion i allocated 2 trillion of lending i believwe have done like 25 billion in total. We are talng about this it is irrelevant in the broad scheme of thing. Returning to your airline example are there other examples that could be provided . On any of the existing underlying loans, if there is a main street loan that has already been made and that needs a protective advance after december 31st 2020, that can be done the difference between 4027 and 4029 has to do with existing loans versus new london so its very clear 4029 refers making loans or loan guarantees for other investments shall terminate. Thank you very much. The gentleman from south calina is recognized for five minutes. Thank you madam chair i want to align myself with the colleagues on both ses of the aisle. We need to help Small Businesses across this country. It is critical and asked time and the state of South Carolina struggling have businesses that a set back with the bars and restaurants and yoga studios in thain South Carolina were mostlys we opened here in dc 25 percentapacity for restaurants the hotel is close to the restaurant and rooftop bar until restrictns are lifted. We need to help the busisses being out of work by the governme the government closures are helpful in certain cities by d others we need to say from reopen any businesses closed because of the government musget relief. It is taking and iis wrong we need additional ppp loans but have to be surgical will need to pay with a bro brush so my rst question is to both of you there is no denying there is an exorbitant amount of money to combat the health and economic two of the virus as a National Debt claims to authority trillion it could be 30 trillion next year betwe the next package what we are looking for targeted relief from constituents how do we get the best bang forur buck and cond how do you recommend policymakers address our debt e next few years . For Small Businesses the simple and most effective thing to be done is authorize me to use 140 billion sitting in the accounts of the general fund for additional ppe loans unfounately i dont have the Legal Authority to spend t money and i would like the Legal Authority that is the simplest thing to do. It is that enough . What about 97 percent revenue loss . Or any other business totally shut down. They are not looking at this they need more ppe but the government has entered our revenue. The good news is use the money correctly they become grants and they are forgiven and we should pass legislation. And to allocate 300 billion to this immediately i couldnt agree with you more has to be done before christmas i dont know if that person is and got not but everybody is playing politics and is to blame even we rise above and we get this done. Secretary mnuchin yesterday before the Senate Banking committee you indicated it should not be leaving the conservatorship without proper oversight does that mean they have to have capital and the new capital is that the minimum that is specified in the 2020 will . We have made no decisions but there could be a scenario at some point between basically the zero auppercaseletter have a National Capital requiremen requirement, there would be a Consent Order and they would be released subject to the Consent Order. But there has to be significant capital for them in my opinion to be released. Thank you. And it has been truly remarkable. So to be on the other side and with that i yield back. Thank you. And tnk you for all your work during the pandemic when of those facilities with the mainstam program has a nuer of issues and is a sappointment and designed to have 6 million in businesses but its only 5 billion of loan. I and disappointed as well but it was very difficult to design a program and a see the familiar with us hyphen with th loan that was made i havent seen the underlying documents so you can have to make this loan between the lender and the borrower . Otherhasetting the policies for the facilities but i dont know so those loans will not be available to lending institutions. Correct . I believe that is correct but i am not familiar with the details on the loan that you are referring to. I will tell you about it because they could exploit a loophole in the law by organizing and texas with Consumer Credit Access Company rather than a lender and they did that in texas to avoid the use of the laws they are. Now there is a 25 milliondollar loan from the us government, taxpayerfunded at 3 percent they are lending out to people at 350 percent. Where do you agree assuming that is correct that violates the spirit and intent of the law and the regulation . I would and i would expect that would be reviewing and audited. Senior agreed is not a good book that it has come to light the owner of the company is a major donor to the president. Again as i have said, i dont know the specifics but i agree based on what you have said that is not the spirit of the intent of the use of the loans. And i get a commitment from you that you will revi that loan and consider calling back th money . They administer the program. To administer the program or have that ability but im sure chair powell. Chairman powell . Can i get a commitment from you to call back the many . It is inappropriate for me to try to comment on individual like the secretary are not involved in the process. People make representations. We set out clear rules. They have to be paid and we will lose look. They are not obeyed or incorrect representaons are made then consequences will foow. What has taken place so that interpretation so i will inquire to talk to incoming treasury secretary ellen . I have have you discussed your intention to them these facilities. We are cooperating with the transition i had a very good working relationship wither when she was the fed chair and i ha advised her in my interpretation was nonpolitical and i did advise hethat. Did she seem disappointed or dagree with your interpretation . She do not reflect one way or the oth gentleman from texas recognized for five minutes. I appreciate the this hearing in your hard work and one that we did not see coming. Those forces provide help versus targeted help which is where we are talking more about i do have some reluctance to target specific help user lines as an example to your targeted specific health one specific help what we did not see coming. Talk about those policy decisions person is pride hope versus targeted help. And you suspend for a moment until we get the audio straightened out. He we resume. Thank you. And with our hospitality space and then talking to those 10 Million People that are unemployed as a result of covid half that are in one specific sector in that hospitality space so it is my concern we need to be targeted and i will point out that ppe is designed specifically to say you have a 35 percent drop of revenue to save you are doing well you cannot get that ppe will load. And my businesses in my district that telemedicine sales are up 300 percent because thats a big thing that only the ppp load. Thats not what they need. So chairman powell will do concur is time to think about specific targetehelp rather than had happened to sectors and harms way as i mentioned earlier including small sinesses and for that to happen. I will point out is but the taxpayer rather than handing t tens of money everywhere to be specific targeted assistance for sinne part assistance . As you have said if we do more ppe pletters that companys revenues are down that is straightforward your guidance and i have to admit i am entertained of the discussion to make sure i rose reading it correctly so on decet 2022 to make loan guarantees shall terminate. That seems very clear so the ability to make new loans that terminates. That is what the law says i think thats what you are sayin saying. And as i have said if anybody doesnt think that is what it said and i think it doesnt apply and that gives me Unlimited Authority to use the money forever and i dont know why 4029 would have been inserted i havent had anybody rightfully explain 4029 what is the purpose. And 4029 again december 31st be 2021 and one for another year but clearly it is the end of this year is the termination of your authority under the law. Im about the equal protection the law and i commend you for following the law and not trying to twist into something it was never meant to be. Rossi was very clear to me and i applaud your efforts to comply despite the efforts to twist it into something it is not. Thank you. You wish was dismissed im talking about ppe loans as 4027 and 4029 cents going to pass the bill that is highly unlikely we would be using these at this period of time. Thank you mr. Chairman madame chair i yield back. Thank you the gentleman from massachusetts where the gentleman is recognized for five minutes. Thank you madame chair thank you to Sharon Powell and secretary mnuchin for attending the hearing and helping the committee with this work. Lets talk about january 1st because we have much pandemic related support going away right now unless action is taken but the last week 827,000 new unemployment claims that agaigoing back to the rental assistance pandic related that is scheduled to expire cember 31st as well. Mr. Chairman, we will be in a bad ace i think on januar januat and eveas a last ditch effort to put something in place, where we saw in and i exactly owes a considerable lag time before we actually got the help out to the American People whether Small Business where people are waiting fo a stimulus check core supplemental employment is there a power tha you have indepeent of congress with appropriation. Take renters assistance. The forbearance we might allow the managers who dont have the ability to pay the rent then we have to protect the land roots are out there that are getting pressure from banks and Mortgage Companies to 2 payment to them and then ultimately to the bondholders as well under those mortgages and expecting payments are do you have independent power to provide relief in the shortterm until congress can get its act together and come to an agreement on a larger package similar to the c. A. R. E. S. Act . With broad powers but not that kind o power. Those four to the Legislature Nobody elected us. Who created us under statute that are very specific powers. I was here 2008 and those on your side of the table were doing their darndest to rescue wall street. Now it is mainstream that is under the gun. Im just asking for the same consideration and the same sense of urgency when it is regular workers were just average families struggling to pay the rent. By to see the level of urgency and seriousness i saw in 2008 when we tried to rescue the big banks. I have to be honest i think its a little bit of as a fair with respect to average families i dont see that sense of urgency and mr. Secretary, with all due respect, use the w to read her to give back the resources that werevailable. I didnt see along in her discussion how to get this money out to the people that need it but this is what the law says and i will do it. I didnt see an extraordinary effort on the part of treasury to find a way and go into court to ask for the interpretation i have the ability to continue this relief to the American People. People need fiscal resp. These programs were not used. People need more ppe money and grants and airline support and Unemployment Insurance. These facilities were not being used and i worked every day to try to get congress to pass more legislation. I dont appreciate the comment that i havent worked hard. I would just say what i saw when wall street was on the hook was creativity in ways of repurposing money to make sure they got what they needed. The gentlemans tim has expired. Thank you, madam chair. Feel free to use some of my time here to complete your tught. If i had any Legal Authority to send out the 140 billion to the Small Businesses i would do that and again for all the conversations we have had which were barely being used most of which did support big corporations. I want to start by saying thank you to both of you for your leadership during this pandemic especially as it pertains to standing up and finetuning. First off the paycheck Protection Program ive heard from Business Owners in my district and from mayors and others how it not only saved Small Businesses and Small Business jobs but the entirety of main street in the first Congressional District of new york. With regards to the facilities the original term sheet excluded my home county where my constituents live but they listened to the concerns i and others raised about lowering the population thresholds. This provided greater access to a much needed backstop for entities i want to say thank you for your attention to this critical market and the commitment to remaining vigilant of the problems as they arise because we need all levels of government to Work Together. This is not a time to be republicans for stor first or ds first. This is a time to be americans first. Late one night got on the phone with my democratic county executive to talk to us about the facility and getting eligibility and he listened to our concerns. Its set to expire at the end of this month and all unused funds will be returned to the Treasury Department but i want to make sure they are working together and remaining vigilant to ensure adequate liquidity the facilities should remain in operation into 2021 so we know for sure we are out of the woods. It isnt just on its own reserve and treasury, Congress Needs to step up to the plate and get a relief bill across the finish line. I know how hard you have been working over the course of many mohs which is why im glad you d an opportunity to help clear up the record as to the allegations and charges that were being made in your diction. Chairman powell and the Senate Banking committee in may talked about the overallconomy that faced serious fiscaconstraints citing evidence from the financial crisis. Its clear all levels of government is important for economic recover can you elaborate on the importance of the government for the health and growth of the economy . The state and local governments as you sugst provide Critical Services by the police, sanitation, all those things people dend on and live under a balanced budget requirements and essentially all of the states so what happens when costs go up and revenue go down is they lay people off and they laid off more than a Million People so far. That was a big problem in the years after the financial crisis. We hope it doesnt bome a big problem here but these are critical Government Services and as i said its up to congress and the administration but thats an important area to look at for their support. Thank you both for all of your efforts since we were first he hit by the pandemic a again thank you chairwoman and Ranking Member for holding the hearing and i will yield back recognized for five minutes thank you for making the time. You made a comment about how given a comment that youust made and how it ok up the marity of the money and whether it com out next year wh improvements would you recommend to take on to ensure the majority are going to the Small Businesses in the communities keeping their heads above water. A. We created the original program the entire economy was shut down but now that that is in the case, i agree it should be much more targeted. I think it should be focused on the smaller businesses. I think it should be focused on a revenue decline. Chair waters and i worked on it to make sure there was money available in the underserved areas and that is something that should be done again. We signed up many more since then and i very much support a program and investing ten to 12 billion so they can do 100 billion in lending. Theres good bipartisan support and ive spoken to the chair waters, senator warner and others so theres a lot that can be done quickly that would have a big impact. Thereso question that the need is there and frusttion especially i want to take this in a different direction that hasnt been covered today in the area of sanctio. Ive served on the Foreign Affairs committee for my first six years in congress and both in congress as well as the executive branch sanctions is one of the first go to actions to take within the realm of the Foreign Policy for a variety of reasons. The list of sanctis that we have on countries and industries and individuals around the world it is a very exhaustive list as im sure you are aware with some going back even deces. Can you spea to the department of treasurys process and ether you work with other agencies and departments and otrs to assess e effectiveness of these economic sanctions once they have been levied and if you do tt, how often with the intent that theyve beenut in place are they achieving the intended objective, and if not,hat are they doing and what unintended negative consequences are there . First let me say i appreciate you bringing of the subtext and i would be happy to follow up with you offline. I spend enormous amounts of my time before the pandemic i was spending 50 of my time on the sanctions. I think they are very effective Foreign Policy tools. We coordinate 100 with both the state department, the national securitnationalsecurity councile intelligence agencies on anything we do, so we have a robust interagency process. Im going to encourage the chair to spend time on this. I also want to thank the committee and congress youve given us a lot of funding over the last four years. Weve increased the number of people we have in these areas and these are very effective tools combined with our Strong Military but in many cases they are very powerful tools and dont put our military in harms way. If you couldpeak briefly and i would le to follow up i would like to know what mechanisms a measures of effectivess you and these her departments use in order to make sure that they are achieving the objectives a objel as what measures of impact you used to say they were intended for this purpose in creating a negative humanitarian effect. That is a very thoughtful question i might add. In the best Case Scenario we see a specific action as a result of the sanction but we also work very hard on the humanitarian issues. The gentleadies time is up and theentleman from ohio was is recognized for five minutes. You aren me. I think hes trying to get off of mute. Thank you for the time youve given us today. I appreciate the way you pointed out the law Congress Passed franklye do need fiscal policy and congress by the way it sounds some would strike article one from the constitution and have the executive branch do everything. So im glad that the body stays relevant. Hopefully we can do some of the good things that they have. Let me highlight a couple things the constituents in the district of ohio share with me those first two or three weeks there is a true liquidity crisis hitting the markets because the demand for dollars wasnt just here in our markets there was no buby side, so the Federal Reserves response in providing liquidity fits in line with the purpose of the Broad Authority but nevertheless we saw some distortions that have carried over as we see the size of the Balance Sheet grow its not so big that it causes true economic distortions and the inftion showing up isnt in the consumer prices. A lot of people fear and frankly know that its in the marketable securities on wall street and all that benefits and Retirement Savings accentuates the wealth gap. Thank you for calling attention to the plan that was tremendous and in our district we had about 9,000 loans a day. 80 of them were for 150,000 or less and what was the effect of that we had over 100,000 people in ohios eighth district stay on payroll for the purpose of keeping payroll happy and the benefit is so many of these individuals their families kept benefits, Health Insurance and other things that come with unemployment so its been a tremendous source of stability. As time dwindles i want to get to one topic that is emerging. We have seen the re of Digital Assets and frankly to the extent some have proposed through the monetary situation right now its important that we do that very thoughtfully [inaudible] i think there are some technical difficulties here. We are past the hard stop and so i would like to thank the distinguished witness to the testimony today. Without objection all members will have five legislative days within which to submit additional written questions for the witnesses to the chair which will be forwarded for their response. Within which to submit extraneous materials to the chair for inclusion in the record and with that, the hearing is adjourned. Thank you very much. [inaudible conversations]