Field . On a number of occasions we have issued public statements and communications to our supervisory group. We dont want to be on a hair trigger to classify loans or call them loans or anything like that. We want to look at this as an unusual situation and be flexible and thoughtful about the way we do our jobs. Of course we havent been really supervising. Were only starting to supervise again. At the fed were going to do it remotely. Were not going to be visiting yet but that time will come i think fairly soon. But were doing training for our supervisors and things like that so we want to be we have also by the way, we have encouraged banks to use their buffers. And in a similar way that Mortgage Backed securities can. Do you think that the threat of clo is properly accounted for and can you discuss how the fed has been monitoring this risk . And thats not the case. We have really good information. We include them to the extent and we include them in our stress tests and we stress them under very stressful situations like the Current Situation and we know what the losses would be coming out of that. Its a very, very different situation. Thats not to say there wont be losses. There will be losses. This is a downturn but its one that we can be monitoring carefully and the banks are well capitalized. I yield my time back. You can recognized for five minutes. Thank you madam chair. Can you hear me . Yes, i can hear you. First i want to join my colleagues and offering my condolences to his family. Our hearts are with them. But now id like to welcome back to the Committee Chairman and i just want to start by saying i think the u. S. Economy is going to need all the help that it can get for the foreseeable future and i hope that you dont take your foot off the gas. And thats a position that i strongly support as well. I want to ask you would you continue to hold Interest Rates at zero until 2022 even if Economic Conditions unexpectedly improve . In other words, what would cause you to change your position that Interest Rates should stay at zero until 2022. Thats not the committee forecast. So what that really was was evidence that that is what our participants do feel. And were confident that they weathered the situation and are well on the way to recovery. So i think that were not thinking about raising rates. Were thinking that this economy is going to be support for Monetary Policy. For an extended period of time. And it looks like it will be the deepest recession. It may not turn out to be a very long one but the road back we believe and well take some time. And at the low end of the wages where we were. Theyre telling us that this is the best we had in a really long time. Well get back to that so look at the employment numbers and Consumer Confidence and all the usual economic ones but i know and i dont believe that anyone has a good sense of what metrics youll be looking at now in the middle of a recession caused by a Public Health crisis and my question is what are the key metrics that youre looking at now. Are you looking at rates of infection, hospitalizations rates, what are the public help metrics that youre paying the most attention to. So we are of course were looking at all kinds of economic data. And hearing from experts about the pandemic and where are cases going down and where are they going up and all of that kind of thing. Thats a new area for us and everybody. If you knew for sure youd have a lot more confidence in your Economic Forecast but we dont have that. Were also looking for a month or so now we have been looking at the data that suggested an economic reopening. So you can track people moving around a lot. We are beginning to see them now. Thank you and i yield back. Thank you. Mr. Hill, youre recognized for noo five minutes. Thank you madam chair. Thank you for conducting this hearing. And we were so broken hearted at about 8 30 when we learned about the loss of carol barr. I cant imagine the pain that andy feels so all of us on the committee share that bond of affection for andy and we wish him comfort during this tough time. So thanks for being so thorough in your answers. As the Ranking Member on the Monetary Policy subcommittee, i wanted to turn and talk about the Balance Sheet of the fed and Monetary Policy and just put parameters on it as we are in covid19 now and again thank you publicly for the outstanding job that the board of governors did in early march. And were close to 7 trillion. Do you see that range of 16 to 17 of gdp. Still in post pandemic target based on reserves that you see the Balance Sheet returning to . I hadnt thought of a target. In the long run the size of our Balance Sheet will be kidictate for the publics demand for reliability. We were getting close to that demand at the level that you suggest and that would tend to be roughly constant overtime as a percent to gdp. And if a peak in 2014 you owned 21 and this most recent phrase as you expanded the Balance Sheet youre about 19 of the new issue treasury market and 30 of the market and how is it as big an issue this time as it was in 08 but you had liquidity and spread issues in the markets. You want to take a minute and talk about where you did engage in the agency purchase. Those markets are critical for financing the housing industry and also were closely connected to the treasury market. So in terms of the mbs there wasnt the capacity to hold those securities and what was happening is the very low rates that we were putting in place they werent getting through to borrowers. Rates werent going down. So we had to get in there and get the market functioning again. Im happy to say that it is now. Functioning essentially normally. Not perfectly but that is what was our thinking. Well, obviously you had people trying to get out of long dated maturities and treasury market and you had prepayment speed pick up but you do support moving from an all treasury portfolio to a philosophical point of view. Isnt that correct . Yes. Absolutely. I had no intention of ever buying a Mortgage Backed security line would you say that theyre functioning and youre no longer needed to the same extent . I would say that. I also hasten to add that were still on alert. Well were grateful for your leadership. Thank you for being before the committee. I yield back. Thank you. Youre recognized for five minutes. Mr. Sherman. Mr. Green youre recognized for five minutes. Hes muted. Mr. Sherman unmute. Can i be heard . Are you there . Im here. Lets go. We only have a few more members left for them to be able to ask questions. I hope that i can be heard. You can be heard. Good. Thank you for joining us. As you know they have written you about this and andy barr has written you a letter about this. There are 9 Credit Rating agencies for various purchases by the sec which has the expertise in the area. If the fed seems to put a premium on only three Credit Rating agencies. Is it your intention to look at all of them. We have expanded the group of Credit Rating agencies from 6 to 3 and were continuing to look at others. Theres still a situation and its rated by one of the big three or are you accepting all six on the same level. The former, not the latter. You havent given real equality to the six that you havent decided. The second issue is when we passed cares, if a company got a loan from the federal government it came with strings, like no stock buy backs. If youre just going to go out in the market and buy instruments those strings wouldnt apply of course. It was carefully negotiated. They dont apply to Capital Markets or sind kacindicated lo. Theyre either sind kaloans or markets transactions. Capital market transaction is usually when there are many buyers of the debt instrument issuane issuance. Are you going to have any that are a government loan but youre going to package them even if its the fact that you can call it a bond issuance liberates you and the company from congressional intention. Is that what youre saying . It effects congressional intention. It was never our intention to have you take what is in substance alone and package it as a Capital Markets transaction. Or is substantially the sole lender and you found a loophole and yet you plan to exploit it. It was never the intention. If you do a government loan this way theres strings that come with it. Youre free to do it but heres this loophole. Its one where the fed has the additional insurance that comes from others buying that off the same day on the same terms. And youre depriving us of that if youre the sole purchaser of the issuance and you deprive us of the restrictions on the stock buy backs. And that is certainly not what congress intended. But if theres a loophole its up to congress to plug that loophole. I believe my time has expired. Thank you. You have five minutes. If he is not ready you have fyffe minutes. Thank you a lot of times we dont look at how bad things could be. They could be a lot worse if we hadnt had the intervention that we have had through the administration. Okay. I apologize. I guess, im getting some feedback. I dont know if anyone else is. And the way that you oversee and regulate the banks. They were all very skeptical going into this but i can tell you that they just a couple of quick questions because were running low on time. You have Mortgage Backed securities with fannie mae and jenny mae and mortgages that werent backed, they were included and consumer installment loans in town. So the answer is on mbs. Thats under consideration. As a general matter we have been expanding things where it is appropriate. Consumer installment loans is a little different. Intercontinental exchange and other clearing houses. It has a huge spike in funds overnight because of the market volatility and commercial banks can only accept limited amounts of those deposits because of the capital requirements. They would like to be able to temporarily deposit the funds with the fed. Is that something that youre considering . We the only entities Like Intercontinental Exchange that can deposit funds or goes in designated as systemically important Financial Market utilities under the law and so we dont have the Legal Authority to do that right now. It would be a question, really, not for one company but for all of the companies that are in that category should they get the Legal Authority to do that. But as of right now we do not have the authority to unless theyre a designated Financial Market utility. Its something that we can work on Going Forward but i thank you and i know that were short on time so i will yield back. Madam speaker, i think mine works now. Thank you. Mr. Lawson, youre recognized for five minutes. Mr. Lawson. Thank you madam chair. And really appreciate the opportunity to talk to you today. Madam chair said that maybe two hours ago and the application number has slowed dramatically. Would you believe that businesses take an Additional Debt obligation is effecting the program and in order to create confidence and reopening and hiring a Grant Program would be better, what do you propose for businesses that cannot take Additional Debt . So we dont have the the spa administers the paycheck protection program, ppp. We have a little bit of a role in that once a bank makes the loan well take the loan off their Balance Sheet so they can have the room to make another loan. So i follow it but its not one that we would say the benefit o program is when a loan turns into a grant as long as you obey the rules. And i know that the rules have been adjusted by the last both by the last law that you passed and also in regulatory flexibility. So i would say for many small businesses, thats what they need, and theyre not well served by taking on a loan to make payroll and things like that. Thats the tool we have, thats all we can do. We cant do grants. We can only do loans, and thats why were doing that for Larger Companies than the ones that are eligible for the ppp. Okay. And i think when madam chairs closes out, she might have some. The other is that the april job report was the worst in american history. And the may job report shows that less than half of black adults have jobs. What steps can affairs take to ensure that emergency relief and target i targeting that the minority businesses in the state of economy . Well, all too large portion of those who lost their job in the pandemic were from low and moderateincome communities, and many minorities. The same is true of businesses, you know, minorityowned businesses are under tremendous pressure. We have tools that apply broadly across the economy. Thats what we can do. I think we can also work with the depository institutions and cdfis, as well, to support the work of those institutions in their communities. And thats what we can do. I know there are things that congress can do, as well, and has done. Okay. Thank you. I yield back, madam chair. Recognized for five minutes. Thank you, madam chair. And thank you for your patience with my ability to use this machine. It goes without saying, but im going to say it anyway. Like everyone else on this committee our prayers and hearts go out to andy barr and his family. Very tough day. Chair powell, i appreciate you being with us here today, albeit virtually. And even though even more so after my recent experience trying to get my mute button fixed, i think the house should be back here in washington doing our jobs, the opportunity to connect with you digitally has brought to mind several topics related to thin tec that ive been working for and on the thafrts committee. You know, technical technological innovations. As late as last year, you told my colleague, representative french hill from arkansas, that you were fully Central Bank Digital currencies closely. But that the fed was not developing a Central Bank Digital currency. You said, quote, characteristics that make the development of Central Bank Digital currency more immediately compelling for some countries differ from those in the u. S. , closed quote. It is true other countries utilize digital cash at a higher rate than the u. S. , however, our technological edge has kept us the predominant world leader we are today for at least several decades. And i think the recent pandemic has actually shown that this is an important step that we need to make regardless. What substantive recent actions has the fed taken to understand an experiment with this technology . Can you disclose Current Situations or regulations you and the fed have on the concept of a Central Bank Digital currency . Id be glad to. So we think we Central Banks everywhere, around the world, are looking at this. We owe it to the public that we serve to be up to speed and to if this is something that is going to be good for the United States economy and for the worlds reserve currency which is the dollar, then we need to be there and need to understand it first and best. Were working hard on it. Theres a group of major Central Banks that have gotten together to share understanding of the technology and the cyber implications, Cyber Security implications, the economic implications, the Financial Inclusion implications. It is a big, complex problem, and its one that we take seriously. Again, i think its our obligation to understand it well and not wake up one day and realize that the dollar is no longer, you know, well, reserve currency because we just missed a technological change. So were not going to let that happen. At the same time, theres some very serious questions that have to be answered before we would want to implement the digital currency. Thats great. Its good to hear, to hear that youre leaning in. In the recent report issued by the digital dollar project and reflected in some of the congressional proposals that are out there, there seems to be a recognized need agreement that the private sector should be involved in the creation of a cbdc. This is either in its development or disbursal. And i guess through the feds work, an analysis on the topic that youre in, what role do you think the private sector would play . I do think this is something that the Central Banks have to design principally. You know, we dont the private sector is not involved in creating the money supply. You know, thats something that the central bank does. And i think i know their ideas that this should really be the work of a private board, i dont really think the public would welcome the idea that private employees who are not accountable solely to the public good would be responsible for something this important. I mean, once its once we assess it and decide what to do, it will be all about the prechblth you know, it has to work through the Banking System and through businesses and the economy for individuals and all that. I think in the first instance its got to be the work of Central Banks. Which leads me to the last question. If the fed were to adopt a digital currency, should the fed have the Technical Capability to deny access to lawabiding citizens for any purpose, and should it oversee transactions between private individuals . Yeah, those are the big questions. You know, youve got in one case if you create a Central Bank Digital currency, you can know every payment by everybody. And thats no good. If you dont if you dont know any payments by anybody, then where does the money its a very difficult problem. Thank you. Thank you, chair powell. Thank you, madam chair. Recognized for five minutes. Thank you, madam chair. Good day to you, chairman powell, and andy. Your friends are mourning mourning with you. Deeply sorry for your loss. Madam chair, want to begin by thanking you and the committee for drafting this letter on behalf of the committee that we sent to secretary mnuchin and to you, chairman powell, dated may 13th, 2020. Particularly addressing the lack of territorial inclusion in the Municipal Liquidity facility thats being administered by the fed. More specifically, we write through the coronavirus aid and relief and economic securities act, signed into law on march 27th, congress instructed the treasury secretary to seek the establishment. A facility that would support the market for borrowing by state municipal and territorial governments despite the clear and unambiguous inclusion in these instructions, the Federal Reserves Municipal Liquidity facility initially announced on april 9th did not list territories among eligible issuers of debt. Furthermore, despite earlier requests to correct the original announcement, the feds subsequent announcement on april 27th, significantly expanded the number of eligible issuers that the Municipal Liquidity facility would support but continued to exclude territorial governments. Mr. Chairman, earlier in your dialogue with my colleague, mr. Himes, i quoted you saying were implementing the law that you passed. But the law that we passed in the c. A. R. E. S. Act fully includes territories in the Municipal Liquidity facility, and yet the fed is excluding territories from being able to access that facility. In response to our letter that we sent to you on may 13th, we got a response two days ago on june 15th from you, and the area that you addressed with respect to that concern, you state and i quote, as you know, we are required by law in our emergency lending to be well secured and to protect taxpayers from loss. And we are prohibited from lending to insolvent borrowers. The financial circumstances of the territories are generally inconsistent with these statutory constraints. Now, mr. Chairman, notwithstanding puerto ricos circumstances, guam is not insolvent. The commonwealth are not, American Samoa is not insolvent, the u. S. Virgin islands are not insolvent. My question is why are we excluding these territories from being able to access the municipal Lending Facility . So as you pointed out, we are you know, what we put in our letter is really the way the law were required to conclude that were adequately secured. And we have not been able to come to the view that any of the territories would be able to borrow from us. And there are other there are other gastonia i dont doubt the need for borrowing, but there are programs which are better suited serving the territories needs. The c. A. R. E. S. Act specifically authorizes territories to be able to access the Municipal Liquidity facility. Its very clear in the law, and the rationale for excluding them is not consistent with all the territories. And i seriously doubt theres some kind of test being administered to every other jurisdiction in the country thats accessing the Municipal Liquidity facility. I want to ask if theres going to be any reconsideration from the fetd given all of these facts. All of the other to be eligible for the municipal facility, borrowers are required to have an investmentgrade rating. All of those do have an investmentgrade rating. Thats the requirement we set for the municipal loan facility. The liquidity facility, though, mr. Chairman, when we authorized it under the law, we did not set those kind of bars. And one of the reasons why the liquidity facility being accessed by the fed is because when you have jurisdictions that are having more difficulty accessing Capital Markets, the reason why we provided those fundings is for the fed to be able to provide that through the government. Right. Im sorry that we disagree to this. I would just say that were provider of liquidity, and those are the judgments that weve made. Well be happy to go back to the drawing board and look at it. But thats thats the judgment that weve come to in terms of what the section 133 of the Federal Reserve act requires us. To close, madam chair, in the conversations we talked about giving minorities more access, taking care of those communities. Our territories have upwards of 90 populations comprised of minorities. We talked about the need for supporting Tourism Industries. Our Tourism Industries in our territories are critically strained. We need to be able to access these resources were providing. Thank you, madam chair. I yield back. Thank you very much. Id like to thank chair powell for his testimony today. Without objection, all members will have five legislative days within which to submit additional written questions, where the witnesses to the chair which will be forwarded to chair powell for his response. I ask you to please respond as promptly as youre able. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. Let me just say that i join with all of you today, all of my colleagues, in sending my prayers and con dolentses to andy barr and his children. Let us keep them in our prayers. This meeting is adjourned