Transcripts For CSPAN3 Federal Reserve Chair Jerome Powell Testifies Before House Financial... 20240712

Any time. Members are reminded to keep their video function on at all times. Members are reminded that theyre responsible for muting and unmuting themselves and to mute themselves after they are finished speaking. Consistent with the regulations accompanying the resolution, staff will mute members when not recognized to avoid inadvertent background noise. All house rules relating to order and decorum apply to this remote hearing. [ inaudible ] economy and i know recognize myself for four minutes to give an opening statement. Chair powell, the law that required the Federal Reserve chair to testify before congress twice each year was established back in 1978. However, no fed chair has ever testified before this committee with the economy in the condition that it is in today. More than 116,000 americans are dead from the coronavirus. And just last week, 21 states recorded an increase in their average daily new cases compared to the prior week. The april jobs report was the worst in American History showing 21 million jobs lost and wiping out nearly a decade worth of job games in a single month. Today the top line Unemployment Rate remains higher than it has been at any time since the great depression. And three full Percentage Points above its highest level during the Great Recession. As you recently noted, chair powell, the expected decline in gdp is likely to be the most severe on record. Communities of color were suffering disproportionately from the virus are also in Major Economic distress, even before the crisis. A 2019 study found that overall racial wealth gap between black and white families widened from 100,000 in 1992 to 150,000 to 2016. Unfortunately, over 2 million black americans lost their jobs as a result of covid19. And nearly 18 of black workers have lost their jobs since february. Youre warning that, and i quote, if not contained and reversed, the downturn could further widen gaps in economic wellbeing, quote unquote. Its a reminder that Congress Must use all tools available. States and cities are making painful cuts at a moment when they need more resources. As states scramble to pay skyrocketing unemployment claims and meet Public Health expenses, 1. 6 million Public Sector employees have lost their jobs. State governments face an estimated 790 billion revenue short fall next year and without action, 5. 3 million more Public Sector employees could lose their jobs. Were also facing an impending eviction crisis with 30 of renters being unable to pay their rent for june against this backdrop, donald trump has urged a premature return to business as usual, and held a jobs report that showed black unemployment rising as a quote, he said, gray day, unquote. Last month, the house passed the h. E. R. O. S. Act to extend assistance to states and the unemployed but the Senate Republican leader has said congress should, quote, wait and see, quote unquote, before considering more relief. While the Trump Administration has declared victory and spread dangerous misinformation, you have been a real voice of reason, cautioning that unemployment is still, quote, historically high, unquote, recognizing its impact on communities of color and acknowledging that economic recovery will depend on Public Health outbreaks. You have also stressed that, quote, additional fiscal support, quote unquote, is needed to avoid long term damage. The economy recovered unevenly from the last crisis leaving the fed with limited ammunition. The fed has stepped in to rescue an economy in free fall. Weve seen the stock market respond but communities of color and Small Businesses are reeling and you are at the end of what you can reasonably do in terms of Monetary Policy to help the economy. Now is a time for strong fiscal policy. Without it, im concerned about the future of our nations economy. With that, i yield back the balance of my time. The chair now recognizes the Ranking Member of the committee, the gentleman from north carolina, mr. Mchenry, for four minutes for an opening statement. Thank you, madam chair. Welcome back before the committee. Thank you for virtually being here and for virtually taking our questions. But the circumstances are obviously much different than where we were in february when we last met. I would like to commend you and the Federal Reserve for your activities and engagement in this unprecedented time. I believe it was the feds rapid action that prevented the worst effects of this economic catastrophe brought about by the coronavirus and helped stabilize the market. The feds as firefighter, was able to save the flames, to contain the flames. But we know that is not a permanent circumstance for the Federal Reserve to be in that firefighting phase. Using a 133 emergency lending authority, the fed signaled to american households and businesses that it will do everything in its power to respond to the economic crisis that resulted from this Global Health crisis. Smartly done, many of these facilities are in operation today. However, some of those facilities arent even yet operational but markets were calmed just by the announcement from the fed. So i want to commend you for that Decisive Action in this early phase of what we know as are challenging times for the American People. I believe we must keep these we must keep these facilities focused on broad based support of our economy and ensure that theyre responsive to the Economic Conditions, not the political ones. I want to express a point that you made last week, as the fed embarks on protecting the economy through careful use of its powers, Congress Must be realistic about what the fed can and cannot do. The fed is a lender. The fed is a lender of last resort. It is not responsible for fiscal policy. Thats congresss action and it is not a piggy bank to be used to fund the whims of congress. We must ensure the fed remains laser focused on Monetary Policy and not become a testing ground for unproven theories. Unconventional proposals should be considered with utmost care, particular one that is have mixed records in other Major Economies which we focused on the tens of millions of americans who remain out of work through no fault of their own. According to the feds economic projections, we will be still be facing unprecedented unemployment for the rest of this year, for nearly twice the Unemployment Rate that we experienced just as recently as february. Creating economic recovery that grows jobs must be priority number one. But the fed cannot do this alone. The fed cannot train workers to match them more effectively with job openings. Congress has to legislative that. Congress is responsible for enacting pro growth policies. And the fed cannot modernize our Education System or change tax policy. Thats congresss role. Only congress and legislate these policies which is why we need Bipartisan Solutions to ensure that our economy comes back stronger than ever. We should identify the metrics that will be used to determine the need for emergency lending as well. I urge you to continue to be forwardlooking as you have been since many of us before the public actually new what the coronavirus was, you were taking action. And so i anticipate the challenges we face in the next six months of a year will be enormous, but i commend you for looking ahead. And while i hope were through the worst, it is clear that more must be done. However, we should all keep an eye toward the aftermath and how we plan to right size policies, once again, to ensure the longterm stability of our Financial System. With that, i would like to thank you again for being here and look forward to your testimony and questioning. Yield back. The chair recognizes the chair of the National Security International Development and Monetary Policy for one minute. Thank you. Thank you, chairman powell for being here. On sunday, the dallas Federal Reserve president stated, and i quote, systematic racism is a yoke that drags on the american economy. And i tend to agree with what he said. Before the pandemic nearly 80 [ inaudible ] 60 of black adults were employed. Covid19 has ravaged our nation and the low paid and Frontline Service sectors. Less than half of black people are employed. Economic justice is a part of social justice. Economic justice would including the minimum wage increase and create a progressive tax code. Thank you. The chair recognizes the Ranking Member of the subcommittee, mr. Hill, for one minute. Thank you for being with us virtually today. We appreciate you being responsive to all of our questions in this challenging environment. Your Monetary Policy report dated june 12th was an excellent detailed recap of the Extraordinary Events of the past four months. I commend the Federal Reserve in their Quick Response to mitigate the harm from covid19. Your quick action preserved access to markets and fresh capital to weather this storm. Today members will discuss the Federal Reserves facilities, the virus and its impact on the economy, and our citizens, many of whom are not yet become to work. I look forward as well to a discussion about Monetary Policy. The Balance Sheet has grown by since the beginning of march. Welcome to the committee. I yield back. I want to welcome to the committee our distinguished witness, jerome powell, chair of the board of governors of the Federal Reserve system. Chair powell has served on the board of governors since 2012 and as its chair since 2017. Chair powell has testified before the committee and i believe he does not need any further introduction. Without objection, your written statement will be made a part of the record. I want to remind members that chair powell will be with us for three hours. Chair powell, you are now recognized to present your oral testimony. Thank you, chairwoman waters, Ranking Member, and other members of the committee. Thank you for the opportunity to preserve the Federal Reserves Monetary Policy report. Our country continues to face a difficult and challenging time as the pandemic is causing tremendous hardship here in the United States and around the world. The coronavirus outbreak is, first and foremost, a Public Health crisis. The most important response has come from our health care workers. On behalf of the Federal Reserve, i want to express our gratitude to these dedicated individuals who put themselves at risk day after day in service to others and to our nation. Beginning in midmarch, Economic Activity fell at an unprecedented speed in response to the outbreak of the virus and the measures taken to control its spread. Even after the unexpectedly positive may unemployment report, and the rate has risen about 10 Percentage Points to 13. 3 . The decline in Gross Domestic Product is likely to be the most severe on record. The burden of the downturn has not fallen equally on all americans. Instead, those least able to withstand the downturn have been affected most. As discussed in the report, lowincome households have experienced by far the sharpest drop in unemployment. If not contained and reversed, the downturn could further widen gaps in economic wellbeing if the long expansion hasnt made some progress in closing. Recently, some indicate indicators have pointed to a modest rebound in Economic Activity. With an easing on restrictions in mobility and congress and extension of federal loans and grants, some businesses are opening up while stimulus checks and Unemployment Benefits are supporting households. As a result, employment moved higher in may. The levels remain far below their prepandemic levels and significant uncertainty remains about the timing and strength of the recovery. That comes from uncertainty about the path of the disease and the effects of measures to contain it. Until the public is confident that the disease is contained, a full recovery is unlikely. Were over the longer the downturn lasts, the greater the potential for longer term damage from permanent job loss and business closures. Long periods of unemployment can reroad the reroad erode their skills. The pandemic is presenting acute risks to Small Businesses as discussed in the report. If a Small Business or mediumsized business becomes insolvent because the economy recovers too slowly, we lose more than just that business. These businesses are the heart of our economy and embody the work of generations. With we can demand and large price decline for some goods and services, such as apparel, gasoline, air travel and hotels, Consumer Price inflation has dropped noticeably in recent months. But indicators of longer term Inflation Expectations have remained steady. As output stabilizes and the recovery moves ahead, inflation will move up over time closer to our 2 objective. Inflation is likely to remain below that for some time. Feds response to this extraordinary period is guided by our mandate to promote unemployment and stable prices for the people, along with our responsibilities to promote the stability of the Financial System. We are committed to using our full range of tools to support the economy in this challenging time. In march, we quickly lowered our policy Interest Rate to near zero and the heightened risks to the outlook. We expect to maintain Interest Rates at this level until were confident that the economy has weathered the events and is on a track to achieve our goals. We have also been taken broad and forceful actions to support the flow of credit in the economy. Since march, weve been purchasing sizable quantities of treasury securities in order to support the smooth functioning of those markets which are vital to the flow of credit in the economy. As described in the report, these purchases have helped restore orderly Market Conditions and have fostered more accommodative conditions. As market functioning has improved since the strains experienced in march, it reduced the pace of these purchases. To sustain smooth market functioning and thereby foster the transition we will increase our holdings of treasury securities and agency in the coming months at least at the current pace. We will closely monitor developments and are prepared to adjust our plans as appropriate to support our goals. To provide stability to the Financial System and support the flow of credit to households, businesses and state and local governments, the fed with the approval of the secretary of the treasury established 11 liquidity facilities with the Federal Reserve act. The june report provides details on these facilities which fall into stabilizing shortterm funding markets and providing more direct support for credit across the economy. To help stabilize shortterm markets, the money market liquidity facility was established. The fed established the primary dealer Credit Facility which provides loans against good collateral to good dealers in shortterm funding markets. To more directly support the flow of credit to households, the fed established a number of facilities. To support the Small Business sector, we established the Paycheck Protection Program to bolster the effectiveness of the c. A. R. E. S. Act. Our main Street Lending program which is just now launching, supports lending to Small Business and mediumsized businesses. The assetsbacked Loan Facility supports lenders. We established two Corporate Credit facilities and to help u. S. State and local governments serve their communities, we set up the liquidity facility. The tools that we are using under the authority are appropriately reserved for times of emergency. When this crisis is behind us, we will put them away. June report reviews the implications of these tools for the Federal Reserves Balance Sheet. Many of these facilities will be supported by funding from the c. A. R. E. S. Act. We will be disclosing names and details of participants in each facilities, Interest Rate charged and costs, revenues and fees for each facility. We embrace our responsibility to the American People to be as transparent as possible and we appreciate that the need for transparency is heightened when were called upon to use our emergency powers. We recognize that our actions are only part of a broader Public Sector response. Congresss package of the c. A. R. E. S. Act was critical in establishing many of the lending programs. C. A. R. E. S. Act and other legislation provide direct help to people, businesses and communities. This direct support can make a critical difference, not just in helping families and businesses in a time of need, but also in limiting longlasting damage to our economy. I would acknowledge the events that have put a spotlight on the pain of Racial Justice in this country. The Federal Reserve serves the entire nation. We are a part of many of the communities across the country where americans are grappling with and expressing themselves on issues of racial inequality. I speak for my colleagues when i say theres no place at the Federal Reserve for racism and there should be no place for it in our society. Everyone deserves the opportunity to participate fully in our society and in our economy. We understand that the work of the fed touches communities, families and businesses across the country, everything we do is in service to our public mission. Were committed to using our full range of tools to support the economy and ensure that the recovery will be as robust as possible. Thank you and i look forward to our discussion. Thank you, chairman powell. I recognize myself for five minutes for questions. Chair powell, before you joined the fed, you were a fellow at the Bipartisan Policy Center and an advocate of deficit reduction. I took it seriously when you said on april 29th, and i quote, this is a time to use the great fiscal power of the United States to do what we can to support the economy, quote unquote. On may 13th, two days before the house passed the h. E. R. O. S. Act, you reiterated this message saying, quote, additional fiscal support could be costly but worth it if it helps avoid longterm economic damage and leaves us with a stronger recovery, quote unquote. On sunday, that quote was echoed, fiscal policy is going to be critical from here, quote unquote, and yesterday former fed chairs and more than 130 economists wrote a letter calling for a bold congressional response including, and i quote, continued support for the unemployed, new assistance to states and localities and investments in programs that preserve the employee relationship, quote unquote. The may jobs report showed slightly better jobs number than the april jobs report which was the worst in recorded history. Theres still major reasons. Black unemployment rose to 16. 8 and 600,000 Public Sector jobs were lost. Yet, this administration and Senate Republicans are not moving with economy urgency. Republicans seem to be more focused on a more limited response while granting a broad liability shield for major corporations. Question, do you agree with your predecessors, chair powell . Should Congress Take bold action as soon as possible, quote unquote . Thank you, madam chair. I would agree that congress has already provided significant fiscal support and that support is now having a positive effect on the economy. We see it in consumer spending, income data, we see it in payrolls, all of that is helping. And i would just note that there are Something Like 25 Million People who are still who have been dislodged from their job either in full or in part due to the pandemic and i would think that it would be a concern if congress were to pull back from the support that its providing too quickly. I wouldnt presume to prescribe exactly what you should or should not do. But i would say that it would be wise to look at ways to continue to support both people who are out of work and also smaller businesses that may not have vast resources for continued period of time, not forever, but for a period of time so we can get through this critical phase. The economy is just now beginning to recover. Its a critical phase and i think that support would be well placed at this time. Thank you very much. On may 15th, more than a month ago, now, the house passed the h. E. R. O. S. Act which would provide 175 billion in rental and homeowner assistance, nearly 1 trillion to support state, territory and local governments and another round of direct stimulus payments for individuals and families. I would note many states are reporting an uptick in confirmed cases of new highs, hospitalizations, with some officials slowing their effort to reopen. So who will suffer if the senate does not properly adopt these measures to support state and local governments, renters, homeowners and the broader economy . Well, as i mentioned, madam chair, i think you it would be appropriate to think about continuing support for people who are newly out of work and for smaller businesses who are struggling to get through what will be a temporary period as the economy moves back up toward higher levels of activity. Thank you very much. Before moving on for the next question, i would like to call on Ranking Member mchenry to share with us some information that is very important to this committee. Madam chair, please continue your questions. Ill take that out of my time. But actually, while were here, since technology is tough, a point of personal privilege i would seek to inform Committee Members about the tragic passing of our colleague and friend andy barrs carol last evening. When andy arrived home, he found that his wife had passed. They have two young children. She was 39 years old. This is quite a surprise and shock for all of the all of us. But i wanted to ensure that the Committee Members know this information and please keep andy and his two girls in your prayers. Thanks so much and thank you, madam chair. I yield back. Thank you very much. And now mr. Mchenry, i would recognize you for five minutes for questions. Thank you, madam chair. And, look, chairman powell, chairwoman waters, her questions about fiscal policy are certainly, i think, appropriate, we always want the fed chair to endorse our pieces of legislation. That is commensurate with every previous fed chair and with you as well. However, the monetary and fiscal policy are two very different things. And so i would urge you and the leadership of if fed to stick to Monetary Policy. Now, your words of encouragement are responsibilities that we have on the fiscal side of the house i think are well noted. What youre telling us about the employment marketplace on a goingforward basis i think is informative for our policymaking and so thank you for your statements there, the additional congressional action is required. Now, along those lines, we have the main Street Lending facility that is to be stood up soon. So walk me through what the intention here is because this is not something that is over the last 100 years, the fed is engaged in, and the intention here, and what is the missing piece that perhaps congress should think about filling in . Are you asking specifically about main street or yes. If you say the intention of the main Street Lending facility. Great. For Smaller Companies there was the Paycheck Protection Program and for companies that have access to the bond markets, we have Corporate Credit facilities and then theres a large group of very important companies, very diverse, different sectors, different needs, just very different, and those are for them we have the main street facility. And our intention is that if theyre to the extent theyre credit Worthy Companies in that space who are not able to get credit because of the pandemic, we want to be there to provide that credit. Thats what weve been working on. Its significantly different from any other undertaking we have been working on here. Particularly because that space is, by definition, its a space where commercial banks are the key form of liquidity and of lending and the bank credit agreements are always negotiated so there isnt a really high level of standardization. Each one is a little bit different. We have to find a way to get to those borrowers and get them funding. And were working through the Banking System to do that. We have now registered lenders who so the facility is effectively open now, the lenders are registering and they can begin to make loans. Those loans will soon be transferred 95 interest in them will be transferred to the facility. Were there. And, you know, were i think weve shown, as we go with all of these facilities, we are learning, no one has ever done this exactly, and so were weve been constantly taking feedback from lenders and borrowers and well keep doing that, and thats true for all of our facilities, until we feel weve got the facility that can do the best job. Okay. Thats an unconventional set of Monetary Policy that youre utilizing given the unconventional nature of this health and therefore economic challenge crisis that were facing. We also see other banks, japan and europe, trying to control inflation targets using unconventional means such as yield curve control and negative rates. Do we have empirical evidence to support deploying these tools in the United States as you see it . Theres a split. I would say the evidence is mixed on negative rates. There are those who you believe negative rates are quite effective and those who see the results as somewhat ambiguous. I think here in the United States weve looked at it carefully. We looked at it during the you know, the long expansion that ended in february and chose not to deploy them in the United States. Lately the fmoc has looked at negative rates and continues to see pretty broadly across the committee that negative rates are not something we think are appropriate for the u. S. Economy at least at this time and its not something that we see ourselves resorting to. We look at ourselves using asset purchases and forward guidance. Its currently being used by a couple of Central Banks around the world and rather than buying assets, youre saying, we wont let the Treasury Curve at a certain level move above something if it starts to move above that level, the rate moves above it. The United States actually did that from the late 40s and ill finish, sorry. But were educating ourselves on at this point. Its not something we have at all decided to do. Thank you for testifying and, chair powell, i appreciate the fact that you said when the crisis passes we will put them away. These new tools. That i think is a very sober assessment. We need to have a return to normalcy once this crisis passes. Thank you for your leadership and i yield back. Thank you chairwoman waters. Youre recognized for five minutes. Thank you, madam chair. Chairman powell, again, thank you for being here. I started out with my opening comments, talking about the situation that we found ourselves in in this country and i believe that this is a moment unlike any other that i have seen in terms of the countrys willingness to finally address these longlasting issues of race and putting them aside. I spoke to a group of 5,000 demonstrators and i was almost brought to tears when i stood up to speak because the crowd was probably 65 white and the rest maybe brown and africanAmerican People. So i think this is a different situation. And i believe that the Federal Reserve has a place in this particular moment. I think that you could play a role. And one of the things that im thinking about, you know, the Justice Department used to do and probably still should do what they consider patterns and practices where if theres a problem in a particular city or some Police Department or Fire Department or maybe just that city, they go in and they do a study and enter a Consent Decree to try to enable change and that happened in ferguson, missouri, and ferguson has changed dramatically. What im wondering how you would feel about patterns and practices with some of our financial agencies where, you know, the there is an obvious sign lack of inclusion and maybe even history of problems. Do you think that would work in the Financial Services world . Well, we do as you know, we do supervise banks for fair lending practices and, you know, where we see that kind of pattern and practice we engage in strong enforcement measures. So there is [ inaudible ] there is some of that going on already. Well, are there other steps, though, that the Federal Reserve can take to, you know, confront this moment . Do you believe that the board can take on some of the issues of economic injustice and i may even be using terminology that is not universal. But increasing the minimum wage and expanding the earned income tax credit, things i mentioned earlier, and to try to, again, to iron out, if you will, some of the wrinkles that have been around way too long, if to the i dont feel great about even discussing this issue in 2020. I see a role, but im wondering if you think the fed can play a role . I do. I do think we have a role. And i believe we will do our best to play that role. I wouldnt say its the lead role. I would say that we are definitely recommitting ourselves to enforcement of fair lending laws, as i mentioned. I would also say just as an institution, we want to be weve tried to make it a very high priority of diversity and inclusion so we want to set an example for that both internally to some extent, you know my colleagues and i have spoken out publicly on these issues which i think is n this unusual moment. The most important thing we can do is try to get back as quickly as possible to the labor market we had for the last couple of years. Theres nothing like a tight labor market for the lives in low and moderateincome communities. Everything were doing with our Monetary Policy tools is ultimately designed to get us back to a tight labor market as quickly as we can and stay there. Thats really the overarching goal of what were doing. And, you know, i appreciate your comments. My questions were not meant to be aaccuse toir. I think the Federal Reserve, the comments of mr. Kaplan, but even later on this week, i will be sitting down to discuss some of the same issues. Thank you mister chairman and thank you. Miss weaver, you are recognized for five minutes. Thank you madam chairwoman. I think you chairman powell for coming before this committee today. I want to commend you, as some so many of our college law colleagues have, for moving so swiftly and decisively these past few months in keeping americas economy stable during this pandemic. Just this week the Federal Reserve announced hell be buying 250 billion dollars and individual Corporate Bonds through the secondary market corporate Credit Facility with the ability to also tap into 25 billion from the treasury department. That was provided by the cares act. Understand the need for the Federal Reserve. To have this facility at the ready. I would like to know why you decided that it was this time to launch the facility now. What was the reasoning for launching this now . It was something weve been saying since we first announced the facility. What we do it did happen to be with the fact that we ultimately got around to doing it on monday. The overall goal of all that is to support market functioning. This is the secondary market part of it. We want to support market function. When markets are working people could borrow companies to borrow. Companies are not feeling tons of financial stress. I would say couple things. First buying cash bonds is gonna push the primary mode of support. Over time move more to buying bonds. At the current moment, markets are functioning pretty well. Our purchases would be at the bottom and of the range. As those markets continue to normalize, our purchases with the client. Chairman powell, are you planning on holding all these bans these bonds . We are generally an ultimate insurance. We are a buy and hold. Chairman paul as you know on april 22nd, in response to a letter from sandra cripple, the Federal Reserve vice chair, requested the congress consider modifying section one 71 otherwise known as the collins amendment. Do you believe with vice chair that congress should revisit that amendment when banks are able to adequately respond to increase credit demands. Yes so what were looking for a lot of the things were doing during the pandemic were giving relief so the banks could use their sheets to support their household and business customers. As theyve taken in more deposits and engaged in forbearance and things like credit cards knit Balance Sheets grow theyve been supporting their customers and this is simply a matter of allowing them to do it it would be a temporary measurement. So you are in favor of at least a temporary measure to modify the columns amendment to allow them to undo increased credit demands. I love to work with you on the details that. I thank you so much. The Federal Reserve has noticed that theyre currently not eligible lenders for any main street Loan Facility. In the faq guidance it states that, they consider expanding a list of spenders in the future. What is the reason for the Federal Reserve excluding non bank and non insured depository institutions from being eligible lenders under the main Street Lending program. Is it not possible to create a lender agreement . Similar to the one that we issued by the department of treasury for non bank and non insured deposit institutions . Like we get for the Paycheck Protection Program . It is possible. Weve been engaged in a sprint here to get these programs set up. Thats what weve been doing. Its like dunker getting the boats and go, bring the people back. Thats what weve been doing. In the case this, we can look at various thank you my time is expired. I hope you do take a careful look at that. And were also able to modify. Thank you madam chairwoman i yield back. Thank you you are recognized for five minutes. Thank you madam chair, chairman powell thank you for the hard work that you and your staff in the fed up put in. Very difficult circumstances. Taking a look at your monetary report, just if you look at the first four graphs in the report, the last few years youve been here chairman theyve been consistent steady growth. Since the Obama Administration into the Trump Administration. Now i know the definition of falling off a cliff. Those graphs are very telling in the loss of jobs that we have seen. My first question to you sir is, in the heroes act, there is a substantial appropriation for state local and School Districts. That have seen their tax revenues fall tremendously. Colorado the State Government alone is looking at a three billion dollar dropping revenue from last year so i know you are not particular interested in talking about fiscal measures but if in fact we were to assist a state local and School District over the next year to, thousands and tabs of jobs are lost, how is that gonna affect the recovery you hope for . I will agree that i would not offer specific advice on fiscal policy. From an economic standpoint, state and local governments employ Something Like 13 Million People. States have to balance their budgets and when revenues go down and expenses go up. When they do the cut costs. Weve seen state local governments layoff 1 million and a half people. State local governments provide essential services, as we all know. They are very large employer. I would say it certainly worth considering all that. Well hold back the economic recovery if they continue to lay people off. And they continue to cut essential services. This is kind of what happened post financial crisis. So i thank you for that. Im gonna summarize your answer laying off a lot of people. We i saw today, even a substantial company like at t, laid out thousands of people. What i have in your report this in the second page the strains on household and business Balance Sheets from the economic and financial shocks from march, well likely create assistance facilities. What did you mean by persistent facilities . Is what we mean by that. Something like 25 Million People. Have been displaced in the workforce. Overall. Either fully or partially. Those people are right now they are getting enhanced Unemployment Insurance perhaps. Many of them might have gotten support checks, as part of the cares act. We they lose the benefits they are getting. They will come under financial pressure right away. We its the same thing with smaller businesses. They dont tend to have substantial quantities of cushion substantial cushion to fall back on. Youll be under strain, and the prospect of facing that kind of strain is already strenuous in causes people to pull in their spending. Those things are suffering forcing for the economy. Is there anything that you would like to do, from a monetary position of the fed, that treasury or the administration has prevented you from doing . The answer is no. We are very specific powers which are landing powers. In addition to our regular Monetary Policy powers. Weve use that to completely unprecedented extent here. I think weve been able to broadly do the things that we felt were most in need of doing. Of course the powers that are gonna matter so much Going Forward have already mattered is the spending tax and spending power. Thank you for your testimony and your work. I yield back to the chair. Thank you mister rose you are recognized for five minutes we. Mr. Rose . He is not president. We go into mr. Style, correction eyes for five minutes. Hello . Can you hear me . Yes. I was talking if i can begin . He may begin. Okay thank you chairwoman waters and thank you chairman powell for being with us. As we move through the Pandemic Recovery process, i am encouraged by the economic result. Obviously we still have much farther to go but i am encouraged. I credit the administration led by President Trump and institutions like the fed and your leadership are helping you to so quickly work to revive the economy. How i received news yesterday that makes me a little less encouraged and more concerned. I received a call from the bank here yesterday alerting me to the fact that they have been notified at the beginning of this week by the fed that they would only be receiving a small portion of their weekly order of coinage. According to this banker is institution will likely run out of coins by friday of this week or this weekend and after some preliminary research around that many other banks across my district are having the same operational challenge. My fear is customers that use these banks will react very poorly. I know that we all dont want to wake up to headlines in the near future such as banks out of money. German pell i wonder where you will have this issue and what is being done to mitigate it . Thank you i am aware of it. Im very much aware of it. Let me say whats happened is with the partial closure of the economy, the flow of coins to the economy has gotten all it is kind of stop. The places where you go to give youre coins or cash, folding money that has not been working. Stores have been closed. Oh system of low has come to a stop. We are well where this, we are working with the mint and the reserve bank. As a company open up again were seeing cohens move around again. If you havent done so they should certainly be in touch with their reserve bank. If you report the situation. Weve been working on this problem very much appreciate you bring it to our attention. We feel like were making progress with it. Its been something weve been working on. Chairwoman waters i would like to submit for the record, this released from the fed strategic allocation of corn inventories. Without objection such as the order. Chairman powell, i wanted to some degree already spoken to this. Is this indicative of a larger issue . And is it temporary or does this point to a larger structural issue on this particular matter . We believe its just temperature. Due to the fact of the economy being in part closed as i mentioned the flow of coins to the economy. The reserve banks in the banks think of it all the time but now are beginning to see there are shortages. Weve been aware of it we are working with the mid to increased supply and working with the reserve bank to get that supply where needs to be. We think its temporary situation. And if you would i guess the banks and im talking with , like the one i mentioned in my district, what would you suggest they do to deal with this issue. Something in high not only for the banks, but their customers businesses in the consumer who is going to be faced all of these institutions and individuals will be faced with the prospect of having to round up around down and in a time when pennies are the difference between profitability and loss, it seems like it could be a bigger concern and the announcement from the fed would indicate that it is. So i would encourage you youre banks to get in touch with their reserve bank. I dont know whether you are atlanta or st. Louis. But whichever it maybe both in your district. In any case, they are responsible for this. We are working on it. Thank you chairman. I would encourage you maybe to put up some more robust guidance for banks, so they dont feel the banks have been speaking with, all of the opinion that they dont know what to tell their customers. I just encourage you to maybe put out some more robust guidance for them. I want to thank you for bringing that up ill certainly do that. I am a cosponsor along with other members of our committee of hr 20 6 50 the payment choice act of 2019 a bipartisan supported bill which would require merchants to accept cash. This legislation is critical because parts of the country in both rural and urban areas are more dependent on the cash economy. I see iran at a time i would encourage my colleagues to take a look at and support this bill thank you chairman powell and chairwoman waters. Mr. Hines youre recognized for five minutes. Thank you chairwoman. Thank you chairman powell for being with us today. Thank you for your extraordinary efforts and the efforts of the Federal Reserve to contribute to the emergency support. I want to explore to ideas, who is the beneficiary of trillions of dollars that have been mobilized in the rescue . Chairman as you know a company do three things that is my. It could buy stuff, rent insurance space, raw materials. It can pay wages, keep people employed, or third it can Services Capital structure. Could be interest on bonds or banks or an issue dividends. Chairman powell as you know the payment Protection Program we set up an explicit extensive, that money be used for wages. My first question is chairman paul well start with the primary market where you are actually lending directly to corporations. Is there any incentive a requirement, that recipients of that age preference the payment of wages over the service of payment of interest, or the purchase of stuff . Put it this way theres nothing in the cares act. The cares act specifically exams the transactions to take place in the primary market and corporate Credit Facility those requirements. They do apply to direct loans. As you know thats different requirements. You time by the requirements of the patriot protection act . Yes explicitly create an incentive for the use of that money to pay wages and keep up employment. It doesnt sound like the fed landing the inside the fed has those protections, let me ask you to reflect that cant went through all the 11 programs. The money back it the mutual funds, all his Credit Facilities, either any terms in the availability of that equity the preferences the payment of wages over the servicing of that from corporations . No. They arent. Or implementing a lot the cares act specifically does not piles things. I think its up to us to rewrite the law to achieve goals we might have. Having lived through the political fallout of the tar program, when americas top banks and the Auto Companies bill out, and very sensitive to programs that ultimately use public money, to allow corporations to avoid bankruptcy, and service their debt. And ultimately pay dividends. I commend that my colleagues, as Something Real concern. When the story is told here, i think a lot of private minister corporations and time by the car wash back down the street qualified for alone. A lot of that money will have been used to keep banks solve, and to preserve loans, and Service Bonds was much i support your efforts, in my decorative doing this is been the second time that this is been necessary for the government Federal Reserve to step in and truly massive way beyond the economy. Ten years ago it was the banks, it was the oil industry. Never seeing airlines the list goes on and on. Nowhere to have which relates my first wary, actors in the private market and i was once in the private sector, are going to decide that they could take on a lot more risk, repurchase shares, Dividend Capital because when the going gets tough, and catastrophe hits, will be there to build him out. I want to use my last 40 seconds or so to ask you to reflect on whether you think, the activities from the past six months, and a last ten years have created significant moral hazard, in our markets system. So me first say the intended beneficiary of all our programs are workers that are able to keep their jobs because companies could finance themselves. You raise a good question. Certainly is a concern. Its why generally will look for ways to insert ourselves into markets when they are functioning. Whos award world historical event unlike any other. The situation that happened was one where we really felt like we had to come in with all our tools as aggressively as possible. I dont regret those positions decisions. Thats why i always say well put the tools away. I take it very seriously. Ultimately, in a free market, an economy like ours, and you get the benefits of your success. And the cost of your failures too. Thats the way it works. You are recognized for five minutes. Mr. Style present . If not mr. Taylor youre recognized for five minutes. Thank you. Chairman powell, for five years, ive worked very diligently in an effort to unlock at least 45 billion dollars in capital to be available to the economy. Without missing any more, you understand where i am headed. The inner affiliate marginal. I hear rumors that we might be getting closer to such a rule being announced. Any insight you could provide on that . Im happy to be able to confirm those rumors. We are indeed getting close. Ive been under strict orders not to give you an actual date, nonetheless its very clear thats been a long road i will agree with you. But we will get there very soon im told. I spend enough time on farm bills await you out. Lawmaking process is very important. That said german pell, theres been a lot of comments made by the nature of the programs that have been put together. And the way the fed has addressed this unprecedented set of challenges weve had. The first part of the year. That said, in your experience as a fed chairman, in your academic could youve ever imagined a pandemic of this magnitude with this kind of Economic Impact . Not just on the United States but around the world . No i certainly didnt. Like everyone else i was aware that there were things cold pandemics and they could have consequences. You essentially had all over the world, governments and people sort of deliberately stopping a lot of Economic Activity. We will see declines of Economic Activity that are beyond any in living memory because of a disease. I really do think this is oh i certainly hope its a once in a lifetime event. I hope Market Participants dont go to think of it as something that will react to any old thing. Absolutely. You and i have discussed many times before coming from my part of oklahoma, golden fresh in the 1930s, that ball the dramatic effect affect policy in 29 and 30, and congress is policies in ministration of that times policies that made things so dramatically worse. Three quarters of the population in my county has gone away and then come back. Its fair to say that doing what we in congress, what the fed is done in treasuries of done, unprecedented as it may be, still is dramatically cheaper than a lack of action, Fair Assessment . Putting the economic train on the tracks cause a lot more in keeping it on the tracks. I feel very strongly that way i really do. When i come out of this, the more we do now the stronger our economy will be. The better we are able to keep people working get tax revenue backup. And have a Strong Economy to pull this forward. And service the debt. Trying to come out of this with more that. So our banks are gonna have taken losses, households will run down their capital. Nonetheless, the economy will be stronger that will help everyone. And that policy will reflect the new reality as well physical policy in the United States congress has to reflect the new reality. The piper ultimately have to be paid. That bill pays how we get to the point being able to pay. Thats right. Theres not a time to worry too much about the longer run physical situation. Laughter turned that. This isnt the time to prioritize that. One last thought representing a substantial part of a rural area of oklahoma. Making sure the fed programs work as well in the countryside as they do in the Money Centers in the big urban areas. Its critically important for my perspective. Making sure those facilities, are available to everybody. Helps assure the robust recovery. We dont want to leave any particular reasons or parts of society behind. As we come out of this. I believe youre working aggressively in that area. We have tried to and in fact i would point to the stuff weve done with the municipal facility. We make sure that states with more rural populations who dont have a lot of big cities, nonetheless have the benefits of that facility. We will continue to adjust all our facilities to try to serve that goal. How madam chair i yield back the balance of my time. Thank you mr. Heck, youre recognized for five minutes. Thank you madam chair id like to start by thanking you are setting up the phone call the other day was chair powell regarding the issue of commercial real estate. And the future of that market and its importance. I have time to get into that today. We still have a problem and hammering the alarm bell. Again, since i was privileged to join this committee, nearly eight years ago, ive asked that every single when does america get a race . The truth of the matter is for far too long in the United States id suggest 40 years, we have been contempt and some people have supported frankly running the economy short of its potential. I remember, when i got here, there are people both on and off the fomc. Thought if we have our dipped below 6 unemployment would trigger inflation. But it was no not six five and a half, five four. What we know is we ran this economy between three and a half and 4 unemployment. For two and a half years. And we maintain in fact we were short of the price stability target. The fact of the matter is, during your tenure mister chair, and i tip my hat to you sir. Youve open peoples eyes about the importance of a tight labor market. This yesterday in the senate, he did again today. Youve done it in public utterances. We cannot thank you enough. Well done sir. You pointed out rightfully, tight labor markets help with wage growth. But especially with employment and wage growth at the people at the lower end of the income spectrum. Again i want to thank you. But the fact remains mister chair, the mission of the fed is no different today, it was over two generations when it never allow the economy to operate in a tight labor staff. The law hasnt been change in the rules regulations havent changed. Were gonna get past this at this at some point. The sooner the better. My question for you is, short of you having a lifetime appointment, which by the way i would support sir. Short of you having that, how could we be assured, that what you have so appropriately pursued, will continue . I want to preempt you a little bit if i may mister chair, racing every federal entity in the history of civilization, has resisted opening up the underlying authorizing act. In defense so my know some degree i get it. You are channeling well rogers and saying once, people feel about congress the same way when davie gets a hold of the hammer. Youre worried about what might happen if we open that up. There is no assurance, that what you have rightfully pointed out, what you have rightfully pursued will continue to be pursued. How do we assure ourselves, that what you have figured out, and what you have led the fed to do, well continue into the future if we dont change the law sir . I forgot to myself. Sorry. I actually think the law was written to accommodate what we have really learned. What a lot of us have learned. That is for many years, when we are growing up it wasnt a problem. People imagine it they had to watch carefully over inflation. It would move up and it would hurt people on fixed incomes more than anyone else. We have learned, these Inflationary Forces they are here to stay for a while. We live in an era of continued downward pressure on inflation. That gives us the ability to have very low levels of an employment. I dont think its going to be if you change the law to the situation will change. The economy is every falling. I think there are no changing the law is what we need to do. Were so eager to get back to where we were and below. We wincing inflationary pressures at three half percent. What we saw was the gains in wages, going to people at the lower end of the weight spectrum. For the first time in a very long time. I cant tell you how badly want to get their how fast we want to get their. Well be using our tools that way. Its really how i look at it. Thank you again surfer leadership. Mr. Style youre recognized for five minutes. Mr. Style . Hes talking about were not hearing. We are having technical difficulties here. Mr. So we cannot hear you want to move on while theyre trying to correct that mr. Taylor. But you have five minutes. The in not will move on to mr. Lucas meyer. He recognized for five minutes. Thank you madam chair. Thank you chairman powell for being here today. Thank you for quick action or alas errol months to set up these different facilities, to be able to underpin our markets. Minimize the damage to our economy. Its amazing to see what youve done the impact this had and we certainly appreciate your efforts. Thank you very much. Their most recent report, you stated how lending standards have become less accommodating and bring conditions i thinkers in his Financial Institutions are beginning to look three or four months down the road, and preparing for regulators in their exams. Coming to their institution after this forbearance and begin classifying loans and force banks to reserve against those assets. I can tell you from talking to bankers across the country, that if the regulators do not give forbearance of these institutions, and they start forcing institutions to classify a whole lines louisiana be a real problem with the credit shortage in rural areas. Do you believe the regulation providing forbearance what do you think it should look like . We are encouraging our supervisors, to encourage banks to work with their borrowers. And not to jump to criticize loans. And to take on board, the situation that werent. We are communicating with them a lot in that respect. I hope thats getting through to the banks. In fact is going to the borrowers. The situational is or so businesses are closed this is clearly a temporary period, when i keep on urging tour for the customers. I appreciate the comments are but your earlier comments talked about some businesses struggling and the need for forbearance. I appreciate that but i could tell you ive been going through this ppp program, that the banks with their accountants and attorneys close at hand are very reluctant to do anything unless theres some physical guidance there. Some words on paper that they could point to. Ive got a bill to try to put something in place that they can point to to give them the kind of forbearance and protection they need to get forbearance to the customers. My greatest fears we wind up with Something Like when the regulators going in closed down entire industries, and hurt local communities and we end up losing banks in the process. If we can do this in this situation. Its too broad based. If you do this whenever i get out of this economic downturn. Very hopeful hell work with us to court and make a solution to make sure theres something the banks could point to, to provide the forebears they need. Certainly they need to manage their customer base. Were trying to give them that. Were also doing additional training of supervisors. On point all through banks came into this well capitalized. That helps as well. Theres gonna be some more guidance interagency guidance on post pandemic exams and how we conduct those. We are working away at it, and we really want to hear from banks and supervisors and anybody so the extent that this is not getting through. This is effectively a Natural Disaster. We want to treat it like that. Just a quick comment. I know they made a comment yesterday that he seeing increase in deposits. I know anecdotally, luckily here theres a local banks in the area who says 20 increase in deposits. Servings of increased have you seen that same thing happening . What do you ascertain from that as to why and what kind of effect on the road it will have them because the citizens of our country having that money 100 to be spent. Part of it is the answer is yes, we are seeing a lot of that. And you saw it in the income data where people are holding just a very very high levels of savings right now and part of that is that they are getting the ppp loans and personal Bank Accounts, its also the Unemployment Insurance, and its the checks and theyve been holding back. I think you getting to your point, what it is evidence that there is a lot of spending power and we are sort of i think it bodes well for the next few months. Thank you, madam chair. Thank, you we recognized for five minutes. Im going to go back to mr. Style has the problem been corrected for mr. Spy . I hope so, chairwoman waters, inaudible thank you very much chairman women waters. Thank you for being with us here today, i look forward to being able to do these meetings in person as we work through some of the technical glitches here. During and immediately following the financial crisis of 2009, the Federal Reserves Balance Sheet grew by north of two trillion dollars reaching about 4. 5 trillion dollars. In comments, in your comment following on congresswoman and wagners question, you noted that the Federal Reserve has been mostly holding to maturity. Im wondering if you can comment on what the Economic Indicators that you are looking at in the Federal Reserve between 2009 into 2019 as the Federal Reserve drop to the Balance Sheet by roughly half of a trillion dollars, and whether or not those same Economic Indicators would be guiding you as you make determinations to the fed as to whether we will be needing to all those, hold those reserves all the way through to maturity or whether there will be opportunities to reduce the feds Balance Sheet in advance of that maturity. So, we waited until the economy was well down the path of recovery before we even thought about starting to shrink the size of the Balance Sheet. And the other thing that we did was, we froze the Balance Sheet at the end of 2014, we froze the size of the Balance Sheet. Pardon me, for a period of three years, so that the economy was growing and therefore the ratio of the size of the Balance Sheets to the economy was declining. I think we declined from baby 25 of gdp to maybe 17, 18 . So that is a passive way to allow the bank Balance Sheet to shrink relative to the economy. I think in this situation, we are thinking that we may do Something Like that but it is so far down the road, i think we are at the beginning of the second phase of this process the one where the economy begins to recover from the shut down period and that period will take some time and then it will probably be a lengthy period as we get back to full employment. So it will be awhile before we start really thinking about how to shrink the Balance Sheet and i would say that at current levels or a current plan levels i think we know now that the Balance Sheet doesnt present issues in terms of either inflation or financial stability. Those were big concerns as weak with the Balance Sheet during the last crisis. Obviously we dont have the inflation rate today but i do hold some concerns that we may see inflation and pressures in the future as the feds Balance Sheet has now increased beyond seven trillion dollars. And honestly you and your colleagues at the Federal Reserve will continue to watch that. Let me shift here slightly, weve seen articles recently related to Loan Obligations, in the Banking Sector i think what is important here to note is Banking Institutions came into this crisis with a much healthier Balance Sheet than they did in 2009, under recently an article that was put forward, identifying potential risks and collateral lies Loan Obligations face, indicating that banks may have broader systemic risk. Can you comment as to whether or not you hold that you or whether or not you believe banks came in with the strong Balance Sheet and are there for well capitalized to weather these challenges . Sure. The seal is quite different than what was back in the crisis, we have a lot of transparency into what in the sea allows, we regularly include them in our annual stress tests we stress them really hard to see what kind of losses they produce and theyre also not that large i think its less than one half of 1 of the assets of the banks are in theses clos they contain leverage lows several years looking at it carefully, i think the comparison to the Global Financial crisis is not the right when it is an issue we will continue to monitor. I appreciate you moderating that as the Balance Sheets that may pose to inflation down the. Road i appreciate you being here today. Thank you. Thank you. Mr. Vargas, you are recognized for five minutes. This if mr. Vargas is not present, we will move on to miss at me. You are recognized. Please. Unmute yourself. Good day chairwoman and hello chairman powell, thank you so much for being with us again today and thank you for all the good work that you do. We are very appreciative. Obviously we know these are difficult times that we are in, for the second time in a dozen years we are in a severe recession. I believe that in may we saw the 20 million less american americans have jobs in the three months prior. Unemployment is at its highest rate since world war ii and the feds projections have that remaining in almost 10 through the end of the year. We have also discussed, to make matters worse, that situation appears far worse for lower income workers than it does for others who are making more, chairwoman powell you have alluded today and i believe yesterday, i think you said that you had been concerned about the overall deficits for the long term, but the time to address that is when the economy is strong. Not when we are in an economic crisis. Is that correct . Im sorry, i forgot to admit myself again. Yes. I do think that. Ultimately the debt cant go faster than the economy forever, that is sort of the definition of an unsustainable path. We have been on that for a while now. And we need to address it. We have no choice ultimately, we have to address it. The timing for that is when the economy is unemployment is low and economies. Growing thank you. I couldnt agree with you more. Obviously each recession is different, i want to take a look back at the last one to see what lessons we learned, to see what we can look at to help deal with this one. I had an opportunity back in the 2009 stimulus bill frame i know we devoted about 20 of that total aid to fiscal support for state budgets. That is when i was working at the state of iowa. And in charge of supervising some of that funding. One thing that i saw was that when that assistance started to end in 2010, because of a balanced budget requirements that we have for instance in the state of iowa, we had to cut budgets. Teachers, firefighters, public servants, etc lost their jobs. And then i also have seen some research from the International Monetary fund and others showing that these cuts were a drag on the economy for several years afterwards and some of those estimates showing that the jobs lost due to these cuts actually offset to the job growth in the Public Sector entirely. Does that impact seem like it might be part of the reason why the recovery from 2008 recession was so slow . Yes, that is a finding that Economic Research has come up with. I think pretty clearly. I appreciate that. It seems like we are in agreement to supporting state and local budgets is a key step to supporting the recovery process. I know we are absolutely trying to work on getting that piece through the house. And it is something that i have worked on. Do you think that is Something Congress needs to be doing more on to make sure that we recover our economy . As you point out. State and local governments are large, large employers and they offer Critical Services to people and there is a balanced budget, a provision that effectively in every state, almost every state. And so, when there are budget problems, what happens as you see layoffs and cutbacks in essential services. Both of those create not just human misery but they also weigh on the economy. So i do think its an area where for congress to look. Thank you obviously we are trying to push that through, i actually have a bill that i wrote previously that directly supports state and local governments for lost revenue to ensure that these job cuts dont happen again. I appreciate all that you are doing to help us shore up our economy at this point. Give us the guidance and oversight that we need. I am grateful for your health back here today and i hope that we can move a state and local government bill forward. Thank you so much and i yield back. Thank you. Mr. High zinger, you recognized for five minutes. Thank you madam chair and i like to thank the Ranking Member just think of our mutual friend andy barr right now and his daughters, and i know chairman, he would love to be here to grill you about a number of issues he and i both recently chaired the monetary in trade subcommittee but i need to touch base on the paycheck, sorry, two things. Mainstream business that is not eligible for Paycheck Protection Program and as you will know a huge part of our manufacturing economy is automobiles especially illegal parts in those account for about 900,000 jobs, 125,000 of those here in michigan alone. And what we are seeing and we have been hearing from the large automobile manufacturers is they are concerned for their suppliers. And those suppliers are telling me, which i have a tremendous number of here in the Second District of michigan. That they are having some liquidity issues. Not that they dont have been properly funded previously, but it is about the liquidity right now. Last month i joined with my michigan colleagues and asking the administration to create short term lending assistance to Medium Sized Companies in Motor Vehicle parts sector, using necessary capital from the main Street Lending program. Now you had said and written it down i think you had said we are there, and standing up the main Street Program i am not as convinced i guess of that. And i would like to make sure that you can commit to maybe clarify what that means. I need to have the top now. And what i really want to know is what you commit to working with treasury secretary mnuchin to a dedicated program to have a sector focused on companies to keep production four key links in Motor Vehicle parts manufacturing viable. Because if we lose them, that is going to be a huge part of our economy that will be hit. Im wondering if you will commit to working on the. The facility is open now for lenders to register, so those companies will have banks that they work with. Their regular partners and business. And those banks should be in the process of registering with the boston feds to become an approved lender in the mainstream facility. At that point, they can make main street loans right away. And very shortly they will be able to put 95 interest in those loans. So we are there. Effectively, if their banks are. How about a separate facility within the program . We try to set, we dont do facilities for individual industries. What we do is we set. The requirements that we have set up should be a very good fit for the companies who are talking about. Essentially, its we are looking at 2019 financials and you can borrow in a multiple of your 2019 and that could either be four or six, depending on the kind of alone you want. And the kind of company it is. These would be, they would be a perfectly good fit for this facility. We dont do facilities that are designed for individual, industries we do facilities abroad, applicability, anybody who meets those requirements can borrow. I hear no program dedicated to an automotive industry, correct . Thats right. Okay. I think thats a mistake, however, i need to move on to another unintended consequence i believe that is part of the Paycheck Protection Program. And a company that is not able to take part in that but it is waiting for this mainstream lending program, i have a company here in michigan in the district probably many of my colleagues have your product, look home it is coffee and 26yearold very Fast Growing Company has manufacturing facilities here, a couple of hundred constituents, but they are based in philadelphia, for the last six years theyve been focused on growth. And it also means they have had to borrow funds which has led to accumulation of quite a bit of debt. Rules are currently written, just so that law comb would not qualify to participate in the main Street Lending program however i hope that believe that the leveraging requirements in the program is currently draft, is a fairly punishes company such as the calm that would otherwise be viewed as true american success tories when using different metrics. If as if the rules are, as a currently written, its designed to prevent funds from going to companies that need them. Most understand youre not wanting to deal with over Leverage Companies being build out more talking about growing companies that have had to accumulate debt. Im working with some wed appreciate it if theyd be a ratio, one to one independently appraised in the past 12 to 18 months and ability to access for those kinds of companies, if we are missing something we want to understand that. Weve been willing to adopt these programs insistently. Will be looking forward to talking with that wonderful thanks appreciate it. Thank you mister mcadams directness for five minutes. Thank you madam chair and chair powell for being with us and your leadership during this difficult Economic Situation. Chair powell the last time you are before this committee, the occ moved ahead with its reright the community rian investment act. In light of the renewed focus by congress to address racism and systemic issues throughout our economy in our nation, i think its particularly important that we get the cra correct. Since its purpose its a story called purpose black and minority individuals and communities and to have Financial Institutions meet them. Many of my colleagues share my concerns the elsisi misses the mark. Probably does more harm than good. Im glad the fed did not sign on for rulemaking. They gave a speech on how to strengthen the cra in that speech he said quote by sharing our publicly we hope to solicit public input on a broader set of options for reform in a brighter way forward toward inter agency agreements. Now that the occ is finalized its rule, is there any update you could provide the committee on how or when the fed might be forwarding any information to the public that receives . Of course. Sorry for us is an extremely important law. We agreed that it is a good time to update it. We want to update it in a way that has broad support its always been our nonnegotiable addition for it. We are still working on it. I do think move forward on how much for you on timing. Theres been a lot of great work done, and i like where we are on it. In terms of the things in the ways weve been thinking about it. We will ultimately move forward, can say exactly when were not gonna let that were go to waste. Thank you we look forward to you more about that. Next question, my perception off weve done a decent job of putting the country on life support. The response has been an even. You have double digit unemployment numbers and more for African Americans and some secular hit order than others. The Congress Said that we have the option when this pandemic broke out about acting quickly or acting perfectly and i think we have we shows to act quickly. I think that was the right call. By my calculations the fed has allocated 200 billion in the cares act. Some of that funding was given to the facilities you discussed. How do you intend to use the remaining funds . Anderson it takes time to set up various facilities also worry if we dont work fast enough businesses and individuals in communities may suffer as a result. First let me agree that i think the actions the fiscal actions you took were incredibly timely, and they will be very well judged overtime. Even though nothing is perfect. Its an emergency do the best you can think the ppp program i think its certainly helping the economy out of what could have been so much worse situation. Terms of the rest of the cares act of money, it is there when we need it. We have a lot more ability to use our lending powers, should be necessary. Should be appropriate. We are certainly willing to do that. It kind of got to the end of the beginning here. Now getting to the fees and the reopening of the economy. The money is there if we need it. The secretary of treasury and all that. They could put it into our programs we stand ready to do more if more needs to be done. So that is essentially being more of the same as necessary, or is there anything else we are looking at any other gaps that keep you up at night . Weve covered now weve got nonprofits now on main street, i think a sometime. We have small medium and large companies. We have state local governments. And then we covered a lot of the waterfront. Were always open to additional ideas. Mainly its a lot of execution now and continuing to improve what weve done make it do its job better. I yield back. Thank you mr. Vargas you are recognized for five minutes. Thank you madam chairwoman do you hear me . Yes. I never abandoned you i was here though time my microphone wasnt working. It was sad to hear the news event hes wife and family. On our side to we love him is very tragic i know we all keep his life and his family especially now in our prayers. Again thank you mr. Mackenzie for letting us know. I dont agree with mr. Heck that mr. Paul that im a federal lifeline appointment for you to much of a good guy. To be fair at all. I do have to commend you. Near what i would call those republicans of old stable dignified, intelligent fair charitable. I think everyones been looking to you for guidance. I think youve been the right person at the right time. I do want to continue. I also want to commend you for highlighting the disproportionate impact that this pandemic has had on communities of color, latinos African Americans and especially the poor. My district is composed in appeal county which is an important county over 70 of my district is latino. The Unemployment Rate is a striking 28 in april. Thats what it was. Thats basically the same one we had in the Great Recession 35 . As of april the Unemployment Rate also increased 15 . Take a closer look specifically in the places that represent, the unemployment in april was about 20 . This proportion impacts of this pandemic on our economy, it is clear in my district. What policy has the fed pursued specifically at reducing the high rates of unemployment for African Americans and latinos during this pandemic. What policies as the fed put in place to make sure latinos and African Americans are not suffering from this disproportionate rates as we come out of this recession. Im tempted to say all of our policies are focused on that problem. The way this pandemic works, it companies in parts of the economy our Service Economy Companies Involved people getting together, in tight quarters either feeding them or giving them drinks or flying them around or entertaining them. Those are service jobs which happened to be overly represented. The workforce happens to be inconsistent and a large measure of lower income communities and minorities. Extraordinary man and those people are laid off. Of course it shows the no in the numbers we the tools we have other tools we have. Were supporting the flow of credit the economy to companies so they dont feel financial stress. Were trying to create an environment where people have the very best chance to go back to their own job or get a new job. That is really what all our efforts are about. Nothing more nothing less. Let mr. Chairman i think you know, and i agree with you the type of job that you just described also relies on tourism, restaurants. And that Service Economy. They seem to be the last ones to come out of this recession. People dont feel comfortable. That Unemployment Insurance how are these people going to make it . Thats exactly were in a see a lot of people go back to work here in the next few months. We believe that. But the people that are in those parts of the industries, they will struggle. Until the pandemic is really in the history books. Thats gonna be a problem. I think those people are needs some work. It may be different to find jobs in that industry. I think were gonna need to support them and help them. As congress did in the Global Financial crisis. As the years went on congress reupped employment insurance. A number of times. Just to keep people in their apartment, keep them they are not being evicted or moving into a crowded place. That will be a place where the disease could spread more quickly to. I do think its important that we provide that kind of help. I appreciate those words. Use your influence as you can to make sure that happens. I do have to ask one of the things you said is this pandemic was thank you very much for being here continue being the prisoner. We have a lot of faith in you. Thank you. Thank you. Mr. Taylor you are recognized for five minutes. Madam chair could you . I could hear you. Terrific. Sure appreciate you being here. We are all concerned about the economy as it goes to recovering jobs. Something that is the concern to me, properties that have long term mortgages what a lender has very little flexibility and the ability to forebear. We has a congress saw the need to forebear from lenders encouraging banks which are the biggest of lenders in our economy. To forebear. We have given guidance to fanny and freddy. We have worked on legislation in financing and trying to help encourage forbearance. There are pockets of the economy, theres not the ability for the lenders to forebear at a level that will help them get to the other side. In particular concern about three subject or is in real estate. Hospitality, Student Housing, an indoor retail. Where it is because of the pandemic, they have very little casual. They cannot service their mortgages. I love working with a lot of members of this community, and this committee. From all over the country to share this concern. I perceive that theres been absent action from this body of congress, this impact on jobs will be very material. As for people who are working in the retail, people and Student Housing where you have a university town. And hes out the housing foreclosures will be really serious. Assuming that you are to see things the way i see them, there is a coming cataclysm here. Do you have the statutory authority, with you in the treasury to open up the main Street Lending program or any other programs to provide lending authority, to someone that in terms helps these properties who are in trouble cant make a mortgage . There are limits, i think are free to do what we can do. Theyre landing powers, very explicit in the law of the conclude that we are adequately secured. Cannot lend to insolvent borrowers. Within that, we could take a lot of risk. The question is for Companies Like that, you really hit the most affected sectors. Have to be lending on some sort of an asset base basis. It is something we are looking at. I question again is a yes or no question. Can you do this without an act of congress . Or do we, Congress Need to take an act to give you the authority. Do you have the authority today . If you decide this is important, we have to do it to make these loans to the lower leverage healthier properties, to try to get them to the other side. A liquidity problem, if we get into the other side, they will be able to reemploy people in communities will survive. There are whole communities that are going to die or be very badly impaired if they lose their hospitality space. Or lose Shopping Centers are extremely important that community. Do you have the authority . Does Congress Need to act to give you the authority. . My guess is, without seeing the numbers if you are talking about low leverage situations where it really is just a liquidity problem, we have that authority, we do have that authority. inaudible if you give a security loan in the hospitality space, the average lever is 63 . Normal really state is normally levered at 15 to 70 times. To put it in maine street terms. That is well outside the range of what you have stated by rule that you can do. Again, my question is do i have to pass a law so that you can then go into this space or do you have the authority right now to say you know what, there is a problem, we are going to go take action . I think some of the problems in that space will be better served by fiscal policy. I think we can probably reach some of them as well. But the answer i think is both. Okay, thank you. Thank you, miss wetston you are granted five minutes. Thank you madam chairwoman and thank you chairman powell for joining us again today and for all that youre doing in these difficult times. One of the most stabilizing things that congress did in the cares act was to expand Unemployment Benefits by increasing the benefits by an extra 600 dollars per week on top of those benefits that the state provides. In virginia, our maximum weekly benefit was 370 dollars. The extra money has been a huge relief to the over 822,000 virginians who have filed for Unemployment Benefits since march 15th. With these Unemployment Benefits, these enhanced benefits are set to expire at the end of july. Do you anticipate to the Unemployment Rate falling significantly by that time . I would say reasonably, many forecasters which say, i would agree, that we should see strong job creation between now and the end of july. Yes. And that may mean that the Unemployment Rate comes down. So, one of the arguments against continuing this benefit is that it is too generous. Some of my colleagues are suggesting that employers are having a hard time getting employees to come back to work because employment is more lucrative unemployment is more lucrative than what they make in the regular jobs. Is that something that you have encountered as far as your regional surveys of this activity and the data . Have you gotten any information that employers are trying to hire people back in that they are having trouble doing so because the employees say i would rather just kick back and collect my unemployment . Here is what we have been hearing. Its sort of a little bit different from the. Employers, Many Employers are reluctant to go back quickly and it may partly be that they, the 600 dollars is generous compared to what they make and they werent making that much with the other Unemployment Insurance. But if it is a Service Economy job and you are very close to someone, its a barbershop, its a beauty parlor, its a nail salon, any of those things, there is also still reluctance on the part of workers to go back to work at all. If they can delay that, more broadly i would say, that program does and at the end of july. I would say it is probably going to be important that we continue in some form, i wouldnt say what form but you wouldnt want to go all the way to zero on that. Im glad to hear that mr. , chairman. What you said and talked about people not feeling comfortable going back to work is pretty consistent with what im hearing anecdotally, that people are more concerned about the safety that they have at home who are elderly or with compromised immune systems and also a lot of people in my district and i would imagine this the same nationwide, or having trouble accessing childcare at this time, because many of the centers of closed. So that is a real issue for a lot of people. Now former fed chairs yellin and bernanke have endorsed a proposal which is the worker relief security act that would tie federal Unemployment Benefits to the state of the economy. For example, changes in the Unemployment Rate. Do you agree that we should tie assistance back to the conditions of the economy or, what are your thoughts on these processes that would have set triggers for the legislation for the benefits to continue . I think youve got almost, a month and a half really until the end of the you our program. And i think you are seeing a lot of interesting ideas come up there are numbers of proposals that have come out from part bipartisan groups and i think its no doubt you are thinking of what should the next bit of support look like. And i think some of those ideas are very interesting ones. I dont want to endorse a particular idea or program that somebody is has proposed, but i do think those things are worth careful consideration. Thank you mister chairman. I want to thank you for all of your transparency in the programs that the fed has administered and also for your having these listening sessions and for your willingness to make changes to those businesses that might be eligible for the program in terms of the money amounts and things like that. By opening it up to more people. I really appreciate your responsiveness to us and to the community. And thank you madam chair i will yield back. Thank you. Mr. Steyers, you are recognized for five minutes. Thank you and thank you madam chair chairman powell for your testimony and your willingness to be so accessible. I want to thank you for everything that you are doing during this crisis, i think your actions have prevented this from hitting much worse. I take your answers pretty seriously about what we need to do for people that are still impacted by this crisis, especially folks who are still seeing a lot of unemployment. That arent benefiting from this coming recovery and we need to try to help them. And you just answered a question a little, bit you dont want to endorse anyone proposal, but is there, are there elements that you think are important without endorsing one single proposal . I think a couple of, things i think with the unemployment, insurance i think it is important to just keep in mind that some of the jobs are not coming back, soon they ultimately are likely to come back, with those jobs that are in tourism and all those areas for travel, accommodation, restaurants, bars things like that. Theyre gonna have a hard time finding the job so i think better to keep them in their apartments, better to keep them paying their bills, and this is a Natural Disaster this isnt their fault, and i think we should find ways as a country to support, those people and help them through this part of their lives. Many people will go back to work i think the other one i would mention that we have talked about is state local governments to provide this critical service, and you know what happens when they cant run deficits and they are already doing that, and the last thing i would say is absolutely Small Businesses, we dont want to lose any more Small Businesses than we absolutely have to they had a beating heart of the economy and so i just think those are three areas i will point to. Can i also just take a second and say, i was very very sorry to see the news about andy barrs wife this morning. He has been a joy to work with. He is a happy warrior. Hes a wonderful man and i know we all feel terrible about, it and he is in our prayers. Thanks for bringing that up mister chairman. They are great friends and we are definitely keeping the family in our prayers and i know and he said this morning is number one job is being a dad to his two daughters that now have lost their mom. So we are keeping him in our prayers and i really fuchsia you bringing it up i do want to one of the first Covid Response bills we did include 150 billion dollars we are gonna stay governments but we tied that money it has to be used only for Covid Response, and i hope that we will be at the very least, untie the strings on that money to start and see if local governments State Governments need any more money. Im not going to ask you to comment on that but i hope we will do that in the spirit of the second part of your answer, obviously, we want to focus on folks who are going to continue to be unemployed and Small Businesses to, so those are three great pillars that i really appreciate it. So with Interest Rates at your record low, another thing we could do for our state and local governments our municipal governments, is allow advance, funding so they could take advantage of these historically low Interest Rates in the Capital Markets, i dont know how the Capital Markets would respond to that, but it is another thing that i hope we will do, and i thought, i would bring that up since you just mentioned the importance of state and local governments, again i wont ask you to comment on that because frankly it is not in your purview. So the Federal Reserve did know it has made 2020 civility reports, the Life Insurance industry has been adversely affected by a number of factors caused by the covid19 Economic Situation including that near zero Interest Rate environment that i just brought up. Do you think the near Interest Rate environment near zero Interest Rate environment is a big impact on our insurance folks and is there what helped do you think that we should give to make sure that i dont know that its any kind of aid but obviously we want to help people that are nearing retirement, and help people that are savers, what can we do to impact that, knowing that the industry probably will not go up anytime right away . The Life Insurance industry is challenged by low Interest Rates and they have had a lot of practice here over the last decade or so, they do come into this highly capitalized and i want to say a strong recovery is really what that industry needs. That is what we are going to work on. Thank you for your time mister chairman. I yield back. Thank you, mister rich you are recognized for five minutes. Thank you madam chair thank you madam chair, mister chairman, i want to say i appreciate you. I appreciate you doing this, you have been helping us on the unemployment, you have been helping us on trying to get some of this money out to main street. I am very happy to see your revisions recently on the main Street Lending program. And i want to thank chairwoman waters for her relentless advocacy to get that minimum loan size down. It started at what was it, a billion . And now its a 250,000. So. No, it was a 1, 000, 001st now its down to 250,000 so i think its much more a reasonable range for some of our Small Businesses. I do appreciate that the payback period has been expanded to five years, and for participating banks, you also had a 15 skin in the game factor for some of these participating banks that i thought probably made the program on attractive to a lot of our local banks. But youve got that down to 5 , so we will have to wait and see if that is efficient. But i want to thank you for that. The question i had is, we had a Financial Task force here the other day, where the subject was of chairwoman waters fit accounts. So this is the idea about establishing fifth accounts. Basically doing, having the fed do for the on banks what they do for banks. To give them access, to give them accounts, and to tie them into the economy. I think if facebook can reach out and provide access to two billion daily users a day. I think maybe the fed could accomplish 5 of that, even though it would be requiring the feds to do some things that has normally done. I just wanted to know what your thoughts are on the fed account idea, and if there is any other way that we might address the gap that still exists between some of our folks who are on banked or under banked in their areas, is there something the fed can do to close that gap . Thank you. Thank you. As you pointed out. We can only offer Bank Accounts to our reserve banks to depository institutions, not people. I think that would be a very dramatic change in the landscape of banking, i would worry, what would happen to the rest of our private Banking System because an awful lot of people would opt to keep their personal money in the fifth. And then who would do the lending . It could kind of hurt our, our intermediation process. In terms of the under bank though, this is a big part of what we do is work in local communities under cra, to encourage financial inclusion. We also enforce fair credit laws. To some extent. We dont have all that authority, we have a part of it. Those are things that we do now, to address the needs of the and bank and under bank. We were closely with see the fisa and mid role depositories. They play a big role in doing that. Have a great feel of outreach interaction with those institutions. Which are active in the communities. That really need the help. I do think that with the change in technology, your drifting away from brick and mortar and moving to mobile banking. It presents some opportunities that we had not had in the past. I would ask you to treat it with the level of attention that we would if the banks were in charge right . I appreciate we are asking you to do something that you are designed to do within the circumstances this gives us an opportunity to do something. It might not be changing the feds traditional role. But certainly we can try to make life easier for these people. I yield back thank you. Thank you. You are recognized for five minutes. Thank you madam chair. Chairman paul good to be with you this morning. We did appreciate your comments and thoughts and prayers certainly go to he and his two daughters today, we appreciate you again taking time to be here. Chairman powell weve heard a lot about the effects on the economy we appreciate the what you have done to address those concerns. What is appreciative to see the main Street Lending program was landing this week. We are having some concerns that arent being addressed. Under the terms and conditions, they may deter some potential borrowers and entire segments of the market, from participating in the program. The Hotel Industry we talked about tourists this morning its been one of the hardest hit sectors during the pandemic. It may not have great access to the mississippi. I think its worth repeating definitely a great impact in the district lineman. Could you outline whether the fed has considered some of the long terms borrower participation. What is this could be addressed to updated guidance. . We so some of those companies should be able, our facilities open that a company as long as its an eligible company. That would include the ones you mention. Some of them should qualify would think under our existing standards. Those who dont we want to understand that, if there are ways we could adapt, well absolutely look at that. One thing we are looking at is some kind of an asset based claiming. I think were hearing this a lot from those sectors its something we are looking at. I do appreciate your comments on that. One thing you said administration as been viable. You mentioned that throughout this conversation. Or Uncharted Waters something that not a lot of us anticipated wherever experienced before and hope not to again. Trying to be able to make sure we are keeping jobs and the liability of businesses to continue. Weve heard from some industry participants the Financial Reporting required under this program they prevent through them participation in particular, one thing thats been pointed out, some of the Credit Facilities were constantly for you dont have the infrastructure to be able to create complex could you explain why the fed shows do anticipate potential adjustments as you go into the participant haitian rate and program . We cut back the Financial Reporting requirements. In the last few weeks before going live year. Just for that purpose. We thought we had cut them back to close to the bare minimum of what we would need to monitor the performance of alone at all. If we misjudge that, and we want to know, well be getting that feedback. Thats feedback we want to get. Were trying to make that process as user friendly in the easy and automated as possible. We certainly tried to address that specific problem. But in quite get that done. Its very useful feedback. Thanks anyone saying as we enter this crisis, we step back three months. In conversations we had, the understanding of the banks have been in a challenging situation. Terms of capitalization we still see the banks capitalize. We do banks have been a generally a source of strength here. Theyve taken on deposits, theyve gotten a lot of forbearance to in the vigil and business customers. And theyre making loans. We are in a whole lot better shape to face the situation and we are to face the last situation. I yield back. Mr. Philip you are recognized. For five minutes. Thank you madam chair. And chairman powell i we are not here so be a prognosticator, could you please share with the American Public as simply as possible, what household should expect from an Economic Perspective in the months ahead. The way i look at it is this. You can think of this is taking place in three stages. The first page was the shutdown. We are now in the early stages of a second phase. Called the bounce back. Beginning of the recovery. The virus remains significantly under control. You make that assumption. We could see positive data coming up, i think most forecasters just about all forecasters some of the economy has struggled to recover. Those are the ones that people come close to get it to be fed, or entertained. In all those areas that we talked about. That area is gonna take a while to recover. You can take the public well to gain confidence that safe to engage in those activities. Theres a lot of workers who work there that groups are struggle. You will need support. They will need help. I think thats the way i see it. The incoming data suggests that we are at the beginning of that phase of recovery, reopening and expansion. That is the road we need to get on that road and stay on that road. Before you know it, things will feel a whole lot better. Mister chairman. Im sure its fair to say consumer psychology will change consumer psychology will change. Im sure you and that some thought. What should we be thinking about as we move forward . As lawmakers relative to a change economy. In the meantime. I think the focus should be getting through this critical phase. As policy makers what help does the economy need to trends late this phase and get going again. Thats our thing about. Longer term, these are interesting questions. It does seem very likely, that people have learned for certain jobs, you can do them anywhere. Its gonna happen with people know a lot of industries that could really do their jobs from home if they wanted to. Or from another state. The technology hasnt really moved to a place where you could do amazing things. That was enough to do before. This conference call, its not something we had regularly done. You can be very routine. Establishes, theres plenty which is on the fed. If they were to learn that this is a lot of ways its accelerating preexisting trends. Its trends that have split up a lot in the economy. And more Online Shopping things like that. That is something we think about. The main thing we think about what are we gonna do to make this recovery, cut off to a really good start to get a lot of people back to work. So for the economy, were not thinking about putting down our tools for a long time. Mister chairman with that in mind you advise us to go big and we have. Our National Debt is approaching 27 trillion dollars. Are i have concerns about our ability to manage that to pay that bill moving forward. Any counsel and guidance might share with we lawmakers as we contemplate some degree Going Forward. I think congress to go big. It has gone big. I think its been appropriate. I think will be well judged overtime. In terms of the National Debt, i think the time will come. When its time to return to the concerns of fiscal sustainability. Sustainable plan is something that you stay on for many years. Its not where you flip a switch and go into difficult times, its really ideally when you do you get in a situation where the economy is going faster than the debt. Thats how successful countries have done. It will need to get to that. We will, i dont think we need to get to it until we get through this extraordinarily challenging time. Thank you. I yield back. Mr. Williams, you are recognized for five minutes. Thank you madam chairman. I also want to say my prayers go out to end the barr and his family with the passing of his beautiful wife. Miss chairman thanks for joining us in this virtual setting during these strange times were in. Previously when you have come before our committee we were talking about how we could continue to build on historic economic growth. Now that we are talking under difficult circumstances id like to focus on getting back to where we were precoronavirus as we talked about before Small Businesses are the main economic engine and you know i am a Small Business owner. We are the job creators in our country. And one of those that believes we could have growth in the First Quarter the Fourth Quarter rather. I feel good about that. What do you think needs to be done to support these mainstream businesses as they attempt to remain viable at the lockdown on our country ends . As the lockdown ends in the economy reopens, the first thing is we need to do it in the sustainable way. No one wants to it potus really good if we do. To the extent that we could continue to observe keep distance washer hands. Wear a mask that kind of thing. Thats really going to help. That goes with a fast reopening of the economy. That goes with the successful reopening. Those things are really important. I also think we at the fed need to keep our foot on the gas until we are really sure that were through this. Thats certainly our intention. You may find that there is more for you to do as well. As a traditional snapshot of the Banking Industry will likely not been a rosy picture based on the recent shutdown they faced in recovery. Our bank capital and federal service mean strong. There many borrowers that could return to profitability once the economy rebounds. Mister chairman, what steps are being taken to ensure the regulators are taking a reasonable approach to oversight, how is that being communicated through the Federal Reserve in the banks and examiners in the field. We have a number of occasions we issued public statements publicly medications to our Supervisory Group in the other banking in distress and essentially it boils down to guidance that we want you to work with and we want the banks to work with their borrowers we dont want to be on a hair trigger to classify loans or call them trouble loans or anything like that we want to look at this is an unusual situation and be flexible and thoughtful about the way we do our jobs. Of course we havent been really supervising weve only starting to supervise again, at the fed we are going to do remotely we are not going to be visiting yet but that time will come i think fairly soon. We are doing training for supervisors and things like that so we really want to be, weve also encouraged banks to use their buffers. They built up these buffers during good times. That is a great thing now because they can use those Capital Buffers to make loans and to work with borrowers. Thank you for that because it is different than await as we talked about. The atlantic magazine published an article titled the looming bank collapse, the u. S. Financial system could be on the cusp of calamity, and this time we may not be able to save it. The point of the article was to compare the threat that collateral Loan Obligations or clos post of the Financial System in the same that Mortgage Backed securities did back in the security crisis. Do you think that the threat of ceos is properly accounted for, and can you discuss how the fed has been monitoring this risk . I dont i dont think thats an appropriate comparison. I really dont. This is not the same as the Mortgage Backed securities, in that situation ten, 12 years ago, there was almost total lack of transparency to what the banks held, that is not the case the ceos we have really good information we include them we include them in our stress tests, we stress them under very stressful situations like the Current Situation. And we know what the losses would be coming out of that. It is a very, very different situation. That is not to say that there wont be losses, there will be losses, this is a severe downturn. But it is one that we have been monitoring carefully, the banks are will have well capitalized to deal with, we believe. Thank you. I want to thank you for being here today, i have a lot of respect for what you are doing. As a business owner, i feel that we are in comeback mode. As i said earlier, i look forward to having growth in the Fourth Quarter and better next year. Thank you for your hard work and appreciate we appreciate your efforts and working with us. I yield my time back. Maloney, you are recognized for five minutes. Madam chair, can you hear . Me yes, i can hear you. First, i want to join my colleagues in offering my condolences to andy barr and his family. Our hearts are with them. Now i would like to welcome back to the Committee Chairman i just want to start by saying that i think the u. S. Economy is going to need all the help we can get, for the foreseeable future. I dont think you should take your foot off the gas, continue to be aggressive. You announced at the feds does not expect to raise Interest Rates until at least 2022. A position that almost all members supported, that is a position that i strongly support as well. As you noted, the fed is being cautious, inaudible in the uncertainty about the coronavirus in about the damage to the economy. Going forward so 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 or position that Interest Rates should stay at zero until 2022 . Thank. You what you are referring to there, the end of 2022, that is actually not a committed forecast. It happens to be the median of forecasts of individual Committee Members. We dont see a collective group. What that really was, was evidence that that is what our participants do feel. That is their prediction of an appropriate chairing policy, it is not actually a promise to do that. What we have said we would do is we would keep rates where they are until we are confident that the economy has weathered the Current Situation and as well on the road to recovery. So what would it take . I think we are not thinking about raising rates, we are thinking that this economy is going to need support from monetary, for an extended period of time and not just threw Interest Rates, also through our asset purchases, and also through the lens this is the largest economic shock to hit our economy in living memory, and it is also without any kind of precedent, it is the deepest, it looks like it will be the deepest recession, and may not turn out to be a very long one. But the road back, we believe in, but many of the forecasters due to, will take some time, and will be there to support this economy until we fully recover, as i mentioned, we want to get back to where we were in february as mr. Williams was saying. We want to get back to three and a half percent unemployment and wages going up the most for people at the low end of the weight spectrum. Where we were, where a low and moderate Income Community people were telling us this is the best we have had it in a really long time. We want to get back to that as soon as we possibly can. We will be using our tools to do that. We have a good sense of what Economic Indicators the fed looks at a normal times. Look at the employment numbers the inflation data Consumer Confidence and all the usual economic, but i dont believe anyone has a good sense of what metrics will be looking at now, in the middle of a recession caused by Public Health crisis. Where the economy wont fast back until the virus is under control so my question is, what are the key metrics that you are looking at now . Are you looking at rates of infection, hospitalization rates, mortality . What are the Public Health metrics you are paying the most attention to . So we are first of all, looking at all kinds of economic data, but we are also now looking of course at all the data we can get in hearing from experts about the pandemic. And we are where cases are going down, where are they going up, all that kind of thing, that is a new area for us and of course for everybody, really. Unless you are an epidemiologist. That is a big thing. Its almost as though if you could give me a, if you knew for sure what the path of the pandemic was, then you would have a lot more confidence than your economic forecast. We dont have that. We are also looking i think, 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, there is a lot of this High Frequency data that you get from a technology company. It is published our people moving around a lot . Are they starting businesses . Lots of early indicators and so we have been seeing a great deal of that. You are now clearly seeing spending is ticking, employment is taking, these are the early indicators that we have been hoping to see and we are beginning to see the. No thank you. I yield back. Thank you. Mr. Hale you are recognized for five minutes. Thank you madam chair. Thank you for conducting this hearing. Of course our thanks to lisa, climate and katrina for keeping us on track on the technology, we appreciate our staff. And martha and i were just so brokenhearted last night about 8 30 when we learned about the loss of carol barr, i cant imagine the pain that and he feels, so all of us on the committee are sharing that bond of affection for antiand we wish him comfort during this tough time. Mister chairman, glad to have you back for the committee. And you have done an excellent job a talking about the facilities, the challenges with the facilities. Talking about your concerns about how to maintain some fiscal support in the unemployment area particularly in your concern Small Businesses, thank you for being so thorough in your answers. As the Ranking Member on the Monetary Policy subcommittee, i want to turn and talk about the Balance Sheet of the fed, Monetary Policy, and just put some parameters as we are in covid19, now and again, thank you publicly for the outstanding job the governors did in early march to bring the quantity back to the system and preserve peoples access to capital by keeping our Capital Markets functioning. I do want to talk about how we measure Monetary Policy Going Forward. Now as we as you say, enter that midpoint of the return to economic recovery. The Balance Sheet was about four trillion dollars before the pandemic hit, and we there was a lot of concern over that level in terms of the percentage of gdp and the like. Very quickly, dwarfing anything in the queue idais you have added three trillion dollars, we are close to seven trillion. Do you see that range of precovid of 60 to 70 of gdp still in post and amok, target based on reserves that you see the Balance Sheet returning . To i hadnt thought of an actual target. But i would suggest in the long run, the size of our Balance Sheet will be dictated by our publics demand for our liabilities, the two differences which are currencies and reserves. We felt that we were getting very close to that demand at the level you suggest, so that would tend to be roughly constant over time, i guess this percentage of gdp. It is a place to get back. At the peak in 2014, you owned about 21 of all new issue treasuries and about 40 of new issue agency in and its most recent phase the spring that you kind of the Balance Sheet i think you are about 19 30 of the nbas market some commentators have said this time as it was certainly no wait for this location point of view, you had liquidity and spread issues if you want to take a minute to talk about why you did engage in the gst agency. Those markets are critical for financing the housing industry, and also they are closely connected to the treasury market. And so when it benefits all the Financial Markets and when the treasure market is working, in terms of the and bs. There was wasnt a capacity to hold the securities and what was working is the very low rates they werent getting through to borrowers rates were going down and that is why there wasnt a demand there was a holding mbs, the market functioning functioning essentially normally that was really our thinking. Long dated maturities and marcus then you have free payment so i understand why you did it. But you do support moving in the long run portfolio from a philosophical point of view, isnt that correct . Yes, in fact absolutely i had no intention of security line. Would you say that the Rainbow Market in the short term liquidity markets are now functioning after your extraordinary efforts and are no longer needed in the Retail Market to the same extent . I also hasten to add that we are still on alert, we still dont take the gains were granted at all. We are grateful for your leadership madam chair, thank you for the opportunity and mr. Chairman thank you for being before the committee i yield back. Mister chairman you are recognized for five minutes. Unmute. Mister chairman. Mr. Green. You are recognized for five minutes. Sherman needs to unmute. He is muted. Mr. Sherman. On mute. Can i be heard . Yes. Mister sherman are you there. Im here. Lets go, you only got a few more minutes left for the other members to be able to ask questions. I hope i can be heard. You can be heard mr. Sherman. Mr. Powell thank you for joining us Credit Rating agencies, as you know, the chairwoman and congressman andy barr led a letter with 16 has written to you about this congress and the bar has written you letter about this. There are nine Credit Rating agencies except it for various purposes by the sec which has the extra keys in the area. The fed seems to put a premium on only three Credit Rating agencies. Is it your intention to look at instruments rated by all of the sec Credit Rating agencies . We have actually expanded a group of Credit Rating agencies to six from three. We are continuing to look at others. There is still a situation where you will accept one of those second three only if the statements raided by one of the big three . Or are you accepting all six on the same level . The former. Not the latter. You havent given really quality to the six that you have assigned . The second issue is when we passed cares if they company got a loan from the federal government, it came with strings like no stop pipe adds. If youre just going to go out on the market and buy debt instruments, those strings would into ply, of course. The company may have issued that a long time ago. And has not consented to any restrictions on a stop like that. Are you planning to have a transaction which in substance is a government loan . That is to say, but is a conflict inform by having a Company Issue a bond as to which you are basically the sole purchaser, you are the sole purchaser. The cares act is very specific on this, i wasnt part of this but my understanding is that it was carefully negotiated, those requirements do not apply to Capital Markets transactions or syndicated loans, they do apply to direct loans. The main street facility is a direct loan program. The Corporate Credit facilities are either syndicated loans or Capital Mortgage transactions. Capital market transaction is usually when there are many buyers of the dead instrument issuance. Are you going to have any that are in substance a government loan but you choose to package them and say that they are Capital Markets . When we purchase a bond which is a registered security and it comes in a normal form that is a Capital Market transaction. Even if you are the sole purchaser and it has all of the Economic Conditions of being a government loan, the fact that you can call it a bond issue and it liberates you and the company from congressional attention. Is that what you are saying . It naturally affects congressional intention. It was never our intention to have you take what is in substance alone and package it as a capital marcus transaction. We know a bond issuance is one when there are many purchasers of the same instrument and a loan is one where the federal government makes a loan and is the sole lender in the transaction. Or substantially, the so lender and it sounds like you have found a loophole in what is written a new plan to exploit it. It was certainly never the intention. What sense would it make for congress to say, if you do a government loan this way, there are some strains that come with it, but heres a slew poll where you can apply it Capital Markets transaction is one where the fed has the additional assurance and comes from other Market Participants buying the same issues on the same day, on the same terms. You are depriving us of that if you are the sole purchaser of the issuance, and at the same, time you deprive us of the restrictions on stock buybacks, you are creating circumstance where money goes directly from the treasury into the pockets of shareholders, who are taking their money out of the company. And that is certainly not what congress intended. But if there is a loophole, it is up to congress to plug that loophole. I believe my time is expired. Thank you. Mr. Amara, you have five minutes. Mr. Amara. Hard you are. If mr. Emirs not present already we will go to mr. Lawn mill. You have five minutes. Thank you madam chair. Thank you mr. Paul mister chairman for being here. Also i would like to thank you for all the work that you have been doing, a lot of times we dont look at bad things could be, i think they could be a lot worse, right now if they had had the intervention that we have had through the administration. Another ten minutes to prepare. Im sorry inaudible . inaudible you look at the thumb nail. I apologize, i guess im getting some feedback, i dont know if anyone else is. But i want to thank you for the actions, especially the way, made changes on the fly, with the way that you oversee and regulate the banks, i know that my local bank, community banks, regional banks are all very skeptical going into this. But i can tell you that they are not happy with the way things are, but they are pleased with the way things are going because they realize that they could be a lot worse. Just a couple of quick questions, because i know we are running low on time. But you have done a lot of Mortgage Backed security jeanne may and jimmy mac those precluded intel for, but in 2008, mortgages that werent backed. My question is ive written a letter about this are you considering including those nonagency backed mortgages and consumer loans so the answer is on and be yes, that is something that we have under consideration and your rights. As a general matter we have been willing to and eager in fact to expand things where its appropriate. And consider installment known as a little different, they dont have the history in the it Securities Market so we struggle a little bit with that one, but we are looking at it as well. One last question Intercontinental Exchange and other clearinghouses for future traits, weve had a huge spike amount of funds they held overnight because the market volatility, and commercial banks can only accept a limited amount of those deposits, because of the Capital Requirements they like to be able to temporarily deposit those funds with the fed, is that something that you are considering . The only and cities like Intercontinental Exchange they can deposit funds and that are designated as systemically important Financial Market utilities under the law, and so we dont have the Legal Authority to do that right now. We it would be a question really not for one company but for all the companies that are in that category, should they get the Legal Authority to do that, but as of right now we dont have the authority to make those cuts unless there is a designated market utility. This is something that we can work on Going Forward. I thank you and i know we are short on time so i yield back. It is with Great Sadness that i come here because we had such optimism and such hope. The u. S. Congress has always spoken in bipartisan house and senate, democrats and republicans with one voice in defensive those who are pressed by beijing and its support of freedom, justice and real autonomy for the people of hong kong. We continue to urge President Trump to hold chinese officials accountable for abuses including taking steps under the hong kong human rights and democracy act. We must consider all tools available. Including v. Limitations and economic penalties. Here today, i am very honored to join chunky young lee general secretary Hong Kong Confederation of trade unions Carrie Peterson professor of law at the university of hawaii, brian loan, peach tea candidates at the university of washington. And virtually, electronically, nathan law. Legislative council, former Member Legislative Council of hong kong and former chairman dentist. Oh again, for years, the world has watched in horror as beijing has accelerated its campaign to dismantle the rights and freedoms of the people of hong kong. From its brutal response to peaceful protest to the introduction of the horrific extradition law that, we condemned. So many times this committee mr. Macomb mr. Elliott angle, in the senate marco rubio. Mr. Cardin, and others have put chris van hollen, mr. To me or other democrats and republicans have put the bright spotlight on what is happening. The executive committee on china, chaired by mcgovern, and quote shared by chris smith. Vice chair, chris smith. Have worked very hard with hearings instead aurora as has this committee to call attention to all of this. The land toast commission on human rights, the former chair of this committee in a bipartisan way has called a tension to all of this over the years since tiananmen square. And then in terms of hong kong, more specifically leading up to 1987 and including that. And what is so sad about it is that the chinese regime just thinks they can act with impunity. And repressing the spirit of democracy. 2 Million People turned out against the extradition law, 2 Million People, that is a big crowd in the United States, but when you understand it was 25 of the population, of hong kong, it is just almost anybody who could could have showed up against with the chinese regime was going to do. House Speaker Nancy Pelosi made a rare appearance this morning in a House Foreign Affairs committee meeting. Members discuss the implications of chinas National Security law in hong kong you can watch that hearing tonight starting at nine eastern on. Cspan thursday at 10 am eastern, nih director dr. Francis collins, cdc director doctor red field and acting for preparedness and response doctor brisk go, for a review of operation warp speed, the researching, manufacturing, and distributing of a safe and effective kind of our specks scene. Watch live coverage starting at 10 am eastern on cspan. A demand at cspan. Org or listen wherever you are on the cspan radio app