Transcripts For CSPAN3 Treasury Secretary Mnuchin Federal Reserve Chair Powell Testify On... 20240712

First, i would ask all members on the webex platform to keep themselves muted when theyre not being recognized. This will minimize disturbances while members are asking questions of our witnesses. Members on the webex platform are responsible for muting and unmuting themselves. The staff have been instructed not to mute members except where a member is not being recognized and there is inadvertent background noise. Members on the platform are reminded they may only attend one remote hearing at a time. So if you are participating today please remain with us during the hearing. Members should try to avoid coming in and out of the meeting particularly during the question period. If during the hearing members wish to be recognized the chair recommends that members identify themselves by name so as to facilitate the chairs recognition. I would also ask that members be patient as the chair proceeds given the nature of the Online Platform the committee is using. In addition the chair informs the members participating in person that in enforcing order and decorum in the hearing room the chair has a duty to protect the safety of members. The attending physician provided the following guidance. For u. S. House of representatives meetings in a limited and closed space such as a Committee Hearing room for greater than 15 minutes face coverings are required. Accordingly the chair will treat wearing a mask as an order and decorum and all members should wear a mask. The chair has a strong preference for member tuesday wear a mask even while not recognized. Members who do not wish to wear a mask may participate virtually through the webex platform. Before going any further i would ask unanimous consent to speak out of order and i suppose this would be a personal privilege. I would like to take a minute to acknowledge the departure of a staff member. Lisa has been with the committee for 8 years working her way up from a fellow to the committees chief counsel. She has been a dedicated, tireless and committed Public Servant with a keen understanding of procedures and a deep knowledge of the legislative process. Under lisas guidance the Committee Democrats successfully transitioned from minority to majority, and then lisa was instrumental in the committees transition fum inperson hearings to virtual and hybrid ones. Lease s has accomplished so much. Lisa has been a valued member of my team and i will miss her dearly. So i want to thank her for her service and wish her the best in her endeavors. I now recognize the Ranking Member to speak out of order. Thank you, madam chair. And as we all know and as we grow in our service here we know how important having staff is to this whole process. How essential it is you have good staffers who are going to represent their members perspective. And i will tell you lisa has been a fierce advocate for her principle perspective. In negotiations shes not wavered in her view, but her view being the chairwomans view, but at the same time being cordial enough to have a conversation and maintain relationships. That is a priceless bit of art that is representative of lisas character. And we were grateful that, lisa, weve been able to work with you. We wish we had been more successful in our negotiations with you personally. But it is due to your talent. It is also due to your knowledge. So we thank you for your service to your country, to our country, to this institution and to this committee. And i know Committee Democrats especially will miss you. Committee republicans wont miss you quite as much, but we are certainly grateful for the relationship that weve all been able to have with you, lisa. And so congratulations to you on your son and your new family, and we hope your time away will be but temporary from public service. But thank you for your service to this country and institution. And i yield back. [ applause ] thank you very much, mr. Ranking member. This hearing is entitled oversight of the Treasury Departments and the Federal Reserves Pandemic Response. This hearing is the committees second quarterly hearing required by the cares act for oversight of the various facilities and programs under the act. I now recognize myself for 4 minutes to give an opening statement. So welcome back chair powell and secretary mnuchin. Since you last testified before this committee in june the Coronavirus Crisis has continued to have a catastrophic impact on communities across the country. Nearly 200,000 people in the United States have lost their lives to the coronavirus, and there have been over 6. 8 million cases. Millions of families are struggling to make ends meet during this crisis and are on the verge of eviction. Over a million Small Businesses which are the lifeblood of our economy has shut their doors. As families across the country are looking to washington for leadership. The Trump Administration has utterly failed in its economic response to this virus. With 32 of renters unable to make their full september rent payment at the beginning of the month according to apartment list. And back rent piling up. The need for emergencyal assistance to prevent a crushing wave of evictions is growing every day. Instead of rental assistance the Trump Administration has issued a centers for Disease Control and prevention action that temporarily prevents evictions for some renters but only after they sign documents that potentially exposed them to litigation and criminal penalties. Meanwhile, the unpaid bank rent continues to aview. Meaning that the Trump Administration is simply delaying not preventing evictions. The heroes act which passed the house in may to prevent those evictions and provide other critical relief is gathering dust on Mitch Mcconnells desk. I said before that im pleased that after calls of members of this committee, the raegsy and Small Business Administration Made adjustments to the Paycheck Protection Program to ensure that Community Development of Financial Institutions are able to provide loans to the communities they serve. And i appreciate that the Federal Reserve has expanded several programs, but im frustrated with the Trump Administrations implement agsz of pandemic relieve based on the concerns i continue to hear. Specifically im very concerned that much of the 500 billion congress allocated in the cares act to treasury most of which was to support fed lending to help businesses, nonprofits, state and local governments has gone unused. Were almost 6 months after the passage of the cares act and a mere 0. 2 of main Street Lending Program Funds and 0. 3 of Municipal Liquidity facility funds have been put to use. This is unacceptable. Secretary mnuchin, chair powell, let me be blunt. This Pandemic Response has followed badly short and the Trump Administration has done everything to pass a relief package or address the Major Public Health or economic crisis we face. Your work to address this crisis doesnt stop when the stock market recovers from this crisis. Before i close let me just say i just learned today that there are 40,000 students that have been infected with the virus. That shakes me. And we still have people who are forcing schools to open and not do distance learning. I dont get it. And i didnt know until today that that many students had been infected. So im very, very concerned. I now recognize the Ranking Member of the committee, the gentleman from North Carolina for 4 minutes. We all know that testing, treatment and therapeutics need to come online for full economic recovery. That is moving at pace, at unprecedented space i would say, not just globally but here in the United States with great innovators. And the coordination between the Public Sector and private sector has been the best its ever been in generation. And this administrations response to this unprecedented pandemic, this Federal Reserves response to this unprecedented pandemic is topnotch. It is fantastic, the delivery that secretary mnuchin was able to provide on ppp, which supported 51 million jobs and issued over 5 million loans to Small Businesses impacted by covid. That was the direct intervention of the secretary secretary and his team at teshry. They stood up more facilities than they did in decades prior oo this pandemic. So i would give the federal research an aplus to its initial response and where we are. And just because congress cant get its act together and compromise, see a way through so we can provide these people that are still hurting because of this voluntary shutdown of our economy because of this health crisis, we need to give those people relief, and we need to come to terms. That means democrats and republicans need to move to the middle. And i would commend the secretary on his willingness to move forward on behalf of the American People even in the midst of crazy politics were experiencing and people shouting in the streets and threatening violence because they dont like political perspectives. So i would commend him for being willing to negotiate where others have walked away like Speaker Pelosi and leader schumer saying 3 trillion is all well accept and nothing less is acceptable. We need to compromise for those people out of work in this Global Health pandemic. Let me finish with this. What we saw at the end of last year was the best economy of our lifetimes. We had household wage growth at almost 7 in 2019. Households were feeling wealthy for the first time in a very, very long time in my state of North Carolina and across the country. We need to do that again. We know that were in the midst of this health pandemic. We know that therapeutics are coming online, treatments, techniques are much better than they were at any time since march. And those things are coming along. And maybe therell be a vaccine, maybe. But we need to have treatment and testing at wide scale so that people can get back to some semblance of economic life. But what i would like to hear today is the limits of the Federal Reserves actions and activities and where congress should act. Because Monetary Policy simply cannot do the same thing that fiscal policy can. And on the fiscal side of the house, secretary mnuchin, id like to hear the economic plan from this administration on how we get past when we get past this awful, awful scourge of covid, what that economic recovery must entail to get people back in a position they were in in 2019 or even in january or february of this year. I think theres a good story to tell and a hopeful story to tell if we can Work Together and get things done. I look forward to your testimony. I yield back. I now recognize the chair of the subcommittee on oversite and investigation, mr. Green, for one minute. Thank you, madam chair. I would like to associate myself entirely with your comments, and i would only add this. That the stimulus, the Economic Impact statements must be made because the rent must be paid. Yesterday the goa reported that the Treasury Department lacks uptodate information on the number of eligible recipients who have yet to receive their eip Economic Impact payments. This new report follows previous goa findings dating back 2020 t in the traditional employment relationships such as those working in the gig economy may be missing from the irs eip outreach. This is very difficult to know who is being left behind and there may be millions in the number. I say again, the rent must be paid against the eip payments must be made. We put persons at risk of being evicted at a time of a pandemic still taking lives in this country. I do believe that this can be done but i do know that we must have more help to make sure the rent is paid. The eip payments are already there and we need to make sure that the people who need them will get the funds. I yield back. I now recognize the subcommittee Ranking Member mr. Barr for one minute. Thank you secretary mnuchin and chairman powell for appearing before the committee today and our continued efforts to battle the covid19 pandemic. Treasury and the fed acted swiftly to stabilize the economy and keep businesses open and continue the credit markets and promote longterm recovery. Since you last appeared before this committee to testify on the c. A. R. E. S. Act implementation, the economy has improved. Unemployment has decreased. Half of the jobs last in the early days of the pandemic have been added back to the labor market and our economy is safely reopening. We are on the road to recovery. Policies put into place by treasury and the fed and both actions put the economy on a more stable footing. However important sectors including hospitality, conventions, entertainment and retail remain in distress and there are elements of your responses to the pandemic that could still be adjusted as we move forward. I look forward to discussing those today and hearing your plans to implement a strategy for longterm Economic Growth. Thank you. I want to welcome todays witnesses to the committee. First, i want to welcome steven t. Mnuchin, secretary of the treasury. He has served in his current position since 2017. Mr. Mnuchin has testified before the committee on previous occasions and i believe he does not need any further introduction. I also want to welcome our other distinguished witness, jerome powell, chair of the Federal Reserve system. He has served on the board of governors since 2012 and chair since 2017. Chair powell has testified before the committee and i believe he also does not need any further introduction. Without objection, your written statements will be made part of the record. Each of you will have five minutes to summarize your testimony. When you have one minute remaining, a yellow light will appear. At that time, i would ask you to wrap up your testimony so we could be respectful of the committee memberstime. Secretary mnuchin you are recognized for five minutes to present your oral testimony. Thank you. Chairman waters, Ranking Member mchenry and members of the committee, im pleased to join you today to update you on how the department of the treasury and the Federal Reserve have been partnering over the last six months to provide relief and liquidity to businesses and nonprofit organizations and state and local governments and households. Were fully committed to getting every american back to work as quickly as possible. America is in the midst of the fastest economic recovery from my crisis in the u. S. The august jobs report showed the economy has gained back 10. 6 million jobs since april and nearly 50 of all jobs lost due to the pandemic. The Unemployment Rate decreased to 8. 4 , a notable achievement considering many people thought it could get as high as 25 . Thanks to the programs provided by the c. A. R. E. S. Act, we never got close to that figure. I believe well see tremendous growth in the Third Quarter fueled by strong retail sales, housing starts, home sales, manufacturing growth, and increased business activity. The september blue chip survey projects close to 24 for Third Quarter gdp. The administration and congress Work Together on a bipartisan basis to deliver the largest Economic Relief package in american history. The Federal Reserve has been instrumental to the recovery by implementing 13 unique lending facilities. Economic reopenings combined with the c. A. R. E. S. Act have enabled us to have an economic rebound but some Industries Hard hit by the pandemic require additional relief. The president and i remain committed to providing support for American Workers and business. We continue to work with congress on bipartisan basis to pass a phase four relief program. I believe a targeted practice is still needed and the administration is ready to reach a bipartisan agreement. Treasury has been working hard to implement the c. A. R. E. S. Act with transparency and accountability. Weve released a significant amount of information on our website, treasury. Gov and usaspending. Gov. The Federal Reserve has posted information on its website regarding the lending facilities. We have provided regular updates to congress marking the sixth appearance before congress for a c. A. R. E. S. Act hearing. Were cooperating with the treasury Inspector General and the congressional over Sight Commission and the gao. We appreciate the significant resources to responding. We remain committed to working with you to accommodate congresss legislative needs and further whole of government approach. I would like to thank the members of the committee for working with us to provide economic support to the American People. Thank you. Thank you. Secretary mnuchin. Chair powell you are now recognized for five minutes to present your oral testimony. Thank you, chairman waters, Ranking Member mchenry and other members of the committee. Thank you for the opportunity to update you on our ob going measures to address the hardship brought by the pandemic. The Federal Reserve and others across government are working to alleviate the economic fallout. We remain committed to using our tools to do what we can for as long as it takes to ensure the recovery abo recovery will be as long as possible. Economic activity has picked up when much of the economy was shut down to stem the spread of the virus. Many Economic Indicators show marked improvement. Household spending looks to recover three quarters of the earlier decline, likely og to federal stimulus payments and expanded unemployment benefits. The housing actor has rebounded and shows signs of improvement. In the labor market half of the 22 million payroll jobs last no march and april have been regained as people return to work. Economic activity remain well be low prepandemic levels and the path ahead is uncertain. Those least able to be affected has been severe for lower wage workers and for women and for africanamericans and hispanics. The reversal of economic fortune has up ended my lives and created great uncertainty about the future. A full recovery is likely to come only when people are confident it is safe to reengage in a broad range of activities. The path forward will depend on keeping the virus under control and action taken at all levels of government. Since midmarch weve implemented a policy of near zero rates and standing up to 13 Emergency Landing facilities. We took these measures to support broader Financial Conditions and more directly to support the flow of credit to households, businesses of all sizes and state and local governments. Our actions taken together have unlocked more than a trillion dollars of funding which in turn has helped keep organizations from shuttering, putting them in a better position to keep workers on and to hire them back as the economy continues to recover. The main Street Lending program has been of Significant Interest to this committee and to the public. Many of the businesses affected by the pandemic are smaller firms that rely on banks for loans rather than public credit markets. Main street is designed to facilitate the flow of credit to small and medium size businesses. In establishing the facility, we conducted extensive outreach soliciting Public Comment and holding indepth discussions with lenders and borrowers of all sizes. Weve continued to make adjustments to main street to provide greater support to small and medium size business and to nonprofit organizations such as social service organizations. Nearly 600 banks representing well more than half of the assets in the Banking System have either completed registration or are in the process of doing so. About 230 loans totaling roughly 2 billion are either funding or in the pipeline. Main street is intended for businesses on a sound footing prepandemic and have good longterm prospects but have encountered cash flow and are not able to get credit as a result. Main street loans may not be the right solution because the c. A. R. E. S. Act states clearly that the loans could not be forgiven. Our Credit Facilities have improved Lending Conditions broadly, includer for potential main street borrowers. The evidence suggests that most small and medium size businesses could currently get loans from private sector Financial Institutions. Many programs rely on emergency lending powers that require the support of the Treasury Department and only in unusual circumstances. By serving as a backstop to keep credit markets our programs have significantly increased the extension of credit from private lenders. However the facilities are only that, a backstop. They are designed to support the functioning of private markets, not to replace them. More over these are lending not spending powers. Many borrowers will benefit as will the over economy but for others a loan that could be difficult to repay might not be the answer and direct fiscal support may be needed. Our economy will recover fully, we remain committed to using our full range of tools to support the economy fozar long as needed. Thank you. Thank you very much, chair powell. I now recognize myself for five minutes for questions im very appreciative, chair powell, of the explanations that youre given in anticipation of all of the questions that we have about maybe street and other facilities. Earlier this month our Committee Held a hearing on the need for further federal assistance to state and territorial governments. Although each of the state governors at that hearing can borrow through private markets and more attractive rates than Municipal Liquidity currently offers. They have found the need to keep the facility as an option in the future and the guam governor urged the fed to make the facility available to territories. The republican witness dr. Holt eakin, a farmer, Congressional Budget Office director and staff economist for president george h. W. Bushs council of advisers said, and i quote, the mystery to me has been the performance of the treasury in using essentially half a trillion dollars to backstop fed facilities including the Municipal Liquidity facility. This seems underutilized in my eye and i dont fully understand why that hasnt happened. That is something they can and should be more aggressively used. So, secretary mnuchin, at a time when a wide range of businesses have been frustrated that they have been unable to access their facilities again, like the main Street Lending program, and weve heard the excuses that were given for that and we have republican and Democratic State governors pressing for more assistance, do you agree there is more than the treasury can do with the 500 billion congress provided you to enhance these fed facilities to support the economy . I unfortunately think there is not more we can do and part of the reason we agreed if there is potential legislation is to reallocate that money to better use. Almost every single one of the facilities has extra capacity. I think that in the case of many businesses that havent been impacted by the virus, theyre able to borrow in the private markets. As it relates to main street, weve worked very hard with the Federal Reserve to roll out this program. It is based upon underwriting from prepandemic and i know there has been some questions, we do expect to take losses on that. And were working closely with the fed on that facility. Secretary mnuchin, of the 600 billion available through the main Street Lending program, only about 1. 2 billion has gone out of the door to 118 companies. Would treasury object to eliminating the main Street Lending program minimum loan threshold of 250,000 so that Small Businesses and minority owned businesses who need smaller loans could access the program . Let me just say im appreciative because when we started out, when they first rolled out, with the main Street Program, the minimum requirement for the loan was 1 million. And did you reduce that to 250,000. Im asking, can you go further in the reductions so that the loans can be made to smaller businesses . Secretary mnuchin . Id be fine lowering than to 100,000 and will consult with chair powell afterwards on lowering it. Chair powell . Um, so there is re little demand in the facility below a Million Dollars. There isnt much interest at all below a Million Dollars so this would have to be a different kind of facility. It wouldnt look like main street. Extending credit in the small quantities would require a facility built from the ground that would be quite different than main street. It wont have the same requirements but we could talk about that. It wouldnt look like the current main street facility. It is a very different kind of a thing. Well im aware of how the main street facility was formulated, was created for the midsize businesses and im very much aware that they have to rep repay those loans. But we have so many Small Businesses still eligible for ppp and beyond and certainly they would repay those small loans that they could get. It is not that they absolutely looking to have those loans waived, so you think that something can be done . It is possible. I really do think that this is more appropriate for ppp loans which are in the nature of grants. I think that is a better way to approach these. Trying to underwrite the credit of hundreds of thousands of Small Business, it would be very difficult and i think ppp is a better way to approach that space in the market and i think youre well advised to use that. Thank you. And i now recognize the distinguished Ranking Member mr. Mchenry for five minutes for questions. Thank you, madam chair. So secretary powell, lets begin here. So in the Federal Reserves own data, we see that there is a substantial economic recovery happening. Not even we see economic numbers improving. And we have many households that are about the same as they were, a little better off in terms of savings and back at the beginning of the year. But we see many households much, much worse off. And so it is sort of a tale of two different recoveries if you will, or two different experiences of this pandemic. So while we see good economic numbers, what are the areas that you see as needing further assistance . What areas of our economy do you see as needing further assistance to get us back to something more normalized given where we are with covid . I guess i would point to the labor market to sort of capture the size of the issue. We still have 11 Million People out of the 22 million who were laid off from the payroll numbers in march and april. Still 11 million out there. And that is really good progress. Weve put fully half of those back to work. But that is a long way to go. That is more people that lost their jobs during the financial crisis as you know. And there is a lot of work to do there. And our policies will support that but it will go faster if all of government is working together. Mean if there is a fiscal response to get the economy to help support the economy for those most affected by covid, economically affected by covid . Of course, now the details are between congress and the administration, not for the fed to say, but i do think the recovery will go faster if we have both tools continuing to Work Together as they have so far, i think worked very well together. Thank you. Secretary mnuchin much has been made on capitol hill about your negotiations on another cares package, youre the lead administration negotiator on that package which i think from all sources it was a very solid piece of bipartisan legislating and i want to commend you for being the administrations voice and negotiator on that project. And i think weve got good results from the programs that you were there able to set up in coordination with the fed. Now along those lines, what are the components for the next package that we need to take to support the economy to get things back going again . I think the next package should be much more targeted and focus focused on kids and jobs and areas of the economy that are still hard hit, particularly areas such as the travel business, and others, restaurants. I think there are broad bipartisan support for extending the ppp to businesses that have had revenue drops for a second check. I think Small Businesses are a large priority of that. Okay. So focused on Small Business and family support, right . And so that would be a strong foundation. Okay. Now, so let me ask you both this, so treatment therapeutics, massive scale testing, we are getting up to speed with some really first rate testing across the country and getting kids back in school in a safe way. Those things are sort of foundations for us getting the economy going to the next degree, right. It is not all fiscal policy or Monetary Policy that gets people back in restaurants again. It is not government regulation, it is peoples decisions of whether or not engage in many ways. Similar to getting on airplanes. So along those lines, do you see the capacity for us to get to a full economic recovery, secretary mnuchin . I do. I think it is just a question of time and i would just highlight were extremely pleased, weve committed to 150 million point of care tests with abbott that will be delivered between now and the end of the year and working with other parties to deliver point of care testing with instant results. So it is instant results and those are very low cost tests, are they not . That is correct. All right. So thank you all for your testimony. Thank you for being here today and thank you for your leadership in the midst of this. And i know were still deeply in the midst of it, of the economic effects of covid. And i want to thank you all for being there both with the Life Insurance policy and with the water to put out the flames. Youve worked in good stead on be half of the American People. Thank you both. The time has now expires. I recognize mr. Heinz of connecticut for five minutes. Thank you for being here. Im going to pick up on what the Ranking Member just said about the insurance policy. My time in washington is bracketed by bailout, right before i got here we passed the tarp which led to a massive bailout of the Financial Services and the Auto Industry and now through cares were burying out airlines and the government is very much in the business of bailouts. I would point out on the republican side that all of the bailouts were promoted by republican president s. They might just bear that in mind as they accuse my party of being socialist. But that is a conversation for a different day. I had an opportunity to talk to chairman powell about this so i want to talk to you about bailouts. I like to believe we do do fewer rather than more. I dont like the idea of Business Managers big and small thinking the government will bail them out of liquidity crises or whatever it might be. As long as were going to do these things, i like the idea that the American Public be compensated for the use of their funds or private and commercial purposes and i admire your efforts to get warrants and make sure that they are compensated. But there is a hostage and i got called from the Airline Industry saying no, if you make the money cost anything, they wont take it and they will fire us. That feels to me like a hostage situation. Give me the money for free or well not take it and fire people. So mr. Mnuchin, i would love to give you much of the rest of my time. What do we need to do structurally to get out of the business of bailouts and, number two, how can we get out of this hostage situation in which i think you actually worked very, very hard where the American People are being compensated fairly for the use of their money for private purposes. Well, first of all, i would say this is a very different situation than the financial crisis because in this case the businesses that were impacted were impacted because of covid which was not their fault as opposed to issues that they controlled. I would say in the case of the airlines, i think we struck the right balance. We did get proper compensation for taxpayers. I think we were it was very important given what went on in the travel industry and the case of the National Security loan that weve made to the trucking company. We took a 30 equity interest in that for proper compensation. So i agree with you that government should be properly compensated. On the other hand i think for very Small Businesses like the ppp, the money that we spend there we save significant money and unemployment on the other side. So with respect to the warrants, mr. Secretary, and the 30 equity stake in the trucking company, what is your philosophy . Is your philosophy to dispose of that position as soon as you could do so safely and in a sound manner or to maximize the return to the American Public . I dont think it is to absolutely maximize the return but i think that the American Public should reap the benefit. So my expectation is that is not something wed liquidate now. We liquidate when the markets are more normalized and the economy is back to normal. So let me run an offbeat idea by you. As it happens, i had the opportunity to talk to both secretary paulson and another former treasury secretary about it. One of the vehicles for capturing commonwealth for the citizens of a country as a Sovereign Wealth Fund. As you know persian gulf countries, alaska, norway uses it, largely oil driven wealth. Should Congress Investigate if were in the bailout business and receive a return on the bailout and should we look at establishing a Sovereign Wealth Fund to take the proceeds from that fund and use it to disburse however we want to diverse it. Does that make sense to you. Most countries with Sovereign Wealth Funds, in alaska, it is for future generations where theyre focused on energy and things like that, that will not necessarily be around forever. I dont necessarily this the u. S. Should have a Sovereign Wealth Fund. But taking the profits and putting it into an account that is reserved for future emergencies is a very interesting idea and wed explore it with you. Im going to take you up on that offer. I dont think i of us want to be in the persistent business of bailouts but if we are going to do it we should make sure the public is compensated for the use of their money. Thank you very much. And i recognize miss wagner for five minutes. Thank you, madam chairwoman. Thank you for being here today. I have been hearing from employers across the Second District of missouri who desperately need congress to do its job and pass Coronavirus Relief legislation so they could do their job and keep handing out paychecks to their hardworking employees. Earlier this month, the senate acted to pass relief legislation that could actually be signed into law. That package would have given relief to families, schools, childcare providers, Small Businesses, and those who need it most. At a time when so many are struggling. We really do need to put americas family first and im sick of the partisan politicking, partisan wish lists. This should have no place in this conversation. Congress should be laser focused on providing targeted and immediate relief. The Senate Majority supports a second round of ppp money. That would keep our Small Businesses afloat. And i call on my colleagues in the house to bring this to the floor. Secretary mnuchin, im grateful also as the Ranking Member mentioned for your Due Diligence and your work in negotiating this. And what it means for our Small Businesses. Including, as you said, restaurants, travel, events industry, Dentist Office and so many others that keep americans employed. You talk about how passing the second round of the Paycheck Protection Program would keep america on track for a full economic recovery. How much money do you think we could repurpose from cares and tell us again what this would mean in terms of economic recovery. Well, i agree, we have 450 billion allocated to work with the fed on the 133 facilities and would reallocate 300 billion that is not used. That needs congressional support. But we would reallocate and our priorities are kids and jobs. I think the ppp, there is very strong bipartisan support. I know that both committees in the house and the senate have worked on revisions that are necessary revisions. And wed look forward to working with both parties. And that could be passed today and signed into law today. Is that correct . The president would very much support signing into law additional ppp money immediately. We must act. It is clear that the best economic stimulus package we could give to the American People is a fully open economy. It brings people back to work, allows Economic Growth to begin and will restore our economy. Chairman powell, do you agree that reopening has increased Economic Activity and jump started the process of bringing the u. S. Back to prepandemic prosperity . Yes, i do. We need to reopen the economy so people could go back to work and need to do it in a Sustainable Way and that is why i always mention that part of reopening quickly and effectively is to keep the virus under control and that takes basic measures like Wearing Masks and things like that and gets two things go together. A fast reopening and maintaining these sorts of measures actually go together. Absolutely. The president s plan to reopen america has enabled states to tailor reopening plans to address specific challenges in their state and region. Chairman powell, how does this state by state approach ensure success, especially when it comes to states that are responding differently to the pandemic and are there any regulatory burdens you were aware of that should be removed to improve states abilities to quickly safely reopen . You know, the question of how to reopen exactly and what policies to use, that is a question that is one for elected officials at the state and local level, not for the Federal Reserve. And so i wouldnt be a good judge of that. And i would say in terms of regulatory adjustments, wed made a number that have been designed to allow banks to serve their customers in this weve relaxed the number of regulations temporarily and we think that is helped them serve their customers in a way that doesnt endanger safety and soundness. Were open to doing more of that but many of those things weve done and frankly the economy is healing now. So the economy is healing and i do believe that many of the regulatory burdens are things that could be sustained even beyond this pandemic so i hope that this committee will be able to take a look at that as we go forward. I thank you for your answer and i yield back, madam chairwoman. Thank you. I now recognize the gentleman from illinois, mr. Foster, for five minutes. Mr. Foster, you are muted. All right. My apologies madam chair and my thanks to you and to our witnesses. Chairman powell, the fed recently announced hypothetical scenarios for the second round of bank stress tests. And unlike the results of the sensitivity analyses conducted earlier this year, you will be released bank by bank results. I appreciate this transparency and believe it is important for policymakers and the banks themselves to have this information public. One of the tragedies of the last financial crisis was that in the months prior to the crisis, as pressure built on Financial Institutions, they did not use this time to raise capital until it was too late. Hopefully the prospect of publicly disclosed stress tests will help avoid a repeat of this behavior if the pandemic downturn continues. Now youre using the results of these stress tests to determine whether the restrictions on shareholder dividends and buying back shares will continue through the fourth quarter. So my first question, will you be making these determinations on a bank by bank basis or will all of the large banks be subject to the same restrictions . That is going to depend on a lot of things and decision well make down the road but i think well be looking probably to use the the bank by bank approach. Thank you. And given that continuing high unemployment, failure of the senate to pass any new covid relief and the uncertainty and volatility of the large number of Economic Indicators, would you err on the side of conservatism and safety in making these determinations . Well, i think the stress test themselves always err on the side of safety. We think of very extreme scenarios and so that is been our approach overall. I appreciate that. Now, will you be reanalyzing the living wills of the giant banks to ensure they could be executed properly at a time of covid pandemic with, for example, most of the workforce at home . We dont have any plans that i know of to change the schedule of doing that. Banks have to resubmit those on a regular schedule and i think well just stick to that schedule. All right. Well i urge you to keep an eye on that. Because if we have to execute them and it is not possible in the pandemic conditions, well regret that. Potential problems may not be confined to a small number of giant banks. For example the savings and loan crisis was the result of losing bets by over a thousand smaller institutions and the taxpayer ended up on hook for bailouts of 2 of the gdp which is huge compared to tarp and which the taxpayer got their money back with at least some interest. And given that the fates of small banks are more closely tied to the fates of small and medium size businesses, which are often most at risk of business failure due to the failed response to this pandemic, what should we be worried about in regards to the potential needs to bail out large numbers of Smaller Banks if the pandemic continues . You know, i guess i would say we spent ten years and the bank spent ten years strengthening the capital and liquidity and the risks and management of them and so far the Banking System has held up well. We dont know where we are in this whole process so well be continuing to, as you could see from the stress test, continuing to do the things that we need to do to continue to assess the strength of the Banking System. But so far we dont see the kinds of problems youre talking about. I think with Smaller Banks, the issue is there is a 30year trend of consolidation and banks going out of business and that is not a trend we want to do anything to exacerbate. I do think that Smaller Banks are going to probably bear too much of the burden here. They have more exposure to real estate and to smaller businesses which are probably more vulnerable and have less resources to deal with this sort of stress. So i think well be watching carefully to make regulatory adjustments, supervisory adjustments to give those bnks every chance to serve their customers and make it through this difficult time. Thank you. One of the problems we have in financial regulations, we always seem to be fighting last war and we maybe should look two wars back in this. And in my limited amount of time left, you introduced a new strategic framework for conducting longterm Monetary Policy. And as part of that, you discarded the idea of fixed unemployment and instead a wide range of indicators in making an assessment, whether there are any shortfall in employment. And i urge you to do that very publicly and transparently because you could get different measures both for inflation and for unemployment. My time is up. And i yield back. Thank you very much. I now recognize the gentleman from kentucky, mr. Barr, for five minutes. Thank you madam chairwoman. I want to representative hines comments about bailouts because i share my friends antipathy for what he described as bailouts. But i do think it is important to point out that the bailout, the way that i look out, implies that the government is saving businesses from mismanagement or the use of taxpayer funds for private use in a way that would promote moral hazard. We saw some of that in the aftermath of the financial crisis but thos not what we have here. What we have here is a congressional response to many state and local governments imposing a restrictions. Now some of the restrictions may be very warranted and in response to a pandemic. Others may criticize some of those restrictions as being overzealous and draconian, but nevertheless, this congressional response in the c. A. R. E. S. Act or the ppp program or the main Street Lending program or some of the liquidity facilities seem to me more like a compensation for a regulatory taken. So i think it is important to point out that distinction, a regulatory taking. I want to ask chairman powell about main street and i do think there is interest among potential borrowers to participate in this program. But many businesses and lenders are reporting to us in congress that the program is not working for them. To date the fed has committed less than one half of 1 of the total available funds under the program and so an argument could be made that the program isnt performing to the full potential. Last week the fed issued updated faqs and ive heard from banks in my district that the updates are unlikely to move the needle you mention that smaller lopes for smaller businesses under a Million Dollars that this program may not be right for them. It is more suits to a ppp. But chairman powell, i would offer for your consideration, that some of the businesses that need a smaller loan, the ppp program doesnt help them because their payroll is fairly limited and they have larger amounts of debt. So my question initially would be is the fed considering publishing more targeted guidance, underwriting standards and documentation requirements for the smallest main street loans. Well, as you know, mr. Barr, the limit now is 250,000 and we have very little demand below 1 million as i told the chair a while back. So were not seeing demand from very small loans because the facility, and the nature of the facility and the things to do to quality, it tends to be sort of larger size businesses. The very small, the lending at the very small end under 100,000, it tends to involve a lot of personal guarantees. Youre lending to a person. And that person is guaranteeing what is a very Small Business. And that is just that is not a facility that we currently have. We have to start from scratch to develop that. Fair point, just the feedback for the smaller loans, that the lenders are telling us that they really would prefer to use their existing structuring underwriting and documentation and account monitoring processes in order for them to get into that smaller level of loan. I want to talk about ebitda restrictions in the program. The restrictions in the program right now to prohibit commercial real estate borrows from accessing the program and in the faqs you indicated that the study to have asset levy borrowers but determined that conditions do not warrant such changes at this time. How did you come to this conclusion and there r there ways to retool commercial real estate borrowers. We hear these things too, probably from the same people. And we look for places where the Banking System, the lending system is not working for commercial real estate and the big part is the cmbs market. And we dont have an answer to that because cmbs, there are problems with commercial Mortgage Backed securities that make it impossible for loans and the servicers have to pay and it is hard to get foreclosure. So it is not easy to find places where we could have much of an impact. And i appreciated our conversation earlier where you said that the feds emergency lending powers may not be particularly suited for but to secretary mnuchin, appreciate the communication with your team on this issue and particularly cmbs. Could you detail what treasury is doing to monitor and respond to these challenges facing commercial real estate . Well, first of all im sympathetic to the issue and weve spent a lot of time internally to figure out if there is a way to structure a program with the fed. And as the fed chair said, unfortunately there is a structural problem with limitations of Additional Debt and prepayment penalties. I think the best way to help many of these is with additional ppp funds so people could pay rent so that owners could pay their mortgage. Thank you. I yield back. The gentlemans time has expired. I now recognize the gentle lady from ohio, miss beatty for five minutes. Please unmute. Thank you, madam chairperson. To the witnesses, thank you. We have heard a lot today about reopening the economy, we have also heard a lot about pandemic, health and safety, and director, you even used the words they go hand in hand and actually use the words and pointed to your mask by wearing a mask, all of that is a part of it. So to you, mr. Secretary, we recently learned that the white house has scrapped plans at the United States Postal Service to send approximately 650 million worth of masks through the mail. Maybe that is because President Trump sees no value and tweets about not wearing it. Youve had a lot of involvement with the operations and governance of the u. S. Postal. Were you involved in that situation about scrapping the plans or aware of it . So just to be clear, i think i read something in the press about that alleged situation. I never in any of my Task Force Meetings do i recall that being discussed or any plan being scratched whatsoever. It may have occurred in a different part of the government, but no, i have not heard anything about that. Would you be willing to look into it, since most experts, not me as a congress person, but scientists and medical have all states that wearing a mask is helpful in preventing the spread. Now that we know over 200,000 people have died. Would you look into that since youve had involvement with the u. S. Postal. Well be happy to and get back to your staff. Thank you very much. My next question is certainly we know that when we talk about reopening the government, which you both agree if people are healthy and if they have health care, that too go hands in hand with reopening the economy by having people be healthy enough to go back to work. That is a yes or a no question. Director powell . Yes, sure. Secretary . Yes. And i just would add one of the reasons that we liked the ppp is that kept employees connected to businesses and in many cases allowed them to keep their health care. Earlier this year the Trump Administration submitted a brief to the Supreme Court urging them to overturn the Affordable Care act which would roughly strip 20 million americans of their health care in the midst of this historic pandemic that has already cost the lives of we know today more than 200,000 americans, including stripping protection for preexisting conditions, kicking many of our younger adults off their plans, were also hearing now about how great their numbers are. Ive been in congress for eight years and i have voted against it a dozen times. Chairman powell, what affect would stripping millions of americans from their health care in the midst of this covid pandemic to the economy . I wouldnt want to comment on a particular Supreme Court case. But as you mentioned, health care is an important part of the support system. Well let me say it this way. Excuse me. Let me say it this way, mr. Chairman. Do you think stripping health care or not having health care would be bad for the economy . As you started with, i think that having Health Care Coverage is an important basis for people to go to work. One of the reasons people do work and it helps importantly to continue to would you say thats a yes, that having health care would certainly be a plus or a positive to having people i mean, come on 200 Million People have died. Look at numbers. If i look at africanamericans making up 13 of the population, but having almost 30 some percent positive results, 24 dying, dont you think health care plays into keeping people healthy, and the economy . Yes, i do. Thank you. Chairman powell, according to a transaction data of the secondary market Corporate Credit facility, the Federal Reserve published on sunday the fed purchased Corporate Bonds of dozens of companies that are in Financial Condition which has more than 200 billion cash in hand. How does buying corporate debt of Large Companies in good Financial Condition help further the feds mandate and how does buying corporate debt of Foreign Owned Companies like bp and toyota further the feds mandate . None of those secondary market corporate debt purchases extend any new credit to anybody. That is just buying an outstanding bond. And the reason were doing that is to have a footprint in the after market which should conditions deteriorate, it would enable us to continue to have good Financial Conditions which would support companies and allow them to keep workers on staff. Thank you, the gentle laid y ys time was up. Thank you, most of you know im a Small Business owner. I want to thank both of you for coming before our committee today. The Treasury Department and Federal Reserve have worked with incredible speed to implea. The c. A. R. E. S. Act and get money to hard working american citizens. I applaud you both for your leadership and main street america also thanks you. Some local governments in my district, in texas, are sitting on the money they received from the Coronavirus Relief fund because there is uncertainty surrounding what counts as an eligible expense. For example one local government in my district would like to spend the money to buy food for a local food pantry since they are seeing Food Insecurity but theyre unsure if this is an eligible expense since the cost was not account the for in the annual budget prior to the pandemic. So secretary mnuchin, would advice would you give local governments that are unsure if a use for the Coronavirus Relief funds will be deemed a qualified expense so we could get this money spent . Well, well look into your specific question and get back to you. But i will say, as weve tried to give as much flexibility as we can and as part of additional congressional authorization to move forward, were inclined to allow for additional flexibility on the money that is already gone out to state and local governments. Thank you. Well get something for you to look at. Chairman powell, i raise this issue with vice chairman corals back in may but i want to get your opinion to make sure everybody at the Federal Reserve is on the same page regarding Business Interruption business. Losses would be a terrible precedent of the government stepping in and retroactively changing the terms of an agreement between two private parties and would decimate the Insurance Industry and ive said before in texas, we say a deal is a deal. And the last time you were in front of this committee in june, you were aware of the issue as it related to fiscal stability and im hoping we could get more substance on this issue since the Federal Reserve is involved including Insurance Companies that do not pose a risk for our Financial System. So any question would be could you give us your thoughts on forcing Insurance Companies to retroactively cover Business Interruption claims. I dont think ive had a conversation about that since our last visit together in june. But let me check in on the Current Situation and come back to you. Okay. That would be great. Thank you. And both of you have discussed the potential need for another economic stimulus package to come through congress. Weve done that today. However at the moment much of the money that we allocated in the c. A. R. E. S. Act has not yet been spent. The Nonprofit Committee for response for federal budget estimates that the government has dispersed 2. 2 trillion of the 4 trillion congress has passed in covid relief. Mr. Secretary, you have been deeply in negotiating as we very well know the next covid19 relief package. As we discuss spending new money, how should we be viewing the economy to ensure that industries and in most need of assistance receive it while the other money allocated makes its way into the system. Well, i think were in a very different situation than we were last time. I think last time the entire economy was shut down and we had to act very quickly and in many cases that requires us to do things across the board. I think this time it should be much more targeted to the industries most impacted by this situation. Well thank you. And thank you again for your efforts and tell you somebody who is on main street, the economy is pretty good right now. It is getting better. And attitudes of people in startups are getting better. I hope one day we could look at liability toward small and big businesses that could keep them from growing. So thank you again for your efforts. We appreciate it. And i yield my time back. Thank you. Thank you. I now recognize the gentleman from washington, mr. Heck for five minutes. Thank you, madam chair. Chairman powell, i want to discuss fiscal support today. But before i do, want to quickly address the announcement that fed make to take steps to make inflation target more symmetric and emphasize a mandate framework with im not exaggerating when i say the framework with the most important thing that has happened to Monetary Policy and Economic Policy for years in this country. It will have a bigger impact on absorbing [ inaudible ]. Excuse me, mr. Heck, speak right into the microphone so that we could hear you clearly. I hope he was able to hear all of my comments. Can you hear me now, madam chair . Yes. Thank you. So thank you, chairman powell, very much for the new framework. At the outset of this pandemic, you declared this is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through this, end quote. Congress responded by passing the c. A. R. E. S. Act and Congress Continues to deliver a further fiscal support. At your press conference on wednesday you said that the Federal Reserves projections for growth and inflation and employment were assuming more fiscal support. What size support were you assuming . Well, let me say that i think a big part of the good Economic News that we have had results from the fiscal support that came with the c. A. R. E. S. Act. So it deserves a lot of credit for keeping people spending and keeping people, Business Confidence and household confidence high. So we dont have a we dont agree on a forecast, individuals make different assumptions. I think Something Like most private sector forecasters are assuming that some kind of a package passes sometime in the next few months. But there isnt any particular number that i would give you that would come out of the fed. But is it not true, mr. Chairman, that the fed did it selfmake projections as to growth and inflation and employment. And if so, acknowledging that it assumed fiscal support, there ma have been some assumption about the level of fiscal support. How else could you provide your projections . Yeah. I wish that it were that simple. Way we do it is what we publish is the individual projections of the 17 people who vote or who are im sorry participants on the fomc and theyre free to make whatever assumptions they need. And we dont survey them on every little thing but i would say many, most assume some fiscal action. But we didnt say or create a table so i cant tell you exactly what was assumed but fiscal action underlies many current forecasts. What well let me try this a different way. What happens to growth and employment if there isnt fiscal support and it doesnt [ inaudible ]. So what has happened lately is that the economy has proved resilient both to the broader spread of the disease over the summer and some of the south and western states and also to the expiration of the c. A. R. E. S. Act benefits. So we dont real know what will happen. I would just tell you what i think the risk is. As some have pointed out, savings are very high and that is because of a number of things. Part of it is the c. A. R. E. S. Act but still 11 Million People unemployed so the risk is that over time they go through those savings, they havent been able to find employment yet because it will take a long time orb a while to get 11 Million People back to work and so theyre spending will decline and the ability to stay in homes will decline and so the economy will begin to feel the negative affects at some time. At the same time the economy is recovering and that is a good thing and it is very hard to have any certainty about the path forward because we dont know which of the two forces will dominate. Well with all due respect there chairman, unless youre arguing that miss cal stimulus has no impact, is it not inescapable if there is no additional support, growth will be lower . Yes. Fiscal certainly fiscal, and ive said that i think it will likely be needed, i do defer to to the administration and congress who actually have responsibility for this. But i think that it is likely that more fiscal support will be needed. Thank you. The gentlemans time has expired. Thank you, madam chair. I recognize the gentleman from arkansas, mr. Hill, for five minutes. Thank you, madam chair. And thank you secretary mnuchin for being with us today. Chair powell, it is terrific to see you. I want to associate myself with the remarks of the Ranking Member that outlined the outstanding leadership from the treasury and the Federal Reserve in the early days of fighting the virus and we appreciate your commitment to our country to restore the health of the American People. Our families belief in the American Dream and in your own ways rebuild the American Economy. I want to talk for a minute about this issue for smaller businesses. And i plan on signing the discharge petition in the house today to move congressman shabbots bill to the house floor which extends the ppp program and clarifies the forgiveness aspects of that. This is something that should have been done at the end of july. And i was pleased last week that democratic members of mrs. Pelosis caucus are objecting to her leadership or lack there of in trying to negotiate the package and i hope my colleagues will join me in signing the discharge commission because the ppp is a key component to having the tools necessary for the Small Business recovery. Secondly, in my view, the proposal by mr. Rubio, that is the senate bill on the 7a loan program is critical because it allows to take this embedded loss of the last six or eight months that is coming and put it on a 20 year am at a 1 rate is an sba product and much better solution than the Emergency Loan Program that the sba has used during this pandemic which is geared toward a hurricane and not a national pandemic. But the third point is the main Street Program and both of you know my views on this as weve talked about it in overSight Commission hearing and privately and that is on friday at 1 00 in a typical washington, d. C. Issue, the fed releases its frequently asked questions and dumped out to the public on friday afternoon that you would not pursue this assetbased lending type approach for a different main street term sheet. Mr. Barr did a good job describing that. I really think that could be done, chairman powell, to companies on sound footing to companies that are not able to reach credit traditionally on reasonable terms and in the concept of a backstop. And so i want to press both of you that while it doesnt feet the main street term sheet that you have today that took four months to stand up, i still leave that assetbased lending to a solvent company is important. And while youve had a key component, another washington key component in the frequently asked question, you said at this time. So i would urge you to reconsider your position on assetbased lending and offer you each an opportunity to comment. Mr. Powell . So, we have taken a very close look at it as you know and as the secretary indicated. But were happy to continue the conversation and well do that with you. I really do believe it could be done in the right way. And i think the three things that i commented on, the 7a program and the ppp address the lower loan size that the chair mentioned. But i do believe there is a solve vent niche out there of portfolio lending that could be offer some liquidity for hospitality, not cmbs but portfolio lending where they have the gap that we saw after 9 11 and we saw after the financial crisis, a very slow increases in business travel. Secretary mnuchin, you commented that you would Like Congress to give you authority to incur risk as it relates to the a 500 billion in the Stabilization Fund or the 454 not related to airlines and that you propose to reprogram that money for other uses. But when we had a discussion of this in the over Sight Commission, we issued in our fourth report that we dont believe that you need any additional Congressional Authority to reprogram that and take additional risk. Could you comment on that, please . So let me be clear. I dont think we need authorization to take additional risk and let me clarify, i think the main street jones in general well be taking losses because i think this is basically being underwritten on precoronavirus evenidda. We would like to spend it on other areas that could be better serves. Kid jobs, more ppp, sba and longterm loans and we do note Congressional Authority to use it in other areas and we have a lot of money left over in the ppp that has been appropriated by congress that with simple legislation could allow many hardworking Small Businesses to get a second loan. Thank you both for your leadership. Madam chair, i yield back. Thank you. I now recognize the gentleman from california, mr. Vargas for five minutes. Thank you very much, madam chair. I appreciate it. And i want to thank the secretary, of course, and also the chairman for being here today. I appreciate your testimony very much. Have to say ive heard some pretty tortured language and tortured logic from some of my colleagues today. A member said that were not bailing out businesses, quote, compensation for regulatory taking. That sounds a lot like use my words against me when you say you wont vote for a Supreme Court justice on Election Year for president. I mean the reality is when you talk in absolutes, you get into the situations where logic is twisted to try to fit things and the other thing i heard today is we should Pass Congress should pass the second c. A. R. E. S. Act. We did that. We passed it. It is called heroes act, language over in the senate. And i heard another colleague say we should do what the senate did and pass what they do. They didnt pass anything. The senate didnt pass a thing. They tried to pass something. But nothing passed. The other thing i heard today was a pretty rosie picture of the economy. And i dont want to put words in peoples mouth, but secretary, i believe you said the economy, the economic recovery was strong. I think the tens of millions of americans would disagree with that. In fact, they would say that the stock market is not the only economy. We have 11 million americans that are still out of work that lost their jobs. More than in the financial crisis. So i dont think that would agree that weve had this strong recovery. I do agree with what chairman said, that we wont get a full recovery until everyone feels that theyre safe from this virus. And so i think it is very important that we do everything that we can to defeat it. You unfortunately, up until now, the virus has been in charge. So i want to ask this, ive been watching what has been happening in europe. It seems like theyre starting to get a second wave. Im very concerned that we may have a second wave in our own country. And im not sure that were prepared for this. I also went back and did a lot of reading on the spanish flu and saw that the second wave was the more devastating one. Not the first one but the second wave of the spanish flu. Could you comment, either one of you, how prepared we are and what is our plan in case this thing comes roaring back . Well, i would comment on there is a strong recovery because when you close the economy and you reopen it, it is strong. But there is still more work to do. As it relates to being prepared and again im not a Health Professional although ive sat on the task force. I think weve made major progress on vaccines, on virals, on testing, so i think on ppe, so i think we are have done a very good job at being prepared for the virus. But do we have a plan . Do you have a plan in case it comes back . A virus usually has some seasonality to it and you would expect in the winter to come roaring back. Weve seen that before. Do you expect i dont want if it does come back, assume it does, do we have a plan . Does the administration have a plan . Well first from an economic standpoint, we do have a plan for the economy now and that is why we want more congressional approval. As it relates to the health and, yes, the administration and the task force does have a plan and is executing that plan and a major component of the plan is the Vaccine Development which is making great progress. Mr. Chairman, if i may ask you, you said that until people feel that theyre not at risk, the economy wont come back. You could elaborate a little more on that. Sure. So there are parts of the economy that involve people getting close together in groups and that is travel, hospitality, entertainment, things like that. And i think people will, not everybody, but some part of the population will be reluctant to continue in those activities until they feel confident that it will be safe, that they wont get sick from doing so. And i think thats not most of the economy, it is a piece of the economy. It is a reasonably substantial piece of the economy. Where a number of people, millions of people are still not working and it will probably take some time for them to get back to work. So getting them back to work will depend on continued progress on the medical front, including ultimately a vaccine. I think my time is expired and yield back. Thank you very much. Thank you. Any rou recognize the gentleman from georgia for five minutes. Thank you, madam chair, secretary, chairman powell, thank you for being here. And let me also echo the thanks for early on in this pandemic, especially with the ppp program, the way our office has worked together and your office worked with the banks and our community to tailer this thing where it could do something for the Small Businesses. And as a result of that, one of the small banks in my district that only has two branches ended up making more ppp loans than one of the Major National banks did nationwide. And that is just the success of the ppp but because of the engage there. Before i get my i just have two questions. Id like to respond to something my good colleague from california just brought up about the recovering economy. I think there are areas of this country that the economy is recovering strong, in the state of georgia is one of those. Our revenue reports came out just a little over a week ago that tax revenues for 2020 are 7. 7 higher than 2019. And it is because instead of using a heavyhanded government, putting longterm restrictions on the people, we decided to trust the people that they would be safe and secure and opened our economy. So i think if other states would like to see that type of economic recovery maybe they should address the way that their states are being governed. I know the Federal Reserve is looking at ways of broadening the main Street Lending program which i think we all realize need to be broadened. But there are some areas id like to see us take a look at and one of those industries is interested in main Street Lending is specialized Consumer Finance firms which are nonbanks that purchase credit card receivables and secure those assets and enables consumers with sub prime credit to access a credit card which is some of the most vulnerable in our society right now. But the ebitda require them getting a loan. Would you consider modifying main Street Lending to allow firms to access this program . I would have to look at that in particular. Ebitda is a standard cash flow measure. If you make a cash flow loan in our markets youll look at ebitda. The alternative is something asset based and dont know these companies to know exactly what were talking about, but were happy to take a look. Ill make sure that our staff engages with you to give the folks that are looking to do that and i think it would be wise. Another issue is back to the ppp program, mr. Secretary, is the forgiveness of the ppp loans it is very cumbersome and putting some of the banks such as the one i have brought up earlier, vinings bank, into a situation where theyre keeping those loans on the books longer than what they have intended. So is there something that we could do to stream line this Forgiveness Program so it is less cumbersome so we could get the lobans off the book of the small banks and make them more traditional business loans. Weve tried to stream line the process for smaller loans as you outlined. I know there are proposed in congress and as part of legislation weve worked with both committees on that. Making sure we have the right balance of protecting for fraud with simplification. I assume with that youd be willing, if Congress Took action, to work with us on that. All right. Thank you both. I know this is challenging times but i think the administration has responded admirably and well considering the severity of this crisis and i think just keep on track and keep pushing forward and we get through this and make our economy stronger. I yield back. Thank you. I now recognize the gentleman from texas, mr. Gonzalez, for five minutes. Thank you, madam chair and thank you chairman powell and secretary mnuchin. I represent many Small Business hoteliers in my district, many of whom are first and Second Generation americans who have worked hard to achieve the American Dream. As a result of covid19 and subsequent travel shutdowns and through no fault of their own, familyowned and operated hotels if texas and across the country are facing an unimaginable economic crisis with no ability to access a lifeline through main Street Lending program. Despite repeated requests from congress including my own, the mslp facts released on september 18th state that conditions do not warrant change, a change to allowing lending to assetbased borrowers. There is nothing else for these people to turn to. I want to make sure i understand your message to them. Right now we have money on the table, programs that are not being used an programs that are being used that are not quite complaint with the c. A. R. E. S. Act and programs drained of funding because they worked. Your positions that these businesses should be allowed to fail, that hard working americans should lose their livelihood ands youll do nothing to help them. You want to carefully follow the law, right . On the c. A. R. E. S. Act . Well we passed the c. A. R. E. S. Act and to the extent that you will you are not in compliance with the programs included there, it is time to get that done. Failure to do so would not constitute following the law. You either are or not complying with the law. And you did not have you do not have programs that comply with the c. A. R. E. S. Act of funding, we may be if a crisis now but im sure you could imagine what will lap have the crisis whether we start picking up the pieces and scrutinizing the actions of your agencies. Right now were using the powers given to you for explicitly this purpose. Youre using the powers for exclusively this purpose for both you, so you could help the country. Businesses need a lifeline that theyre not even asking for bailouts. Businesses like the ones im talking about. The lending them money or 10 or 20 or 30 years at a low Interest Rate create the liquidity that the marks need and recognize that if all commercial Properties Start defaulting, were looking at another wave of a crisis, arent we . And what are we doing to now and help them now and do the work now . Well, i would first say i think we are following the law. So let me just be clear on that. The second thing i would say is that we want to help the types of businesses that youre talking about. In many cases they need grants and not loans. But as part of additional sba appropriations we very much support longterm loans. Particularly for the types of businesses that youre focused on. What specific loans do you have available for people like the small hoteliers . What i said was or help again, we support additional money to small hotels because that is what they need. Additional sba loans are something that weve looked at as well as ppp loans. They dont fit, in many of the cases, the small hotels did not fit into main street because they already have additional they already have other endebtleness and in many cases theyre not allowed to take additional lows or too levered to begin with to qualify. So the small ones that do fit in, youre saying that sba has a program for them . What i said is small mom and as part of additional legislation, the sba committee has proposed additional money, longterm money for Small Businesses, as part of a new program and that is something that weve looked at and what support. Again many of the small hotels that youre talking about dont have any revenues. So those hotels would qualify for additional pppp loans. There is over 130 billion appropriated by congress that we just need authorization to use. And that would be the best solution for them. Thank you. I would ask that we stay cognizant of these folks ander that important part of our economy locally and nationally and they deserve our attention. Thank you very much. Thank you very much. I now recognize the gentleman from tennessee, mr. Custoff for five minutes. Thank you madam chairman and like to thank the witnesses for your leadership during this crisis. I think youve both displayed tremendous leadership. Secretary mnuchin, if i could, weve talked a lot about the ppp program today and the success and the Ranking Member talked about the 15 million jobs that it is estimated that it saved, as a caveat, maybe 12 million rural jobs in Rural Communities that it saved. I would follow up on what mr. Lauder milk asked a few moments ago as it related to forgiveness. What ive heard from Small Businesses throughout my district, frankly throughout the state of tennessee, is theyre thankful about ppp, it literally saved our business. But there is the concern about the complexity of the forgiveness. And so my question is, have you considered administratively forgiving certain loans, say loans of 150,000 or less again through administrative action . We have considered that. We dont think we have the authorization to do that in the context of the law. And weve tried to make it very simple for Small Businesses. But, again, there were some proposals out of congress that just shed we should automatically forgive all of those loans and give congressional action for. So your interpretation is you dont have the authority to administrativively forgive those certain loans, again the smaller loans. Im using 150,000 or less, administratively you dont have the authority to do that. We think we have the obligation to get the documents, have them fill out what is an easy form and have the ability to audit those. I think as you know unfortunately there is some fraud and were working with our ig on that. But no, we dont think it would be appropriate and we dont think we have the authorization to do a blanket forgiveness across the board. Okay. If i can, again, weve heard from people i think all of us have about how ppp saved their businesses, kept their employees on payroll. One criticism, and frankly you all deserve credit for crafting that. I do think frankly congress deserved credit that they acted swiftly and in a bipartisan nature. The one criticism ive heard from businesses specifically in my district is that they literally could not compete, some, with the enhanced unemployment benefit. That it was set too high. And so maybe in an area like tennessee or mississippi or arkansas, maybe it was generous in other states, maybe its not. I dont want to get ahead of the negotiations. But if there is additional enhanced unemployment benefit in the next package, is there a way to somehow tie that to locality . Yes. So at the time we knew that there were certain places that would be too high and certainly be too low. We thought the fair way of doing it was one number across the board. As part of the president s executive action hes thousand authorized that go forward with up to 400, 300 if the state doesnt contribute and we have proposed as part of additional legislation having it at Something Like 75 of wage replacement. And would that be uniform across all 50 states or based somehow on locality and ideally it would be each state would take some time for them to implement that technology. But that it would be capped on 75 of previous wages. Thank you, mr. Secretary. One more question for you if i can. And im going to touch on something that i dont think has been asked today, and that is on phase one of our agreement with china that was executed earlier in the year. Obviously we know weve faced a pandemic. Are you right now that china could meet its commitment to purchase 36. 5 billion in agriculture products this year . I believe they are on track for that. And ambassador lighthizer and i are monitoring that very carefully. Thank you, mr. Secretary. With that, i yield back my remaining time. Thank you. I now yield five minutes to the gentleman from florida, mr. Larson. Thank you, madam chair and i would like to thank cochair mr. Mchenry for hosting this hearing today. The gentleman to the meeting has been very good here and you all speak this morning. And many of my colleagues, representative taylor from texas joined me in writing a letter to both of you regarding the impact of covid19 on the commercial Real Estate Market and i heard the commercial Real Estate Market continues to be hit hard due to the economic shutdown that has resulted in store closing and harder travel. The covid19 pandemic has turned the commercial Real Estate Financial market upside down. And soon i was joined by over 100 of our colleagues requesting that the department of treasury and the Federal Reserve urgently consider targeting economic support to bridge the temporary liquidity deficiencies facing commercial real estate created by t by the unforeseen crisis. I still do we believe that this is still that the Federal Reserve has the ability to bridge the gap to various facilities to help many businesses survive the economic disruption. However, on friday, the Federal Reserve released an update on the main Street Lending program. Stating that conditions do not warrant changing to allow assist and would you all care to comment on that, please, sir. Well, first, let me say, again, chair powell and i both agree with you that the commercial Real Estate Market has an issue. I just want to clarify, when people talk about Asset Based Lending they traditionally dont include real estate in that. The Real Estate Market is its own market. So that wouldnt necessarily be part of an assetbased program. There are structural problems. I know some people in the house tried to work on a proposal of preferred equity so that could go below the existing. But chair powell and i will continue to work on this. It is an issue we dont have a solution. We wish we did. Chairman powell, do you want to comment too. Because i was on a call with him several weeks ago about this issue, with representative taylor. Yes, and both of us have very familiar with the letter that you sent and have studied it carefully and done really looked hard at how we could reach the problem were talking about. And a lot of the problem just isnt with commercial Mortgage Backed securities. Those loans contain a provision that said you can incur Additional Debt. The secretary referred to a way to get around that and that wouldnt involve the fed, though. That is something for legislation and we do understand and appreciate that this is a significant problem in the economy and to keep looking for solutions. We dont really have a solution with the tools that we have. I understand that we dont have a solution. I think one of the things that really bothers me as a lawmaker when we turn back about 130 billion in ppp funds and then you find out that all of these people that are suffering tremendous and they have coming up to maybe releasing Something Like a large group of employees that depend on them. And i think i had the opportunity to talk to the chair, congresswoman waters about some of the things that was happening in the area, out in california. And im glad that you all are concerned and we need legislation. I dont know how quickly we could get legislation through. But i was certainly hoping that it could be included in negotiation on the heroes act and what is coming out of the senate. But i know the senate, which was stated today, still havent passed anything. So i dont have much time left. But im glad that you continue to keep that the at forefront because a lot of these employees, every day people need help. And with that, madam chair, i yield back. Thank you. I now recognize mr. Hollingsworth from indiana for five minutes. Good afternoon. First to you chair powell. I was recently excited about the news about creating a more symmetrical inflation target. I think that was great news. It is something that you and i discussed at length privately publicly at hearings. Im sure we have a lot of discussion and underpinnings and not just my annoyance that led to it and it is positive for the American Economy going forward. I want to turn to the temporary exclusion of treasuries and deposits at Federal Reserve banks from the slr. I know that was done through march of 2021 on some concerns that increased reserves during that period of time didnt want to count against them during slr but it was not extended through nor flow there to the g said side indicator and why is that the case and is there any further discussion to getting that through the i have to check on that for you. Im not aware of those discussions. If you wont mind checking on it that because it is important to make sure that we see that flow through given that in the fourth quarter, i think many of the largest institutions are going to be seeing those impacts. On to you, secretary mnuchin, what you said a few minutes ago, there is a proposal around congress potentially talking about preferred equity to some of the our real estate borrowers that are most troubled. That, to me, is troubling. That proposal. And i think you said there doesnt feel like there is a good solution. You could talk about why that isnt a good solution . Well, i mean, ideally there would be, we would rather lend at debt and not do. Value and government ownership issues and how do you get paid back issues all of t. All of the above. And there is distress in this community and we talk about solutions that arent Real Solutions the longer it will take to get to an administrative and legislation fix to those hurting across my district and across my state and across this country. So i appreciate your clarity on that. With that, i yield back. Thank you. I now recognize the gentle lady from michigan miss tlaib. Thank you so much for being here. One of the questions or some of the basic ones, i just want to review with both of you. I mean chairman powell and secretary mnuchin, what do you think your role, primary role is during the pandemic. And ill start with you, chairman. Were here to serve the American People. To stabilize the economy . That is a big part of it right now, yeah. How about, you treasury secretary. Yes, that is correct. And to operationalize are all of the responsibilities that the like prevent economic collapse, right . Yes. Nor starters. Yeah. I know, i hope so too. So im going to start with you chairman powell. Every time ive asked you regarding state and local governments, you have insisted there is nothing that the fed can do for states and cities in distress. However you did create a Municipal Liquidity mlf to apparently just do that. However the program is restrictive. It is true that only the state of illinois has applied . No. We have done two loans and, of course, that facility has resulted in 250 billion of borrowing in the private sector, those, where there was none taking place before the facility was announced. Do you think state and local government going bankrupt would create instability in our economy. I think that is an issue outside of my belly wick. Sow dont think it is important that the sector is stabilized and will not go bankrupt. States cant go bankrupt. There is no means. Cities can. So the city of detroit, when they went bankrupt, did you think there was an impact to the economy there . Yes. I think so, too. My district hasnt benefited from the program and one of the things that i want to point out to you, chairman powell, you dont have to lend with penalty rates to state and local governments. This regulation that you have there about penalty rates, that wasnt created by statute, correct . That was created by you all internally. It is in our regulation and in our practice. So but why not remove the penalty rate when there is a high end unemployment or when the state and local governments are at risk . What that facility has accomplished is it is opened up the private market. So people not people but state and local governments are borrowing in record amounts at record low yields. And that is across the yield curve. Only two states applied, correct. Excuse me. Only two states have been able to qualify under the mlf program. Yes, but theyre borrowing in the Public Markets at much cheaper rates. Chairman powell, from what i understand for corporations the fed supports bonds within a five year maturity. Do you think corporations in debt are more important than local municipalities because i understand this is five years and you have it for three years for local government. State and local governments are not allowed to borrow to finance deficits. It is their borrowing is for liquidity and there is a part of the market which is zero to three years that is about liquidity and that is where we have been willing to lend. But there say lot going ong longterm issues. 20 and 30 year bonds have been issued because of the backstop, our facility is performing the backstop function and that has enabled the private market to work very well to serve state and local governments. Yeah, i honestly dont think, looking at what happened in the city of detroit, im worried were not being flexible enough and accommodate for the fact that the state and local governments and much of the policies from within to stabilize the economy, we have to up lift and make sure that the kpun is are protected. So i recommend that you check out the bill that i have uplifting our local communities act. I really would appreciate that. Secretary mnuchin, we got a economic collapse, right. This is a huge issue. This is probably even deeper than what the recession that we went through. Yes or no, do you believe another stimulus check could help stabilize the economy. I do. However been on record for not supporting the package that we passed in may that included another round of stimulus checks for millions of americans that are right now unable to afford their rent and so forth. You could explain what your position there is . Because i think the American People are a little confused. Does the Administration Support a 1,200 another stimulus payment . The administration does support another stimulus page. So but youre willing to go ahead and support within the heroes act, that payment, but push back on what we call let them go bankrupt bill, that the senate has proposed. Let me just say i take great pride that the last two bills we did passed with overwhelming bipartisan support. We cant pass a bill in the Senate Without bipartisan support. And our job is to continue to work with congress to try to get additional help to the American Public. I think you need to be very clear with the senators, secretary, really clear, treasurer that direct payment is critical to preventing the economic collapse in our country. Thank you very much. Were going to move to the last member who will be able to raise questions. Both of our guests have a hard stop at 12 30 and were going to honor that. Mr. Bud, i now recognize you, the gentleman from North Carolina, for five minutes. Thank you, chairwoman and secretary mnuchin. Thanks for being here. So today less than 1 of the ppp loans nationwide have been processed through the sba forgiveness portal. Many Small Businesses, the ppp borrowers are waiting to see from treasury or congress will act on bipartisan forgiveness proposal in the house and the senate. The current one as i understand it, the current process is confusing for Small Business owners and it is not what they expected when they first took out the loans. Now the current process, it is also a real burden on Community Banks that have a lot a lot less resources than our large banks. Now the time for such a streamline process to be put in place was a long time ago, it was weeks ago. But due to this delay, the situation with banks and borrowers is getting por and more urgent. So under your Current Authority would you and administrator core anza stream line a process in the pay tect protection Small Business forgiveness act. Sorry, id have to look at specifics of the act and get back to you. But i believe the answer is that we dont have the authority to implement it the way it is in the act. But, again, i would just say that the forgiveness portal is open. Were encouraging Small Businesses to apply. And were working with sba to make sure that they could process those as quickly as possible. And we could provide Small Businesses tools to make it easy for them. Mr. Secretary, so im glad that the portal is open and it is working. Do you consider it currently to be a stream line process and is there anything, improvement within your authority. We developed an easy form, so we tried to make it significantly easier and again were happy to work with congress on a Bipartisan Legislation that created blanket authority for forgiveness. Chairman powell, thanks again for being here. At your last appearance before the committee you stated that our Banking System is robust and a source of strength throughout this pandemic. Specifically you cited the unprecedented influx of deposits, forbearance taken by banks an the continued ability to lend as evidence of the strengths of the u. S. Banks in the covid 19 environment. While Many Industries have understandably needed Government Support and continue to operating during the force economic shutdown, the Financial System has been a crucial partner for the fed and krogs in facilitating relief in house holds. Now i bring all of this up because ive heard some call the recent actions taken by congress and the fed, theyve called it a bailout for banks. So my question to you is simple. Has there been a bailout for banks during covid19. No, i wouldnt say that there has been. So, my office keeps hearing from companies that are unable to secure shortterm financing. But theyre using their working Capital Financing to run operations. They were too large to take advantage of the ppp and they dont have access to the capital markets. So how could the fed use its 133 authority to provide assistance to the Companies Many of whom provide services and supplied all and down the supply chain that are critical to the nations economy, what could the fed do to provide assistance to them . So on working capital, we did, in looking at the idea of an assetbased facility, we did a good diesel a good deal of work in that sector and came away thinking that it is broadly available. So im surprised and it is not a good thing that im hearing that its difficult for some. So, well go back and look at that. Chairman, is there something that i should relay to these midsize businesses that maybe they havent found or not aware of that they should look to for support . Well, we have the main street facility, of course, which has three different portals and three different loan products. And all companies are welcome to borrow there. We have, as i mentioned, growing interest there. So, there is the ppp program. Chairman, do you think that im sorry, do you think there might be a gap between the ppp and the main Street Lending facility . Where spl could get caught. So weve been looking for gaps honestly and we did look at the working Capital Finance and did not see a a big problem to solve there. But well go back and take another look at that. Thank you, chairman. I yield back my time. Thank you very much. Id like to thank our distinguished witnesses for their testimony today without objection all members have five legislative days within which to submit additional written questions for the witnesses to the chair which will be forwarded to the witnesses for their response. I ask our witnesses to please respond as promptly as youre able. Without objection, all members will have five legislative days within which to submit extraneous materials to the chair for inclusion in the record. This hearing is adjourned. Today a Senate Homeland security subcommittee examines pandemic related cyber threats. Watch live at 3 00 p. M. Eastern on cspan3, online at cspan. Org or listen live with thefree cspan radio app. Democratic Vice President ial candidate Kamala Harris is traveling to detroit today for a campaign rally. Well have live coverage for you when it starts. Now set for 6 15 p. M. Eastern here cspan3. President donald trump and former Vice President joe biden are set to debate tuesday, september 29th. Biden supports Cutting Police funding and he has pledged to end just last week sleepy joesephed the endorsement of the procriminal antipolice portland District Attorney who has a policy of releasing violent extremist without he lied to the American People. He foeingly lied about the threat imposed to the country for months. He had the information. He knew how dangerous it was. And while this deadly disease ripped through our nation, he failed to do his job on purpose. It was a life and death betrayal of the American People. Watch live coverage of the first president ial debate tuesday, september 29th on cspan at 9 00 p. M. Eastern and watch all of cspan debate coverage live or on demand at cspan. Org debates and there is also a link to our campaign 2020 website with campaign videos, candidate information and election results. Go to cspan. Org debates or listen live on the free cspan radio app. Cspan, your unfiltered view of politics. With the ongoing Global Pandemic and many schools shifting to online learning, cspan student cam competition continues to provide students with a platform engage in a national conversation. Were asking middle and High School Students to produce a five to six minute documentary exploring the issues they most want the president and new congress to address in 2021. Justice is conformity, choose fact or reason. The framers of the constitution were necessary in giving american citis justice including those that commit crimes as shown in the fifth and eighth amendments. From then to present day there are still issues with equalify in the justice system. It needs reform. When youth are given the opportunity and the skills to become informed voters, and engaged citizens, they vote. Because democracy must be learned. From irn equity and wait for legal documents to a tumultuous pathway for citizenship for children whose parents pag rated here, the immigration system failed many people. This year were awarding 100,000 in cash prizes including a grand prize of 5,000. The deadline to submit videos is january 20th, 2021. For rules an tips and more information on how to get started, go to our website stude studentcam. Org. Former Vice President joe biden was on the trail to talk about his economic plan. This stop at a metal casting facility marked the second visit to wisconsin over the last month as polls suggest a close rate in the state between him and president