[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]

                          HYBRID HEARING WITH
                       THE FEDERAL RESERVE CHAIR

                            JEROME H. POWELL



                               BEFORE THE


                                 OF THE


                        HOUSE OF REPRESENTATIVES


                             SECOND SESSION


                           SEPTEMBER 23, 2020


                           Serial No. 116-119


      Printed for the use of the Committee on Oversight and Reform

                     Available on: govinfo.gov,
                      oversight.house.gov or

41-958                 WASHINGTON : 2020                              

                CAROLYN B. MALONEY, New York, Chairwoman

Eleanor Holmes Norton, District of   James Comer, Kentucky, Ranking 
    Columbia                             Minority Member
Wm. Lacy Clay, Missouri              Jim Jordan, Ohio
Stephen F. Lynch, Massachusetts      Paul A. Gosar, Arizona
Jim Cooper, Tennessee                Virginia Foxx, North Carolina
Gerald E. Connolly, Virginia         Thomas Massie, Kentucky
Raja Krishnamoorthi, Illinois        Jody B. Hice, Georgia
Jamie Raskin, Maryland               Glenn Grothman, Wisconsin
Harley Rouda, California             Gary Palmer, Alabama
Ro Khanna, California                Michael Cloud, Texas
Kweisi Mfume, Maryland               Bob Gibbs, Ohio
Debbie Wasserman Schultz, Florida    Clay Higgins, Louisiana
John P. Sarbanes, Maryland           Ralph Norman, South Carolina
Peter Welch, Vermont                 Chip Roy, Texas
Jackie Speier, California            Carol D. Miller, West Virginia
Robin L. Kelly, Illinois             Mark E. Green, Tennessee
Mark DeSaulnier, California          Kelly Armstrong, North Dakota
Brenda L. Lawrence, Michigan         W. Gregory Steube, Florida
Stacey E. Plaskett, Virgin Islands   Fred Keller, Pennsylvania
Jimmy Gomez, California
Alexandria Ocasio-Cortez, New York
Ayanna Pressley, Massachusetts
Rashida Tlaib, Michigan
Katie Porter, California

                     David Rapallo, Staff Director
           David Hickton, Select Subcommittee Staff Director
                       Russ Anello, Chief Counsel
                         Senam Okpattah, Clerk

                      Contact Number: 202-225-5051

               Christopher Hixon, Minority Staff Director

             Select Subcommittee On The Coronavirus Crisis

               James E. Clyburn, South Carolina, Chairman
Maxine Waters, California            Steve Scalise, Louisiana, Ranking 
Carolyn B. Maloney, New York             Minority Member
Nydia M. Velazquez, New York         Jim Jordan, Ohio
Bill Foster, Illinois                Blaine Luetkemeyer, Missouri
Jamie Raskin, Maryland               Jackie Walorski, Indiana
Andy Kim, New Jersey                 Mark E. Green, Tennessee

                         C  O  N  T  E  N  T  S

Hearing held on September 23, 2020...............................     1


The Honorable Jerome H. Powell, Chair, Board of Governors of the 
  Federal Reserve System
Oral Statement...................................................     8

Written opening statements and the written statement of the 
  witness are available on the U.S. House of Representatives 
  Document Repository at: docs.house.gov.

                           Index of Documents


No documents were entered into the record during this hearing. 

                          HYBRID HEARING WITH

                       THE FEDERAL RESERVE CHAIR

                            JEROME H. POWELL


                     Wednesday, September 23, 2020

                   House of Representatives
      Select Subcommittee on the Coronavirus Crisis
                          Committee on Oversight and Reform
                                                   Washington, D.C.

    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. James E. Clyburn 
(chairman of the subcommittee) presiding.
    Present: Representatives Clyburn, Waters, Maloney, 
Velazquez, Foster, Raskin, Kim, Scalise, Jordan, Luetkemeyer, 
Walorski, and Green.
    Chairman Clyburn. Good morning. The committee will come to 
    Without objection, the chair is authorized to declare a 
recess of the committee at any time.
    I now recognize myself for an opening statement, and today 
I am pleased to welcome Reverend--Federal Reserve Chair Jerome 
Powell. Thank you, Chair Powell, for appearing before us today. 
Our goal today--well, that happens to me very often. Our goal 
today is to understand the course and scope of the outgoing--
ongoing jobs crisis in America, what the Fed is doing to 
address it, and what else needs to be done.
    Chairman Powell, you said back in April, and I quote, 
``This is first and foremost a public health crisis.'' In July, 
former chairs Ben Bernanke and Janet Yellen appeared before the 
select subcommittee. Quoting from their testimony, ``Nothing is 
more important for restoring economic growth than improving 
public health.'' I agree. This health crisis has dragged on for 
eight months, and we just passed a tragic milestone of 200,000 
Americans killed, far more than any other country on earth. Yet 
the Trump administration still refuses to show leadership and 
implement a science-based national strategy to address this 
ongoing public health emergency. The President continues to 
reject the advice of scientific experts on testing, social 
distancing, and wearing masks. These failures have allowed the 
virus to spread, causing millions of infections, tens of 
thousands of preventable deaths, and one of the worst economic 
crises in our Nation's history.
    Let's be clear. Despite the rosy picture this 
administration tries to paint, many American families are still 
struggling, and millions of small businesses are on the verge 
of collapse, even as investors reap record profits and gains in 
the stock market. Nearly 30 million Americans continue to rely 
on unemployment benefits. While most high wage jobs have 
returned, the employment rate for lower wage workers is still 
down more than 16 percent since January 2020, and an increasing 
number of these jobs are lost permanently. In August, permanent 
job losses skyrocketed to 3.4 million, half a million more than 
the month before and more than two and a half times what they 
were in January.
    Job losses have dire consequences. In one recent survey, 12 
percent of households with children indicated that they did not 
have enough food to eat in the last seven days. The numbers are 
even worse for minority families, with 16 percent of Hispanic 
households with children and 20 percent of Black households 
with children without enough food in the previous week. In the 
richest country in the world, tens of millions of children 
don't have enough to eat.
    Congress helped keep an estimated 12 million Americans out 
of poverty when we passed the CARES Act back in March. But the 
expiration of Federal unemployment benefits and other relief 
measures this summer put millions of Americans at risk of 
hunger, homelessness, and mounting debt.
    We need to provide additional economic assistance for 
American workers and families, especially low-income Americans 
and communities of color that have been hit hardest. The 
legislation we enact must comprehensively address the enormous 
scope of the problems we face. Again, quoting you, Chairman 
Powell, from last week, ``The current economic downturn is the 
most severe in our lifetimes, and more fiscal support is likely 
to be needed.'' Again, I agree. The Federal Reserve has an 
essential role to play in reviving the economy, and it must do 
so in a way that is fair and equitable. Unfortunately, the 
Fed's actions so far have prioritized big businesses over the 
small ones that are most at risk, and it has failed to protect 
American workers.
    Today, the select subcommittee released a staff report 
``Examining the Fed's Purchases in Wall Street's Corporate Bond 
Market.'' The report finds that, while the Fed helped many 
large companies by purchasing bonds, the terms of these 
purchases fail to include any protection for these companies' 
workers. Without worker protections, the companies whose bonds 
have been bought by the Fed have prioritized the interests of 
shareholders over workers. Layoffs have continued, even while 
dividends have been issued.
    While I recognize that, during severe economic crises, 
Federal Government assistance for large corporations can be 
necessary to support the wider economy, public support must 
always be undertaken to achieve maximum public benefit. I 
believe the terms of the Fed's purchase of the corporate bonds 
could have been improved so that benefits were more equitably 
shared by workers as well as investors.
    Of course, assistance for big businesses is never a 
replacement for assistance for small businesses and state and 
local governments. Small business revenues are down nearly 20 
percent since January, and states and localities face budget 
shortfalls of $1 trillion. Regrettably, the Fed's lending 
programs designed to help these entities have failed to make an 
impact because of overly restrictive rules and onerous loan 
terms. The Fed's key programs, including the Main Street 
Lending Program and the Municipality Liquidity Facility, have 
barely loaned any money at all. Of the combined $1.1 trillion 
in available lending, 99.7 percent remains unspent.
    The Main Street program has been plagued by delays, overly 
restrictive loan terms, a $250,000 loan minimum that is out of 
reach for most small businesses, and a lack of employee 
retention safeguards. The municipal program has been plagued by 
onerous interest rates and a short repayment period, rendering 
the facility useless to most jurisdictions. We must do better 
across the board. The Trump administration must finally 
implement a national plan to get the coronavirus pandemic under 
control. Republicans must agree to a comprehensive recovery 
package like the Heroes Act that provides for necessary 
resources to stop the spread of the virus and alleviate 
economic harm. And the Fed must use its tremendous resources 
and market power not just to bail out wealthy stockholders but 
also to protect low income workers and struggling small 
businesses that are the backbones of this country's economy. I 
urge my colleagues on both sides of the aisle and throughout 
the Federal Government to seek common ground and meaningful 
solutions to help the millions of Americans still struggling 
through this crisis. We must find solutions based on science 
and economies and economics, not politics or ideology.
    Thank you for being here, Mr. Chairman. I now yield to the 
ranking member for his opening statement.
    Mr. Scalise. Thank you, Mr. Chairman, for calling today's 
    And, Chairman Powell, thank you for coming before us today, 
and thanks for your service to our country. Earlier this year, 
we had the chairs of the Federal Reserve, former chairs, Ben 
Bernanke and Janet Yellen, come before our committee. I would 
venture to say, Chairman Powell, that the challenges you've 
faced during your tenure far exceed things that we've seen from 
previous Fed chairmen. And as we work together through this, I 
just want to thank you for keeping a steady hand at the Federal 
Reserve which has been so important as we start seeing this 
economic recovery.
    China, Mr. Chairman, has long declared a goal of overtaking 
the United States, both economically and militarily. At the 
outset of this pandemic, China lied about the emergence of the 
most dangerous virus we've seen in over 100 years. China 
refused to allow American scientists into their country to help 
assess the threat, despite the fact that many scientists within 
China were asking for our help. I was in some of those meetings 
at the White House with Dr. Fauci and others when the Trump 
administration was trying to get our best doctors into China to 
find out what was happening, and it was the Chinese Communist 
Party who refused our ability to find that out.
    At the same time China was closing down domestic travel, 
they were sending thousands of people a day overseas, including 
here into the United States, setting the table for this global 
pandemic. In the months of January and February, China hoarded 
medical PPE. The Chinese Communist Party actually banned the 
exports of surgical gloves, masks, and gowns to the United 
States so that they could hoard PPE for themselves while they 
lied to the rest of the world about COVID-19's threats and 
    China not only covered up an emerging pandemic, they also 
spread the pandemic and made sure that the rest of the world 
was not prepared to thwart the virus. Still to this day, this 
House majority calls China's role in this pandemic a 
distraction. The majority has held zero hearings on China's 
role. We've had celebrities testify before our committee, but 
yet, we can't get the Chinese Ambassador, as we've called for 
multiple times, to come and testify before this committee. We 
cannot fully understand this pandemic and the impact it's had 
on the American people without understanding the role of the 
Chinese Communist Party and the Chinese Government in this 
    But let's start with where America was prior to COVID. 
Prior to COVID-19, the economy added jobs every single month 
since the election of President Trump. Prior to COVID-19, since 
the President's election, the economy has added more than 7 
million jobs. This is more than the entire population of the 
state of Massachusetts in 2018. This is 5.1 million more jobs 
than the Congressional Budget Office projected in its final 
forecast before the 2016 election.
    In 2019, real median household income increased by more 
than $4,000 per household, reaching an all-time high of $68,700 
of household income. This represents a 6.8 percent one-year 
increase which is the largest one-year increase in median 
income on record. As income grew by $4,379 per family in 2019, 
this represents more than the entire median income gains during 
the whole eight years of the previous administration by more 
than $1,300 per family.
    Poverty also hit a record low in 2019. The official poverty 
rate fell to an all-time record low of 10.5 percent, and more 
than 4 million people were lifted out of the poverty between 
2018 and 2019 for a 1.3 percentage point decrease. This was the 
largest reduction in poverty in more than 50 years. Minority 
groups led the way in the alleviation of poverty. Compared to 
the overall poverty rate reduction of 1.3 percent, Black 
poverty fell by 2 percentage points, Hispanic poverty felt by 
1.8 percentage points, and Asian poverty fell by 2.8 percentage 
points. The poverty rate fell to an all-time record low for 
every race and ethnic group in 2019. The Black poverty rate 
fell below 20 percent for the first time in history. Between 
the time President Trump took office and February 2020, African 
American employment increased by 1.3 million jobs.
    Then the virus hit our shores, and President Trump listened 
to the experts. In fact, President Trump did take and continues 
to take decisive action, carrying out a plan that is saving 
American lives, carrying out a plan that is getting us on the 
verge of multiple, not one but multiple vaccines for COVID-19. 
That is a successful plan.
    Now, if you want to start with the first decisive action, 
as we finally found out, despite China's lies, what was coming 
in from China, not just to America but all around the world, 
the first thing President Trump did is made a critical, 
decisive decision: he banned flights from China. There were 
critics--we know who many of them are--using terms like 
xenophobia and other things, but yet President Trump was 
steadfast because he listened to his scientists. In fact, Dr. 
Fauci testified from that very chair you are sitting in, 
Chairman Powell, just a few weeks ago before this committee 
that President Trump's decision on that and so many other 
decisions along the way carrying out his plan was the right 
decision and that President Trump's plan saved American lives.
    Of course, the President made other decisions. He banned 
travel from Europe once we realized that, while flights were 
not allowed in from China, people from other European countries 
had already been seeded this disease from China, and then they 
were coming into the United States, so the President made 
another tough decision, but the right decision, according to 
all the scientists: he banned flights from Europe.
    Then the President instituted the 15 days to stop the 
spread plan which, again, Dr. Fauci from that chair just a few 
weeks ago, testified under oath that that was not only the 
right decision, but that decision saved American lives as did 
the subsequent decision the President made to extend for 
another 30 days and so many other decisions that we've seen 
this President make.
    We put the strongest economy in American history on a self-
induced coma. The pain was real: 40 percent of the job losses 
occurred among people making less than $40,000 a year. In my 
home state of Louisiana, almost 45 percent of the accommodation 
and food service work force had lost their jobs, an industry 
dominated by low-income workers.
    Under President Trump's leadership, Congress responded in a 
bipartisan way. We passed the CARES Act. We came together to 
help those small businesses, to help those families who were 
struggling, to help those hospitals who were struggling, and, 
yes, also to help those states who were struggling. It put your 
team to work, Chairman Powell, working on carrying out this 
recovery plan.
    While the Main Street lending facility program has perhaps 
taken a slightly different path than originally anticipated, 
the Fed provided a needed backstop and injected much needed 
liquidity at a critical moment. The United States had the 
smallest economic contraction of any major Western economy in 
the first half of this year during this pandemic, and now 
America has begun this next great American recovery. Total 
nonfarm payroll employment rose by 1.4 million jobs in August. 
With the record-breaking job gains in May and in June and in 
July and now in August, this economy has added more than 10 and 
a half million new jobs just in the last four months. We can 
talk about those numbers. We can also talk about how much more 
we need to go, but a plan that has created over 10 million jobs 
to get that economy back going is the right direction we need 
to be heading. The unemployment rate ticked down by 1.8 
percentage points to 8.4 in August, beating market 
expectations. African-American employment has increased by 1.3 
million jobs from the record that we saw.
    So, how do we keep this great American economic recovery on 
track? I first want to emphasize a point that Chairman Powell 
made in your testimony yesterday, quote: Our economy will 
recover fully from this difficult period.
    You talked about that yesterday. I'm sure we're going to 
talk about that more today. The Chairman also testified 
yesterday that, quote, ``the path forward will depend on 
keeping the virus under control and on policy actions taken at 
all government levels.''
    Now, one of those areas in terms of keeping the virus under 
control, because, clearly, this has been a critical component 
of the President's plan, is to get a vaccine. As you know, 
Chairman Powell, and as members of this committee know, we have 
three different groups of very well-respected, internationally 
respected drug companies that are in final testing, in Phase 3 
of FDA testing, for a vaccine. We don't know when this will 
complete. We don't know if all three, one, two, maybe all three 
will get approved by the FDA. But never in our history have we 
seen one, let alone three, vaccines on the brink of actually 
being approved by the FDA in this quick of a period of time.
    And why is it? It is not by accident. It is because of the 
President's plan. It is called Operation Warp Speed that's 
brought us to this point. Some of this is money that we voted 
on in a bipartisan way for the CARES Act, that we allowed the 
FDA, CDC, and other agencies to have increased ability to go 
out and encourage the development of a vaccine, no corners 
being cut. Critical, critical point. No corners have been cut. 
We've heard from many of the top scientists working on this 
just how detailed this is, just how many people, thousands, 
tens of thousands of Americans who have signed up.
    I want to congratulate and thank, by the way, Mr. Chairman, 
the 250,000-plus Americans who signed up to participate in 
these trials. It's unprecedented that Americans from all walks 
of life have stood up and said, ``I'm willing to be a part of 
these trials so that we can get a vaccine that will save 
American lives.''
    I am concerned, Mr. Chairman, that there's some people that 
are trying to undermine the public confidence in this process. 
You started to see it just last week, some politicians, for 
their own personal benefit, trying to put doubt in the heads of 
people whether or not this process is going to yield a safe and 
effective drug. There ought to be no doubt. There ought to be 
nobody trying to use politics to interfere with this process. 
The highest integrity, not just in America but in the world, is 
taking place at the FDA. The FDA is the gold standard for the 
world at testing and approving drugs, and no one has suggested 
that that process has been compromised. I challenge anybody to 
name one company on this list that would cut corners or speed 
up the process that involves putting a drug in your body just 
because they're trying to help some candidate for political 
office. That's a ridiculous and dangerous notion. That kind of 
attempt to reduce public confidence would cost American lives.
    So, let's follow the science. Let's let the FDA run its 
course. If a drug or two or three or more get approved - 
vaccines, therapies - we ought to celebrate that. We ought to 
applaud that and encourage people to listen to their doctor. 
Ultimately, that's a discussion between them and their doctor 
about whether or not they should take this, but let that 
process move forward without further corruption.
    And, again, I applaud the President for the work he's done 
to put all of these plans in place, to lay out through CDC how 
schools can safely reopen. We need to encourage all elements of 
our economy to safely reopen. It can be done. Some are choosing 
to do it, and some at the local level are choosing not to do 
it. We've seen and we've heard testimony about the devastating 
impact on children, for example, when a local school system 
makes the decision not to safely reopen for in-school learning. 
It can be done safely. The guidelines are there all around. 
Some are choosing to do it, and some aren't, but there's 
consequences to those children. There're consequences when 
economies are shut down, and we're seeing death rates, 
unfortunately, go up in other areas because people are losing 
their jobs, losing their way of life, companies that are 
    We've got a bill, Mr. Chairman. I brought this to the 
majority leader's attention. Congressman Chabot from Ohio filed 
a bill to take the remaining PPP money. We've got $138 billion 
remaining in the Paycheck Protection Program sitting idle in a 
bank account because the program expired. It was a highly 
successful program. It wasn't a Republican program or a 
Democrat program. We all voted on it, and it had unbelievable 
success, over 50 million jobs that had been created, and yet 
there are many of those businesses that are still struggling 
today, that want to get back up and running, that could use a 
second lifeline, and we have the money to do it. What 
Congressman Chabot's bill does is frees up that $138 billion so 
that those small businesses who are actually having a decline 
in their sales--some are increased in their sales, but some are 
declined, let those businesses that are still struggling go a 
second round with that money that's sitting idle in a bank 
account. I would hope that the majority would bring that bill 
to the floor. That's tremendous bipartisan support. An article 
in The Hill today talks about a number of Democrats who are 
very interested in that bill, and yet we're not allowed to get 
a hearing on that bill on the House floor. We could come 
together and get that done. I know there are bigger issues that 
are being negotiated, but that negotiation has been going on 
for weeks. Let's take a program we already agree on and at 
least give a lifeline to those small businesses who are 
struggling while we work to get this great economic recovery 
back on track.
    I look forward to your testimony, Mr. Chairman. And, with 
that, I yield back the balance of my time.
    Chairman Clyburn. I thank the ranking member for his 
statement, and I just wish to say, as we turn to our witness, 
Mr. Ranking Member, I've only heard one politician cast any 
doubt on the scientific research being done, as well as a 
timeline for when this vaccine may come online, only one that 
I've heard that from.
    I would like now to introduce our witness. Today, the 
select committee is pleased to welcome the Honorable Jerome H. 
Powell, Chair of the Board of Governors of Federal Reserve 
    Thank you, Chairman Powell, for being here today.
    Please stand so I may swear you in. Please raise your right 
hand. Do you swear or affirm that the testimony you're about to 
give is the truth, the whole truth, and nothing but the truth, 
so help you God?
    Mr. Powell. I do.
    Chairman Clyburn. You may be seated.
    Let the record show that the witness answered in the 
    Without objection, your written statement will be made part 
of the record.
    Chairman Powell, you are recognized for your opening 


    Mr. Powell. Thank you. Chairman Clyburn, Ranking Member 
Scalise, and other members of the select subcommittee, thank 
you for the opportunity to update you on our ongoing measures 
to address the hardship brought by the pandemic.
    The Federal Reserve, along with others across government, 
is 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 that the recovery will be as strong as 
possible and to limit lasting damage to the economy.
    Economic activity has picked up from its depressed second 
quarter level 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 have recovered about 
three-quarters of its earlier decline, likely owing in part to 
Federal stimulus payments and expanded unemployment benefits. 
The housing sector has rebounded, and business fixed investment 
shows signs of improvement.
    In the labor market, roughly half of the 22 million payroll 
jobs that were lost in March and April have been regained as 
people return to work. Both employment and overall economic 
activity, however, remain well below their pre-pandemic levels, 
and the path ahead continues to be highly uncertain.
    The downturn has not fallen equally on all Americans. Those 
least able to bear the burden have been the most affected. The 
rising joblessness has been especially severe for lower wage 
workers, for women, and for African Americans and Hispanics. 
This reversal of economic fortune has upended many lives and 
created great uncertainty about the future.
    A full recovery is likely to come only when people are 
confident that it is safe to reengage in a broad range of 
activities. The path forward will depend on keeping the virus 
under control and on policy actions taken at all levels of 
government. Since mid-March, we have taken forceful action, 
implementing a policy of near zero rates, increasing asset 
holdings, and standing up 13 emergency lending 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 helped unlock 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 select subcommittee and to the public. Many of 
the businesses affected by the pandemic are smaller firms that 
rely on banks for loans rather than the public credit markets. 
Main Street is designed to facilitate the flow of credit to 
small-and medium-sized businesses. In establishing the 
facility, we conducted extensive outreach, soliciting public 
comment and holding indepth discussions with lenders and 
borrowers of all sizes.
    In response to feedback, we've continued to make 
adjustments to Main Street to provide greater support to small-
and medium-sized businesses and to nonprofit organizations, 
such as educational institutions, hospitals, and Social Service 
organizations. Nearly 600 banks, representing well more than 
half of the assets in the banking system, have either completed 
registration are in the process of doing so. About 230 loans 
totaling roughly $2 billion are either funded or in the 
    Main Street is intended for businesses that were on a sound 
footing pre-pandemic and that have good, longer term prospects 
but have encountered temporary cash-flow problems due to the 
pandemic and are not able to get credit on reasonable terms as 
a result. Main Street loans may not be the right solution for 
some businesses, in part because the CARES Act states clearly 
that these loans cannot be forgiven. Our credit facilities have 
improved lending conditions broadly, including for potential 
Main Street borrowers. And the evidence suggests that most 
credit worthy small-and medium-sized businesses can currently 
get loans from private sector financial institutions.
    Many of our programs rely on emergency lending powers that 
require the support of the Treasury Department and are 
available only in unusual circumstances. By serving as a 
backstop to key 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. Moreover, these are lending, not spending powers. 
Many borrowers will benefit from these programs, as will the 
overall economy, but for others, a loan that could be difficult 
to repay might not be the answer. In these cases, direct fiscal 
support may be needed.
    Our economy will recover fully from this difficult period. 
We remain committed to using our full range of tools to support 
the economy for as long as needed. Thank you.
    Chairman Clyburn. Thank you. Thank you very much, Chairman 
    Because we are running behind on time, Mr. Ranking Member, 
I'd like to go out of order and recognize one of our members 
for his questions so that he may go into another meeting.
    Mr. Scalise. Yes. We have no objection to that, Mr. 
    Chairman Clyburn. I now recognize Mr. Foster for five 
    Mr. Foster. Well, thank you, Mr. Chair, and hello, Chairman 
Powell. I would like to thank the chairman and my colleagues 
for letting me ask my questions early here as I have to leave 
to chair a hearing on the subcommittee on investigations and 
oversight in the Science Committee into political interference 
into epidemiological statistics at the CDC.
    So, you know, the--and I'd like to begin, actually, by 
talking about the importance of regulatory independence. The 
coronavirus response provides us with two crystal clear 
examples of both the benefits of regulatory independence and 
the dangers of political interference. The independence of the 
Federal Reserve seems largely to have been respected during 
this crisis. As a result, you succeeded in the major part of 
your charge: to stabilize the financial system against external 
    Unfortunately, we've also seen a tragic example of the 
dangers of political interference into jobs best left to 
experts as tragically demonstrated by the dangerous and 
incompetent political interference by the Trump Administration 
into the jobs of professional scientific staff at the CDC, NIH, 
FDA, and other public health agencies. Tens of thousands of 
Americans have died as a result, 4 percent of the world's 
population and 25 percent of the deaths, and no amount of 
attempts to rewrite history will change that brutal fact. Many 
more thousands are at risk if the public loses confidence in 
the safety and effectiveness of an approved vaccine due to 
persistent manipulation or attempts to manipulate the 
scientific judgment of career professionals.
    So, Chairman Powell, you should count your lucky stars that 
you have been able to do your job largely behind the firewall 
of independence that Congress has crafted for you and that you 
can depend on the integrity of the statistics that you need to 
do your job.
    Now, in your testimony, you mentioned doing what you can to 
help our economy, an acknowledgment of the limits of the Fed's 
ability to help different segments of the economy survive. And 
the intervention to minimize pain on Wall Street has been 
largely successful thanks, in part, to the Federal Reserve's 
unprecedented intervention in the corporate bond market. These 
interventions have dramatically lowered the cost of raising 
capital for large corporations, and these markets are now 
functioning adequately, although perhaps distorted, due to 
significantly underpricing risk compared to what would have 
happened without Fed intervention.
    During the previous financial crisis, we saw risk spreads 
over treasuries for most corporate bonds, you know, went out to 
several hundred basis points and persisted for about a year 
while, in this crisis, the yield spike was much smaller and 
disappeared promptly in response to the Fed's intervention.
    At the other end of the market, the PPP program has been 
significantly successful in providing a path for survival for 
many of the smallest businesses largely because of the prospect 
of loan forgiveness, and there is bipartisan support for 
extending that program. But there has been difficulty in 
crafting an appropriate program for medium-sized businesses. 
You know, the Fed does have a facility for small-and medium-
sized businesses, the so-called Main Street lending facility, 
but uptake has been rather small. In large part, this is 
because they're loan programs, and many businesses do not need 
loans. They need money to survive, but handing out taxpayer 
money carries many moral hazards.
    So, like--so, my open-ended question here is what are the 
possible extensions and modifications to that program that you 
may have considered but may have discarded that might have made 
it more effective in delivering capital to midsize businesses 
on which so many jobs depend?
    Mr. Powell. Thank you, Mr. Foster. So, I'll first say on 
the corporate credit facilities, the larger companies that have 
access to the bond market were--that market was closed down in 
February and March, and these are very large companies. Their 
businesses were severely affected by the pandemic, and our 
actions were in no way an attempt to relieve pain on Wall 
Street. They were solely focused on opening up those markets so 
that those companies could finance themselves and keep their 
workers working, and I think we've had good success in that. 
The two facilities we erected together really have worked to 
allow companies to finance themselves, not so much to borrow 
from us but our backstop. So, I think those are--we're pleased 
at the success we've had so far with that.
    You asked about Main Street. Main Street is a--this is 
medium-sized companies and smaller companies that sort of fall 
between the PPP program and the corporate credit facilities, 
and that's a world where lending takes place through banks. 
Every bank credit agreement is carefully negotiated and unique 
in its own way, so there isn't the standardization that allows 
you to intervene quickly in the bond market. So, it's very, 
very difficult, and the only way for the Fed to reach those 
companies was through the banking system. So, we had to create 
standardized products that would meet the needs of as broad as 
possible a range of companies and do that in a way that was 
consistent with section 13-3 and the CARES Act.
    As you've seen, we've had repeated waves of efforts to 
broaden the appeal of that program. We've done most of the 
things that we can think of, or, basically, all of the things 
we can think of that are clear gains, we've done. We're looking 
to do more, but the uptake is modest. You're correct in saying 
that, but I would say, more broadly, credit is pretty broadly 
available in the space of small-and medium-sized companies. 
Banks are lending. If the economy performs worse than we 
expect, then Main Street will be there to take on a heavier 
load. But I would say the things that we've done have been--
have really been to widen the appeal of that program and its 
effectiveness. And I don't--nothing major that we're looking at 
now--there is nothing major that we see now that we--that would 
be consistent with opening it further.
    Mr. Foster. Well, yes. I'm afraid I'm over time here, but I 
urge you to remain creative and to see what you can do to make 
that more effective.
    I yield back.
    Chairman Clyburn. Thank you very much, Mr. Foster.
    The chair now recognizes the ranking member for five 
    Mr. Scalise. Thank you, Mr. Chairman.
    I do want to give an update. Just--literally, just a few 
minutes ago--I know I showed this chart in my opening, but 
literally a few minutes ago, there was an announcement that a 
fourth company has just been entered into Phase 3 of FDA 
testing, and that's Johnson & Johnson. It was a drug that was 
showing tremendous progress during Phase 2, but just less than 
an hour ago, we got the word that the FDA has now moved Johnson 
& Johnson into Phase 3 of testing on a vaccine that they're 
seeing tremendous progress in. This is four different major, 
internationally respected drug companies in America that are on 
the verge of a vaccine for COVID-19 that can be approved by the 
FDA. Again, I applaud President Trump for his leadership at 
putting this plan in place through Operation Warp Speed to 
remove red tape so the scientists can actually focus on saving 
lives, and this is what it's yielding. Let's continue to 
embrace that revolutionary pace of scientific research.
    Chairman Powell, I want to ask you about where we are in 
the economy. Clearly, as I talked before, we saw historic job 
creation, job growth, personal income levels increasing for 
people in every demographic group at every income level prior 
to COVID. Now we're working through this pandemic. As the whole 
world is dealing with it, we're trying to get through this as 
well. But between April and August, how many percentage points 
have we seen unemployment fall in America as we've started to 
reopen our economy?
    Mr. Powell. You know, I think the official number is 
something like from 14 and change to 8.4 percent today. But you 
said it in your remarks. Two things are true. One, we've really 
made substantial progress, and that's great to see and faster 
than we expected, frankly, but there's plenty left to do.
    Mr. Scalise. Clearly. And when you compare, let's say, to 
the 2008 great recession, I've seen numbers that it took over 
10 years for our economy to recover from that. Is that about 
what you've seen?
    Mr. Powell. Yes. Of course, that was different. This was a 
situation where we shut the economy down, so we had outsized 
loss of employment and loss of economic activity, so you would 
expect that the first new quarter would be good. As I say, this 
is--and this has been a good start to a recovery.
    Mr. Scalise. Right. And, of course, the economy was shut 
down in part to make sure our hospitals weren't overrun but 
also to slow the death rate, as we learned about this virus 
after China lied to the world, which we still ought to have a 
hearing on before this committee--of all things we should be 
having a hearing on, it's China's role in creating this. But 
because of the President's action, if you look throughout the 
world, this is a global pandemic. It's affecting every country. 
We mourn every loss of life here in America. We've crossed the 
200,000 death number. We mourn all of those deaths. You look 
around the world. Many countries actually are experiencing a 
higher death rate than the United States, and so that's where 
we need to keep doing the things we're doing to bring that 
number down as we are. You see these other countries that are 
above us. They will benefit, by the way, from the work we're 
doing to develop a vaccine. As we work and we put money in 
place to develop a vaccine and the President's Operation Warp 
Speed is getting us to the brink of that, that work will also 
benefit all of these other countries around the world. And 
notice, by the way, you don't see on this list China. You don't 
see on this list Russia because they don't even release their 
numbers, so the world doesn't really know the full impact. But 
as you can see, we all want to get to that place where we've 
conquered this disease. Fortunately, because of science and the 
leadership of the President, we are on the brink of a vaccine 
to actually get around the hump, and that helps us to safely 
reopen the economy even more.
    I want to ask you about safely reopening schools because 
first, I'll ask in a--I mentioned this in my opening. We've 
done a lot to help small businesses. The Paycheck Protection 
Program has been highly successful. If we were, for example, 
able to go a second round for those businesses that are still 
struggling, let's say 25 percent or more loss compared to where 
they were before where they could actually go for a second 
round of Paycheck Protection Program relief, would that be 
helpful to the economy, in your view?
    Mr. Powell. Yes. I'd say--I would say it this way. The 
returns to making people feel safe enough to engage in ever 
more activities, from an economic standpoint, those returns 
will be very high.
    Mr. Scalise. And safely reopening schools. We've seen CDC 
protocols, American Academy of Pediatrics. There's a way to do 
it. Some are doing it; some aren't. Is it a benefit to the 
children, and is it a benefit also to the economy to safely 
reopen schools?
    Mr. Powell. Yes, with emphasis on safely. People have to 
feel confident, and we have to, you know, observe those----
    Mr. Scalise. Right. People can wear masks. You can put in 
plexiglass. Students can be 10 feet from the nearest teacher. 
There are all of those standards in place. A lot of that's laid 
out by the President's plan. If anybody cares to read it, it's 
all online. You can go get it right now. So, hopefully we will 
continue to encourage people to follow those guidelines and 
safely reopen, continue to encourage the great work this 
President's done to get us to the brink of a vaccine so that we 
can finally safely reopen the economy and get this country back 
on track. Thanks for the work you're doing. I'm sure we'll talk 
more about it.
    Mr. Chairman, I yield back.
    Chairman Clyburn. Thank you very much, Mr. Ranking Member. 
The chair now recognizes himself for five minutes of questions.
    Chairman Powell, I notice in your opening statement here, 
you mentioned the fact that these small businesses, Main Street 
loans are--have to be repaid under the law. Now, how did the 
minimum loan get to be $250,000? I don't think that's in the 
    Mr. Powell. No. So, we designed this--this program for 
medium-sized companies, basically, and we had a--if you may 
recall, we had a--I think we had it $2 million originally, and 
then we moved it to $1 million minimum, and then we moved that 
to $250,000. So, actually, the demand in the facility, there 
really hasn't been any under a million dollars. It would be a 
different facility, truthfully, if we were going to try to lend 
money in very small chunks like that. It would--you know, doing 
the due diligence on hundreds of thousands of very small loans 
would be a really different program. And I would tell you that 
it's more--that part of the market is better suited to the 
Paycheck Protection Program. But it would be--the current 
facility would not work for much smaller loans. We'd have to 
start a new facility that had a lot less protections for the 
taxpayer and that kind of thing.
    Chairman Clyburn. So, with 99.7 percent of the money still 
sitting there, you don't think you can come up with a program 
that would use the money, $1.1 trillion, to try to keep people 
employed, try to keep businesses open? It's still sitting 
    Mr. Powell. Well, the purpose of these facilities was to 
reopen the private capital markets. About a trillion dollars of 
lending has taken place just between the corporate credit 
facilities and the municipal facility. All of that was closed 
down in--effectively in March and April. We put these 
facilities in place, and now there are record amounts of 
borrowing happening in the corporate facilities--the corporate 
facility and in that space, rather, and in the muni--muni 
space. We set up a facility, and then the private market 
started working again. With Main Street, it's not so simple 
because you don't have those kind of externalities. We've 
worked hard to reach borrowers. Again, as I said in my opening 
statement, we're looking for borrowers who were in good shape 
before the crisis and had good longer term prospects, but 
because of the pandemic, they've lost--had a real effect, and 
now they can't get loans elsewhere. So, that's a relatively 
modest group in size, and we've done everything we can to reach 
out to them. And, you know, we are--we do--are experiencing a 
steady flow of borrowers, and we expect that to continue and to 
pick up if the economy weakens.
    Chairman Clyburn. Well, Mr. Chairman, I--in view of this 
issue, I'm going to call your attention to the report that we 
just published this morning. We find that, in the dual mandate 
that the Fed has, one of them is maximum employment. Yet the 
Fed bought corporate bonds issued by companies, we found this 
in our report, that laid off more than 1 million workers since 
March. That doesn't sound like maximum employment to me. And of 
these companies, 383 paid dividends to their shareholders 
during the pandemic. Laid off over a million people, paid 
dividends to 383--I mean, 383 companies paid dividends while 
laying off people. That doesn't sound like maximum employment.
    Mr. Powell. It doesn't sound good, but let me explain it a 
little bit. So, the secondary market corporate credit facility, 
what we did was we bought very, very small amounts of bonds 
across 800 different issuers, and those are out--already 
outstanding bonds. We're not making loans to those companies. 
They're not--they're not getting a loan from us at all. We're 
buying from another buyer. And the reason we bought from 800 
was we didn't want to be deciding which company to buy from and 
which not. So, that's what we did. We didn't ask these 
companies whether we could buy their bonds or not. I think if 
we'd said we, you know, ``We want to buy your bonds because we 
want to make you part of an index,'' they would probably have 
said no, and, ``We want you to do--we want you to do certain 
things.'' They would have opted out. We had no basis to ask 
them to do anything. We didn't ask their permission. That was 
the point of this. It wasn't to allocate credit. And these 
are--these are tiny amounts in the grand scheme of things. None 
of those companies sees themselves as having gotten a loan from 
the Fed. Again, there are 800 of them, and we're buying very, 
very--we're down to buying, I think, $20 million worth of bonds 
now daily, and we're barely present in that market at all. So, 
I think it's--you know, the real thing is the primary market 
facility, which is where we were going to make loans to those 
companies, we've made zero loans. And the reason is that when 
we set the facility up, borrowers and lenders started lending 
again because we were an effective backstop, so--and these were 
big American companies that were under tremendous strain, and 
they could have laid off hundreds of thousands of people and 
didn't because of this facility. So, I would say it's been a 
    Chairman Clyburn. Well, as I--my time has expired, but I 
would like to say that 227 of these companies over the last 
three years have been accused of illegal conduct, 227 of them.
    With that, I yield five minutes to Mr. Jordan.
    Mr. Jordan. Thank you, Mr. Chairman.
    Chairman Powell, yesterday, you said our economy will 
recover fully from this difficult period. Would it recover 
faster if some states weren't still largely locked down?
    Mr. Powell. You know, the decision about when to lock down 
and how to open up is one that's given to others other than the 
Fed, so I wouldn't have a view on that.
    Mr. Jordan. But just simple terms. I mean, you think about 
it. We've got California, New York, New Jersey, Pennsylvania, 
Michigan still largely locked down. That's--that's, like, one-
fourth of our population. I'm--frankly, I'm amazed at the 
American comeback, the recovery that's happening in spite of 
the fact that you've got these states, some of our biggest 
states in population, still largely locked down. I think it's a 
simple question. If they were opening faster, would our economy 
be recovering faster?
    Mr. Powell. So, you know, the question is of opening --is 
about reopening-- in a way that is sustainable.
    Mr. Jordan. Yes.
    Mr. Powell. And it's just not a matter of reopening. You've 
got to do it in a way that's sustainable. If you look at some 
of the European countries right now that were doing so well a 
few months ago, now they've got a big outbreak. So, I think 
it's a very difficult judgment, how fast to reopen given how 
urban your population is because that--there seems to be a lot 
of spread in urban areas. So, again, we have a lot of 
responsibilities. You've given us a precious grant of 
independence if we stay out of politics and stick to our 
knitting. And I wouldn't prejudge state and local governments 
in their decisions here.
    Mr. Jordan. But are you somewhat amazed, as I am, that the 
economic recovery is as strong as it is in spite of the fact 
that these states are still largely locked down? I think that's 
amazing when the unemployment numbers have come down like they 
have in spite the fact that you've got five--these are, like, 5 
of the top 10, 11 states in population in the country still 
largely locked down.
    Mr. Powell. Yes. I don't know that there--they may be 
locked down in the sense people are working from home, but I'm 
not sure their GDP is lower systematically. I'd have to look at 
that. If you think about a place like New York, you know, a lot 
of what's happening in New York is the financial markets, and 
people are working from home. Their output, such as it is, will 
be high even though they're still somewhat locked down.
    Mr. Jordan. Was the economy pretty good prior to COVID?
    Mr. Powell. I would say yes. A lot to like about a tight 
labor market. A lot to like about 3 and a half percent 
    Mr. Jordan. It was great, wasn't it?
    Mr. Powell. You know, there are always problems in an 
economy, but this was as good an economy as we've seen in a 
very long time.
    Mr. Jordan. Wages were up?
    Mr. Powell. Wages started moving up, particularly for 
people at the low end of the wage spectrum, in the last couple 
of years. As the--as unemployment got down and the labor market 
got tight, you saw the benefits going. As I said, there's a lot 
to like about a tight labor market.
    Mr. Jordan. The poverty rate was down?
    Mr. Powell. Yes.
    Mr. Jordan. Economic--was the economy better than--better 
for everyone in our population?
    Mr. Powell. I would--I don't know about everyone, but I 
would say that the benefits--and I said this recently in a set 
of public remarks. The benefits began to be more widely shared. 
As unemployment got lower and lower, what you see is businesses 
are hiring people who haven't been successful in the labor 
market and pulling them in, and they're getting training, so 
there's a lot to like about that.
    Mr. Jordan. The economy was good--it was better for African 
Americans, Hispanic Americans. It was better for all Americans, 
wasn't it, low-earning Americans, high-earning Americans? Wages 
up, unemployment down. It was better for everyone, wasn't it?
    Mr. Powell. In a lot of measures, yes.
    Mr. Jordan. Unemployment was low prior to COVID?
    Mr. Powell. Yes.
    Mr. Jordan. Low--lowest in 50 years?
    Mr. Powell. Lowest sustained period of--since the 1960's, 
    Mr. Jordan. Here is what--here is what Secretary Mnuchin 
said just two weeks ago when he testified in front of this same 
committee: I believe there's no question that the reason we 
have unemployment high right now is that certain states are not 
opening up.
    Do you agree with Secretary Mnuchin's statement?
    Mr. Powell. I cannot validate that, no. I'd have to go back 
and look. I'm not sure that's right.
    Mr. Jordan. You don't think the Secretary is right, that if 
states would open up, unemployment numbers will come down?
    Mr. Powell. This is a--you're asking me a data question, 
which is, are--basically, does the unemployment rate correlate 
with the level of lockdown in particular states, and I've 
learned in my almost nine years at the Fed to talk to the 
economists before I could answer that.
    Mr. Jordan. But it would seem common sense, Chairman 
Powell, that if your state is largely locked down and not 
letting restaurants open and not letting things happen, not 
letting people go back to work, saying some businesses are 
essential, some aren't, it would seem just common sense if you 
begin to open up, unemployment is also going to come down. I 
think that's all the Secretary is saying. I'm just asking if 
you agree with Treasury Secretary Mnuchin.
    Mr. Powell. Yes, again, I'd want to look at the data. I 
mean, there's common sense in what you're saying, but, again, I 
think of New York, in particular, people are working from home, 
but they're not unemployed. So, it wouldn't change things. I 
mean--you could--look at it this way: You could reopen all the 
restaurants in the United States right away, and you'd have 
technically unemployment go down. Would that be a smart thing 
to do? That would be a question for others.
    Mr. Jordan. OK.
    I yield back.
    Thank you.
    Chairman Clyburn. I suspect, Mr. Chairman, we would see a 
flourish in the economy with undertakers and cemeteries.
    With that, I'll yield five minutes to Ms. Waters.
    Ms. Waters. Thank you very much, Mr. Chairman and Members, 
of course. I came here today to continue discussion with Mr. 
Powell or the Feds. And I'm always pleased to see them, and we 
work well together. But, you know, Mr. Scalise always starts 
out by talking about how great the President has been in 
handling this pandemic, this COVID-19.
    He's constantly using the time to talk about China and 
China's responsibility in all of this. One of the things I'd 
like to find out from Mr. Scalise--I don't want to do it 
today--is whether or not he would advise the President and his 
daughter to give up the trademarks that they have with China 
and the business relationships they have with China in the 
interest of punishing China.
    Mr. Scalise. Will the gentlelady yield?
    Ms. Waters. No, I will not yield.
    Mr. Scalise. I'd be happy to talk about that.
    Mr. Jordan. You asked him a question.
    Ms. Waters. In addition to that, I would like to ask 
Chairman Powell, did you hear that the CDC had basically issued 
an advisory that said that the virus could be airborne for six 
feet or more and infections, and then they took it back within 
24 hours? Did you hear that?
    Mr. Powell. I'm actually having a hard time hearing you, 
but I don't think I did, no.
    Ms. Waters. What I want to know is, did you hear about the 
CDC having issued a new advisory that the virus was airborne 
and it could infect those six feet away because of the 
emissions, you know, from an infected person? Did you hear 
about that?
    Mr. Powell. Yes. Yes, I did. Sorry.
    Ms. Waters. OK. You have said that this is a health problem 
that we have, and while everybody is trying to dump on you 
about the economy and what you're doing or not doing, did you 
indicate ever in your speeches or in your talks that, to the 
degree that we're able to handle the health problem, that 
certainly would help us with strengthening our economy. Is that 
    Mr. Powell. Pretty much every set of remarks I give I say 
that the path of the economy's going to depend on our ability 
to retain control, to get control of the virus and keep 
control, and that we have the power to help that by following 
the advice of the experts, by wearing masks and keeping 
distances and that kind of thing. In fact, those things help us 
reopen the economy faster.
    Ms. Waters. Did you also hear recently that there are some 
states, some of which were mentioned here this morning, where 
the virus is spreading, it is not subsiding? Did you know that 
there are some states that are in that situation?
    Mr. Powell. Yes, ma'am.
    Ms. Waters. And did you know that the President of the 
United States of America did not begin even talking about or 
letting the public know that we were confronted with the virus 
until after maybe a couple of months that he knew? Did you hear 
something like that?
    Mr. Powell. I would have no comment on that, Madam Chair.
    Ms. Waters. Thank you. Well, let me just say that, when we 
have members who are talking about how good the President has 
been, how, you know, the President has been a leader, and we 
know that we can identify several things that the President has 
or has not done that has caused extended problems with this 
virus, I think that we should pay attention to the experts and 
do everything that we can do to help the economy by getting a 
handle on the infections and the virus that is taking place.
    I am absolutely disturbed about the fact that someone is 
pushing to talk about opening up our schools when we have 
40,000 students that have been infected. So, having said all of 
that, and an answer to Mr. Clyburn about the $250,000, it was 
once $1 million. Because of me and my committee, working with 
Ms. Velazquez, you agree to reduce it from $1 million to 
    Is that right?
    Mr. Powell. We did reduce it to $250,000, yes, ma'am.
    Ms. Waters. OK. And in a hearing just yesterday or so, when 
you were asked about this, along with Mr. Mnuchin, Mr. Mnuchin 
said, well, perhaps it could be reduced to $100,000 as the 
criteria for small businesses being able to make loans in the 
Main Street program.
    Is that right?
    Mr. Powell. Yes. The Secretary did say that.
    Ms. Waters. And what you have said is that you are 
basically involved in monetary policy, not fiscal policy, but 
what has happened with COVID, you have kind of been involved in 
ways that you would normally not be involved, and you'll take 
another look at this, even though you tried to explain here 
today about the Main Street program and how it works now.
    I have to tell you, while I agree with you on a lot of 
things, I'm really concerned about Main Street also. I'm 
concerned that, when we think about Main Street, we really 
don't think about the size businesses that you have 
incorporated in Main Street. Some of us see those as big 
businesses, to tell you the truth.
    Would you tell us what that amount is that covers the Main 
Street program?
    Mr. Powell. It's less than 15,000 employees or 5 billion in 
revenue. That's the top end. We don't actually set a bottom 
end, I don't believe, in terms of size, but it was designed to 
go between the PPP facility, broadly, between the PPP facility 
and the corporate credit facilities for the big companies.
    Ms. Waters. My time is expired, but I'd certainly like to 
continue to ask you to see what you can do to help us with our 
small businesses and the amount of money that is left that you 
    Thank you.
    I yield back.
    Chairman Clyburn. The chair now recognizes for five 
minutes, Mr. Luetkemeyer.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    Chairman Powell, welcome. Always good to see you.
    Last week, we had a hearing with regards to some of the 
state and local needs. And we had a gentleman who--Mr. Holtz-
Eakin, who you probably know, who was former CBO director. We 
asked him the question about how many dollars he thought we 
needed to have in our budget to make whole the state and local 
folks. He said that revenues are coming in on the state and 
local side at record revenues in 16 different states over last 
year with regards to sales tax revenue, but not coming in too 
well, obviously, with income tax revenue. And to make them 
whole, you would take about 200 to $250 billion.
    So, my question to you is, does that seem reasonable? Is 
that in the ballpark of what you would anticipate to make the 
state and local folks whole from the losses that we've incurred 
over the last several months due to COVID?
    Mr. Powell. So, I asked for views on that. I just happened 
to a couple of days ago, and there's actually a wide range of 
estimates. But that's certainly within the range of estimates. 
You can get to a higher estimate. Of course, expenses have gone 
up too.
    Mr. Luetkemeyer. But my point is, if we're in the range of 
$200 billion to $250 billion and we know that from the 
leadership on the other side, they're looking at trying to do a 
trillion to $2 trillion of additional money for state and 
locals, that doesn't seem to be matching up with where we need 
to go, and seems to be the leverage point that the other side 
wants to use to try and hold up changes to the PPP program and 
other things that are necessary to keep our economy going and 
address the needs of those who are left out of this.
    But I mean, that's a fair statement?
    Mr. Powell. Yes. I have a strong desire to not play a role 
in your discussions over how much.
    Mr. Luetkemeyer. You're a smart man, Mr. Powell.
    Thank you very much.
    You know, one of the things that's been talked about here 
is your different facilities and congratulate you on your quick 
response. I know the Fed usually--and don't take this the wrong 
way, but in my opinion of them, it's like trying to turn a ship 
around in the middle of the ocean. It takes a long time to get 
anywhere with the Fed. But you guys were very responsible, like 
a speed boat in the middle of a lake with regards to how you 
set these facilities up and did a fantastic job. Thank you so 
    But it seems to me like there's a misunderstanding of how 
these--how the economy works with regards to helping out bigger 
businesses. I'll give you, for instance. I've got Boeing right 
in my district and another big plant just outside my district. 
I know it's one of--in this report, this is one of the 
companies that's mentioned here, but if you don't help a 
company out like that to make them stay whole, stay in 
business, you're going to lose all the jobs that are there, not 
just the ones that they laid off. And you'll also lose the 
small businesses that make parts for all these planes.
    I'll give you an example. I got one plane that is made in 
my district; 1,800 small businesses provide parts for that. And 
all the employees of those small businesses would be affected. 
This is big business, and once it gets back on its feet, it 
will probably hire back a lot of those folks just like a 
restaurant that lays off two people and once it gets back going 
full speed again will hire those two people back.
    Is that a fair statement of how this situation works?
    Mr. Powell. Very much so. Same with the auto companies. A 
lot of big American companies have thousands of suppliers, as 
you know.
    Mr. Luetkemeyer. So, it's important that we salvage these 
big businesses to make sure that we keep those services and 
things going, as well as provide--maintain those jobs that we 
can be retained down the road, pick up the rest, and also help 
the small businesses that help to feed into these businesses.
    Is that----
    Mr. Powell. Yes.
    Mr. Luetkemeyer. With regards to regulatory stuff. You 
know, I can't let a hearing go by without talking about CECL, 
so I'm sure you expected that. You've probably got something in 
your notes. If not, you've got it off the top of your head. But 
to me this is, you know, CECL is some of the regulatory stuff, 
as well as forbearance, that has got to be playing in, I think, 
in your role here in this pandemic to make sure that we 
continue to address the credit needs of the folks across the 
board, and make sure that the capital and reserves are not 
mismanaged and mishandled.
    Your agency, the Federal Reserve, comptrollers, FDIC, were 
all part of an interim rule that was made with regards to CECL, 
and I think we need to continue to push this down the road, and 
we proved that it's pro-cyclical. Treasury came out with a 
report last week, which is kind of ambivalent about all of 
this, which is unfortunate, but do you see that we need to 
continue to waive and postpone the implementation of CECL till 
this pandemic has passed so we can see what's going on?
    Mr. Powell. I think what we've done is pretty effective. If 
we came to that view, we wouldn't hesitate to act, but I guess 
we gave companies up to five years to insulate themselves from 
the capital effects of it.
    Mr. Luetkemeyer. So, the interim rule is two-year delay, 
three-year implements. I mean, you guys see that there's a 
problem there with regards to forbearance. Again, to me, we 
don't want a repeat of 1908 and 1909 when the regulars came in 
and were forcing because of their rules and regulations to 
force banks to foreclose and push out some of our customers. 
So, to me, I realize that there's some rules that'll be put in 
place, but if you have a law in place that both the banks and 
the regulars can point to that as guidance to be able to help 
them through this period to make sure that forbearance is given 
to make sure we don't close down industries and businesses.
    Would you agree with that?
    Mr. Powell. Yes. I think we came in with a strong banking 
system and that gives us the ability to make targeted temporary 
adjustments to regulation. We've done plenty of that, and I 
think that's just a byproduct of all the work everyone did in 
strengthening the system over the last----
    Mr. Luetkemeyer. I had a long discussion the other day with 
former Chairman William Isaac, and he made the comment that, 
back in the 1970's, he was part of a group that actually went 
to try and help the REITs survive that period. And there was a 
five-year forbearance period that was granted to the REITs to 
try and salvage them. It would seem to be a good way to address 
our needs today to make sure that we don't push businesses out 
of being able to do business.
    Mr. Powell. Thank you.
    Mr. Luetkemeyer. Thank you.
    Chairman Clyburn. The gentleman's time has expired.
    The chair now recognizes Ms. Velazquez for five minutes.
    Ms. Velazquez. Thank you, Mr. Chairman, and thank you, 
Chairman Powell.
    The Main Street Lending Program as the Fed role would 
ensure credit falls to small and midsize businesses with the 
purchase of up to $600 billion in loans. The program did not 
make any loans until July. Why did it take the Fed four months 
to set up the Main Street Lending Program when it was able to 
set up credit facility for big businesses in just a few weeks?
    Mr. Powell. Main Street is many, many, many times more 
complicated to set up because, in the case of the companies 
that have market access, there's quite a bit of standardization 
in the bond market, and it was straightforward to set up that 
facility, and we did so very, very quickly. The difference is 
that Main Street deals with medium-sized companies who get 
their funding in the banking system and every bank credit 
agreement for every company is basically individually 
negotiated. There's nowhere near the degree of standardization. 
So, it was a much more complicated problem to solve, and, you 
know, it took us a lot of outreach, and we took in public 
comments. It was quite a bit of work to get to where we are.
    Ms. Velazquez. OK. I hear you. You said yesterday the 
program as set up tends to help larger sized businesses proven 
by nearly one-third of loans being over $10 million.
    Can you understand why many of us believe the Fed is 
failing Main Street?
    Mr. Powell. So, the--if I heard you correctly, most of the 
banks that are active in lending are smaller banks, and the 
loans are fairly small. I don't know what the average loan is, 
but there's lots of business between $1 million and $10 
million, which is not a big loan for a company that has the 
kind of employees that one of these companies would have.
    Ms. Velazquez. So, Congress already authorized a specific 
lending facility to help small businesses in the CARES Act. The 
Fed chose instead to set up the Main Street Lending Program.
    Does the Fed have sufficient legal authority to provide 
liquidity to small businesses who still need credit assistance 
to followup on the points raised by Chairwoman Waters?
    Mr. Powell. I think there was a particular Main Street 
facility that was outlined in the CARES Act, but that was 
expressly not binding on us. It said: Nothing in this facility 
shall be seen to dictate to the Fed and the Treasury in 
designing your own Main Street facility. So, we designed the 
one that we have, which is designed to be as broadly applicable 
as we could possibly make it.
    Ms. Velazquez. So, the CARES Act told you to set up a 
facility for truly small businesses that needed the assistance, 
but you decided to create your own facility despite having the 
authority, which is the issues that we're raising here.
    So, last week, the Fed updated its guidance telling 
participants that loans made in compliance with Main Street 
program requirements won't be faulted by examiners. Why was 
this change made, and how will it help encourage greater 
participation in the program?
    Mr. Powell. We want to work with our banks to make sure 
that they understand that we won't run in and criticize these 
loans. So, Main Street is supposed to be for loans that 
wouldn't otherwise be made. In other words, if the loan was 
already going to get made, then we didn't really need Main 
Street for that. So, they're riskier to some degree, and 
there's more risk in them, and we want to encourage the banks 
by telling them that we understand that and that we will not 
run in and criticize these things unnecessarily if you make a 
loan that is consistent with Main Street.
    Ms. Velazquez. So, Mr. Chairman, will you commit today to 
taking a hard look at how to fix the program and even set up a 
new facility from scratch, as you mentioned yesterday, to help 
small firms on Main Street as we intended, as Congress 
    Mr. Powell. I would say this: it would be very hard to 
create a facility that reaches very small businesses. The 
reason is this--and that's why I think you were wise in the 
CARES Act to create the PPP for smaller companies. To extend 
credit to hundreds of thousands of very small businesses, these 
are largely personal loans, you know. Business founders are 
borrowing on their credit cards or their bank line with a 
personal guarantee.
    Ms. Velazquez. I hear you, but, Mr. Chairman, you stated 
yesterday--or I don't recall when--that the coronavirus is a 
great increaser of inequality, yet you decided not to collect 
voluntary demographic data on borrowers in the Main Street 
    Would you commit to including a voluntary demographic 
questionnaire with loan applications going forward? How do we 
know that the smaller businesses are being helped by the Fed?
    Mr. Powell. We did not collect that data, and we don't have 
any plans to do so. It's not a requirement in the law. We're 
really implementing the law that you passed.
    Ms. Velazquez. I yield.
    Chairman Clyburn. The time has expired.
    The chair now recognizes Mrs. Walorski for five minutes.
    Mrs. Walorski. Thank you, Mr. Chair.
    Thank you, Chairman Powell. I appreciate you being here.
    The part of northern Indiana that I represent is home to 
major manufacturers of RVs, boats, and cargo trailers. In fact, 
85 percent of the RVs you see on the road come from my area. 
Our community's also known among--also the hardest hit during 
an economic downturn. In fact, Elkhart County in my district 
had the Nation's highest unemployment rate during the great 
recession. However, the coronavirus has turned that on its 
head. Suddenly RVs and boats are in hot demand, so the local 
economy in my area has been doing incredible, all things 
considered, but I've still had plenty of small business and 
nonprofits in my district reach out to me, even in the last 
week saying they still need help.
    Recovery is neither instantaneous nor even. That's why it's 
sad that Democrats, led by Speaker Pelosi, have chosen politics 
over our economic recovery. Let's not forget that the HEROES 
Act they point to is nothing more than a wish list messaging 
bill that had no chance of becoming law. It wasn't the product 
of serious negotiations or committee hearings. Instead, it's 
chock full of giveaways to special interests and the rich which 
have nothing to do with rebuilding our economy.
    The HEROES Act had more mentions of the word ``cannabis'' 
than the words ``job'' or ``hire.'' It gave more money to state 
and local governments that haven't even fully spent CARES Act 
money, and it restored the unlimited deduction for state and 
local taxes, or SALT. Over half the benefits of the SALT 
deduction go to those with annual incomes of $1 million or 
more, while only 1 percent of the benefits go to those making 
under $100,000 a year.
    The nonpartisan Joint Committee on Taxation found that 
restoring the unlimited SALT deductions for just two years 
would cost almost $137 billion. Meanwhile, the Paycheck 
Protection Program, which has been a vital lifeline in my 
district and my state for small businesses to keep the lights 
on and save jobs, expired last month. And Speaker Pelosi 
refuses to allow a vote to keep helping Main Street survive.
    Chairman Powell, which would you think would be better for 
our economic recovery, and I think you've already answered 
this, giving $137 billion to the rich by restoring the SALT 
deduction for two years or using that money to fund more PPP 
    Mr. Powell. Again, I don't want to get into your fiscal 
debates with one another, but I do think small businesses would 
benefit from more PPP support, and I think there's probably 
very wide agreement on that.
    Mrs. Walorski. We definitely have benefited in my district 
and my state. Chairman Powell, I think it's an understatement--
I don't think it's an understatement to say that PPP was one of 
the most critical lifelines for small business and not-for-
profits in my district. They wouldn't have survived otherwise, 
but two weeks ago, Democrats in the Senate blocked a 
coronavirus relief package that would have started--restarted 
PPP and added new provisions like allowing for those hardest 
hit to apply for a second round.
    Over here in the House, Republicans have filed a discharge 
petition to stop the political games and bring a commonsense 
bill to the House floor that would restart PPP, allow a second 
loan for those hardest hit, and simplify the forgiveness 
    Chairman Powell, can you talk about what you've seen from 
the macro level on PPP? And I know you've just talked about the 
need for a second stimulus. Should a bill that I just 
described, which restarts PPP, allows for a second loan, and 
simplifies forgiveness be a part of that?
    Mr. Powell. I guess I'd start by saying that the good 
economic data we've seen since really May is, to a significant 
extent, reflects what you did in the CARES Act. Also just the 
general reopening of the economy, but those checks, the 
unemployment insurance, all of that really helped to keep 
people in their homes, keep them spending, and, you know, it's 
a tribute to the fast and forceful response that all of you 
    I think we helped as well, but I think the power of fiscal 
policy is unequaled by really anything else. You know, I've 
said on a number of occasions, I think it's likely that we'll 
need more fiscal support. And the reason I say that is we've 
still got, in the payroll numbers, we've still got 11 million 
people who haven't gone back to work. If you look at broader 
measures of unemployment, it's actually more like 16 million 
who are working part time or have left the labor force and 
things like that.
    So, there's a long way to go. We've come a long way pretty 
quickly, and that's great, but there's a long way to go. So, I 
just would say we need to stay with it, all of us. The recovery 
will go faster if there's support coming both from Congress and 
from the Fed.
    Mrs. Walorski. Yes, and I want to thank you for your 
efforts. I also want to thank the guidance and the amount of 
wisdom that President Trump has had in continuing to appeal for 
restoring and recovering of our local businesses. I've had two 
calls in the last couple of days since I've been out here. One 
from a woman on the west side of South Bend that's a social 
worker running a behavioral modification agency and one from a 
restaurant, 100-year-old restaurant in North Manchester. And 
those calls were so disturbing because what they're asking for 
is that second round of stimulus. And we were hoping that we 
could have got that in this week while we're here. We're still 
hoping we can get it in.
    I would just plead with Speaker Pelosi and hoping that she 
listens to these comments today that we've got to restore and 
we've got to let these businesses in our districts rebound. 
Lives are still at stake. You know, we are still looking at 
saving American lives and saving American livelihoods at the 
same time, and there is a balance, but we need her help to 
actually get us there.
    So, I yield back, Mr. Chairman. Thank you.
    Chairman Clyburn. Thank you for yielding back.
    The chair now recognizes Mr. Kim for five minutes.
    Mr. Kim. Thank you, Mr. Chairman.
    And, Chairman Powell, a pleasure to have you before our 
Select Subcommittee here.
    I wanted to just start by raising something that a former--
your predecessor, former Chairman Bernanke had mentioned. He 
had said in the op-ed earlier this year that after the 2008, 
2009 recession, an $800 billion Federal program authorized by 
Congress was already offset by states through cuts in spending 
and layoffs. He said, quote, ``Together with the subsequent 
turn to austerity at the Federal level, state and local budget 
cuts, meaningfully slowed the recovery.''
    He actually told me in a previous hearing before this 
committee that, in estimate, he saw that the cost at the state 
and local level led to perhaps about a half a percentage point 
off the growth rate at a time that the economy was trying to 
recover. I feel like I've heard some similar statements coming 
from you before, but I just wanted to confirm.
    Do you agree with former Chairman Bernanke, his assessment, 
that cuts to the state and local funding negatively impacted 
the economic recovery after the 2008, 2009 recovery recession?
    Mr. Powell. Yes. So, I think there's been a great deal of 
research on that question, and it does generally support that 
    Mr. Kim. And, last week, you said that the current economic 
downturn is, I think, quote, ``the most severe in our 
lifetime,'' that it's something that's worse than what we 
experienced a decade ago.
    What I thought about Bernanke's point is, you know, just 
how he's trying to frame it here. So, I guess I wanted to just 
ask you, would our national economy right now be in a stronger 
position to recover from this pandemic and crisis if we could 
avoid state and local job cuts and slashes in the way that we 
saw in 2008, 2009?
    Mr. Powell. Well, again, I don't want to give advice to 
Congress on what I'll do, but, yes, and Chairman Bernanke also 
said, you may remember, that if we play our cards right, if we 
provide the right amount of support, in a few years, this 
doesn't really need to leave a permanent mark on the economy. 
And I would also say that your first effort, the CARES Act, was 
much bigger, of course, than the 2008 response, but, yes. 
Overall, I would agree that there's going to be a need for 
further support, and I do believe that we'll get further 
support. Not sure when or in what quantities or what nature, 
    Mr. Kim. I appreciate that. And, look, I want to respect 
your position here, and I'm trying not to drag you into the 
middle of the discussions and the debates that we're having 
here in Congress, but just try to understand the frame by which 
we should be approaching this. I find that oftentimes we are 
talking about this as if it's solely about the support and the 
help that our states and our local governments need. Certainly, 
we need to be focused on that. You, yourself, had raised the 
point that one in seven workers in our country is employed by a 
state or local government, about 13 million workers. That is a 
huge part of our work force.
    That is certainly something here in New Jersey we 
experience with full force, but another point that I've been 
just trying to highlight based off what Bernanke said and your 
comments today is that this is about our country as a whole, 
our economy as a whole. It's not just about helping certain 
states or certain cities, both red and blue, both Republican 
and Democrat, but it's about our national economy as a whole. 
So, I just wanted to linger there on this front because I often 
hear that the criticisms make it sound like it's trying to--
that they're raising concerns about money mismanagement at the 
state level or bailouts of preexisting debt, arguments like 
    So, Chairman Powell, I want to just dig into that a little 
bit. Have you seen any evidence from before, whether 2008, 
2009, or the CARES Act or other situations where funding for 
state and local governments during times of crisis created 
incentives for mismanagement?
    Mr. Powell. You know, that's not something--that's really 
not something I've looked at.
    Mr. Kim. Well, I think that that's something that we've 
been trying to press for and trying to understand.
    So, I understand where you're coming from on this, but, as 
I said for me, I'm trying to figure out if there's a way we can 
square the circle here and get through this. I don't know if 
you would comment on whether or not there's a way to be able to 
provide funding for state and local governments that might be 
able to ensure that that money is in a fiscally responsible 
    Mr. Powell. So, that's very much in your hands to do. I 
honestly--we don't really bring anything to that. The idea of 
what form to provide, what strings to put on it is really 
squarely on your plate.
    Mr. Kim. Well, I asked that question to your predecessor. 
He said that, quote, that the money could be structured in a 
way that could eliminate that incentive. He specified that 
there could be things done by block grants or by formulas that 
don't relate to existing tax burdens, things like that.
    Is that something that you think we should be looking in 
    Mr. Powell. It certainly sounds like a reasonable thing to 
look in to, but as the current Fed Chair, it's really not up to 
me to, you know, get into these questions and try to design the 
legislation, you know. I think those things are very much in 
your bailiwick.
    Mr. Kim. No. I appreciate that, and I agree completely, but 
your approach in helping us understand the national struggle 
that we might face if we don't move at the state and local 
level is helpful.
    So, with that, Mr. Chairman, I turn back to you.
    Chairman Clyburn. Thank you very much.
    The chair now recognizes Mr. Green for five minutes.
    Mr. Green. Thank you, Chairman and ranking member, and 
thank you, Chairman Powell, for testifying today.
    I graduated in the top of my medical school class but 
barely passed econometrics at West Point. So, I deeply respect 
you and your colleagues. I want to digress a second and discuss 
school closures, which I and many other physicians, educators, 
and behaviorists believe have drastically harmed our children.
    We should follow the science, and as a physician, I know 
the science is definitive. The CDC has stressed the importance 
of kids returning to school saying, and, I quote, ``The harms 
attributed to closed schools on the social, emotional, and 
behavioral health, economic well-being and academic achievement 
of children, in both the short and long term, are well-known in 
significant,'' end quote.
    There's already extensive research on the summer slide, 
according to the Northwest Evaluation Association. In the 
summer following third grade, students lose nearly 20 percent 
of their school year gains in reading and 27 percent in math. 
By the summer after their seventh grade, students lose an 
average of 39 percent of their school year gains in reading and 
50 percent of their school year gains in math, perhaps 
explaining my difficulty in econometrics. Imagine the detriment 
a yearlong slide will have on our children. We can't allow this 
to happen.
    School closures also endanger the emotional and mental 
health of children, a recent published--article published in 
the Journal of Child and Adolescent Psychiatry found that post-
traumatic stress scores were four times higher in parents and 
children in quarantine than those not in quarantine. The CDC 
has added that suicides are through the roof. And in one of the 
scientific journals that I read as an emergency physician, just 
last month, the shutdowns showed an enormous increase in drug 
overdose and addiction at all ages, yet Democrats continue to 
call for more school closures. They seem willing to put 
children and parents through all of this, despite the facts 
that of the 587,948 children diagnosed with COVID, only 103 
have died. And nearly all of them have significant medical 
    Now compare that to over 6,000 suicides a year in children, 
4,000 who die a year in automobile crashes, but the left is 
clearly not stopping children from riding in cars. There's no 
question we know which comorbidities put people at higher risk 
for COVID. We can protect at-risk children with virtual 
learning while letting the rest go back to in-person school.
    We hear the left rambling about science and numbers. Well, 
they're clearly ignoring them to keep schools closed, and the 
consequences are significant. Chairman Powell, I just--I would 
like to ask you, and I've kind of shared a little bit of the 
medical side of this, what are the economic impacts on these 
school closures?
    Mr. Powell. Well, let me say again that these decisions get 
made, a lot of them, at the local level. And I'd imagine you 
would agree that that's appropriate. You want these decisions, 
this is peoples' lives, it's their kids, and to the extent they 
get made as close as possible to them, that makes a lot of 
sense to me any way.
    Mr. Green. No, I'm asking you to elaborate for us on the 
economic impact. What's the impact to the economy on these 
school closures? I just shared that there's an increase in 
suicide; there's an increase in opioids. Only 103 have died out 
of 580,000 that have been diagnosed. I can share those numbers. 
I'm a physician. I'm asking you the economic impact of all 
these closures.
    Mr. Powell. I just want to make it clear that I do not have 
a judgment on the pace of school closures whatsoever. I'm not--
I don't have one, and I wouldn't say if I did. But, you know, 
just as a straightforward matter, if the kids are home, then 
some of the parents are going to stay out of the work force, 
and lots of people have tried to quantify that. I don't have an 
estimate of it.
    But parents who have to stay home to take care of their 
kids will be there. As to whether that's a good thing or a bad 
thing, honestly, it has to do with the safety of kids and 
teachers, too, as well. The teachers are probably much more at 
risk than the young kids are, I imagine, but nonetheless these 
are decisions that are really not for the Fed and----
    Mr. Green. I understand the decision on whether or not to 
open a school, you know. I was trying to get--you implied a 
little bit there. As parents are staying home, that's a 
decrease in economic output, and, therefore, it has a 
downstream affect in our economy.
    So, there is an economic impact, as well as the behavioral 
impact that the CDC has highlighted. The increase in suicides, 
overdoses, all that stuff in light of 103 deaths out of 587,000 
that have been diagnosed.
    Mr. Chairman, looks like I'm out of time, so I yield.
    Chairman Clyburn. Thank you very much. The gentleman yields 
    The chair now recognizes Mr. Raskin for five minutes.
    Mr. Raskin. Thank you very much, Mr. Chairman. Listening to 
our colleagues wax eloquent about how great the economy was 
before millions of people were thrown out of work and before we 
saw spreading hunger and before, you know, a record number of 
Americans are unemployed, is like listening to Herbert Hoover 
talk about how great the economy was before the Depression.
    I'm also a little surprised that they've decided to go back 
to China as a way to distract people from the President's epic 
failures in managing this crisis. We know that there were 37 
different occasions in January, February, March, and April when 
President Trump praised the performance of his great friends in 
the autocratic Chinese Communist Party.
    Take for example, January 22, Twitter, one of the many 
great things about our trade deal with China is it will bring 
both the USA and China closer together in so many other ways. 
Terrific working with President Xi, a man who truly loves his 
country. January 24, China's been working very hard to contain 
the coronavirus. The U.S. greatly appreciates their efforts and 
transparency. It will all work out well. In particular, on 
behalf of the American people, I want to thank President Xi.
    I wish I had 20 minutes to read through all of his tweet 
statements praising his friends in the Chinese Communist Party. 
February 10, at a campaign rally in Manchester, New Hampshire, 
I spoke to President Xi, and they're working very, very hard 
there, and I think it's all going to work out fine.
    February 13, I think they've handled it professionally. 
They're extremely capable, and I think President Xi is 
extremely capable, and I hope it's going to be all resolved, 
and so on. So, either President Trump is an easy mark who got 
played and exploited by China or he's been collaborating in all 
of the sins that our colleagues are talking about.
    Chairman Powell, from the beginning of the pandemic, people 
have tried to portray this as a tradeoff between national 
public health efforts and national economic efforts. Now that 
we're eight months into the nightmare of COVID-19, which has 
cost more than 200,000 of our people their lives, what can you 
tell us about your assessment of this framing that there's a 
tradeoff between public health policy and economic policy?
    Mr. Powell. I don't really think there is a tradeoff. I 
think that we all want to reopen the economy as fast and as 
sustainably as possible, and I think the thing that we can all 
do to help that happen is to do what the experts tell us to do, 
which is to wear masks and keep social distances, and don't do 
those things that will, you know, support the further spread of 
the disease.
    Again, the two things go together. They're complementary; 
they're not in contradiction.
    Mr. Raskin. OK. And the President and his advisers have 
embraced a policy of herd immunity, which the President 
sometimes calls herd mentality, which really means a policy of 
mass human sacrifice that has already cost us 200,000 lives and 
perhaps hundreds of thousands more on the way if they get their 
way of just saying let the disease wash over the population.
    Is there any economic reason to compel us to adopt a policy 
of herd immunity as opposed to trying to go out and defeat the 
    Mr. Powell. So, I never comment on the President's comments 
or policies as just as a general rule.
    Mr. Raskin. OK. I want to go to the question of dividends 
because there are 383 companies that paid dividends to their 
shareholders during the pandemic who also were the beneficiary 
of the Fed's lending program. For example, the food service 
company Cisco laid off about a third of its work force a month 
before paying a dividend to its shareholders, and yet they were 
a beneficiary in your program.
    Caterpillar announced a $500 million distribution to 
shareholders on April 8, two weeks after saying that they would 
be furloughing workers. So, why is it that they are continuing 
to fire workers, give dividends, and they are the beneficiary 
of the Fed's stimulus money?
    Mr. Powell. So, I guess I would say they really are not 
beneficiaries of the program. That refers to the fact that we 
bought small amounts of outstanding bonds, already outstanding 
bonds, from about--from in the market, bonds of about 800 
different companies. And we didn't make a new loan. They got no 
credit because of it, and, you know, so they didn't--they're 
not actually beneficiaries.
    We haven't made a single loan to a corporation as part of 
the primary corporate credit facility.
    Mr. Raskin. OK. So, I guess I'm a little puzzled by that 
because, at least it was my understanding, that all of these 
companies are partaking of the Fed's 13(3) authority. Is that 
not right?
    Mr. Powell. What we're doing is we're buying--we wanted to 
buy in the secondary market to support the overall market 
function for these big companies that have bond market access, 
right. So, we didn't want to pick winners and losers, so we're 
buying very small amounts. We created an index of 800 
companies, and we're buying very small amounts of their already 
outstanding bonds. We didn't ask their permission.
    When 800 companies are having small amounts of their bonds 
purchased, no one's really benefiting. Really the market--what 
it did was it supported market function, which enabled a broad 
group of companies to go out and finance themselves, and that 
did happen. It happened so successfully that we actually didn't 
have to make any direct loans to these companies.
    Mr. Raskin. OK. And finally----
    I yield back, Mr. Chairman.
    Thank you.
    Chairman Clyburn. Thank you.
    The chair now recognizes Mrs. Maloney for five minutes.
    Mrs. Maloney. Good morning, Chairman Powell. It's very good 
to see you again.
    Mr. Powell. Good morning.
    Mrs. Maloney. I want to ask you about economic recovery and 
specifically who benefited from the economic recovery. It's 
clear to me that large corporations have benefited from the 
Fed's rescue programs much more than small-and medium-sized 
businesses ever since the Fed promised to essentially back stop 
the corporate bond market.
    Large corporations have been able to borrow record amounts 
of money at rock-bottom rates in order to stay in business, but 
small-and medium-sized businesses, on the other hand, had to 
wait for months for the Fed to set up the rescue facility for 
them. And when the Main Street Lending Program finally went 
online, it was woefully insufficient.
    So, this has, unfortunately, led to the perception that the 
Fed will do whatever it takes to support large corporations but 
will only do the bear minimum to support smaller and medium-
sized businesses. In previous testimony, you have stressed the 
logistical hurdles to providing meaningful relief to medium-and 
small-sized businesses, logistical hurdles that the Fed hadn't 
considered before the pandemic.
    So, my question is, in the future in order to avoid a 
situation where large corporations get substantial, immediate 
relief but then smaller and medium-sized businesses are forced 
to wait for months for inadequate relief, do you think the Fed 
should build out a robust infrastructure ahead of time to 
ensure that it can deliver adequate relief in a timely matter 
to smaller and medium-sized businesses?
    Mr. Powell. So, I do think that the question of how to 
apply the lessons that we're learning from Main Street is a 
really good one, and it's one that we'll be revisiting, I'm 
sure, over time. I guess I would say, though, that this is the 
first time in our lifetime and I certainly hope the last time 
that we faced such a crisis of credit availability for 
nonfinancial companies that the Fed had to use 13(3) to create 
facilities to lend to them.
    So, it's highly unusual, and, nonetheless, we will learn a 
lot, and there may be other ways we can improve upon this. So, 
I would say that. I guess I would also say that, you know, the 
surveys do show that most small-and medium-sized companies do 
have access to credit, and that's not to say they all do. And 
certainly credit terms have tightened.
    I think the smaller the company, the tighter the credit 
terms right now. So--and I would, of course, not fully agree 
with your characterizations of Main Street. I think we are 
reaching a growing group of companies. We have ongoing interest 
in the program, and it's there as a back stop. It can get a lot 
larger if the need does grow.
    Mrs. Maloney. Do you think Congress needs to act in this 
area in any way? Do you think Congress should----
    Mr. Powell. I do think, particularly for smaller companies. 
It's really not practical for the Fed to try to create a 
facility that would deal with millions or hundreds of thousands 
of very small loans because a loan is something where you need 
documentation under the law to avoid insolvent companies and 
have evidence that the company can repay it.
    I think something like the PPP program could continue to do 
a lot of good in the small-and medium-sized company space 
because it's going to take longer than we had hoped for some 
companies to be able to get back online.
    Mrs. Maloney. Thank you. And I also want to ask you about--
and I'm sure you recall in March there was a tremendous turmoil 
in the markets and especially in the Treasury market. This was 
very scary for our country because the Treasury market is 
probably the most important market in the world, and at the 
time the Fed took dramatic action to shore up the Treasury 
market. It provided unlimited amounts of cash in the form of 
short-term loans on Treasuries and also directly purchased 
trillions of dollars in Treasuries through another round of 
quantitative easing. These actions were successful, and I 
applaud the Fed for taking them, but now that we've had time to 
study what went wrong, there seems to be a broad consensus that 
highly leveraged hedge funds were at the center of the problem, 
and this was the conclusion of the bank for international 
settlements. The Office of Financial Research, former Fed 
Chairs Yellen and Bernanke, even Governor Quarles has 
highlighted the central role that leverage hedge funds played 
in the Treasury market dysfunction.
    So, in light of the broad consensus, do you think there 
needs to be additional reforms to hedge funds to ensure that it 
doesn't happen again? Do you think Congress should consider 
leverage limitations on hedge funds, or should we just stick to 
the current structure and let the Fed rescue the Treasury 
market whenever there's trouble?
    Mr. Powell. So, actually, I think that there are a number 
of important causes. The one you mentioned regarding hedge 
funds is part of it, but it's far from the whole story. There 
are lots of other factors. More broadly, though, what we're 
doing is we're going back now as we did after the financial 
crisis, the global financial crisis 10 years ago, and we're 
looking at where were the stress points? How did all of the 
work we did for the last 10 years, how did it hold up? What 
happened that was new? And we're going to be doing a lot of 
work on that. We are doing a lot of work on that, and a big--a 
central part of it will be the Treasury market and what changes 
do we need to make in and around the Treasury market so that we 
don't have this happen again
    Mrs. Maloney. My time is expired.
    Chairman Clyburn. Thank you very much.
    All time has expired for questions. We will now yield for 
closing statement to the ranking member.
    Mr. Scalise. Well, I thank the chairman, Chairman Clyburn, 
for hosting the hearing.
    And, Chairman Powell, again, thank you for the work you're 
doing during an incredibly difficult time. The Federal Reserve 
has stepped up like so many other Federal agencies to manage 
what is an unprecedented time in America's history, a time that 
we mourn the deaths we've experienced in America. We are 
managing through finally getting our economy back open, seeing 
economic growth, helping families get back on their feet, which 
is an ongoing process, while we also follow the science and get 
to a cure to get multiple vaccines, hopefully in the stage of 
approval from the FDA, which could happen in a matter of weeks 
to see this revolutionary work that's being done with a 
partnership between the FDA, CDC, working with the best 
scientists, not just in America but in the world, to get us to 
vaccines by some of the most respected companies in the world. 
Most of them headquartered here in America, something we ought 
to be proud of, something this President has led the effort on.
    I know there's a lot of talk about China. There ought to be 
a lot of talk about China because China lied to us, and not 
just to America but to the whole world. If China would have 
been candid with just the United States, let alone the other 
countries around the world, we all could have seen dramatic 
reduction in deaths. You know, when you look at the deaths all 
around the world, obviously, we are concerned about all the 
deaths. We want to do everything we can to stop deaths here in 
America, doing the things we can do.
    Do you know if just five states who many of us on this 
committee worked to uncover, we still haven't gotten the 
answers we want, we still haven't gotten the transparency we 
want, but five states broke with President Trump's guidelines, 
went against the CDC guidance from the scientists, and sent 
nursing homes patients who were COVID positive in hospitals 
back to the nursing homes. More than 25,000 seniors died who 
shouldn't have. If just those five governors would have 
followed the President's guidelines from his medical experts, 
we would not even be on this list of the top ten deaths. So, we 
need to keep working to get those answers. But the fact that we 
haven't had one hearing on this committee on China, the country 
not only who started this virus but the country who lied to the 
rest of the world, to increase the number of deaths that 
occurred in every country. We need to have that hearing to get 
those answers, to get the facts out because we know a lot more 
about this disease today. The Secretary of HHS, Secretary Azar, 
has talked about, if you walked into a hospital back in March, 
if you had some of those preexisting conditions that we now 
know about that put you at a higher propensity of dying from 
COVID, if you walked into that same hospital today, your 
chances of walking out of that hospital alive would be 
dramatically higher because of medicine.
    Doctors know a lot more today than they knew just a few 
months ago. They know how better to treat patients. We all know 
from the data who's most at risk to save more people, to get 
that data out there, but we also know, as Dr. Green and others 
have pointed out, that closing down schools when they can 
safely reopen is hurting kids. It's going to kill kids.
    Deaths are up amongst young people, not from COVID but from 
non-COVID related things. There are so many studies that are 
showing the harm that's being done to kids for those school 
systems that won't safely reopen. The protocols are there for 
how to safely reopen. The money is there. We passed in the 
CARES Act $150 billion to states. Not one single state has 
spent all that money, and that money can be used to safely 
reopen schools.
    The time for excuses is over. The can-do spirit that's got 
us on the verge of a vaccine by multiple companies, and now 
today, literally, as we were holding this hearing, a fourth 
company's been added to this, Johnson & Johnson, but we're on 
the brink.
    This is a--you're talking about revolutionary moonshot 
items that are being performed by medicine because the can-do 
spirit of America. We know we can do this. We know we can get 
our economy back up and running to the greatest economy we had 
maybe in the history of our country before COVID. We can get 
back there. Every income group was doing well, but, as Chairman 
Powell pointed out, the lowest income level groups were doing 
the best prior to COVID because they were becoming part of the 
middle class again, something we all ought to applaud, 
something we all ought to achieve, and work to get back to. We 
can work to get back to that. We are. We have work to do. We 
ought to pass that bill that's sitting out there floundering 
before we leave, the bill by Congressman Chabot to take that 
PPP money, 138 billion sitting idly that can be turned on today 
to help those small businesses who are dying on the vine, who 
we don't want to go away. We don't want those jobs to go away. 
We can get that done. We ought to get that done. That bill 
ought to be on the suspension calendar. It would pass 
overwhelmingly if the majority would just bring it up.
    So, I appreciate that you've talked about what you're 
doing, what others are doing to get this economy back going. 
We've obviously talked about what the President is doing 
following the science to confront this virus, to get us to the 
brink of a vaccine that hopefully everyone who wants to take it 
will feel comfortable taking because the FDA's the gold 
standard. And it only happens if they approve it. If they 
approve it, we all ought to celebrate that achievement because 
it would be historic for the world that quickly to get a 
vaccine approved.
    So, with that, Mr. Chairman, I know we're going to have 
other hearings, and hopefully we'll bring up some of these 
other issues as we move forward, but I appreciate you holding 
this one. And, again, Mr. Powell, thank you for the work you're 
    I yield back.
    Chairman Clyburn. I thank the ranking member for his 
closing statement and for yielding back.
    In closing, let me thank you, again, Mr. Chairman, for your 
testimony here today. As I shared with you in a previous 
conversation, you are among the public servants for whom I have 
a great deal of admiration and respect, and I appreciate your 
being here today to help us try to determine how best to get 
beyond this pandemic, how to improve our economy, and help the 
millions of Americans struggling to find jobs, pay rent, 
mortgages, and put food on the table.
    As you know, Mr. Chairman, this select subcommittee is 
modeled on the Truman committee during World War II. As many of 
my colleagues know, Harry Truman is one of my political heroes. 
I became acquainted with him as an elementary school student 
back when he ran for President. I just admired, a gentleman 
from Louisville, Missouri, being limited in education but had a 
great deal of what it took to make this country what it is 
today. I'm one of those few Democrats who's not referred to--I 
don't call myself a New Dealer; I'm a fair dealer.
    Harry Truman's fair deal is what started me into politics, 
and Truman said this about that committee that this 
subcommittee is modeled after. Harry Truman said that he sought 
to prevent policies that, and I'm quoting him here, that make 
the big men bigger and let the little men go out of business or 
starve to death. That is what Harry Truman said back in 1941 
when we were trying to recover from World War II. And this 
committee was modeled after that, and according to our 
research, that committee, Harry Truman's committee, cost the 
government about a million dollars, but according to our 
research, it returned over $16 billion to the Federal coffers. 
But beyond that, the research has said that his work saved the 
lives of millions of children, untold numbers of children whose 
lives were saved by that committee.
    And I would say to my friend, the ranking member, he talked 
about those four companies that are on the verge, hopefully on 
the verge of coming up with a safe--I want to emphasize safe--
vaccine. The fact of the matter is that those companies are 
really the recipients of a significant Federal investment. And 
I hope that they will get us to saving lives.
    However, I caution, according to my readings, neither one 
of these four companies included children among the testing 
that they're doing. No children.
    So, we know that this virus affects children and adults 
differently, yet all of the protocol has been on adults. We 
have no idea what it would do to children, and we have no idea 
what will happen when children are brought back into the 
classrooms and what it will do to teachers if we believe that 
children may be asymptomatic in many instances.
    So, let me remind my friend, the ranking member, that the 
Centers for Disease Control and Prevention has made clear that 
in-person learning presents the highest risk for spreading the 
virus compared to remote or hybrid school. Now I don't know 
what's going on in Louisiana, but I do know that school 
closings in my home state where the legislature is Republican 
controlled--the governor is a Republican, so this is not about 
Democrats versus Republican. No Democrat closed any school in 
South Carolina. The schools are closed. He and I banter a lot 
about Clemson and LSU. I don't know what you're all doing down 
at LSU, but Clemson is closed.
    Mr. Scalise. Would the gentleman yield?
    Chairman Clyburn. I'll be glad to yield.
    Mr. Scalise. And this is just a good, candid conversation. 
I know we had a hearing--the Vice President came down to LSU's 
campus. We had the head of the LSU system and the head of the 
Southern University system. I think it's the only historically 
Black college and university system. There are a lot of HBCU 
colleges, but Southern, I think, is the only full system, and 
both of them have opened for in school. They offer hybrid, and 
I know a lot of systems, each school system is different.
    We have a Democratic governor. We actually work very well 
together. I think he's done a good job of allowing school 
systems to open and give them the tools they need. Most have, 
not all. I think New Orleans starts this week in school, so 
some have delayed opening. And they've had good success. 
Obviously, they put protocols in place for, if one student 
tests positive, how to handle that in that classroom, but 
overall it's been going on for probably over a month now. I 
know our kids go to school in the city of New Orleans, and 
they've been in school for a few weeks now, and it's working 
very well. But each school system is obviously handled 
differently, but the tools are there, and I know we've put a 
lot of that, the work you and I did, all of us did in this 
committee and our full House colleagues, the cooperation we did 
in the CARES Act has been part of that.
    So, I appreciate that, and we're going to continue to 
follow that progress. Maybe we can have a hearing on the 
Operation Warp Speed status of these four drugs and what else 
we can do to spur that kind of progress.
    I'll yield back.
    Chairman Clyburn. And I thank the gentleman. You made my 
point very well. You're doing it. You opened in Louisiana to a 
fuller extent than South Carolina. Louisiana has a Democratic 
governor. South Carolina has a Republican governor. So, this 
isn't about Democrats versus Republicans. It is about who has 
the science working for them. We had this administration to ask 
us to reopen schools. A lot of schools reopened, but according 
to my information, 21,000, 21,000 children and teachers 
contracted the virus: 21,000. And a lot of these schools have 
been forced to close. The University of North Carolina stayed 
open for a week and closed, sent the kids home. They made it 
very clear that some of them who did not--this wasn't the 
University of North Carolina, another school. All the students 
lost their tuition, couldn't get it back.
    So, we have a responsibility here to really do what is 
necessary for the country. So, I would hope that, as we go 
forward with these hearings--and I think on the 2nd, we'll have 
a hearing, Mr. Azar will be here. You invoked his name today, 
and I would hope you will ask questions of Mr. Azar as to why 
the President was so laudatory of China. That may have been the 
chilling effect for many of us in dealing with that issue.
    Mr. Scalise. And would the gentleman yield on that?
    Chairman Clyburn. I'll be glad to yield.
    Mr. Scalise. Clearly, we learned a lot more about China. We 
were trying to find out information about China in those early 
weeks. Clearly, once we found out, you've seen this President 
very aggressive against the Chinese Communist Party; in fact, 
talking about why we need to bring manufacturing back from 
China. The masks, the PPE that we couldn't get because--even a 
company like 3M, an American company, they were making PPE in 
China, and the Chinese Communist Party banned them from 
exporting that back into the United States. So, it showed that 
we need to bring that manufacturing back to America. I think we 
would probably agree on that. That's something the President, 
our President Trump, has been very aggressive about against the 
Chinese Communist Party because we've learned this. Again, they 
were lying to the world. It wasn't just America they were lying 
to. So, if somebody's telling you one thing and, at one point, 
you're trying to get information, but for the time being, 
they're telling you something. If you find out later it's a 
lie, clearly, your attitude toward them will be very different, 
which we are seeing.
    I yield back.
    Chairman Clyburn. I thank the gentleman. I would hope that 
we would hear the President apologizing to the American people 
for having misled us as to what China was doing. He is the one 
that said China was doing a great job. We listened to him. And 
I believe that maybe it's time for him to be public in 
apologizing to the American people for having misled us.
    So, I want to say, Mr. Chairman, at the end of my statement 
here, that the Truman statement I mentioned earlier, it really 
grabs me. I've studied Truman all of my life, and I think 
there's so much that's kind of interesting. At the end of his 
Presidency, he was a pretty unpopular fellow. But the more 
historians look back on him, the more they elevate him in the 
history books. And I believe it won't be long before he'll be 
in the top three or four when people get a chance to compare 
how his committee dealt with this crisis, calling on the 
research from World War I. And if you recall, World War I ended 
in, what, 1917. The Spanish Flu hit in 1918. It too was a 
double whammy on our economy like we have today.
    So, I'm a little bit worried about whether or not we are 
heeding to the history here, whether we aren't repeating this 
big man versus little man thing here, when we have such a high 
level, 250,000, may have been good to get down to. I think we 
ought to look at what not to go down to 100,000 or maybe even 
50,000 and have--it says to me--for us to be in this thing for 
as long as we've been in it and $1.1 trillion sitting there--
99.7 percent of it has not been used--it says to me that we 
just don't want to make the kind of policies that are necessary 
for little businesses--flower shops, little restaurants need to 
be reopened, and they need to receive this money. I can name 
you--take you to restaurants where, if they had $100,000 of 
that money, they could reopen safely. They could create the 
outdoors that's necessary for them to carry on their 
businesses. With $100,000, I can assure you restaurants that 
would have outdoor patios, that they could keep open and go 
back into business, but they can't do it without that kind of 
    So, I want to thank you, Mr. Chairman. I do mean it when I 
say that you are among those that I admire and respect, and I 
hope that we can work together going forward to get this 
economy moving. We cannot do it unless we protect our children, 
unless we protect the health of our teachers, unless we do 
better by small businesses.
    Without objection, all members will have five legislative 
days within which to submit additional written questions for 
the witness to the chair which will be forwarded to the witness 
for their--his response.
    I ask our witness to please respond as promptly as you are 
able to.
    With that, this meeting is adjourned.
    [Whereupon, at 12:16 p.m., the subcommittee was adjourned.]