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


                   OVERSIGHT OF FINANCIAL REGULATORS:
                    ENSURING THE SAFETY, SOUNDNESS,
                    DIVERSITY, AND ACCOUNTABILITY
                       OF DEPOSITORY INSTITUTIONS
                          DURING THE PANDEMIC

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 12, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-113
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
43-527 PDF                  WASHINGTON : 2021                     
          
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
DENNY HECK, Washington               TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
BEN McADAMS, Utah                    LANCE GOODEN, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    November 12, 2020............................................     1
Appendix:
    November 12, 2020............................................    65

                               WITNESSES
                      Thursday, November 12, 2020

Brooks, Brian P., Acting Comptroller of the Currency, Office of 
  the Comptroller of the Currency (OCC)..........................    10
Hood, Rodney E., Chairman, National Credit Union Administration 
  (NCUA).........................................................     5
McWilliams, Hon. Jelena, Chairman, Federal Deposit Insurance 
  Corporation (FDIC).............................................     7
Quarles, Hon. Randal K., Vice Chairman for Supervision, Board of 
  Governors of the Federal Reserve System (Fed)..................     9

                                APPENDIX

Prepared statements:
    Brooks, Brian P..............................................    66
    Hood, Rodney E...............................................    97
    McWilliams, Hon. Jelena......................................   112
    Quarles, Hon. Randal K.......................................   130

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Letter from the Credit Union National Association (CUNA).....   187
    Letter from the Independent Community Bankers of America 
      (ICBA).....................................................   195
    Letter from the National Association of Federally-Insured 
      Credit Unions (NAFCU)......................................   197
Perlmutter, Hon. Ed:
    Letter from various undersigned organizations................   200
Porter, Hon. Katie:
    Various inserts for the record...............................   202
Brooks, Brian:
    Written responses to questions for the record from Chairwoman 
      Maxine Waters..............................................   236
    Written responses to questions for the record from 
      Representative John Rose...................................   245
    Written responses to questions for the record from 
      Representative Anthony Gonzalez............................   248
    Written responses to questions for the record from 
      Representative Tom Emmer...................................   249
Hood, Rodney:
    Written responses to questions for the record from Chairwoman 
      Maxine Waters..............................................   250
McWilliams, Hon. Jelena:
    Written responses to questions for the record from Chairwoman 
      Maxine Waters..............................................   255
    Written responses to questions for the record from 
      Representative Anthony Gonzalez............................   269
    Written responses to questions for the record from 
      Representative John Rose...................................   270
    Written responses to questions for the record from 
      Representative Roger Williams..............................   271
Quarles, Hon. Randal:
    Written responses to questions for the record from Chairwoman 
      Maxine Waters..............................................   273
    Written responses to questions for the record from 
      Representative Anthony Gonzalez............................   289
    Written responses to questions for the record from 
      Representative Joyce Beatty................................   291
    Written responses to questions for the record from 
      Representative Stephen Lynch...............................   293
    Written responses to questions for the record from 
      Representative Ben McAdams.................................   295
    Written responses to questions for the record from 
      Representative John Rose...................................   299

 
                   OVERSIGHT OF FINANCIAL REGULATORS:
                    ENSURING THE SAFETY, SOUNDNESS
                    DIVERSITY, AND ACCOUNTABILITY
                       OF DEPOSITORY INSTITUTIONS
                          DURING THE PANDEMIC

                              ----------                              


                      Thursday, November 12, 2020

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 12 p.m., via 
Webex, Hon. Maxine Waters [chairwoman of the committee] 
presiding.
    Members present: Representatives Waters, Maloney, Sherman, 
Meeks, Clay, Green, Cleaver, Perlmutter, Himes, Foster, Beatty, 
Vargas, Gottheimer, Lawson, Tlaib, Porter, Axne, Casten, 
McAdams, Wexton, Lynch, Adams, Dean, Garcia of Illinois, Garcia 
of Texas, Phillips; McHenry, Lucas, Posey, Luetkemeyer, 
Stivers, Barr, Hill, Emmer, Loudermilk, Mooney, Davidson, Budd, 
Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, and 
Taylor.
    Chairwoman Waters. The Financial Services Committee will 
come to order. Without objection, the Chair is authorized to 
declare a recess of the committee at any time.
    Before we begin today's hearing, I want to remind Members 
of a few matters, including some required by the regulations 
accompanying House Resolution 965, which established the 
framework for remote committee proceedings.
    First, Members are reminded to keep their video function on 
at all times, even when they are not being recognized by the 
Chair. Members are also reminded that they are responsible for 
muting and unmuting themselves, and to mute themselves after 
they have finished speaking. The staff has been instructed not 
to mute Members, except when a Member is not being recognized 
by the Chair, and there is inadvertent background noise.
    Members are further reminded that they may only attend one 
remote hearing at a time. So if you are participating today, 
please remain with us during the hearing. Members should try to 
avoid coming in and out of the hearing, particularly during the 
question period.
    If, during the hearing, Members wish to be recognized, the 
Chair recommends that Members identify themselves by name so as 
to facilitate the Chair's recognition. I would also ask that 
Members be patient as the Chair proceeds, given the nature of 
the online platform the committee is using.
    Finally, Members are reminded that all House rules relating 
to order and decorum apply to this remote hearing.
    Today's hearing is entitled, ``Oversight of Financial 
Regulators: Ensuring the Safety, Soundness, Diversity, and 
Accountability of Depository Institutions During the 
Pandemic.''
    I will now recognize myself for 4 minutes to give an 
opening statement.
    On November 3rd, America decisively rejected President 
Trump, his harmful policies, and his dangerous rhetoric. The 
American people have given President-elect Biden a mandate to 
govern and reverse the harmful policies of the Trump 
Administration, including the many actions that several of our 
witnesses have taken to deregulate Wall Street. This mandate is 
entirely consistent with recent State referendums in which 
voters in red States embraced progressive economic policies. 
For example, in Nebraska, voters banned usury, approving a 
Statewide interest rate cap of 36 percent. In Florida, voters 
approved a $15-an-hour minimum wage. It is clear that Americans 
want a financial and economic system that works for them and 
not against them.
    I was inspired by the words of President-elect Biden on how 
he wants to unify the country. As ever, I stand ready to work 
with Members on both sides of the aisle, and the incoming Biden 
Administration, on reforming our financial system so that 
consumers and investors have the protections they need.
    President-elect Biden has already begun the work of 
building a better future for our nation. On Monday, we 
established a coronavirus task force, showing how seriously he 
is working on this virus. Make no mistake, the pandemic 
continues to take a terrible toll. There have been over 10.2 
million U.S. cases, and over 239,000 people have lost their 
lives to the virus. We are now seeing over 100,000 new U.S. 
cases a day.
    From the beginning of this pandemic, I have urged 
regulators to focus their efforts on pandemic response, and 
halt rulemakings unrelated to addressing the crisis. I am very 
concerned that regulators have nonetheless issued numerous 
harmful regulatory rules in the midst of the ongoing pandemic. 
For example, the Office of the Comptroller of the Currency 
(OCC) issued a harmful rule that badly undermines the Community 
Reinvestment Act (CRA). Regulators have also moved to weaken 
the Volcker Rule, which prevents banks from gambling with 
taxpayer money. There have also been a number of troubling 
rulemakings to weaken capital and other prudential requirements 
for the nation's largest banks.
    The last thing the nation needs during this crisis are 
actions from regulators that harm communities and make our 
financial system insecure and less stable. I am putting our 
witnesses on notice that I will be working with the Biden 
Administration to roll back these rules. Financial regulation, 
and the approach to diversity and inclusion in this country, 
are going to change for the better. With the historic election 
of this country's first woman and person of color to serve as 
Vice President, it is already changing for the better.
    Under my leadership, the committee has led the way on 
diversity and inclusion, establishing an historic Subcommittee 
on Diversity and Inclusion, aptly chaired by Representative 
Beatty. Under President Biden's leadership, our financial 
regulators will and must be diverse. We are emerging from the 
dark days of the Trump Administration into the dawn of a new 
progressive America where pro-consumer and pro-investor 
policies will always be first on the agenda.
    The Chair now recognizes the ranking member of the 
committee, the gentleman from North Carolina, Mr. McHenry, for 
4 minutes for an opening statement.
    Mr. McHenry. Thank you. And I want to thank the regulators 
for being here.
    I would also note for the Chair that I don't see the 
election outcome as this vote for the woke left policy agenda 
of House progressives; it was anything but that. We have more 
Republicans in the next Congress in the House of 
Representatives because, quite frankly, the far left went so 
far. And so, while you may have had some successes in the 
election, I don't think it is the wide endorsement of a far 
left policy agenda that the Chair noted.
    In fact, what I would note is that in the middle of this 
pandemic, instead of taking political potshots, we should make 
a serious, concerted effort to have a serious conversation in 
this committee, like we have not had in the midst of this 
pandemic. And I think it is a very, very sad thing that we have 
not been more focused on financial stability, and the important 
work that these regulators who are before us today have been 
about this year.
    So with that, I would like to thank our witnesses for being 
here today, and I want to commend them for the work that they 
have put in to address the effects of the pandemic on our 
financial system. They have done a fantastic job, a wonderful, 
fantastic job, and they all should be commended for the work 
that they have put in, tacked decisively at the start of this 
crisis to provide the necessary certainty and clarity for our 
financial system.
    Your quick implementation of the provisions of the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act from 
March forward provided financial institutions and consumers 
appropriate flexibility to accommodate the daily challenges 
that they faced in the midst of this pandemic. I would also 
encourage you to continue examining the regulations in your 
purview to ensure stability in the banking system.
    As I have said previously and will repeat again today, our 
focus must be on the following: increasing testing; opening 
schools safely; and getting people back to work. Last week, 
unemployment dropped to just under 7 percent, a rapid 
turnaround from the April high of 14.7 percent. This is a good 
start. Our economy is rebounding, but more can be done, and I 
believe pro-growth regulations and policies are the key to 
sustained success. We know that modernizing and right-sizing 
regulations will unleash the economy and allow consumers and 
small businesses to flourish, and that is what you are doing, 
and I appreciate that work that you are about.
    A big part of that is regulatory clarity. I want to thank 
Acting Comptroller Brooks and Chair McWilliams for their work 
to help bring certainty to the legal status of loans made 
through banking partnerships. Much of the innovation in 
financial services right now is happening within the context of 
partnerships between banks and fintech firms. Your efforts have 
helped bring greater definition to the regulatory and 
supervisory models for these partnerships.
    We should also continue to examine the importance of de 
novo charters in rural banking. Serving banking deserts is a 
necessary aspect of supporting our Main Street rural small 
businesses. And I want to commend my colleague from Kentucky, 
Congressman Barr, for his work on this important issue.
    Now more than ever, technology is going to play an 
essential role in our financial future. Innovation is important 
for our success. As new policies are considered, we should 
ensure that government is not standing in the way of private 
sector creativity and helping our people.
    I will end where I started. The tone of this hearing does 
not bode well for the next Congress. We have the ability to 
find good bipartisan solutions to help promote a successful 
financial system that is inclusive and addresses the needs of 
the American people. Yet, my colleagues continue to choose 
divisiveness over bipartisanship, and that is disappointing.
    I want to thank all of the witnesses for being here today 
and for your solid, good work in the midst of this health 
pandemic. Thanks so much.
    Chairwoman Waters. The Chair now recognizes the gentleman 
from New York, Mr. Meeks, who is also the Chair of our 
Subcommittee on Consumer Protection and Financial Institutions, 
for 1 minute.
    Mr. Meeks. Thank you, Madam Chairwoman.
    As we reach the end of the 116th Congress, it is important 
to consider all of the accomplishments of this committee, for 
which I congratulate our chairwoman and all of the members of 
this committee.
    As Chair of the Consumer Protection and Financial 
Institutions Subcommittee, I set out to focus my work on issues 
of discrimination, inequality, and the unbanked and 
underbanked. I spent the bulk of my time working on Minority 
Depository Institutions (MDIs) and Community Development 
Financial Institutions (CDFIs), and thinking that a period of 
relative stability in a decade into the expansion that started 
under President Obama's leadership was a perfect opportunity to 
tackle these issues.
    The COVID-19 pandemic and nationwide protests against 
police brutality and racial injustice have laid bare the 
structural inequalities, and, yes, discrimination across our 
system. I would argue that the agenda set in this committee for 
the 116th Congress was persistent and laid the foundation of 
the urgent priorities that our nation grapples with today, and 
it is an inflection point.
    And so, therefore, I thank you, Madam Chairwoman, again, 
for tackling these issues, and I look forward to continuing to 
work with you.
    Chairwoman Waters. Thank you.
    The Chair now recognizes the subcommittee's ranking member, 
Mr. Luetkemeyer, for 1 minute.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    And thank you to all of the regulators who are here today, 
for being here in this critical time for our nation's economy.
    As you know, the pandemic caused a blanket shutdown across 
the country and threatened tens of millions of American jobs. 
But the strength of American businesses and workers responded 
with an astounding 33 percent increase in the GDP in the third 
quarter. It is clear that Americans have undergone an heroic 
effort to adapt to the strain and pressure of the pandemic. And 
with recent news of a vaccine, economic recovery is in full 
swing.
    While this is good news, we must ensure that Congress and 
the regulators do not hinder the progress that the economy is 
making. To the contrary, regulators should enhance financial 
institutions' ability to aid in the economic recovery and 
ensure that consumers and businesses can make it to the end of 
the pandemic.
    Many provisions in the CARES Act, including a Troubled Debt 
Restructuring (TDR) provision, are set to expire at the end of 
the year. I am very interested to hear what you, the prudential 
regulators, are going to allow institutions to do to keep their 
customers and communities afloat in this time.
    With that, I look forward to discussing these matters, and 
I yield back. Thank you.
    Chairwoman Waters. Thank you very much.
    I would now like to welcome today's distinguished panel: 
the Honorable Rodney Hood, Chairman of the National Credit 
Union Administration; the Honorable Jelena McWilliams, Chair of 
the Federal Deposit Insurance Cooperation; the Honorable Randal 
Quarles, Vice Chair of Supervision at the Board of Governors of 
the Federal Reserve System; and Brian Brooks, Acting 
Comptroller of the Currency at the Office of the Comptroller of 
the Currency.
    Each of you will have 5 minutes to summarize your 
testimony. You should be able to see a timer on your screen 
that will indicate how much time you have left, and a chime 
will go off at the end of your time. I would ask you to be 
mindful of the timer, and quickly wrap up your testimony if you 
hear the chime, so we can be respectful of both the witnesses' 
and the committee members' time. And without objection, all of 
your written statements will be made a part of the record.
    Chairman Hood, you are now recognized for 5 minutes to 
present your oral testimony.

 STATEMENT OF THE HONORABLE RODNEY E. HOOD, CHAIRMAN, NATIONAL 
               CREDIT UNION ADMINISTRATION (NCUA)

    Mr. Hood. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, thank you for the opportunity to 
provide an update on the safety, soundness, and diversity of 
federally insured credit unions and the NCUA's efforts to 
assist them during the ongoing COVID-19 emergency.
    Our nation's credit union system was well-capitalized at 
the start of the pandemic, and it remains so today. With high 
levels of net worth and ample liquidity, this strength has 
allowed credit unions to adapt to the operational challenges 
resulting from the pandemic. Total assets in federally insured 
credit unions rose 15 percent over the year, ending in the 
second quarter of 2020 at $1.75 trillion. Credit union shares 
and deposits rose by nearly 17 percent, to $1.49 trillion.
    Since mid-March, the NCUA has worked diligently to provide 
credit unions with regulatory relief and much-needed 
flexibility so they can continue to safely serve their member 
owners. We have also adjusted our examination program to 
protect our staff, and we all continue to work remotely and 
effectively.
    We continue to examine for compliance with the Bank Secrecy 
Act and potential cybersecurity risk, helping to ensure our 
credit union system remains secure and resilient. We have 
issued 11 interagency statements and 20 guidance letters to the 
industry to date, helping credit unions to address emerging 
risk, and to implement the regulatory and statutory changes 
that have been made in response to the pandemic.
    The NCUA has provided over $3.7 million in technical 
assistance to small, low-income, and minority credit unions in 
the form of our 2020 Community Development Revolving Loan Fund 
allocation, which went directly to COVID-19 assistance. The 
credit union system's net worth increased 6.8 percent over the 
year, to $182.9 billion. The aggregate net worth ratio of the 
system stood at 10.46 percent, well above the 7 percent 
statutory requirement.
    The Share Insurance Fund is also strong, and the equity 
ratio remains well within the statutory range under the Federal 
Credit Union Act. Accordingly, we believe there is no need to 
assess a premium at this time.
    Credit unions have continued to provide needed credit and 
financial services, with lending rising to an all-time high of 
$1.5 trillion in all major loan categories. Credit unions 
collectively extended $8.4 billion in loans under the SBA's 
Paycheck Protection Program (PPP), with an average loan amount 
of $49,000.
    Like capital, liquidity is a pillar of strength and the 
bedrock upon which the safety and soundness of the credit union 
system rests. Congress' decision to increase the flexibility 
of, and borrowing authority for, the Central Liquidity Facility 
(CLF) in the CARES Act has contributed greatly to bolstering 
the availability of liquidity in the credit union system. Since 
the Act was signed into law, the NCUA has successfully 
encouraged natural person and corporate credit unions to join 
the CLF. Today, the Facility's borrowing capacity has exceeded 
$32 billion and provides access to nearly 80 percent of all 
credit unions.
    I am indeed grateful that Congress provided this much-
needed authority in the CARES Act. However, I respectfully 
request that these changes be extended for the pandemic's 
duration so the credit union system and the NCUA can respond 
effectively should the need for emergency liquidity arise.
    One important lesson from 2020 is the need for greater 
financial inclusion. Lamentably, recent events have revealed 
many inequities in our society, not the least of which is that 
the pandemic has had a more deleterious impact on communities 
of color. At the NCUA, we are proud of the fact that diversity, 
equity, and inclusion are part of who we are and how we do 
business, and Section 342 of the Dodd-Frank Act has been a 
catalyst for growth and change. Indeed, we have made tremendous 
progress in this area over the last decade in terms of 
recruitment, employee retention, and procurement.
    Since becoming the 11th Chairman of the NCUA, I have made 
financial inclusion a priority within the agency and the credit 
union system as a whole. I recently reinforced that commitment 
with the launch of a new financial inclusion initiative called 
ACCESS (Advancing Communities through Credit, Education, 
Stability, and Support). This initiative will refresh and 
modernize regulations, policies, and programs that all support 
greater financial inclusion within the agency and the credit 
union system and will address the specific needs of diverse 
communities. I look forward to working in partnership with the 
members of this committee towards this worthy endeavor.
    In closing, I would like to thank the committee again for 
the opportunity to appear before you, and I look forward to 
answering your questions. Thank you.
    [The prepared statement of Chairman Hood can be found on 
page 97 of the appendix.]
    Chairwoman Waters. Thank you, Chairman Hood.
    Chair McWilliams, you are now recognized for 5 minutes to 
present your oral testimony.

STATEMENT OF THE HONORABLE JELENA MCWILLIAMS, CHAIRMAN, FEDERAL 
              DEPOSIT INSURANCE CORPORATION (FDIC)

    Ms. McWilliams. Thank you, Chairwoman Waters, Ranking 
Member McHenry, and members of the committee and staff, and 
thank you for the opportunity to testify today. I hope that you 
and your families are staying healthy.
    When I appeared before you 6 months ago, we were 
confronting great uncertainty and volatility due to the COVID-
19 pandemic. Many industries and segments of the economy were 
experiencing unprecedented declines in activity, and this shock 
was reverberating throughout the financial system. Although 
there remains considerable uncertainty about the path of the 
economy, the banking system has served as a source of strength 
throughout this period. Banks of all sizes have supported their 
customers and communities, including by originating nearly $500 
billion in Paycheck Protection Program (PPP) loans and 
accommodating more than $2 trillion in new deposits over two 
quarters.
    Today, I will provide an update on five areas in which the 
FDIC has made significant progress: responding to economic 
risks related to COVID-19; enhancing our resolution readiness; 
supporting communities in need; prompting diversity and 
inclusion at the FDIC; and fostering technology solutions and 
encouraging innovation. My written statement provides greater 
detail in each of these areas, but I would like to briefly 
touch on each of them, starting with how we responded to the 
economic risks related to the pandemic.
    Beginning in early March, the FDIC and our fellow 
regulators undertook a series of actions that helped maintain 
stability in financial markets. In addition to providing 
flexibility for banks to work with their borrowers, we made 
many targeted, temporary regulatory changes to facilitate 
lending and other financial intermediation. We continue to 
monitor conditions and receive feedback from supervising 
institutions, and we will consider additional guidance as 
appropriate.
    As the FDIC responded to the immediate impact of the 
pandemic, we also focused on enhancing our resolution readiness 
in several ways. Although we entered the pandemic with a 
historically low number of bank failures, we recognize that the 
absence of failure could not last forever. Accordingly, the 
FDIC approved our resolution-related capabilities by, among 
other actions, centralizing our supervision and resolution 
activities for the largest banks, establishing a new approach 
to bank closing activities to help protect the health of our 
employees during the pandemic, and carrying out targeted 
engagement and capabilities testing with select firms on an as-
needed basis.
    We are particularly mindful that minority and low- and 
moderate-income (LMI) communities have suffered 
disproportionately during this pandemic. Shaped by my personal 
experiences and guided by commitments to increasing financial 
inclusion in traditionally underserved communities, one of my 
priorities as FDIC Chairman has been expanding our engagement 
and collaboration in support of Minority Depository 
Institutions (MDIs).
    One of the options we are exploring is a framework that 
would match MDIs and CDFIs with investors interested in the 
particular challenges and opportunities facing these 
institutions and their communities. We are in the process of 
creating a vehicle through which investors' funds will be 
channeled to make investments in or with MDIs and CDFIs. We are 
still developing the details but expect to release more 
information in the near future.
    The FDIC is deeply committed to fostering a diverse 
workplace and an inclusive work environment. Although we are 
not yet satisfied with our progress or the pace of change, we 
have taken meaningful steps in furtherance of this goal and we 
will not stop.
    The racial, ethnic, and gender diversity of the FDIC 
workforce continues to steadily increase. At the end of 2019, 
minorities represented over 30 percent of the permanent 
workforce, and women accounted for approximately 45 percent. 
The FDIC has also increased diversity across our leadership. 
Minorities hold 22 percent of the management level positions, 
and women hold 39 percent, up from almost 16 percent and 30 
percent, respectively, 10 years ago. Likewise, my senior 
leadership team comprises a diverse set of individuals. 
Notwithstanding, we know more needs to be done, and we are 
fully committed to doing it.
    As we consider additional ways to create a more inclusive 
banking system, we must recognize the tremendous benefits that 
financial innovation can deliver to consumers. Our recent 
biennial survey on household use of banking and financial 
services shows that individuals are increasingly moving to 
digital banking. To enable this evolution, we established an 
office of innovation, FDiTech, and began working on several 
initiatives. Notably, we recently sought feedback on a 
groundbreaking approach to facility technology partnerships 
within banks and fintechs which aims to reduce the cost and 
uncertainty associated with the introduction of new technology 
at an institution.
    Thank you again for the opportunity to testify today, and I 
look forward to your questions.
    [The prepared statement of Chair McWilliams can be found on 
page 112 of the appendix.]
    Chairwoman Waters. Thank you, Chair McWilliams.
    Vice Chairman Quarles, you are now recognized for 5 minutes 
to present your oral testimony.

STATEMENT OF THE HONORABLE RANDAL K. QUARLES, VICE CHAIRMAN OF 
 SUPERVISION, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 
                             (FED)

    Mr. Quarles. Thank you.
    Thank you, Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, for the opportunity to testify today 
on the Federal Reserve supervisory activities.
    My last appearance before this committee in May followed a 
period of historic financial stress. The emergence of COVID-19 
and the measures taken in response added a deep strain of 
uncertainty to financial markets, which prompted a sharp and 
global flight from riskier, more volatile asset classes and a 
retreat to the safety of cash. That retreat demanded immediate, 
extraordinary, and concerted public intervention to ensure 
stability, restore calm, and see the nation through an 
unfolding crisis.
    The Federal Reserve's intervention spanned a wide range of 
intermediaries and markets, including the banking sector. 
Strengthened by a decade of improvements in capital, liquidity, 
and risk management, including the refinement and recalibration 
of the last 3 years, banking organizations became an important 
shelter from financial distress. Our goal was to ensure that 
this shelter stood fast, that banks could respond to the 
emergency and address consumer, business, and community needs 
without jeopardizing their own safety and soundness.
    The report accompanying my testimony lists these actions in 
detail, and we have extended several of them as the COVID event 
has continued. They include temporary adjustments to capital 
and reserve measures, compliance requirements. They include 
offsite examination activity. [inaudible] They clarify beyond 
doubt that safety and soundness are no impediment to working 
constructively with borrowers and other customers in times of 
strain.
    Together with monetary, financial stability, and fiscal 
actions, these regulatory measures helped calm the waters. The 
initial wave of market stress has passed, and the recovery has 
begun much sooner than expected. This speaks to the country's 
tenacity, ingenuity, and spirit in responding to even the 
greatest of shocks.
    The challenge we face now is distinct, formidable, and 
complex. The surprise of the COVID event is gone, replaced by a 
clearer view of its economic consequences. The burdens facing 
households and businesses are better understood, but they are 
no less significant, and they are not evenly borne. I am 
confident that we will work through them together, support 
those hardest hit, and ensure that our economic wounds do not 
become scars.
    The Federal Reserve remains committed to using our full 
range of tools to support the economy for as long as needed. A 
strong, resilient banking system is an essential element of 
such support. A durable recovery demands banks that lend 
actively, confront gains and losses honestly, withstand 
unexpected shocks, and help customers rebuild and adapt. Our 
task as supervisors is to ensure that the country's banks 
continue to meet that exacting standard.
    The Federal Reserve's earliest COVID-related guidance 
encouraging banks to work constructively with the borrowers was 
an important step toward this goal. Since then, working with 
our colleagues in other financial regulatory agencies, from 
principles to guide COVID-related credit accommodation through 
a clearer statement on Community Reinvestment Act consideration 
of COVID-related activities, to steps that make it easier for 
banks to participate in emergency lending programs. It also 
includes the use of flexibility in our stress testing apparatus 
to better understand the effects of the COVID event shock on 
the strength of banking organizations.
    As our report shows, that strength is still intact. 
Liquidity and capital remain high and, indeed, have increased 
at our largest banks over the course of the COVID event. Firms 
have sharply increased their reserves, setting aside resources 
today against possible losses tomorrow. Banks are well-
positioned to serve as a bulwark against broader financial and 
economic stress.
    It is worth recognizing how things might have been 
different. This foundation would not exist after a once-in-a-
century shock, if not for a decade of work by officials and the 
banks themselves to make banks stronger and more stable and to 
make banking supervision fairer, more efficient, and more 
transparent. Those values are not contingent only for an 
economic boom. They represent an ethic and a commitment to 
addressing the most pressing supervisory and regulatory issues 
in the most effective ways that are even more critical during a 
crisis. That ethic has steered the Federal Reserve through the 
last 7 months and will continue to guide us through the 
recovery.
    COVID-19 changed many aspects of the Federal Reserve's 
work. It also affirmed the values and priorities that remain 
the same, those that will continue to guide us in our support 
for the financial system, the economy, and the country long 
after the COVID event has passed.
    Thank you for your time, and I look forward to answering 
your questions.
    [The prepared statement of Vice Chairman Quarles can be 
found on page 130 of the appendix.]
    Chairwoman Waters. Thank you, Vice Chairman Quarles.
    Acting Comptroller Brooks, you are now recognized for 5 
minutes to present your oral testimony.

    STATEMENT OF BRIAN P. BROOKS, ACTING COMPTROLLER OF THE 
   CURRENCY, OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)

    Mr. Brooks. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee and staff, thank you so much for the 
opportunity to update you today on the OCC's work ensuring that 
the Federal banks operate in a safe, sound, and fair manner and 
remain sources of strength for their communities.
    Over the past 8 months, the OCC has supported the orderly 
function of our banking system through an extraordinary time. 
Fortunately, banks and savings associations entered this period 
with near historic high levels of capital and liquidity. Asset 
quality was strong, and the economy had enjoyed the longest 
expansion on record. And then, as part of the national response 
to COVID-19, economic activity was suspended. Regulators at 
this table collaborated to provide banks the flexibility 
necessary for them to use that strength to support their 
customers and to sustain economic activity. My testimony today 
will provide detail on the actions the agency has taken on this 
front.
    Now, today, we continue to monitor the effects of shutting 
down the economy. While banks remain sound, we see potential 
for troubled assets ahead in commercial and residential real 
estate, small business and consumer lending, and travel and 
hospitality sectors. Banks, particularly those with 
concentrations in those assets, must take a sober view of their 
risks and work with customers to the maximum extent possible 
consistent with safety and soundness.
    The recent OCC semiannual risk perspective highlights the 
credit, operational, and compliance risks in the system, which 
we will focus our supervisory efforts on in the months ahead. 
Prudent risk management today can avoid the need for more 
extreme loss mitigation tomorrow. Having said that, we also see 
reasons for cautious optimism about the future based on strong 
third quarter GDP growth, continuing reduction in unemployment, 
strong consumer and small business sentiment, and better-than-
expected news about the near-term availability of effective 
COVID-19 vaccines.
    While the economy and banks clearly face uncertainty as to 
the length and depth of the pandemic's trough, I also want to 
highlight what gives me optimism for the future of banking and, 
frankly, for the future of the country.
    During the social unrest that followed the killing of 
George Floyd this summer, it became clear that the protesters 
were angry, among other reasons, because too many Americans 
have been left out of our national wealth creation engine for 
far too long. The OCC founded Project REACh for just this 
purpose, to convene bankers, civil rights leaders, innovators, 
and business people to promote full, fair, and equal 
participation in our economy.
    The Project is working to eliminate obstacles to credit for 
45 million people with no usable credit score, to expand 
affordable housing for those who cannot afford high down-
payment requirements, and to reinvigorate minority banks that 
serve often neglected communities. And we have now kicked off 
regional REACh efforts, including one serving the greater Los 
Angeles areas, Chairwoman Waters, that you and I both call 
home. And we have hosted events on access to capital and credit 
in places ranging from South Carolina to Colorado.
    I have been humbled by the momentum among the industry, 
community and civil rights advocates, and our staff. Indeed, 
Project REACh has become a movement to tear down barriers so 
that all may pursue their American Dream.
    Another reason for my optimism comes from innovators within 
banks and elsewhere who are excited about improving banking and 
financial services to consumers, businesses, and communities. 
We are seeing new products and better ways of delivering them 
and much more efficient ways of operating. Ultimately, this 
progress will benefit consumers and businesses as people have 
greater choice and more autonomy over their financial well-
being.
    At the OCC, we believe that consumers, businesses, and the 
economy are best served when this innovation can occur within 
the banking system and the system is allowed to evolve as 
consumer preferences evolve. Now, we think this for several 
reasons. First, the banking system is among our most strictly 
regulated and most closely supervised industries. Those who 
fear that innovation may harm consumers should consider the 
possibility that innovation might be safer in a supervised 
environment than it is under the current, largely unsupervised 
one.
    The same is true for those focused on prudential risk. Over 
the last decade, it is clear that large market shares of 
lending and payments have migrated from the commercial banks 
into less-regulated shadow banks. This trend reduces our 
collective ability to spot and manage issues early on. And, of 
course, we should not underestimate the risk of a status quo in 
which incumbents seek protection from competition and, thus, 
delay the delivery of innovative financial services that are 
already available in other parts of the world.
    The OCC has been a leader in this area since coining the 
phrase, ``responsible innovation,'' in 2015. We remain 
committed to encouraging responsible efforts to deliver more 
choice and more economic opportunities in safe, sound, and fair 
ways within the Federal banking system to benefit consumers and 
businesses across the country.
    Thank you again for this opportunity. I am very proud to 
have served as Acting Comptroller of the Currency and to 
support the agency's important mission. I look forward to your 
questions.
    [The prepared statement of Acting Comptroller Brooks can be 
found on page 66 of the appendix.]
    Chairwoman Waters. Thank you very much.
    I will now recognize myself for 5 minutes for questions.
    First, let me just ask each of you about the deregulatory 
efforts that you have made during this pandemic, despite the 
fact that this committee specifically asked you not to do that. 
I won't go into all of the deregulations, but simply, I would 
like to ask each of you, would you commit to freezing these 
deregulatory actions? Let's go right down the row on this and 
ask each of you if you would agree to freeze the deregulatory 
actions that you have taken. We will start with Mr. Brooks.
    Mr. Brooks. Chairwoman Waters, thank you for the question. 
I guess I don't perceive what we have done at the OCC as 
particularly deregulatory. We have regulated a true lender in 
ways that solve the rent-a-charter problem by holding banks 
accountable for their marketplace lending partnerships. We have 
provided lists of community reinvestment activities to make 
clear which things will count. We have fined banks record 
numbers of dollars and fined individual bank executives in ways 
that have never been done before to hold them accountable.
    Chairwoman Waters. Okay. Reclaiming my time here, you are 
saying that no, you don't feel that you have done anything that 
is deregulatory. I hear that.
    Chair McWilliams, what about you?
    Ms. McWilliams. Chairwoman, I am afraid that you don't want 
us to stop, because some of the things that we have done 
actually have ensured that borrowers and consumers, especially 
low- and moderate-income people, can stay in their homes. We 
have done a number of things to either satisfy the role of 
Congress that you implemented through the CARES Act or to 
ensure that our regulated entities have an opportunity to work 
with their borrowers proactively and not have a repeat of the 
2008 financial crisis.
    Chairwoman Waters. Okay. So, you are saying no, also. You 
don't feel that what you have done is deregulatory.
    Vice Chair Quarles?
    Mr. Quarles. Yes. The changes that we have made have been 
designed to ensure that the right incentives are in place to 
ensure we have a resilient financial system. And I think as we 
consider the resiliency of the financial system, we should be 
willing to do what is necessary to keep it safe and sound.
    Chairwoman Waters. Thank you.
    Chair Hood?
    Mr. Hood. Yes, ma'am. All of our efforts have been to 
provide regulatory relief and flexibility so credit unions can 
serve their members during the time of the pandemic. Every 
action I have taken to date is to do things such as providing 
the loan forbearance. In fact, credit unions have now made over 
1.7 million loan forbearance loans to the amount of $55 
billion.
    Chairwoman Waters. Okay. Thank you. If I may interrupt, you 
don't feel that you have done anything that is deregulatory, is 
that right?
    Mr. Hood. Only to aid the credit union member owners.
    Chairwoman Waters. Thank you very much.
    I want to just go now to Chair McWilliams. We talk a lot 
about diversity and inclusion, and I am very interested in what 
is happening with our small banks, some of the community banks. 
Is it true that we have banks that are basically closing down, 
they are leaving banking, or is that just a rumor?
    Ms. McWilliams. Chairwoman, when you say banks closing down 
and--
    Chairwoman Waters. Community banks.
    Ms. McWilliams. Community banks. There has been a great 
consolidation trend for years now. And as you are probably 
aware, we lose about 200 to 220 community banks to mergers 
every year. So, yes, banks or community banking--
    Chairwoman Waters. Of any of those banks that you described 
as having merged, have you had the opportunity to interact with 
Blacks or Latinx about bank ownership and acquisition of banks 
that are being merged?
    Ms. McWilliams. Yes, we have. And, actually, one of the key 
components of our MDI outreach efforts, in pursuit of our 
mandates to preserve and promote them, has been to look at the 
ways that would provide that an entity that is being sold, that 
is either failing or about to be sold--
    Chairwoman Waters. Have you been involved in any 
acquisitions by MDIs or Latinx bankers?
    Ms. McWilliams. We are in constant discussions with our MDI 
banks--
    Chairwoman Waters. Have you been successful at any? Do you 
know of any acquisitions that have been made by MDIs or Latinx 
bankers?
    Ms. McWilliams. Yes.
    Chairwoman Waters. Would you tell me which ones they are, 
please? We don't know of any, and I am really interested in 
this.
    Ms. McWilliams. I would be happy to provide you that 
information. I don't have the information in front of me, but I 
am in active discussions with a number of MDI banks to make 
sure that they have an opportunity to acquire failing MDI 
banks.
    Chairwoman Waters. That is my question, and if you have 
been successful, I want to know about it, because we are 
talking about wealth building and we are talking about opening 
up opportunities that have not been available in the financial 
system. And so, I want to know more about this and whether or 
not you actually have a program by which you will be 
outreaching to ensure that these opportunities are opening up 
to MDIs. So, I want to thank you very much.
    And I now recognize the ranking member of the committee, 
Mr. McHenry, for 5 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman.
    And what I would like to first say to this group of 
regulators is that this committee has followed very closely 
your actions since this unprecedented pandemic has hit this 
country and the world. And I have great confidence that the 
actions that you have taken have made a very challenging 
situation, a very challenging health situation that has become 
a challenging economic situation, that because of your actions, 
we have been able to prevent a financial crisis. And without 
your concerted action, until the final moment that you are in 
your seats, the American people would be in a tougher position 
than they are currently in.
    So what I want to ask you to do and to commit to do is, to 
the fullness of your terms of office, that you do the business 
that you have set out to do to ensure the safety and soundness 
of institutions, that the American people can have confidence 
that their regulators are on the job, watching out for them, 
and taking every action necessary to prevent bad outcomes. And 
so I commend you for that action, but I also urge you to 
continue this good work.
    To that end, the work of the Federal Reserve has been 
foremost in this discussion. And so, Chair Quarles, I want to 
commend you for the actions of the Federal Reserve since March 
especially, but we also need to know this process going 
forward. And so, as I have mentioned before and raised with you 
before, we want a clear understanding of the path forward on 
the London Interbank Offered Rate (LIBOR). This is an important 
rate for a number of financial products, looking at over $200 
trillion notional value for contracts, and we know that LIBOR 
is ending at the end of 2021. So can you give us some assurance 
about your process going forward?
    Mr. Quarles. Yes, I would be happy to do that. The issue 
that you raised, I think, is an important one from a stability 
point of view, which is that there are a lot of legacy 
contracts that current rely on LIBOR, but that we need to 
define a path forward for them after the end of 2021. The 
transition for new contracts is going pretty smoothly. The 
legacy contract is the big issue there.
    I think finding a way to allow those legacy contracts to 
continue for at least some period, to allow the bulk of those 
legacy contracts to mature on their existing terms without a 
significant change, would probably be the best way forward, and 
we are working on a method to do that. There are a variety of 
different ways one could do that, but I would expect over the 
next couple of months to be able to publicly define the way 
forward to address that.
    Mr. McHenry. Thank you, Vice Chair Quarles. And at this 
point, do you have a legislative request or a need for 
legislative action by the Congress?
    Mr. Quarles. I think that the ultimate transition will 
ultimately require some legislative element, but at this point, 
I think the answer would be no, because I think it's good to--I 
think what we want to try to do is find a way to allow those 
contracts to mature before we have a legislative solution for 
the so-called hard tail.
    Mr. McHenry. Yes. Thank you.
    Chair McWilliams, I want to commend you for the action you 
have taken to modernize the FDIC, to focus on financial 
innovation and to use technology to keep your people safe and 
secure, and also, our institutions safe and secure.
    Mr. Brooks, I want to commend you for the actions you have 
taken on OCC's true lender rulemaking to provide certainty and 
clarity on those partnerships that are very important for our 
current economy. Can you, Mr. Brooks, at the top line describe 
how that rule will work in practice and why it is a good thing?
    Mr. Brooks. Ranking Member McHenry, thanks for the 
question. Two quick top lines. First of all, the purpose of the 
rule is to redress what happened in light of the Madden rule, 
which reduced the availability of credit to low- and moderate-
income Americans by as much as 64 percent. And so, allowing 
banks to leverage their balance sheets will solve that. We have 
also addressed the rent-a-charter problem by making clear that 
banks that do those partnerships are accountable for all 
consumer compliance obligations.
    Mr. McHenry. Thank you. Thanks for your testimony. Thank 
you all for being here or being wherever you are. Thanks so 
much.
    Chairwoman Waters. Thank you very much.
    Mrs. Maloney of New York, you are now recognized for 5 
minutes.
    Mrs. Maloney. Thank you, Madam Chairwoman, and 
congratulations on your reelection, and to all of my 
colleagues, it is great to be back in business.
    My question is for FDIC Chairwoman McWilliams. The COVID 
crisis is a threat to our economy. It will not go away until we 
have a vaccine, sto we should be using every tool at our 
disposal to guarantee the safety of our banking system. During 
the Great Depression, over 400 banks failed, and one of the 
most important lessons we learned from that time was the need 
for banks to shore up sufficient capital to withstand severe 
economic downturns.
    And, Chairwoman Williams, my question for you is, given the 
positive correlation between economic downturns and bank 
failures, are you expecting an increase in bank failures at 
this time?
    Ms. McWilliams. Thank you for that question. The bottom 
line is that fortunately, and fortunately for me at this time, 
we entered the pandemic and the related financial crisis caused 
by the government shutdowns with banks very well-capitalized, 
with high liquidity levels, and the lowest number of banks on 
the problem bank list. Thus far this year, we have had four 
banks fail. Historically, when we look at our data, during good 
times, we have about five banks fail a year. So I would say we 
are on trend for just a normal year thus far, which surely 
shows the resiliency of the financial system as highlighted by 
Vice Chairman Quarles in his opening statement.
    We are grateful for the efforts of the banks to shore up 
their capital balances and liquidity during the good times, and 
we are certainly monitoring conditions on the ground to make 
sure that they can do what they need to do. But I also want to 
highlight that I am not sure that we would be in as good of a 
place as we are right now if we did not take a number of 
regulatory actions over the past few months to make sure that 
banks can stay in the business of banking and that, for 
example, loans that were modified for the purposes of the 
pandemic, that were performing before the pandemic, would not 
constitute troubled debt restructuring.
    And if I can just highlight briefly, during the 2008 
crisis, the reason banks were not really eager to modify loans 
up front is because they weren't sure how the regulators were 
going to treat those loans, and they didn't want to have 
nonperforming loans and impaired debt on their books. So, it 
was imperative for us to act quickly and promptly to make sure 
that we have good banks that are serving their communities, 
that consumers can stay in their homes and that, frankly, the 
FDIC doesn't have to jump into action with more bank closures 
than absolutely necessary.
    Mrs. Maloney. Some countries have prohibited dividend 
payments to shield their banks. Do you believe that prohibiting 
dividend payments would help our banks shield them from 
failure, forcing them to hold onto more of their capital?
    Ms. McWilliams. Sure. That's a great question. And I will 
tell you, with respect to small banks, community banks, a lot 
of those banks are privately held. Their investors are friends 
and family. They are local farmers, schoolteachers, et cetera, 
who sit on the boards of those banks and actually have 
ownership in the banking system. So having a blunt cut 
instrument such as just across the board dividend, I would say, 
would probably hurt those communities and the investors in 
community banks.
    We have supervisory tools where we can manage dividend 
payouts if we are concerned about the bank's capital position, 
and we have certainly utilized those tools in the past as 
appropriate.
    Mrs. Maloney. I have a question for Vice Chair Quarles, if 
I have the time. Your latest stress test found that several 
banks could be at risk of reaching minimum capital levels. As a 
result, the Fed banned stock buybacks, but only limited 
dividend payments by the largest banks to safeguard their 
solvency. So given the continued uncertainty of, really, the 
crisis with COVID, do you think that the Fed should have 
prohibited dividend payments entirely?
    Mr. Quarles. During this period, given the capital 
conservation measures that we put in place, the capital 
positions of the largest banks have actually increased even 
while they have been taking record levels of provisions. And we 
are running stress tests currently in light of the events of 
the spring and the effects of that on bank balance sheets in 
order to determine at the granular bank level what we think the 
effects of potential [inaudible] losses might be. So, I think 
we have been in a pretty good position. I think, though, that 
events have demonstrated that the measures we have taken have 
been effective.
    Mrs. Maloney. I believe my time has expired, and I yield 
back. Thank you.
    Chairwoman Waters. Thank you very much.
    I now recognize Mr. Lucas for 5 minutes.
    If Mr. Lucas is not available, I will go to Mr. Posey for 5 
minutes.
    Mr. Posey. Thank you very much, Madam Chairwoman.
    During times of stress for our financial institutions and 
markets, we have the obligation to temper safety and soundness 
so that our potential fears over an event like this pandemic 
will not goad us into adopting such stringent prudential 
standards that we exacerbate the stress. I have the same 
concerns related to the troubled debt restructuring and 
associated accounting standards during our recovery from the 
financial crisis.
    Madam Chairwoman, you and I co-sponsored a bill to address 
these concerns during the recovery from the financial crisis. 
As you know, the bill placed common-sense parameters around 
putting loan modifications, often called troubled debt 
restructuring, or TRD, into nonaccrual status. That status 
negatively impacts capital requirements and it pushes banks 
away from working with customers facing difficulties and more 
toward extreme solutions such as foreclosure.
    I was so pleased that this committee worked together in a 
bipartisan manner to mitigate the impacts of accounting 
practices on troubled debt restructuring in the CARES Act. We 
need to extend that relief for a while longer, though I have 
concerns about tying that extension to sweeping expansion of 
consumer forbearance for a wide variety of credit such as 
credit cards and installment loans.
    As we know, forbearance for one entity in the chain of 
financial transaction creates yet another potential liquidity 
crisis for subsequent people. And we have other bills here 
today, like a treatment of PPP loans, that I believe have 
merit.
    For Mr. Quarles, as I mentioned, there is legislation 
before the committee to extend the pandemic-related relaxation 
of accounting standards associated with the troubled debt 
restructuring. This provision was included in the CARES Act. 
The language allowed banks and credit unions to provide relief 
to consumers and businesses by temporarily removing the 
burdensome troubled debt restructuring classification 
requirement. Financial institutions that will actually take 
advantage of this provision will be required to provide 
forbearance to consumers for a wide variety of loans, including 
installment debt and credit cards. Small businesses will also 
be afforded forbearance for a wide array of loans.
    The bill would impose conditions of how the loan balances 
deferred in forbearance could be repaid. I am interested in 
your candid evaluation. What would be the first concerns about 
such forbearance, if any?
    Mr. Quarles. Thank you. Thanks for that question. I think 
the current forbearance provisions, as you know, obviously, 
will allow any changes that the adjustments were made before 
the end of this year be for whatever length that the bank and 
borrower would agree, so the forbearance doesn't really end at 
the end of this year. It is the ability to make new changes 
that ends at the end of this year.
    I do think that in general, it is good for us to move as 
promptly as possible to regular order where the challenges that 
are facing banks, given the position of their borrowers, are at 
least recognized. So at least what we are seeing right now is 
not a--as banks begin to understand the fact that the 
forbearance that is available under the law doesn't end at the 
end of the year, but simply that they must make their decisions 
by the end of the year. We aren't getting a lot of pressure, at 
least at the Federal Reserve, for that extension, but 
ultimately, that would be a decision for Congress.
    Mr. Posey. Thank you.
    Madam Chairwoman, I have a couple more questions, but by 
the time I ask the questions, there is not going to be time to 
answer them, so I will yield back the balance of my time.
    Chairwoman Waters. Ms. Velazquez, you are recognized for 5 
minutes.
    If Ms. Velazquez is not available, we will go on to Mr. 
Luetkemeyer for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman. I would be 
willing to yield to Mr. Lucas, who is above me in ranking here, 
because I think he missed his mute button a while ago. If he 
has found his mute button, he can take the spot, and I will 
follow up in a moment.
    Chairwoman Waters. Thank you.
    Mr. Lucas, you are recognized for 5 minutes.
    Mr. Lucas?
    Mr. Luetkemeyer. Apparently, he hasn't found the mute 
button yet, but--
    Chairwoman Waters. We will let him continue to look as we 
go on, Mr. Luetkemeyer.
    Mr. Luetkemeyer. Okay. Thank you very much. Thank you, 
Madam Chairwoman.
    Before I begin my questioning, I would like to applaud all 
of you, the regulators this morning, for proposing to codify 
the 2018 interagency statement on guidance and place a binding 
rule on the agencies that supervisory guidance does not have 
the force and effect of law. This has been something that I 
have consistently worked on in Congress, and I look forward to 
continuing to work with you all to draw a clear line between 
rule and guidance and what is enforceable and what is not. So I 
appreciate your attention to that and I look forward to 
continuing to work with you.
    To follow up on Mr. Posey's conversation with regards to 
troubled debt restructuring, I have a bill out there to do this 
as well. And I am very concerned that at the end of the year 
when we run out of--when the CARES Act sunsets, the TDR 
provision that is in there, that regulators will have minimal 
options to--nothing to point to legislatively or any sort of 
other law to say that they can take a different approach on 
this. I can tell you from discussing this with the banking 
industry folks and the credit union folks, that they are very 
concerned about having to rely on guidance, having to rely on 
something like that to make these decisions in order to give 
forbearance to their customers, whether it be for home loans, 
car loans, or their business loans.
    Chair McWilliams, you and I have talked about this at 
length, but just to get you on record here with what we are 
talking about, where are you and what are your plans with 
regards to TDR guidance and how you want to work with your set 
of regulators and the people they regulate, which are the 
banks, and hopefully their customers will be impacted by those 
decisions?
    Ms. McWilliams. Thank you. Thank you for that question. As 
you know from our discussions back in March, I was really 
concerned about loans not being modified and banks being 
concerned about having impaired debt and driven by the examples 
from 2008 where some of these loans, once modified, were 
treated as impaired debt or troubled debt restructuring. They 
are still performing now 10 years later, 20 years later, but 
they are still on the books as troubled debt, which doesn't 
bode well for the bank.
    So driven by that, we have worked with--amongst these 
regulatory bodies here at the table, I would say, but on the 
screen--we have worked with the financial accounting standards 
boards to make sure that our banks can modify loans that were 
performing prior to the pandemic and not have TDRs on the 
books. And then subsequently, Congress enacted similar 
provisions in the CARES Act.
    So I would say that is probably one of the main reasons 
that you have seen homeowners stay in their homes and small 
businesses have access to credit during very, very tumultuous 
months in March and April. And we are certainly open to 
considering what additional actions Congress may come up with 
to make sure that we can enable banks to work with their 
borrowers.
    Mr. Luetkemeyer. Thank you for that. I can assure you that 
the institutions desperately need to have certainty on this on 
forbearance, because if they are not able to get it from the 
regulators, it is going to be very difficult for them to give 
it to their customers. So, we thank you for that.
    Chairman Hood, you had an article, I think last week in 
your Credit Union Times magazine, with regards to Current 
Expected Credit Losses (CECL). And I appreciate that position 
you took, again, indicating that CECL is going to be 
detrimental to the credit union folks. It needs to be done away 
with. It is going to be procyclical.
    And I know, Mr. Quarles, you and I have talked about this 
as well, quite a bit. And we are three quarters into the year 
here now with CECL data. I know the bigger banks, at the very 
beginning of the year, actually had to roll over another 30 to 
35 percent into the reserves, and while that is fine, 
eventually that stresses out the income. So would you like to 
comment on it just a little bit, please?
    Mr. Hood. As you know, we have immediately, as a result of 
the COVID event, extended the transition periods for smaller 
banks. They will be insulated from the capital effects of CECL 
for 2 years, and then a 3-year phasing will begin. I do think 
that gives us the ability to understand what has happened and 
what the implications of CECL are, particularly as we see it 
operating with the larger banks, and we can then make any 
permanent adjustments that we think are necessary.
    Mr. Luetkemeyer. I see my time is up. Thank you very much. 
I appreciate Chairman Hood's position on it as well. I yield 
back.
    Chairwoman Waters. I now recognize Mr. Sherman for 5 
minutes.
    Mr. Sherman. Thank you. I have a couple of comments. 
Ranking Member Luetkemeyer said in his statement that our 
economy grew 33 percent. The more accurate way to say that is 
that we grew 8 percent during the third quarter. I don't know 
if you can extrapolate that. And, of course, that was only a 
halfway bounceback from a terrible second quarter.
    This crisis continues. During this crisis, it makes sense 
to have limits on the stock buybacks and the dividends paid by 
large banks. That is why I wrote you, Mr. Quarles, back in 
early March, urging that you prohibit dividends and stock 
repurchases by megabanks during this crisis.
    You have, in fact, taken some action, and particularly on 
stock buybacks, and I hope that we can count on you to continue 
to limit stock buybacks and dividends as well until this crisis 
is over so that we are not confronted with the need to or the--
at least the asserted need to bail out huge financial 
institutions.
    We have talked about the troubled debt restructuring 
relief, which allows banks to restructure their debt to aid 
consumers and small businesses without being penalized. This 
CARES Act provision expires at the end of this year, though we 
have heard testimony that it could be applied next year to 
forbearance agreed to this year, that there may be forbearance 
agreed to next year.
    So I would ask, Mr. Brooks, do you have the authority to 
extend this loan modification flexibility for loan 
modifications made during the 2021 part of this COVID crisis, 
and if you do, do you plan to exercise that authority?
    Mr. Brooks. Congressman Sherman, thank you for that 
question. These are really important issues. And what I would 
tell you is, there are certain aspects of this where without an 
extension of the CARES Act, we would have statutory inability 
to do certain things, and that is because we are statutorily 
required to hold banks accountable for gap financial reporting.
    On the other hand, we have significant flexibility to 
protect banks from the impact of TDR treatment under various 
categories, and I think we have communicated some of these to 
your colleagues in writing. These include things, for example, 
like determining what TDR impact is immaterial, which is then 
excluded from the gap TDR standards. It also includes things 
like making determinations about when banks would be required 
to refile a call report or not, and so, there are a number of 
things we can do to mitigate effects.
    Mr. Sherman. I hope very much that we will pass additional 
legislation. I know that even before we passed legislation, you 
had a regulation project, which means you had the authority 
before we acted. Hopefully you will have that authority after 
our actions are no longer effective, unless, of course, we are 
able to extend them, which, I hope, the wisdom will perhaps 
arise in the United States Senate. Anything is possible.
    As to LIBOR, we have $2 trillion of legacy LIBOR. Most of 
those instruments do not provide a replacement rate to be used 
in calculating the amount of interest payable once LIBOR is no 
longer published at the end of next year. Some of those 
instruments provide that the lender gets to pick the rate, 
which would be an outrage if you are the borrower, and all of a 
sudden some new rate is imposed on you, and that is why the 
National Consumer Law Center, the Student Borrower Protection 
Group, et cetera, are very concerned about this as is, I think, 
the financial services community.
    I know there is some discussion as to whether legislation 
is necessary. I clearly think it is, in that I don't know how, 
if the instrument does not indicate how interest is to be 
calculated, anything other than legislation could solve that 
problem. I have put forward a discussion draft, and it reflects 
the suggestions of the Alternative Reference Rates Committee.
    What would be the consequence, Mr. Quarles, of simply not 
having any regulatory or legislative solution? Would this 
result in an awful lot of class-action lawsuits, et cetera?
    Mr. Quarles. If there were no solution at all, yes, when 
we--when LIBOR stops, there would be significant disruption. I 
think that there is a way, as I indicated in my answer to Mr. 
McHenry, that we can combine current measures that allow the 
bulk of the existing contracts to mature on their existing 
terms and then save legislation for the hard tail, when we have 
had more time to think about it. That may work best.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Sherman. I think we need to act on it. I yield back.
    Chairwoman Waters. Thank you. I will now recognize Mr. 
Meeks for 5 minutes.
    Mr. Meeks. Thank you, Madam Chairwoman. First, I want to 
thank you, Madam Chairwoman, as well as Ranking Member McHenry, 
for your active engagement on the bills that I drafted, which I 
believe were some of the most impactful bills that supported 
MDIs and CDFIs in a generation.
    Similarly, I want to thank, with an expressed gratitude, 
each of the regulatory agencies present here today who offered 
constructive input into these bills. We haven't always agreed, 
and, in fact, we have had some deep, deep, deep disagreements. 
But I believe with conviction that these bills matter, and that 
the collaborative approach is critical as we seek to redress 
structural discrimination and systemic inequalities that hold 
back too many families across our country. MDIs and CDFIs are 
essential pillars to tackling the systemic problems that we 
seek to solve.
    Chairwoman McWilliams, would you agree that MDIs and CDFIs 
are key pillars to addressing the issues of inequality and 
discrimination in our banking system? And also, I guess, would 
you thereby commit that the FDIC would work actively to 
implement the provisions of this legislation if signed into 
law?
    Ms. McWilliams. Thank you for that question. I will say 
that community banks serve their communities. That is why they 
are called community banks. But, in particular, minority 
depository institutions are at the very forefront of serving 
their communities, and those communities happen to be low- and 
moderate-income people and people of color. So I would say that 
they are not just pillars in their community, but in many 
cases, they are the only vehicle to get financial services for 
the communities that have traditionally been underserved and 
underrepresented in the banking system.
    So we are working very hard to make sure that those banks 
can sustain themselves, that we do what we can at the FDIC to 
make sure that they have regulatory flexibility. And the 
creation of the fund that I briefly discussed in the opening 
statement would hopefully help MDIs and CDFIs get additional 
capital. They really need capital.
    And so, we thought about, we can do a number of things on 
the regulatory side, but they seem to be getting deposits from 
known MDIs, they seem to be getting some assistance on the 
technical side, but they really need capital. So the idea 
behind this fund is to provide resources and have others invest 
into MDIs and CDFIs so that they can continue to serve their 
communities.
    Mr. Meeks. I couldn't agree with you more. And I think that 
your initiatives, which are supporting aspiring minority 
investors in MDIs so that they can strengthen their capacity, 
but it is also the case to strengthen the capacity of MDIs to 
acquire branches or operations of failing institutions.
    Now, I think this is key, because without de novo banks, we 
are on a path to the disappearance of minority banks, which is 
what I am afraid of, because I fear that minority banks and MDI 
investors are being steered solely to the most challenging 
markets or failing institutions.
    Can you elaborate a little bit more on how we can expand 
the number of de novo minority banks and support them in 
expanding and achieving scale? Because we see the numbers 
dwindling, and even as they merge, they dwindle more so that 
there will be less communities or less banks that are available 
throughout the United States of America. So what can we do to 
expand, so that more MDIs are created?
    Ms. McWilliams. That is a great question. And really, your 
question has two components. One is, what can we do to make 
sure that the failing banks, or the branches that are being 
sold off MDI banks go to MDIs, so that those communities 
continue to be served by MDIs?
    And I ran a little bit out of time when Chairwoman Waters 
asked the question, but we have changed the way that MDIs can 
bid and give technical assistance on failing MDIs so that they 
have additional time, they have 2 extra weeks, when we open up 
the books of the failing bank only to MDIs, while known MDIs 
have to wait for their time, 2 weeks later.
    But we want to give them that advantage, that window of 
time for them to analyze and prepare bids for the failing MDI, 
which, frankly, is going to result in more MDIs that are 
failing or selling partially. Their businesses are offered an 
opportunity to go to other MDIs.
    On the de novo front, I couldn't agree more with you. We 
need more new banks, and, frankly, some of these communities, 
rural communities in particular, and MDIs, there just aren't 
enough of them.
    And, so, we have done a number of things at the FDIC to 
ensure that we have changed the way that we process and approve 
de novo applications for deposit insurance, so that there is an 
increased ability in the agility of investors and the 
organizers to have new banks. I would be happy to give you more 
information in detail, as I understand our time here may be up, 
but thank you for that question.
    Mr. Meeks. Thank you. I look forward to following up with 
you.
    Ms. McWilliams. Thank you.
    Chairwoman Waters. Mr. Lucas is recognized for 5 minutes.
    Mr. Lucas. Let's try one more time, Madam Chairwoman. Can 
you hear my voice?
    Chairwoman Waters. Okay. Mr. Lucas, are you available for 
your 5 minutes?
    Mr. Lucas. Yes, ma'am. If you can hear me, I am available.
    Chairwoman Waters. Okay. You are recognized.
    Mr. Lucas. Thank you, Madam Chairwoman.
    PPP is a very important program in my district, and I think 
it is very important to the survival of all businesses across 
this great country. And throughout the course of the pandemic, 
the banking system has served as a source of strength and a 
lifeline for struggling businesses across the country. And 
those banks have played a critical role in supporting small 
businesses through that Paycheck Protection Program 
distributing more than $0.5 billion.
    As a result, many banks are at risk of crossing asset-based 
regulatory thresholds. What discretionary authorities do the 
Federal Reserve, the FDIC, and the OCC have to ensure that 
banks do not face additional regulatory burdens as a result of 
doing the important thing of participating in PPP?
    I first turn to you, Vice Chairman Quarles, and then 
Chairman McWilliams, and then Comptroller Brooks, please, for 
your observations.
    Mr. Quarles. Thank you, and thanks for that question. Yes, 
we have been looking at that issue. I think you are exactly 
right. The various thresholds for the imposition of various 
regulatory measures exist for what are intended to be sort of 
durable and permanent changes in the status of a bank and 
temporary expansion of their positions, particularly in a time 
of stress and when they are supporting their customers. I think 
we need to look at how to address that. We do have the ability 
to provide temporary exemptions for most of these, and we are 
considering doing that.
    Ms. McWilliams. And I would just add to that, to the extent 
that the FDIC has sole authority over some of these things, we 
have already acted, and we will continue to act. I would say 
that it shows that the financial system has served as a source 
of strength. The fact that over $1 trillion of new deposits 
have flocked to banks for each quarter since the beginning of 
the year in Q1 and Q2--we haven't gotten the data yet from Q3, 
and as soon as we have it completed, we will analyze it and 
provide it to the public.
    But we are talking about over $2 trillion. And so what we 
have done at the FDIC is exempt from the deposit assessment any 
assets that have come to banks by virtue of their originations 
of the PPP loans through the Fed Facility. And we will continue 
to work with our fellow regulators to continue to do so.
    Mr. Lucas. Absolutely. Comptroller?
    Mr. Brooks. Congressman, thank you for that question. I 
guess, the other examples I would add on to what has already 
been said are, first of all, we made changes in the way that 
the supplemental leverage ratio was calculated, specifically to 
make it easier for banks to not have capital impacts of these 
kinds of things.
    And in addition to that, there is ongoing interagency work 
across our three agencies to make sure that regulatory burdens 
that get tripped at different asset thresholds starting at $500 
million, get a temporary exclusion of these kinds of assets so 
that banks below $10 billion don't find themselves in a harder 
regulatory climate. We haven't rolled those out yet, but we are 
hard at work on that at the staff level, and I expect we will 
roll that out before the end of the year.
    Mr. Lucas. Ever so briefly, Chairman Hood, can you speak to 
the effect of PPP loans on the credit union balance sheets?
    Mr. Brooks. Yes. All of the PPP loans receive a zero-
percent risk rating in calculating the net worth. And I would 
also add that we, by statute, could only assess Share Insurance 
Fund premiums based on credit union insured shares and not 
assets, so therefore, they don't have an impact on the balance 
sheets as well. And in addition, credit unions originated over 
171,000 PPP loans, so I am glad that we, as a board, were able 
to make those provisions.
    Mr. Lucas. Thank you, Chairman.
    And I want to thank the chairwoman for her indulgence, and 
to thank Ranking Member Luetkemeyer for his efforts to help me 
as I worked through my technical issues.
    I would offer one final thought, and that is, to all of my 
colleagues, be healthy, and be safe. While some of my children 
may think I was around for the 1930 election, on election night 
the Republicans had 218 seats, a majority. By the time Congress 
organized in March, through deaths and special elections, the 
Democrats had a 219-seat majority.
    If a podcast of a nonpartisan news source was correct that 
I listened to this morning, and the difference will be three 
seats, we are in that kind of an environment, 1930 all over 
again. Just a thought to my friends in the Majority and the 
Minority.
    I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much, and we will count 
on those three seats to be there when we need them.
    Mr. Clay, you are now recognized for 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman. And let me say that 
80 years ago was a little while, or 90 years ago was a little 
while for Mr. Lucas and me.
    But my first question is for Vice Chair Quarles. With 
coronavirus cases surging this fall, our economy is still in a 
precarious position. Moody's projects that default rates for 
corporations could rise to as much as 15 percent next quarter. 
States and cities are facing estimated budget shortfalls of $1 
trillion, and New York City recently saw its debt downgraded.
    All of this creates the possibility that financial markets 
will be very volatile, and we may see a return to the 
disruption that we saw in the municipal bond market in March. 
With all of this in mind, do you believe it would be 
appropriate to eliminate the Municipal Liquidity Facility at 
the end of this year?
    Mr. Quarles. The data that you have provided are clearly 
correct, and I agree with that. We are not out of the woods on 
the [inaudible] of the economy. The economy has been coming 
back more quickly than we expected, but the unemployment rate 
is still high. There are still a lot of burdens on small 
businesses.
    So we are looking very closely at what the acquisition 
ought to be with respect to all of the Facilities, including 
the Municipal Facility, at the end of this year. We haven't 
come to a decision yet. The situation continues to evolve, and 
we will make that decision towards the end of the year, but we 
are very mindful of the facts you have cited.
    Mr. Clay. What about the Main Street lending program? Is 
that in the same precarious position or--
    Mr. Quarles. All of the Facilities will expire at the end 
of this year, unless it is ended [inaudible]. I think it is 
true for all of them, certainly the [inaudible]. And so, we are 
looking at all of them, as to this question of whether they 
should be extended or not, and we are very mindful of the 
current environment.
    Mr. Clay. Are small businesses out of the woods yet, or do 
we still have some concerns?
    Mr. Quarles. No, I think there is certainly reason to be 
concerned about the pressures on small businesses. They have 
performed better--the stimulus that was provided in the spring, 
both from the Fed and from the Treasury, has been longer 
lasting than expected, but obviously, it is not going to last 
forever. I think that households are probably in better shape 
than small businesses, as you look at the economic performance 
currently. So, again, those are issues that we are looking at.
    Mr. Clay. Thanks for your response.
    Mr. Hood, can you tell us what your agency is doing--and 
this is a follow-up to Mr. Sherman's question--to encourage 
your credit unions to do all that they can to help consumers 
and small business owners that need forbearance on their 
obligations?
    Mr. Hood. Credit unions have a long history, for almost a 
century, Representative Clay, of helping their member owners 
during times of adversity. We are encouraging our credit unions 
to do just that. I'm very proud of the fact that they have, to 
date, already been able to provide over 1.7 million 
forbearances, up to a total amount of $55 billion.
    We continue to let them also know that in addition to our 
encouragement to help their member owners, that they will not 
have any of these actions held against them when our examiners 
come to do their examinations in the year ahead. That gives the 
credit unions great certainty in knowing that they will not be 
penalized for taking prudent and pragmatic approaches to 
helping their member owners survive this challenging 
environment.
    Mr. Clay. Thank you for that response.
    Ms. McWilliams, is FDIC--are they doing anything to 
encourage your institutions to help small business owners and 
families with their forbearance obligations?
    Ms. McWilliams. Absolutely. We have done a number of things 
to encourage our financial institutions to work with their 
borrowers, and we have instructed our examiners to show utmost 
flexibility when they are looking at the books of these banks 
for the next exam.
    We have done a number of things to make sure that the PPP 
loans, as we discussed earlier, get processed for small 
businesses. We have issued a statement on the use of 
alternative data, which should help small businesses that 
usually have trouble getting traditional credit reporting 
metrics, et cetera. And I am happy to provide you additional 
information on what we have done.
    Mr. Clay. I see my time has expired, Madam Chairwoman, and 
I thank the witnesses for their responses.
    Chairwoman Waters. Thank you very much.
    Mr. Barr, you are recognized for 5 minutes.
    Mr. Barr. Thank you, Madam Chairwoman. It's good to see all 
of my colleagues, and I look forward to seeing all of you in 
person next week.
    Chair McWilliams, according to a recent study by the FDIC, 
citizens in rural communities are much more likely than people 
in urban or suburban areas to visit bank branches for their 
financial needs. Unfortunately, those branches are becoming 
scarce in rural communities across the country. A recent Fed 
study found that a total of 794 rural counties lost a combined 
1,553 bank branches over the last 8 years, a 14-percent 
decline. And I worry that this decline has only accelerated as 
a result of the pandemic.
    And while more and more people nationwide are turning to 
online banking and mobile banking, this trend is slower among 
the rural population because of a diminishing number of not 
only bank branches, but also the lack of adequate broadband 
internet, which reduces their access to safe and reliable 
banking services. I have introduced bills to combat both of 
these issues, but the problems are exacerbated by the pandemic.
    So, Chair McWilliams, given this data, how has the pandemic 
affected rural populations' access to banking services compared 
to their urban and suburban counterparts? And what can Congress 
do to ensure rural populations aren't cut off from the banking 
system?
    Ms. McWilliams. It is an excellent question, Congressman, 
and, frankly, it is a question that we have struggled with for 
some time, recognizing that there is rural depopulation as more 
of the, I would say, younger folks are moving to urban areas 
where there are more jobs.
    And I have done extensive outreach with our rural bankers 
to make sure I understand what is going on in those 
communities. Frankly, we don't have good metrics yet on the 
impact of the pandemic on the rural bank branches and banking 
services. We are hoping to do that postmortem, when we are past 
the dire straits.
    But I would say that I have heard anecdotally that rural 
communities, in particular, have been hard-hit, not only by the 
pandemic itself, but that the economic shutdowns have affected 
them disproportionately, because there is a smaller number of 
businesses operating in those communities per capita. So when 
those businesses close, fewer people are able to get the 
benefit of being able to visit that business, and the ability 
of the workforce to get paid.
    So I would say that anything that Congress can do to help 
rural communities in their time of need would be welcome, in 
the banking sector in particular. We will continue monitoring 
where we have branch closures. We will continue thinking about 
innovation and how technology and innovation can serve those 
communities, especially in areas where there is a single bank 
branch or no branch at all.
    And we certainly think there is an opportunity for the 
Community Reinvestment Act to focus on these issues, as was 
done in the proposal that the FDIC joined the OCC on. And 
certainly, with broadband issues, we have highlighted that 
there should be CRA credit given for the broadband access 
expansion in rural communities so that banks know this, as 
well.
    Mr. Barr. Yes, that is a great idea, Chair McWilliams.
    And I noted Chairman Meeks' interest in the de novo charter 
issue. I want to work with him in a bipartisan way. Maybe we 
can combine my interest in rural banks and his interest in 
minority depository institutions, and do some good for all of 
these banking deserts.
    Acting Comptroller Brooks, you and I have discussed this 
topic at length. I look forward to welcoming you to Kentucky 
next month to discuss access to capital in rural areas with 
community lenders and lenders in my district. How have the 
OCC's efforts, since the onset of the pandemic, including the 
updated CRA, attempted to mitigate the negative impacts of 
COVID on rural communities?
    Mr. Brooks. Congressman, thank you for the question. And as 
a two-time Kentucky Colonel, I am excited to come home to the 
Bluegrass State and do that event with you, so thank you for 
the invitation.
    I would say there are two things that we can do together on 
this to make an impact quickly. The first is picking up on what 
Chairman McWilliams just noted, and that is, one of the main 
points of our CRA reform was to make lending and investment in 
rural communities a more attractive financial proposition for 
banks.
    And so, what we did in the CRA reform that had never been 
done before, is we allowed banks to count loans made in small 
family-farming communities toward their CRA obligations, 
regardless of whether those areas were in their geographic 
assessment areas. So all of a sudden, we have used regulatory 
power to make those loans more economically attractive to banks 
that have ignored those communities for far too long.
    And then the second thing, as you and I talked about, is it 
has simply taken too long to approve any kind of bank charter 
over the last 10 years, whether it is de novo in rural America, 
whether it is an MDI in an inner city somewhere or any other 
kind of bank.
    And so, one of the things we have done inside the OCC in 
the last 6 months is to develop a new process designed to cut 
the timeline for getting bank charters in half from an average 
of about 18 months to an average of about 9 months. Once we can 
do that, I think you will find that organizers of banks in 
small-town Kentucky will have a much easier time seeing an end 
date for that and getting it across the line.
    Mr. Barr. Thank you. My time has expired. I look forward to 
seeing you in Kentucky next month.
    Mr. Brooks. Thank you.
    Mr. Barr. I yield back.
    Chairwoman Waters. Thank you.
    I now recognize Mr. Green for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman, and thank you also, 
Mr. Ranking Member.
    I would like to visit with Mr. Brooks for just a moment. 
Mr. Brooks, you have your Project REACh, and within Project 
REACh, you have an alternative credit-scoring initiative. With 
reference to this initiative, I have some information 
indicating that you have said that you find promise in factors 
such as, do other people in your ecosystem or family have 
homes. I am curious as to how this will aid a person in paying 
bills. Could you kindly give me a response?
    Mr. Brooks. Sure. Congressman, there is nothing in Project 
REACh remotely about that. I have been asked questions in media 
events about the way that artificial intelligence in the future 
could be used to assess people's creditworthiness, and I have 
speculated that there are unknown factors, social factors and 
others that might be predictive.
    Project REACh has nothing to do with that. What we are 
looking at in Project REACh is the inclusion of rent payments, 
utility payments, and bank cash flow data as a way of including 
people in the credit system and, especially in the wealth-
building system where they have been excluded for years.
    And I would just comment that of the 45 million Americans 
who don't have a credit score, Blacks are about 10 times as 
likely as Whites relative to their proportion of the population 
to not have a credit score. So we think finding a way to 
predict creditworthiness, particularly for African Americans, 
is one of the most important things we are doing at the OCC 
today.
    Mr. Green. Thank you very much. I am pleased to have you 
clarify, and sometimes people do make mistakes in reporting on 
this. I have, on many occasions, had this happen to me.
    I am also very pleased to hear you mention rental payments. 
Would you also include light bills, gas bills, phone bills? All 
of these things, if they are paid timely, would be indicative 
of a person's ability to not only be responsible, but also to 
meet obligations. Your thoughts?
    Mr. Brooks. Absolutely. This is an issue I have been 
working on for 25 years in my career, and it is a travesty that 
it has taken us this long to realize that a person's payment of 
a recurring obligation is predictive of their likelihood of 
paying a mortgage. So we need to fix this, and I think it is 
easier than people thought. I think we are going to be able to 
fix this quicker than people would believe.
    Mr. Green. My hope is that you will get it repaired as 
quickly as possible, since you seem to have a good sense of 
what it is all about, and I appreciate it greatly.
    I have some legislation, H.R. 123. It is styled the, 
``Alternative Data for Additional Credit FHA Pilot Program 
Reauthorization Act.'' And I would like to commend it to you. I 
would like to get this to you for your perusal, because I am 
interested in your input. Would you allow me to do so, and I 
will see if I can get the appropriate person on your team to 
get this to you?
    Mr. Brooks. Congressman, I wish you would, and I would love 
to talk to you about that personally when you have an 
opportunity.
    Mr. Green. I promise you, we will have that conversation 
and it means a lot to me.
    Now, let me go on to the MDIs, the minority depository 
institutions, if I may. I make it my business to try to 
understand what is happening with them, and a lot of what is 
happening with them is the lack of capital. It is true. But 
also, they have very small staffs, and when the OCC comes in to 
do what you normally do in terms of testing, it takes up a lot 
of the time that they have.
    I am really interested in finding out how we can streamline 
this process so that it doesn't take up all of the time of the 
few people that they have who are having a hands-on experience 
with making the loans, so that they can stay in business while 
you are there doing what you do as a regulator?
    Mr. Brooks. This is a real conundrum, and I think there are 
two or three different prongs to the solutions. The first is, 
let's just talk about their small staffs for a moment. That is 
absolutely one of the reasons that MDIs fail at a rate far 
exceeding the rate of normal banks.
    And that is why in our MDI component of Project REACh, one 
of the issues we have asked big banks to pledge as part of 
their participation is not only that they will fund capital 
inside of these institutions, but that they will also do 
management rotations and exchange programs so that big banks 
can send some of their employees to work inside of MDIs, not 
only so they can learn about MDIs, but so that they can provide 
boots on the ground in a way that they don't have today. That 
is a critical component of success.
    The second thing has to do with, it is far too hard for 
banks and especially small banks to onboard technology 
solutions to outsource some of the functions that they now do 
manually. We have seen this as an issue in our vendor 
management guidance where it takes forever for banks to do 
that, so we will make that easier as well.
    Mr. Green. My time is up. I have another question, but, 
Madam Chairwoman, I do thank you for your kindness, and I yield 
back.
    Chairwoman Waters. You are very welcome.
    Mr. Hill is now recognized for 5 minutes.
    Mr. Hill. Thank you, Madam Chairwoman.
    My best wishes to all of my colleagues. I look forward to 
being with you next week, and thanks for this excellent panel 
on a very timely set of topics.
    Mr. Quarles, let me start with you and talk about Central 
Bank digital currency, not something in your bailiwick per se, 
but very important to financial services and the regulated side 
of our sector, as well as our economy and American 
competitiveness.
    Dr. Bill Foster and I wrote to Chairman Powell back in 2019 
about, is the Fed considering a digital dollar, and we got a 
note back from Chairman Powell about a month later saying, 
``Not really.'' But since that time, Fed Governor Brainard and 
others have become very active in thinking through the idea of 
a digital dollar, and, of course, your colleagues around the 
world are heavily focused on this.
    Could you give us an update of what changed? Why is the Fed 
now recognizing that a digital dollar is an appropriate 
priority for the Central Bank?
    Mr. Quarles. I think it would be accurate to say that 
understanding the implications of Central Bank digital currency 
is something that we have always been focused on at the Fed. It 
is fair to say that focus has increased over the course of last 
year. It has increased internationally.
    I think we have seen with some of the proposals from a 
variety of quarters for different types of payment systems that 
have raised some regulatory and supervisory issues 
internationally, that has put a premium on our tending to our 
own payment system, and a Central Bank digital currency could 
be a part of that solution. So, we are actively engaged in 
understanding this.
    I still think it would be premature to say that we believe 
that this is a solution that the United States would need to 
implement. We are doing a lot of research. We are weighing the 
pros and cons. We have pilot projects in place. And the 
international study of this is picking up as well. The 
Financial Stability Board (FSB) will also be looking at this. 
But this is still in the early stages. It is a very important 
issue. But I wouldn't say yet we have changed our stance, and 
now believe that it is something that the United States needs 
and it is a question of when.
    Mr. Hill. I certainly agree it is not imminent, but it is 
certainly a matter of national security as the world preserves 
currency, that we consider it. And I commend you for the work 
that your team is doing with MIT. I think that kind of research 
is important. But I do believe that this is a critical element 
for American competitiveness in the years ahead, and I want to 
urge on the work of the Fed's team.
    Let me switch gears to my friend from Missouri, 
Representative Clay's, line of questioning about the Section 
13(3) Facilities and the use of the Treasury's Exchange 
Stabilization Fund. I heard your answer, but I just want to be 
clear, so let me ask it a different way: Will the Board of 
Governors and the Treasury Secretary ask Congress, by some date 
here just in the next few days, for legislative authority to 
extend the CARES Act exchange stabilization funding?
    Mr. Quarles. That is not something that we have decided 
yet, but we are actively considering the pros and cons of that.
    Mr. Hill. Do you think that the Fed and the Treasury have 
adequate resources since the economy is reopening, and there 
has been very little significant uptick since the height of the 
crisis back in March on those Facilities, do you think you have 
sufficient resources under existing 13(3) powers, and the Fed 
with their existing non-CARES Exchange Stabilization Fund? Do 
you think that could be sufficient as you look at 2021?
    Mr. Quarles. We don't need new congressional authority to 
extend the Facilities. It is an existing law that we can extend 
them. And I am sure you are all aware that there are 
significant unused resources currently for the Facilities they 
have. They have served a very useful purpose, but principally 
as a backstop to private sector activity. But it really would 
be, I think, a decision for Congress whether those amounts 
should be supplemented.
    Mr. Hill. I look forward to following up with you on this. 
Thanks for your time. I appreciate the panel.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you. And I will now recognize Mr. 
Cleaver for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. And I would like 
to just say how pleased I am that you will be the Chair of this 
committee for another 2 years.
    But let me go on and follow through on some questions that 
actually, Mr. Clay, and I think, Mr. Green, already spoke of. 
But, Ms. McWilliams, thank you for your willingness to serve 
our country, first and foremost. And some of you will be going 
on after January 20th in your positions. There is some overlap. 
And you are one, Ms. McWilliams.
    Before I left my apartment here in Washington this morning, 
we looked at the cases of COVID around the country, and I 
looked at the midwest, where I live in, Kansas City, Missouri, 
and Missouri and Kansas are both blood red in terms of the new 
cases. It is frightening. I have just been meeting with our 
hospitals, trying to figure out if we need to prepare for field 
hospitaling in our City.
    So, it is a big issue. And we had over 700,000 people file 
for unemployment. And based on conversations with Fed 
officials, I understand that unemployment declines may 
represent people completely dropping out of the workforce.
    So when you consider all of these things, and how we need 
to have a strong fight against COVID and trying to also recover 
the economy, are you involved in any way at this point in some 
kind of engagement with the Biden-Harris transition team so 
that the FDIC can play its historic role, have it continue 
without any disruption?
    Ms. McWilliams. Congressman Cleaver, thank you for your 
kind words, and I am grateful for your service as well, and I 
look forward to seeing you in the next Congress.
    But I will say that we have abided by all of the 
requirements of government agencies that are imposed on us, and 
we have certainly engaged to the extent that is feasible and 
possible with planning, et cetera, for the new Administration 
starting in January. I have not had any discussions with the 
Biden transition team.
    Mr. Cleaver. Okay. I am troubled by the fact that--we need 
to have a seamless move in some of these important areas, and, 
of course, the FDIC is one of those critically important 
institutions. Let me ask you, are you preparing for a 
transition in terms of being able to present the new 
Administration with information that would allow for the 
seamless transition that I think all Americans, regardless of 
their political stripe, would like to see? I don't want you to 
ignore--I am a little frustrated because I am not sure I 
understood what you just said. Are you preparing for the 
transition? Let me just ask you that.
    Ms. McWilliams. I can assure you, Congressman, that any 
transition to the new Administration is going to be seamless. 
None of our critical functions are going to be affected. We 
stand ready to work with whomever is in the White House come 
January, and you have my commitment that I will work with 
whomever is on my board, and I intend--I will even share this 
with you, I intend to fulfill the remainder of my term.
    Mr. Cleaver. Okay. Let me move on. Mr. Quarles, let me 
follow up on something that my long-time friend and colleague, 
whom I will miss dearly, William Lacy Clay, with issues that he 
raised earlier about expanding the lending programs for the 
Federal Reserve and Treasury. I am a former mayor, and so, I 
have always--oh, my goodness. I guess my time is up. I'm sorry.
    Thank you, Madam Chairwoman. My time expired. I heard the 
beep, so--
    Chairwoman Waters. Yes, your time has expired, Mr. Cleaver. 
Thank you very much.
    Mr. Emmer, you are now recognized for 5 minutes. Is Mr. 
Emmer available?
    If not, we will go to Mr. Loudermilk of Georgia for 5 
minutes. You are recognized. Mr. Loudermilk? Is Mr. Loudermilk 
on the platform?
    If not, we will go to Mr. Mooney for 5 minutes.
    If Mr. Mooney is not available, we will go to Mr. Davidson 
for 5 minutes.
    Mr. Davidson. Thank you, Madam Chairwoman.
    And I thank our guests for your work in this tough field, 
and really a period that has seen some important steps by the 
people represented here today. So, without spending much time, 
I want to get to as many as I can.
    Acting Comptroller Brooks, I want to commend you for the 
work you have done promoting innovation at the OCC, 
particularly within the digital asset space. I am particularly 
encouraged by the OCC's July interpretive letter related to 
banks being able to provide custody services for digital 
assets, especially focused on holding the unique cryptographic 
keys.
    I appreciate the approach, and it echoes custody language 
in my bipartisan bill, the Token Taxonomy Act. Action by the 
OCC was much-needed, especially as States such as Wyoming, have 
already provided legal clarity, for example with the special 
purpose charter for Kraken Financial.
    My main concern within this space is that we do not have 
sufficient legislative clarity and regulatory clarity that will 
enable digital assets to truly be adopted and to provide the 
safeguards that markets and consumers and investors need. Do 
you believe that digital assets could benefit from the 
certainty that comes from legislation signed into law? In 
particular, could you address this with respect to the custody 
issue?
    Mr. Brooks. First of all, Congressman, thank you for the 
question, and I have always appreciated your deep engagement on 
these issues going back many years together.
    What I would tell you is, on the custody side, I think that 
clarity around what constitutes a qualified custodian and what 
assets are permitted to be custody would be a good thing. And I 
think as you noted in your Token Taxonomy Act, and which some 
companion legislation kicking around has also recognized, there 
is a lack of securities law clarity that needs legislation.
    At the same time, what we have concluded at the OCC, and 
this is work that began long before I got here, is that digital 
assets are analogous to other kinds of assets that have entered 
the system over the years and that the banking system normally 
has been the vehicle for transmitting that stuff across the 
system.
    And so, picking up on a discussion that Congressman Hill 
and Vice Chair Quarles had just a few minutes ago, your basic 
view is that blockchains are essentially private payment 
networks. There are other private payment networks in the 
world, like the Automated Clearing House (ACH) system. That is 
a private payment network. It is just owned by a very small 
number of big banks, and it is only open to banks, versus 
blockchains are payment systems that anybody can join, right. 
They are open for everyone. They are free and equal to 
everyone, and in that sense, may be superior, in other ways, to 
existing networks.
    That is really what our work in this space is about, is the 
recognition that what crypto and blockchain are fundamentally 
about is changing the way that people interact with each other 
in the world of finance in the same way that the internet 
changed the way that people interact with each other for 
internet information.
    And so, I would thank you for your leadership on that. I 
think that securities clarity and custody clarity would be 
great as an act of Congress, but I also think that the OCC has 
a fair amount of existing statutory authority to clarify banks' 
role in that overall part of the financial ecosystem.
    Mr. Davidson. I agree with your viewpoint, and thanks for 
really clarifying what you are doing and how you view it. I 
hope my colleagues will take note that there really is 
underlying support for this, that is not partisan. And I am 
encouraged by the recent--some of the hearings that we have had 
in the FinTech Task Force.
    So I hope we can continue that progress, and maybe even 
codify some of this into law. And as you alluded to, securities 
law, there is certainty that is desperately needed there, and, 
frankly, sometimes I feel like the SEC is wandering further off 
course. Hopefully, Hester Peirce will continue to be a voice of 
reason and people will listen to her more clearly, going 
forward.
    So, thanks for that. I do have to move on to a couple of 
other topics. We recently launched the Sound Money Caucus with 
some colleagues, and we are at a period where we are printing 
money. We are not really borrowing it truly. We owe it. It is 
borrowed in that sense. It counts as debt. But inherently, that 
dilutes the value of all of the other money.
    So, Vice Chair Quarles, what is your level of concern about 
the long-term consequences for America's debt, and in a related 
topic, the size of the Fed's balance sheet? How will we know 
when we have crossed a limit where we could really undermine 
the essential liquidity that was able to be provided? We 
provided some stability. These are all good things. But in the 
long run, isn't there a level of debt that would be concerning 
for you?
    Mr. Quarles. I think history would show that for any 
country, there is a level of debt that should be concerning. 
The United States is in a special position given our wealth and 
our status as a reserve currency. So I don't think that is upon 
us soon, but that is definitely something that as we look at 
the overall economics and financial situation that we face 
[inaudible].
    Mr. Davidson. Yes. Thanks, and it is hard to state 
specifically but, the consequence of some of the growth of the 
Fed's balance sheet is a related way. It was a lifeline, and I 
think will be a case study for years on the value of a Central 
Bank in a time of crisis, the last part of March. But there are 
a lot of regulatory policies that are having some real economic 
distortion, and I look forward to working with you and others 
there. Thanks for your work and I wish we had more time to 
collaborate. And I yield back.
    Mr. Perlmutter. I think I am up next, but I have to get 
recognized first.
    Okay. I will begin.
    To our panel, thank you very much for your service at this 
difficult moment in American history. I think that the banking 
system and the financial system has proven itself strong, but I 
would just state to everybody, we are not out of this. And in 
Colorado, just as in Kansas, we have seen a terrible spike in 
the infection rate. A month ago, less than one in 1,000 had the 
infection. Two weeks ago, we were at less than one in 300; and 
last week, one in 200.
    Madam Chairwoman, I went ahead and started, if that is okay 
with you?
    Chairwoman Waters. Yes. We had a little technical 
difficulty. Thank you for getting started. Go right ahead. You 
have 5 minutes.
    Mr. Perlmutter. Okay. And so, the infection rate now is 
less than 1 in 100 in Colorado. Our hospitalizations are higher 
than they have been at any time since the beginning of this, 
and we had terrible hospitalization rates back in March and 
April. Our death rate is starting to rise again, and we thought 
we had this in hand. This virus is a very nefarious, insidious 
thing.
    And so, to the regulators and to my colleagues, I would say 
we are not out of this. And as strong as it has been, I think 
that this pandemic is not over, and it will have a long tail.
    Madam Chairwoman, I would like to offer a letter from the 
Mortgage Bankers Association and other industry partners to be 
submitted to the record.
    Chairwoman Waters. Without objection, is is so ordered.
    Mr. Perlmutter. Thank you.
    One of the things that Mr. Luetkemeyer and a number of my 
colleagues have mentioned is that we took certain steps in the 
CARES Act to make sure that there could be flexibility from the 
regulators to the banks, from the banks to the borrowers, the 
landlords, for instance, from the landlords to the tenants. And 
I think that flexibility is going to have to remain in place.
    For instance, we limited the troubled debt restructuring 
kinds of assets to 6 months for modified loans, and only 
through the end of the year. So I would ask all of the 
panelists, do any of you plan to update this guidance to allow 
these COVID loan modifications to extend beyond 6 months, and 
extend well into next year, given the state of the pandemic? 
And I will start with you, Chair McWilliams.
    Ms. McWilliams. Certainly, and thank you for that question. 
We have worked hard to reach a compromise with the Financial 
Accounting Standards Board (FASB), and I would say we are 
willing to do--I can't speak for others, but I will say, I am 
willing to do what it takes to make sure that our banks can 
continue to be strong and resilient and that homeowners and 
small businesses can continue to have access to credit to stay 
in their homes and operate their businesses.
    As with many, many other things, it takes two to tango, and 
in this case it takes a village of us, and you only have a part 
of that village here on this panel. We will have to work with 
FASB to make sure that they also are willing to accommodate the 
extension of what we have agreed to back in March.
    Mr. Perlmutter. Thank you.
    Mr. Brooks, how about you?
    Mr. Brooks. Congressman, thanks for the question. I echo 
what Chair McWilliams says, and I guess I would go a little bit 
further and say that I think that accounting treatment is just 
one part of the puzzle for banks.
    In our world, one of the most important exposures is on the 
residential mortgage side. And those large banks that I have 
spoken to, specifically about how they are doing loan 
modifications and forbearances, tell me that they learned a lot 
from the Home Affordable Modification Program (HAMP) coming out 
of the financial crisis, and they understand that even 
irrespective of accounting treatment, it is better to maximize 
the net-present value of these loans by keeping existing 
borrowers in those loans as long as there is a future ability 
to repay.
    So I think that there is a commitment on the part of both 
banks and regulators to work there. But on the technical issue 
of TDRs, there is some more to do so with FASB, I agree with 
that.
    Mr. Perlmutter. While we are on that subject, in the Health 
and Economic Recovery Omnibus Emergency Solutions (HEROES) Act 
that we proposed, we had some substantial housing assistance 
pieces in there. My concern is, and I would ask how you look at 
this from a regulatory standpoint, we have forbearances, or we 
have moratoria on evictions. But then these tenants are going 
to have to come up with several months' worth of rent. How do 
you analyze that? Do you think they are going to be able to do 
that without assistance from us, the United States Government?
    Mr. Brooks. Congressman, I would say rent is a little bit 
more complex than mortgage. I think the good news is in the 
CARES Act, it was fairly clear on the mortgage side that when a 
borrower comes out from forbearance, the loan is contractually 
current on the first day out of forbearance.
    Mr. Perlmutter. Yes, but let me stop you. But the landlord 
is eventually going to have to pay the bank, and you are 
eventually going to have to analyze that bank.
    Mr. Brooks. Yes. That is my point, that rent is more 
complicated, and I think it is worth looking at it 
legislatively, as you say.
    Mr. Perlmutter. Okay. Thank you.
    And thanks, Madam Chairwoman, for the time. I yield back.
    Chairwoman Waters. Thank you.
    Mr. Emmer, you are now recognized for 5 minutes.
    Mr. Emmer. Thank you, Madam Chairwoman, for hosting this 
important hearing during this uncertain time. As we close out 
the 116th Congress, we have a lot to be thankful for because of 
the nonpartisan efforts to educate and inform Members on the 
financial technology issues on the FinTech Task Force. I want 
to take a moment to thank Representative Lynch for his efforts 
in leading the task force.
    As we have seen over the past 2 years, fintech issues are 
only rising to higher prominence. It is my hope that next 
Congress, we will continue that nonpartisan dedication to 
fintech issues, whether that be on the task force or an even 
stronger focus on the issues through perhaps a subcommittee. 
One thing is for sure, the opportunities that fintech 
innovations present for all Americans and, indeed, the entire 
world are not going away. Thank you to both sides of the aisle 
for their ongoing focus on these issues.
    And thank you also to Vice Chairman Quarles, Chairman 
McWilliams, Chairman Hood, and Acting Comptroller Brooks for 
all of your work over the past couple of years. In particular, 
Mr. Brooks and Chairman McWilliams, you have both demonstrated 
a strong commitment to crafting a regulatory environment that 
encourages innovation and growth in the fintech space. As we 
know, with more competition, products, and services in banking, 
the American people are afforded with more choice, fairer 
prices, and control over their financial future.
    Chairman McWilliams, thank you for dedicating resources to 
developing a financial technology strategy that works with 
industry to craft smart and considerate regulations for 
financial technology, allowing more consumers to access the 
banking system. And, Mr. Brooks, thank you for providing the 
necessary certainty for banks to provide custody of 
cryptocurrency assets, and all you have done to ensure that the 
Federal Government remains supportive of new technologies and 
is capable of adapting regulations to suit our country's 
continuing investments in innovation. I am hopeful that 
additional regulators will come on board and provide support 
for these technologies.
    Vice Chairman Quarles, Chairman Powell informed us in a 
previous committee hearing that private sector individuals and 
innovations may not have a place in the Fed's consideration of 
a digital dollar. This is concerning. So far, private actors 
have been responsible for the entirety of these innovations and 
are advancing implementation of these technologies with or 
without the Fed. I urge the Fed to make additional efforts to 
make public their considerations regarding the digital dollar 
and to involve private sector innovators to craft a digital 
dollar that is sound, safe, and protective of individual 
privacy.
    Acting Comptroller Brooks, during your short but impactful 
tenure at the OCC, you have made extraordinary inroads into 
providing guidance necessary for OCC-regulated financial 
institutions to engage with digital assets such as Bitcoin and 
Stablecoins. What difficulties or obstacles do you encounter 
when promoting regulatory or supervisory guidance related to 
digital assets to OCC-regulated financial institutions, and how 
can that be improved? And I guess when you are done answering 
that, I have a couple more for you.
    Mr. Brooks. Congressman, first of all, thanks so much, and 
thanks so much for your partnership on this over the years. I 
really do appreciate your vision, and it is great to be part of 
this team.
    What I would tell you is on the institution side, there are 
very few impediments. You can see that very, very shortly after 
we gave our guidance on crypto custody, the nation's largest 
bank, JPMorgan, announced it was going to launch a crypto 
custody business in partnership with Fidelity Digital Assets, 
which is the crypto arm of Fidelity Investments, a company that 
we are all familiar with. This recognizes the fact that 
somewhere between 50 and 60 million Americans own this stuff. 
And some of us might be excited about it, and some of us might 
be less excited about it, but the point is, a gigantic 
proportion of our society believes it is the future for various 
reasons. That part is important.
    I think the other thing that is a bit of a challenge is, as 
a country, we haven't yet recognized the important 
competitiveness aspect of this. When you see that China has 
already issued the e-Renminbi--China has adopted a digital 
currency of their national fiat currency that is now 
transacting on a blockchain--and in this country, we are still 
years away from a national real-time payment system, I come to 
the conclusion that you come to, which is that the best 
solution is to win the way America has always won, by 
unleashing the power of our innovative, dynamic, risk-taking 
private sector. We have built private Stablecoins in this 
country that already have a market cap in the tens of billions 
of dollars. These things are transacting daily, they are 
growing rapidly, and they are used for broad commercial 
purposes.
    I don't think, in this country, we need to wait to build a 
command and control government solution. I think the private 
sector is on it, and I think the role of the regulators on this 
panel is to provide a framework to make sure there aren't bank 
runs or other problems that consumers would be affected by. I 
am sorry for eating up your time.
    Mr. Emmer. That is okay. Thank you. I look forward to 
continuing the conversation.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Mr. Himes, you are recognized for 5 
minutes.
    Mr. Himes. Thank you, Madam Chairwoman, and a hearty 
welcome back to my colleagues on the committee. I look forward 
to working with you. And welcome to all of our regulators. It 
is good to see you, too.
    I cut my teeth in the Congress starting in 2009, when we 
were experiencing a just brutal meltdown of another type, very 
different, of course, than what we are seeing today. But I 
think what we are seeing today, the economic effects of the 
pandemic and the economic shutdown, therefore, is not something 
we would have predicted.
    And to give credit where credit is due, I appreciate the 
actions that you have taken, especially the Federal Reserve, 
working with Treasury, with the authorities granted to it by 
the Congress under the CARES Act. My hope is that this was 
handled well.
    I give credit where credit is due to the Dodd-Frank Act, 
too. I was a freshman when we crafted that legislation. And 
when it was done, it was appreciated by pretty much nobody on 
the left or the right, but here we are where the dog that 
didn't bark, of course, was a major dislocation in our 
financial system despite the dramatic dislocation to our 
economy.
    So, Mr. Quarles, my questions are to you, and hopefully I 
will give you enough time to answer them. Obviously, the crisis 
has uncovered a number of things that are concerning, and I 
would like you to, if you would, just address each one. And, 
obviously, you won't be able to do so comprehensively, but if 
you could try.
    Number one, the dislocation in the Treasury market in mid-
March gave an awful lot of us heartburn. Number two, a number 
of you have mentioned concerns with the commercial credit 
market. Could this be something that at the end of the day, 
causes a significant problem within the banks? And then, if 
COVID has done one thing, it has really uncovered the 
disparities that exist in our society. And while I have heard a 
lot of back and forth, I actually haven't heard the regulators 
offer suggestions on how we might increase the bank population 
and make credit available to more Americans.
    I know that is a tall order, Mr. Quarles, but you have the 
remainder of my time to address those three issues.
    Mr. Quarles. Thank you. Thanks for that, and I will be 
brief. I could take the remainder of the hearing on those three 
issues.
    On the Treasury market, there clearly was dysfunction in 
March. It was severe dysfunction for a few days that was caused 
by the Treasury market trading infrastructure essentially being 
overwhelmed by sales orders on the parts of many different 
participants. You had a variety of people who were looking for 
cash liquidity, given the severe uncertainty that there was in 
the middle of March, and that overwhelmed the infrastructure of 
the systems' ability to handle that.
    We are currently looking at a variety of factors. We are 
working multilaterally with other domestic agencies. We are 
working internationally because this was a problem 
internationally. One of the significant issues was foreign 
sellers selling in order to get dollars for their dollar needs 
in this time of--in this dash for cash. And I think that there 
are things that we will need to look at about the structure of 
the Treasury market in order to improve its operation under 
stress. It would be premature to say what they would be.
    The commercial credit market--given the nature of this 
stress, an element of the solution has been increasing debt on 
the parts of many companies that had severe revenue 
restrictions in the spring. The corporate sector was already 
reasonably highly indebted going into this, and so that is 
something we need to look at. We are running bank stress tests 
currently to see how we think that could roll up into the 
financial system. Those will be very granularly run, and we 
will release in the middle of December results for each bank, 
public results of how they performed in this, that I think will 
give us more clarity into that issue.
    On disparities, just to be very quick, I think that the 
actions that we have taken at the Fed to improve a more rapid 
return to economic health--and we aren't there yet, obviously. 
We have learned at the Fed, over the course of the last few 
years, that when we allow the economy, and particularly allow 
the unemployment rate to fall faster and to fall further than 
the Fed has been comfortable allowing it in the past, that 
benefits particularly those who are most disadvantaged in 
society, and that is something that we can do. The Fed doesn't 
have a lot of distributive tools, but we have seen that there 
are distributive effects to that that are important. And that 
was one of the reasons why we changed our framework as we did 
recently announce.
    Chairwoman Waters. Thank you. The gentleman's time has 
expired.
    Mr. Loudermilk, you are recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. I appreciate 
the opportunity to be online with you here today.
    And, Vice Chairman Quarles, let me first thank you for 
aligning the Fed's supervision with the tailoring regime by 
applying Large Institution Supervision Coordinating Committee 
(LISCC) only to Category 1 firms, and moving smaller and less 
risky firms into the large and foreign banking organizations 
with provision portfolio. I think this rightly refocuses the 
LISCC supervisory portfolio by recognizing substantially 
reduced size and risk of Category 3 firms and does not change 
the capital liquidity requirements for firms not in the LISCC 
portfolio. We really appreciate your efforts there.
    On another topic, lenders did an outstanding job of issuing 
PPP loans to support small businesses and their employees, but 
PPP loans remain an asset on lenders' balance sheets until the 
loans are forgiven, and forgiveness is taking longer than we 
all expected. That means a number of financial institutions are 
on the verge of crossing an asset-based regulatory threshold 
because of PPP loans which are guaranteed by the SBA and are 
designed to have a zero credit risk to the lender. I recently 
sent a letter with 13 of my colleagues on this committee asking 
you all to address this issue.
    I also introduced a bipartisan bill with Congressman David 
Scott that would exclude PPP loans from asset-based regulatory 
thresholds of $10 billion and under. Madam Chairwoman, thank 
you for including the bill in our discussions during this 
hearing today.
    Chairman McWilliams, I appreciate that the FDIC has 
addressed the $500 million and $1 billion asset thresholds, and 
I hope you can address the others.
    Chairman Hood, thank you for addressing this issue for 
credit unions.
    Now, to my questions. Acting Comptroller Brooks, I 
understand the banking agencies are discussing how to proceed 
with this on an interagency basis. Can you share what you are 
planning?
    Mr. Brooks. Yes, Congressman, and thank you for the 
question. We are not final on this yet, but I can definitely 
give you some parameters of what is being discussed amongst us. 
The idea is there are, first of all, the need to identify each 
of the asset thresholds that trips you into a new regulatory 
regime, and there are many of them, just being the government. 
So, there is a threshold at $500 million, a threshold at $600 
million, a threshold at $1 billion and $2.5 billion and $10 
billion, et cetera.
    The basic parameters, I believe, are that for a period of 1 
year, which could, of course, be extended by the agencies, but 
to Vice Chair Quarles' point earlier, we want to get to normal 
as soon as we can get to normal. So for a period of 1 year, we 
would exclude PPP assets from each of those asset thresholds, 
up to and including the $10 billion threshold but not above 
that. Our theory is that we want to do surgery here. We don't 
want to act with a meat cleaver. We want to be very careful, 
and we don't want to dislocate the agency's ability to manage 
risk, but I think that we will settle out somewhere pretty 
close to that.
    Mr. Loudermilk. Okay. We appreciate your efforts, and if 
you could please keep us updated as you move forward, because 
you are right, there is a myriad of regulations and tripwires 
along the way.
    Vice Chairman Quarles, does the Federal Reserve plan to 
address these regulatory thresholds?
    Mr. Quarles. Yes. There is an active--we are obviously 
engaged in very active interagency discussions, and I would 
subscribe to what Comptroller Brooks said and I think we will 
have something to report pretty quickly, actually.
    Mr. Loudermilk. Okay. I appreciate that, because a lot of 
the small banks are really left hanging out there. We actually 
have a bank in our district. It has two branches, a small bank, 
which issued more PPP loans than one of the largest banks in 
the nation did nationwide. And so, you can see how that could 
really negatively affect this bank that stepped up. It is 
Vinings Bank. They stepped up, and they took on a lot because 
they are a community bank, and their community was riding on 
the needs of having these PPP loans.
    And my final question is, Chairman McWilliams, do you 
anticipate that the FDIC will provide additional relief as 
well?
    Ms. McWilliams. Yes. We have already excluded PPP loans 
from the deposit assessments for banks, but we are now working 
with the other regulators as mentioned to make sure that we--to 
the extent that we don't have the clear statutory authority to 
change thresholds, to maybe freeze the total consolidated 
assets as of a prior date for those thresholds. So we are 
trying to be, I would say, as flexible as possible to make sure 
that banks have a venue to proceed with helping stimulate the 
economy and make sure that borrowers can stay in their homes.
    Mr. Loudermilk. Thank you very much. Because I mentioned 
this has been a collaborative effort between the private 
industry and government as well, and so we need to make sure 
that we are covering them as well.
    So, Madam Chairwoman, that is all the questions I have. I 
know it is unusual for me to yield back time.
    Chairwoman Waters. Thank you. I appreciate it.
    Mr. Foster, you are recognized for 5 minutes.
    Mr. Foster. Thank you, Madam Chairwoman, and to our 
witnesses. And I would like to get started by just seconding 
the comments of my colleague, French Hill, regarding Central 
Bank digital currencies.
    Vice Chair Quarles, you just spoke and have spoken before 
about the dysfunction that occurred in our Treasury bond 
markets in March, and noted that the sheer volume in that 
market may have, ``outpaced'' the ability of the private market 
infrastructure to support stress of any sort there.
    Under normal circumstances, the Treasury market is the 
deepest and most liquid fixed income market in the world. It 
serves as a critical benchmark for the mortgage corporate loan 
and mini bond markets that are essential to the flow of credit 
in our economy, and it allows the U.S. dollar to operate as the 
world's dominant reserve currency. And that is why it is 
crucial that these financial pipes continue to function well, 
even in stressed and volatile conditions, and especially as we 
continue to fight COVID-19 and work to provide fiscal relief to 
millions of struggling families and small businesses.
    Now, when the Fed has to step in to support the markets for 
Treasury bonds, I view it as sort of the financial equivalent 
of our military going to DEFCON 2. When that happens, it is our 
duty in Congress to see what sort of technical changes could 
prevent this in the future.
    One straightforward solution to this issue would be a 
simple requirement that all secondary market Treasury 
transactions be subject to central clearing. Today, 
participants in the markets for Treasuries face a centrally 
cleared counterparty in less than a quarter of all 
transactions. By comparison, because of the Dodd-Frank Act, 
central clearing covers virtually 100 percent of the exchanged 
traded derivatives and equities and a majority of the swap 
market transactions. And despite a fair amount of squealing at 
the time, I believe that this is now widely viewed as one of 
the many successful reforms of Dodd-Frank.
    So, Vice Chair Quarles, could you explain to us your view 
of why requiring central clearing of Treasuries might be 
beneficial to market functioning? And what are the drawbacks 
and tradeoffs, if any, of this approach?
    Mr. Quarles. As we look at the lessons from the Treasury 
market in March, we have been looking closely at this issue of 
central clearing of Treasuries. The advantage would be that 
central clearing would reduce pressure on dealer balance 
sheets. The current system requires the dealers to basically 
take those Treasuries onto their balance sheets, and when there 
isn't another side to the trade, that is obviously a 
significant strain.
    The cons are really the cons of any [inaudible] It is a 
complex risk management problem. And so, we want to think that 
through carefully for a market that is as large and as central 
as you have correctly identified the Treasury market as being. 
The pros are attractive. We are looking through this carefully 
with an interagency group.
    I would say just as an additional thought, though, that 
could lead to improved Treasury market functioning generally. 
What we saw in March, though, was simply that everyone was 
selling and no one was buying. And there was a period of a few 
days when there just wasn't another side to the transaction. 
So, a smoother mechanism for matching buyers and sellers 
probably would not have addressed the March issue because the 
question was that there just wasn't a buyer. But that doesn't 
mean that it is not a useful wakeup call for thinking about the 
structure of the Treasury market in that particular situation.
    Mr. Foster. So you anticipate for situations like that, 
there is no substitute for having the Federal Reserve have some 
pathway in to support things? And is there a merit, if we have 
to go down that road, to actually have a legislative clarity on 
the circumstances and making sure that the taxpayer is never on 
the hook in that sort of intervention?
    Mr. Quarles. Let's hope that situations like that are as 
rare as this one was, which is once a century, if not longer. I 
think the Fed has the authority to do what it is that we need 
here and that our strong and reasonable expectation is that 
something like this is not going to be repeated in our 
lifetime.
    Mr. Foster. Well, my goal is to die before we ever have a 
crisis like we have been going through. So, thank you. My time 
is up. I yield back.
    Chairwoman Waters. Thank you very much.
    Mr. Mooney, you are recognized for 5 minutes.
    Mr. Mooney. Thank you.
    So, direct questions for Vice Chairman Quarles. Let me just 
start by saying that insurance is normally State-run, and so, 
Vice Chairman Quarles, under the oversight of the Financial 
Stability Board, they have adopted a holistic framework to 
identify and proactively address systemic risk in the global 
insurance market. Can you explain how the U.S. insurance 
regulatory regime has performed in minimizing systemic risk, 
and more specifically, how this performance compares to other 
regulatory systems for insurance around the world?
    Mr. Quarles. I think we have seen in the current stress, 
which has been severe, that the insurance industry, which is 
regulated by the States in the United States and has been since 
the McCarran-Ferguson Act, has performed quite well. And, in 
general, over the history of our industry, compared to 
industries abroad and other forms of regulation, I think that 
regulatory system has stood up well. It has passed the 
practical test of what works.
    As we look at insurance regulatory reform more broadly, 
which the International Association of Insurance Supervisors 
(IAIS), which is a member of the FSB, is considering in the 
United States, the so-called team in the U.S., which is the 
Federal Reserve and the National Association of Insurance 
Commissioners (NAIC) and the Treasury, have worked to ensure 
and have been successful in ensuring that there is scope in 
that process for the U.S. system to be recognized 
internationally, and I expect we will [inaudible] process comes 
to completion several years from now.
    Mr. Mooney. That kind of leads to my follow-up question. I 
agree with you, first off, that it has worked well and the 
States regulating it and we have worked well, better comparable 
to other countries. But given that our U.S. insurance 
regulatory system produces comparable results to foreign 
frameworks, how is the Federal Reserve planning to make the 
case that the American system is, ``outcome equivalent,'' with 
the IAIS insurance capital standard?
    Mr. Quarles. There is a monitoring process that is going on 
at the IAIS of their proposed global standard. We have created 
space in that standard for the U.S. framework to be viewed as 
equivalent as a solution that works within the IAIS project. 
That monitoring process has a fair ways to run yet. It will be 
incumbent on us in the United States to put forward a well-
articulated framework for how a global consolidated insurance 
regulatory framework could work.
    The Fed has done its piece with respect to our building 
block approach for how insurance companies that include a 
depository institution can be regulated. The NAIC is working 
hard on its group capital approach, and again, I am pretty 
confident that as we put those forward in the international 
discussions, the equivalent will be viewed positively and that 
the effort will be successful.
    Mr. Mooney. Thank you, Vice Chair Quarles.
    And let me just close--I don't know how much time I have 
left. Let me just close by saying, as we discussed, here in the 
United States, insurance has been regulated primarily at the 
State level for over a century, so, ``If it ain't broke, don't 
fix it.'' We have a system that works well here. The needs of 
West Virginia are different than the needs of Massachusetts and 
California. You can't have a one-size-fits-all standard that is 
going to work in this country. If we are forced to adopt an 
insurance capital standard at European centric set of rules 
for--
    Chairwoman Waters. The gentleman's time has expired.
    Mrs. Beatty, you are recognized for 5 minutes.
    Mrs. Beatty. Thank you. Madam Chairwoman, let me start by 
thanking you for your stellar leadership, for all of the work 
that we have gotten done during this very difficult time, a 
difficult time in this nation, and certainly as we have been 
confronted with COVID-19, all of the work that we did in 
helping save lives, through what we have gone through with our 
economic problems and with PPP and housing. I just think it is 
very important for me to recognize your work.
    With that said, to our witnesses, thank you for being here 
today.
    Many of my colleagues have talked about where we are, and 
related it to the problems we have had or the successes that we 
have had with PPP. We have also talked about the greater 
financial portfolio. We have talked about capital and liquidity 
and, certainly, access to capital. But as I look to the title 
of this full committee virtual hearing, we talk about 
oversight, and we talk about it as it relates to the 
departments that our witnesses oversee. We talk about it, as we 
should, in ensuring safety and the soundness of diversity.
    Certainly, you all know, as Chair of our Subcommittee on 
Diversity and Inclusion, I like to devote much of my time to 
that, because I think it is most appropriate when we talk about 
the economic downturn, when we talk about the COVID-19 crisis, 
and we talk about social injustices. Why? Because when we look 
at the disparities and how African Americans and others are 
disproportionately affected, it is a clarion sound bell that is 
in the financial services area.
    Mr. Brooks, I am going to start with you, and this will be 
very quick. All of the other witnesses have been asked this 
question. I take great honor that I have had the opportunity to 
be in the forefront with the Offices of Minority and Women 
Inclusion (OMWIs), so I don't want to break my tradition by not 
asking you, do you know what OMWI is, have you met with your 
OMWI Director, and who is your Director?
    Mr. Brooks. My Director, Joyce Cofield, I consider to be a 
close friend and mentor. She and I meet for an hour every 
single week and have really leaned into a number of important 
initiatives here, which I am happy to talk about if you like.
    Mrs. Beatty. Thank you very much. She has done a great job 
on that.
    Let me go to my next question. And, if so, we can come 
back, or offline, I can ask you some things.
    I was very disturbed when, on September 22nd, the President 
issued Executive Order 18950, which seeks to halt certain forms 
of diversity and inclusion training in contracting with 
programs in the Federal Government. So to each one of you, yes 
or no, are you familiar with this? And the second question, yes 
or no, have you ceased diversity training in your department?
    I will start with you, Mr. Quarles.
    Mr. Quarles. Thank you. I am somewhat familiar with it, 
although that order does not apply to the Federal Reserve, 
given the nature of the agency, and we have not changed our 
practices.
    Mrs. Beatty. Thank you. And while independent agencies 
don't necessarily have to comply with the Executive Order, we 
also know that many of you have been known to voluntarily 
comply with the order.
    Mr. Quarles. We haven't changed our practices with respect 
to diversity.
    Mrs. Beatty. Thank you.
    We will just go down the line. Mr. Brooks?
    Mr. Brooks. I am familiar with the order. We are obviously 
a unit of the Treasury Department. There is a review process 
for our diversity programs, but we continue to provide 
diversity programs that don't run into any of the issues in 
that order. For other things, we go through a review process as 
required by the order.
    Mrs. Beatty. Okay. Thank you.
    Ms. McWilliams. And I will say that like the Fed, we are an 
independent agency, and we generally comply with the spirit of 
the Executive Orders. We have been able to continue our 
diversity in training as we have done in the past.
    Mr. Hood. Representative Beatty, at NCUA, we often strive 
to comply with the spirit of Executive Orders. In this case, 
this has been turned over to our general counsel for review, 
but I assure you we are continuing to have outreach and 
engagement opportunities. In fact, I have spoken at over 20 
diversity, equity, and inclusion events, especially following 
the murder of George Floyd. It has been my responsibility to 
ensure that our employees have a safe space to talk and hear 
from me directly during this challenging time.
    Mrs. Beatty. Thank you very much.
    I yield back my remaining 5 seconds.
    Mr. Green. [presiding]. Thank you. The gentlelady's time 
has expired.
    Mr. Budd is now recognized for 5 minutes.
    Mr. Budd. Thank you, Mr. Chairman.
    Just to clarify, I heard a mention earlier in this hearing 
about President-elect Biden. To my knowledge, none of the 
States in question have certified their results, and their 
State electors have met, so there is really no President-elect. 
So we are asking for the same courtesies and the legal 
processes that were extended to Vice President Gore in the year 
2000 be extended to President Trump in 2020.
    As you are aware, Democrats lost seats in this body, and 
that is evidence enough that the American people recognize the 
failure of the far left socialist policies. Now, this gives me 
concern regarding the next Congress, but we have several 
opportunities before us to seek more bipartisan solutions and 
to reject the extreme.
    So, I want to thank the panel for being here. And as we 
continue to weather this pandemic, I appreciate that you and 
all of your agencies have worked with our banks and our credit 
unions to provide some flexibility so that they can provide 
access to credit and financial services to creditworthy 
consumers and creditworthy businesses. All of you have shown 
your ability to work with our banks and credit unions, but it 
is now time for Congress to help out those consumers and those 
same businesses as well.
    And that is why I am pleased to be an original co-sponsor 
of H.R. 7777, the Paycheck Protection Small Business 
Forgiveness Act. This bipartisan bill would not only help 
millions of small businesses by forgiving all loans under 
$150,000 with a simple, one-page forgiveness form, but it would 
also free up countless hours and resources for our banks and 
our credit unions, allowing them to focus on the core of 
banking: providing access to credit and financial services to 
individuals and businesses. As a result, some banks are 
crossing asset thresholds that subject them to greater 
regulatory burdens.
    So, my question is this: What are you all doing to ensure 
that these financial institutions aren't faced with potentially 
costly regulatory burdens just because they helped with 
implementing a relief program? Chair McWilliams, I will start 
with you in reference--I think you may have made some comments 
to my colleague, Mr. Loudermilk, in relation to that, so I will 
start with you, Chair McWilliams.
    Ms. McWilliams. Sure. We are doing a number of things to 
make sure that these thresholds do not provide a disincentive 
for banks to engage with their borrowers, individual consumers, 
and small businesses. We are going through an interagency 
process to ascertain what all we need to do to address those 
thresholds and to make sure that banks need to do what we want 
them to do, which is continue to stimulate the economy and be 
there for their consumers and customers.
    And with respect to the FDIC, we have also done a number of 
things, including a change in what counts for the audit 
purposes thresholds as well as excluding PPP Facility assets 
from the deposit assessments for banks that have engaged in 
extensive PPP lending.
    Mr. Budd. Thank you very much.
    Comptroller Brooks, if you would, please comment on that?
    Mr. Brooks. Congressman, thank you for the question. I 
would endorse what Chairman McWilliams said; we are obviously 
part of the FDIC's process on that.
    The one other thing I would comment on is, like the other 
agencies, we excluded PPP assets from our assessments of the 
first half of the year, and we also adopted a supplemental 
leverage ratio of rule with the two other banking agencies to 
make sure that banks could exclude pandemic-related deposit 
inflows from messing around with their capital ratios and with 
their leverage ratios. I think all of those things create a 
safe space for banks to proceed.
    Mr. Budd. Thank you.
    Vice Chair Quarles, during your testimony earlier this week 
on the Senate side, before the Senate Banking Committee, you 
were asked about the Fed's plan to extend the exclusion that 
was made for the supplementary lending ratio (SLR) to the 
global systemically important bank (G-SIB) surcharge in order 
to ensure that capital is not increased at the end of this 
year. I think your response to that question was that the Fed 
has not heard concerns about this from the impacted banks. So, 
I am looking for clarification to that response, because as I 
understand it, the Fed has discussed the likelihood of a 
capital increase with the banks themselves.
    I am sure you are aware, along with every Republican member 
of this committee--we sent you a letter requesting action on 
this because we have been hearing from the banks that an 
increase in the G-SIB scores could impact their ability to 
support the economy when we need it most. Any comments on that?
    Mr. Quarles. Yes. The way the G-SIB calculation works--and 
I didn't get into this with the Senate, but it is probably good 
that you have given me the chance to do that here. The way the 
G-SIB calculation works is that there is not an immediate 
capital consequence for a firm going over, moving up a bucket 
in the G-SIB framework. Instead, that capital consequence would 
take place after a year. And the framework is designed 
specifically so that temporary changes would not have the 
effect that you and we are concerned about here. This will give 
us the chance, if we think that the changes are likely to be 
durable, to consider whether there should be adjustments made 
over the course of time.
    So, what I was saying was that there is not an immediate 
capital consequence. We are not hearing that there is an 
immediate capital consequence, that is not how the framework 
works, and we have time to think this through should we 
discover that the effect is going to be more durable.
    Mr. Budd. Thank you. I yield back.
    Mr. Green. The gentleman's time has expired.
    Mr. Vargas of California is recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Mr. Chairman. Can you hear 
me?
    Mr. Green. Quite well, Mr. Vargas.
    Mr. Vargas. Thank you. It is a pleasure to be here again.
    And I want to thank all of the witnesses today. I 
appreciate very much their testimony. It is a very difficult 
time, and I think they are working very hard on behalf of the 
American people.
    Now, I have to say, at the beginning of this hearing, we 
Democrats were lectured on the issue of divisiveness, and now 
we were just lectured on the notion of who won the election. I 
think that we won, not only at the President level, but also at 
the congressional level. So I find it interesting that somehow 
the winners are the ones who are saying we were somehow 
rejected by the American people when we won.
    I would also remind people that 4 years ago when Mr. Trump 
was running for President, and Mr. Trump won about the same 
amount of electoral votes as Vice President Biden has now, we 
didn't like it, but of course, we acknowledged it and we had a 
transition. Now, to hear that we are in the same situation and 
we are not supposed to acknowledge that Vice President Biden 
has won is really rather ridiculous, just to be frank.
    Also to divisiveness. I have to say this. I have been on 
this committee for 4 years. From he previous chairman, all I 
heard was divisiveness, mostly around the issue of Dodd-Frank, 
and other things too but especially Dodd-Frank; it was 
demonized, in particular. And I think I heard today from the 
witnesses how well Dodd-Frank has worked. Did I mishear or did 
I hear correctly that Dodd-Frank, in fact, was very beneficial 
during this time?
    Vice Chair Quarles, why don't you respond to that? Has it 
been helpful, Dodd-Frank?
    Mr. Quarles. I think the increases in capital and liquidity 
that were put in place after the 2008 crisis have been very 
helpful.
    Mr. Vargas. Anyone else disagree with that? How about 
Acting Comptroller Brooks?
    Mr. Brooks. No. I would echo the Vice Chairman's comments.
    Mr. Vargas. Now, I have to say, that was--when I first got 
on this committee, it was a far left sort of bill. They told me 
how unhelpful it was going to be, and I believe most of you 
were appointed by President Trump. So anyway, I--again, what 
becomes demonized and far on the left all of sudden becomes 
very helpful in the middle. So, again, I hope that we can work 
together and get away from this divisiveness and name calling. 
I don't think it works. And I do think we have a lot of work to 
do together, and we should work together.
    Now, I do have some concerns about COVID-19 and where we 
are today. COVID-19, of course, is a virus, and this virus, as 
all viruses, has seasonality. In fact, recently, I think one of 
the medical groups said that you would see during the summer, a 
diminution of COVID, and then in the autumn, it would come 
back, and then in the winter, it would spike. I am very 
concerned about where we are here.
    In fact, recently here, very recently, I heard from both 
Jerome Powell, the Fed Chair, as well as Christine Lagarde, the 
president of the European Central Bank, that they are very 
concerned too about this. Could you comment on that? Because I 
do have great concerns that this is roaring back and we are 
going to be in trouble.
    Mr. Quarles, don't you comment first? Were they wrong?
    Mr. Quarles. I think there is a great deal of uncertainty 
about how the situation will evolve, and so we shouldn't be 
complacent about that as [inaudible] ability and within the 
Fed's [inaudible] economic support as well.
    Mr. Vargas. Mr. Brooks?
    Mr. Brooks. Congressman, I think that the watch word here 
is, ``uncertainty.'' There is a lot of negative information out 
there, including increases in cases and hospitalizations. There 
is also a lot of positive news out there, including the 
approval of new therapeutics, the reduction in the length of 
hospitalizations, and effective vaccines. So, I think a lot of 
it depends on our reaction to it at this point.
    Mr. Vargas. I think that they took that into account too 
when they commented. In fact, they still say the uncertainty is 
something that worries them.
    How about Chair McWilliams? What do you think about that? I 
don't know if you heard their statement, but their statement 
was concerning to me.
    Ms. McWilliams. We are certainly monitoring the conditions 
on the ground to make sure we understand what related business 
closures may be happening in different jurisdictions. We are 
working closely with our regional offices to make sure that we 
are appropriately addressing any issues that may come up for 
our banks that are trying to help consumers stay in their homes 
and small businesses continue to operate. So, I would say that 
certainly we are very careful about analyzing the numbers and 
understanding what our regulatory response should be.
    Mr. Vargas. Thank you.
    I guess my time has almost expired. What I would say is, 
let's try to work together. I think that is important. And 
let's get away from this divisiveness. Let's acknowledge what 
happened, too, in this Presidential race.
    Thank you very much, Mr. Chairman. My time has expired.
    Mr. Green. The gentleman's time has expired.
    Mr. Kustoff is now recognized for 5 minutes.
    Mr. Kustoff. Mr. Chairman, I want to thank all of the 
witnesses for appearing today. And I do want to echo the 
comments of the ranking member and so many others this 
afternoon, who have talked about the incredible work that all 
of you have done, the witnesses, in protecting the soundness of 
our financial system over these last 8 months. I think you have 
probably given a lot of stability to people across the nation. 
You provided relief to businesses that, frankly, have struggled 
initially, and to those individuals who struggle. So, thank you 
for all of your hard work.
    Comptroller Brooks, back in May, the OCC completed and 
updated the Community Reinvestment Act. Obviously, these were 
important changes that were made that weren't trivial changes. 
It was a complete regulatory overhaul.
    Under the new framework, banks are going to be assigned a 
CRA grade based on whether they meet certain benchmarks and 
community development minimums. But when the rule was adopted, 
the OCC didn't necessarily define what the benchmarks would be. 
As I understand it, and the way I interpret it, you wanted a 
separate rulemaking process for setting those benchmarks.
    Now, of course, here we are about 6 months later, and the 
OCC still has not started the second rulemaking process. Can 
you talk to us about your plan, what the OCC's plan is, and how 
you are going to provide banks with the certainty regarding 
their responsibilities under the regulation?
    Mr. Brooks. Congressman, absolutely, and thank you for that 
question.
    First of all, I would tell you that we are just a few days 
away from releasing the notice of proposed rulemaking on 
performance standards, so you will see that very shortly, I 
would expect by next week. In terms of the work that we have 
done, one of the things that we were able to do after adopting 
the original CRA rule was to bring on board one of the world's 
leading banking economists, Dr. Charles Calomiris, to lead our 
economics function. And Dr. Calomiris has had a significant 
role in helping us think through what the performance 
assessments ought to look like.
    So, the onboarding of a new economics leadership team has 
been one of the reasons it took us a few extra weeks beyond 
what we would have hoped. But the good news is, we now have 
that level of input to make sure we get it right.
    What I can tell you that you will see in the rule when it 
comes out in just a few days is a couple of things. First of 
all, we are going to be moving from a highly relativistic 
standard under the old rule, where we basically had banks 
compete with each other to see who got the A grade, so it was 
both subjective and relativistic. And we are hoping to move 
toward a more objective and predictable kind of standard so you 
will know that you have to hit this threshold in order to get 
an ``outstanding,'' this threshold in order to get a 
``satisfactory,'' et cetera. That is a significant change from 
in the olden days. The way that I like to put it is we want to 
see CRA as more like a math test and less like an English test. 
``Satisfactory'' shouldn't be in the eye of the beholder; it 
should be predictable so banks know how to meet what we expect 
of them.
    And the other thing we have said is that we will be holding 
banks accountable for meeting or exceeding their previous 
levels of CRA contributions. We know that one of the concerns 
expressed by commenters in the original rule was that somehow 
our new framework was going to result in a reduction of CRA 
activity. We are confident it isn't, and the performance 
standards will speak to that issue in terms of who gets a pass 
and who doesn't.
    Mr. Kustoff. Thank you very much. I appreciate that.
    Vice Chairman Quarles, there was some discussion earlier, 
during questioning from Congressman Barr about de novo banks. 
And I think we are all concerned that we have not seen the 
creation of de novo banks over the last 10 years, like we did 
prior to 2008. If you can, just to set the stage, what are the 
primary factors that led to the lack of de novo banks over the 
last decade? And what, if anything, can we as Congress do to 
facilitate de novo banks?
    Mr. Quarles. I think the primary factor is more of a 
question of mindset. There had been, leading up to the 2008-
2009 crisis, a significant spate of de novo banks approved, 
particularly in some jurisdictions. Many of those banks failed, 
and that has resulted in a caution over the course of the last 
decade in the regulatory system generally about the approval of 
de novo banks.
    Myself, I think that is a little bit of a question of a 
matter of a cat that sat on a hot stove. It won't do it again, 
but it won't sit on a cold stove either, and that there are 
things we can do and have done to improve and streamline the 
regulatory environment for small banks to help make, establish 
[inaudible].
    Mr. Green. The gentleman's time has expired.
    Mr. Lawson of Florida is now recognized for 5 minutes.
    Mr. Lawson. Thank you very much, Mr. Chairman. And I would 
also like to thank the panel on the Hill for this discussion 
today.
    I know that there have been a lot of things that have 
occurred since we have been through this pandemic, and so I 
want to ask Vice Chairman Quarles, the Federal emergency COVID-
19 Facilities are created to support a broad cross-section of 
the financial market and economy supporting the availability of 
credit for households, small and medium-sized businesses, to 
maintain their payroll and employees through new and expanded 
loans providing credit to larger employees so that they are 
able to pay supplies and maintain their business operation. 
However, the Facilities are set to expire at the end of 2020.
    Do you know if the Fed and the Treasury has already created 
a plan to help these businesses maintain on their feet and meet 
payroll, as COVID will still be a concern next year?
    Mr. Quarles. Certainly, the Section 13(3) Facilities that 
we put in place in conjunction with Treasury have been very 
helpful in restoring market function and the availability of 
credit across a broad swath of the economy, as you note. The 
question of whether, in light of the performance of the economy 
since the spring, they should be extended, is one that we are 
currently engaged on.
    And while the economic progress since the spring has been 
better than many people, including we at the Fed, expected that 
it might, we are still a long ways away from being on the other 
side of the COVID event. Unemployment is too high. Small 
businesses are under credit pressure. So, we want to take all 
of that into account as we consider this question. We haven't 
made a decision on it yet. We are talking with Treasury about 
it, but obviously, we need to decide that before the end of the 
year.
    Mr. Lawson. Okay. Thank you. And it will be interesting to 
see what happens with your conversation with the Treasury, 
because it is a major problem. When I travel throughout my 
district and so forth, I get more questions about that than 
anything else, because there are still a great deal of dilemmas 
there.
    But, Mr. Vice Chairman, I have one other thing. In 
September of 2020, the Fed banned stock buybacks and 
constrained dividends payment by large banks to safeguard their 
wealth against COVID-19. However, I think, is it safe to say 
that the Fed officially doesn't want to repeat the history by 
using government funds to capitalize banks rights? So why did 
the Fed prohibit dividend payment entirely, given the economy 
activity will likely be constrained until the pandemic is over?
    Mr. Quarles. Thank you for that. As you note, we did 
constrain dividends. We prevented them from being increased 
[inaudible] An income test. Most importantly, we prohibited 
share repurchases, which is for our large banks, how 70 percent 
of their capital distributions are made. So, the great bulk of 
capital distributions have been suspended.
    The result of that is that during this COVID event, even 
while the banks have been taking very large provisions, 
particularly in the second quarter for expected credit losses, 
capital at these institutions has actually increased. It 
increased in the second quarter and it has increased in the 
third quarter.
    We are now running detailed stress tests with two different 
scenarios, given the uncertainty as to how the world might 
evolve. And we will release publicly the results of those 
stress tests before the end of the year, which will give us 
much more insight into the banks' resilience in light of the 
economic circumstances that we are facing. And then we will 
make a decision as to whether we should extend or modify in any 
way the capital constraints that we have implemented.
    Mr. Lawson. Okay. Thank you.
    And, Mr. Chairman, with that, I yield back.
    Mr. Green. The gentleman yields back.
    Mr. Hollingsworth is now recognized for 5 minutes.
    Mr. Hollingsworth. Good afternoon. I want to thank all of 
the panelists as well for being here today. My first question 
goes to Mr. Quarles. I know Mr. Budd touched on this a little 
bit earlier, but I want to come back to it and put a finer 
point on it. I was, admittedly, a little bit stymied, I say 
respectfully, by your answer to Senator Rounds yesterday when 
he asked about the G-SIB surcharge and some of the effects that 
our largest institutions, because of an increase in deposits, 
are seeing on moving into the next category in terms of the G-
SIB surcharge.
    You said in response to Senator Rounds' question, ``We are 
not hearing from the large firms that changes in their balance 
sheet over the period of the COVID event might lead them to 
being pushed up into a higher bucket.'' I just wanted to 
confirm to you that I certainly am hearing from those 
institutions that this will be a challenge. They are certainly 
telling their investors that this will be a challenge. 
Recently, JPMorgan's CFO said, ``In the absence of rate 
calibration, which we remain hopeful about, managing that back 
down--she means back down to a lower category G-SIB surcharge--
will certainly be challenging.''
    It's certainly something that she is already thinking 
about, and something that JPMorgan is already planning on. And 
I recognize that you have sufficient time to still make news on 
this next year, but many of those capital allocation decisions 
are already being made. I and every other Republican member on 
this committee also sent a letter a couple of weeks ago asking 
about this same thing.
    I just wanted to confirm to you and hear your confirmation 
that this is an important issue. This is something that you are 
hearing about that I am hearing about that others or the Fed 
are hearing about and will at least begin to think about.
    Mr. Quarles. Yes. Absolutely. My reference to Senator 
Rounds' to apple of buckets as opposed to the G-SIB surcharge 
buckets. And as I explained, there is a--we have a year 
timeframe in which to see what the consequences are.
    You are absolutely right that if banks aren't sure 
whether--what accommodations will be made or how they see their 
balance sheets evolving organically, that they will need to 
take steps well before a year from now in order to manage their 
G-SIB position. But we do have time to think that question 
through because of the way the G-SIB framework is structured.
    Mr. Hollingsworth. I understand. And certainly, I don't 
want you to not think it through. Please don't think I am a 
proponent of that. But I just want to make sure that it is 
being thought about and that we all recognize collectively that 
this is a real issue, and it is going to start having 
meaningful impacts on our large institutions even earlier than 
a year from now.
    Mr. Quarles. Absolutely. Unquestionably.
    Mr. Hollingsworth. Perfect. Wonderful.
    To you, Chair McWilliams, I wanted to ask about your FDIC 
rule modernizing the regulatory framework for broker deposits. 
You said, I think earlier today or perhaps yesterday, that this 
should be finalized before the end of the year. Is that 
correct?
    Ms. McWilliams. That is correct.
    Mr. Hollingsworth. Wonderful. I know I sent a letter, along 
with many others, about how we can work through the 
facilitating portion of that rule. I know that I expressed some 
real concern that the restrictive nature of how you thus far 
had defined, ``facilitating'' might lead to an adverse impact 
on some of our community banks.
    As a part of finalizing that role before the end of the 
year, do you expect there to be changes to the facilitating 
definition, enabling our community banks to use third-party 
servicers for some of their critical technology and 
infrastructure?
    Ms. McWilliams. I can't engage in the specifics of what the 
final rule will look like, but I can certainly tell you that 
the reason we have the notice in common process is to solicit 
the type of feedback that you and others have provided so that 
we can improve the rulemaking before it becomes finalized.
    Mr. Hollingsworth. Wonderful. I certainly appreciate that. 
I certainly understand that. Please know that from my 
perspective, and so many of the community institutions all the 
way across our districts and all the way across the country, 
this is something that really concerns them. They utilize these 
third-party vendors to enable them to compete with larger 
institutions that have that technology, have those capabilities 
in-house. They don't want to see themselves be deprived of 
those infrastructure pieces so that they can compete for 
consumer attention, for consumer deposits, for more 
opportunities for them and their consumers. So please know, at 
least from our standpoint, that is an important thing to tweak.
    And with that, Mr. Chairman, I yield back.
    Mr. Green. Thank you. The gentleman yields back.
    Ms. Tlaib is now recognized for 5 minutes.
    Ms. Tlaib. Thank you so much, Mr. Chairman, and thank you 
all so much for being with us.
    I know in the financial stability report released this 
week, the Board had acknowledged that climate change is a 
financial stability risk. I represent Wayne County, which has 
one of the poorest air qualities in Michigan, and hasn't met 
the Clean Air Act standards in over a decade, so I do want to 
talk specifically about Marathon Petroleum Refinery, which is 
in my district. They have repeatedly had a number of violations 
recognized by the State of Michigan, and the residents who live 
near that refinery continue to have a number of concerns and 
issues that they bring to my office almost daily.
    Marathon bonds are also owned right now by the Fed, 
basically the public, $15 million worth of bonds that we own 
right now. And you all know I wrote a letter to the Board where 
I highlighted how long [inaudible] Marathon nearly 20 percent 
of the Fed's secondary market Corporate Credit Facility 
portfolio is bonded--is bonds from the energy--for the energy 
and utility companies.
    So, I would like to ask Vice Chair Quarles, what do I tell 
my constituents about this? When they see this and they see the 
various headlines, when they find out that the public's 
resources and our money and the risk on us, it is not 
investment into State and local governments but instead, 
invested in the very companies that are in their communities, 
that are responsible for bad air quality in their community?
    Mr. Quarles. Thank you for that. The Federal Reserve 
Facilities--we do have a Facility for State and local 
governments that has been serving a useful market support 
function--
    Ms. Tlaib. But how many cities have benefited from 
[inaudible]?
    Mr. Quarles. I am getting that information now, because I 
want to respond precisely. Three issues that--the MLF about 
three issues, but its principal function is to restore the 
capacity of private markets, and many markets have healed 
across-the-board. But for those Facilities to do their job, we 
at the Fed can't be involved in credit allocation. We establish 
broad parameters, and the allocated decisions as opposed to the 
market support decisions are really for Congress.
    Ms. Tlaib. I do want to get very centered on--the report 
came from you, the Financial Stability Report that acknowledges 
the risk of climate change, how it poses a financial--kind of, 
it poses instability in our economy. What are the Board's plans 
to change the Corporate Credit Facility's account of those 
risks? Are we just ignoring them? And I still want an answer as 
to how many cities you all helped through the MLF program?
    Mr. Quarles. There were three purchases. I said that. But 
the new Facility operates mostly through its effect on the 
broad market, and the broad market has healed substantially. So 
with respect to climate, we are looking at that from a broad 
systemic point of view as opposed to specific purchases.
    Ms. Tlaib. Doesn't holding these millions of dollars in 
bonds in Marathon Refinery create instability? It is like you 
are trying to create stability, but your own report says 
climate change is posing financial instability. Then, why 
aren't we just basically saying, ``Hey, we are going to move 
away from this, and maybe focus on local and State 
Governments?''
    Mr. Quarles. No, that was not the conclusion of the report 
at all that we should--
    Ms. Tlaib. What was it saying? Wasn't it saying that there 
is a climate change issue?
    Mr. Quarles. I do think that there is a climate change 
issue, but we have certainly not concluded that the mechanism 
to address climate change is credit allocation. That should not 
come from the Federal Reserve. If there is a credit allocation 
decision to be made, that is a decision for Congress, to be 
debated by the public's representatives.
    Ms. Tlaib. Yes, I agree. I understand. And I am working on 
that, as you probably know.
    Why aren't we helping local and State Governments more? It 
sounds like we only helped one or two States. What cities have 
benefited from the MLF program so far? We are in a pandemic. 
They were in survivor mode prior to this pandemic. They 
literally are the frontline communities, Vice Chair Quarles--
literally, the frontline communities that are stopping the 
spread of COVID, and you don't even know how many cities have 
been helped.
    Mr. Green. [presiding]. The gentlelady's time has expired. 
We will accept the answer in the record.
    Mr. Quarles. Thank you.
    Mr. Green. I am advised by the chairwoman to announce that 
we have a hard stop at 3:30, and that I am to get to as many 
Members as possible between now and 3:30. With that said, the 
gentleman from Ohio, Mr. Gonzalez, is recognized for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Mr. Chairman.
    And thank you to our panel for being here.
    I want to start my questions with Mr. Quarles, and go back 
to the Secured Overnight Financing Rate (SOFR) conversation a 
bit and try to put some fine points on some of your earlier 
comments. First question, how has SOFR stood up from a 
stability and suitability standpoint during the pandemic?
    Mr. Quarles. Our experience with SOFR during the pandemic 
is that as a reference rate, it has stood up quite well.
    Mr. Gonzalez of Ohio. Great. And then just a more direct 
question: At this point, is there any reason to believe that 
SOFR would not be a suitable replacement for LIBOR, going 
forward?
    Mr. Quarles. No, particularly for capital markets and 
derivatives transactions, which are the bulk of the 
transactions that use LIBOR as a preference rate.
    Mr. Gonzalez of Ohio. Great. And then, could you clarify 
what you meant when you said earlier that the plan is to allow 
existing contracts to mature on the LIBOR rate without needing 
a congressional solution, given that so many of the contracts 
would, in fact, expire after LIBOR would go away? Could you 
just kind of clarify that one for us?
    Mr. Quarles. Yes. The issue that we have had is that 
extensions of LIBOR, which there have been a couple of over the 
course of the last decade, after it became clear that it would 
be going away, results in the writing of new contracts, so, the 
problem just perpetuates itself.
    I think that the best solution would be a framework in 
which we allow the existing contracts--we create an environment 
in which the existing contracts could mature on their current 
basis without renegotiation, without change to a different 
rate, but that new contracts would not be written. And over a 
relatively short period of time, the bulk of existing contracts 
would run off. These are not usually long-term contracts.
    There is a hard tail of contracts that would require a 
longer time, and legislation could be useful to help with 
those. I think once it became clearer what the nature of that 
hard tail was, and we had more time to think it through, 
therefore, potential legislative responses, that the 
combination of some mechanism to allow the bulk of the existing 
contracts to mature with time over the course of the next year, 
year and a half, to think about the legislative solution for 
those that won't would be the best approach.
    Mr. Gonzalez of Ohio. Thanks. And then with respect to that 
hard tail, how soon would you suspect we would need to act, 
congressionally or otherwise, before we would start to see 
implications in the broader economy, in the real economy?
    Mr. Quarles. Sorry. I think we are still working through 
that issue currently. It is not a long time. I think probably a 
year, or a year-and-a-half. This is something that we should be 
engaged with the folks who are concerned [inaudible].
    Mr. Gonzalez of Ohio. I hope to work with you and your 
office on that. I personally think we need to act a bit sooner 
than a year and a half, but I am sure we can hammer that out.
    I want to shift now to Chair McWilliams. One of the things 
we have talked about is the difficulty of MDIs and community 
banks in adopting technology. This year, the FDIC issued a 
Request for Information (RFI) for public input on the idea of 
fostering the creation of a public/private standard-setting 
organization for technology vendors and models seeking to work 
with community banks.
    The idea is that small banks need to be able to adopt the 
technology developed by third parties, but those organizations 
need to meet standards to be sure tools are effective, secure, 
and compliant. Can you just talk a bit in my last minute about 
what your vision for this program is, what problems you are 
trying to solve, and how this will make our community banks 
more competitive?
    Ms. McWilliams. Sure. And you have a minute, so I am going 
to get all of this in, in a minute. I realized early in my 
tenure that one of the elements for survivability of community 
banks will be to engage with third-party source providers, 
primarily fintechs and technology companies, that can help them 
deliver better products, more products, and reach more 
customers, especially in rural areas as discussed earlier in 
the hearing.
    And I reached out to several Silicon Valley firms. I went 
and I met with them, technology firms, and to partner with 
banks, and I asked them, ``What can be done to help you partner 
up with these banks more quickly?'' We don't regulate these 
firms. And fintechs, budget, through the third-party service 
arrangements, were able to provide this feedback to us.
    And they said that in the beginning, when they approach a 
bank, to be on-boarded with a bank, they have to go through the 
same due diligence process with each and every bank. So we 
said, why don't we kind of cut out that process and make it 
very simple where they get certified to this public/private 
partnership, and then use that certification to ease the burden 
on the banks, and use the burden on the fintechs when they 
partner up.
    Mr. Gonzalez of Ohio. I think that is a fantastic idea. I 
yield back.
    Mr. Green. The gentleman's time has expired. The Chair now 
recognizes Ms. Porter.
    Not hearing from Ms. Porter, I will now recognize Ms. 
Wexton.
    Ms. Wexton. Thank you, Mr. Chairman. And thank you to the 
witnesses for appearing today.
    I want to switch gears and talk a little bit about 
something that I kind of see as a potential ticking time bomb 
in our financial system, and that is the commercial real estate 
market. Chairwoman McWilliams, there has been a rapid growth in 
CRA exposure, especially for smaller banks. Is that correct?
    Ms. McWilliams. They have had high concentrations in CRA 
portfolios, and it was one of the primary concerns we had in 
the last crisis as well.
    Ms. Wexton. And currently, the FDIC considers at least 356 
banks as concentrated in the commercial real estate bank 
market. Is that correct?
    Ms. McWilliams. That number sounds right. I don't know 
how--it may be slightly outdated.
    Ms. Wexton. So what do you mean by, ``concentrated?''
    Ms. McWilliams. The majority of their portfolio, or a very 
large number of their portfolio--we don't have a magic number. 
We don't tell them it is X percentage has exposure and is 
heavily concentrated in the CRA market.
    Ms. Wexton. But that means that by, ``concentrated,'' you 
mean that they are exceeding the FDIC's regulatory criteria or 
your recommended proportion of a portfolio being made up of 
commercial real estate portfolios?
    Ms. McWilliams. We don't have a clear-cut number, where--it 
depends on the individual institution, and we are trying not to 
manage our institutions with that kind of a blunt-cut 
instrument by telling them it is X percentage. But we will look 
at each individual institution, look at their risk management 
profile, capital levels, their CAMEL ratings, management 
experience, do they know how to manage this, did they go 
through the last crisis with these issues as well and how did 
they fare?
    So I would say we have more of an individual ad hoc 
bespoke, if you like, approach to how we look at commercial 
real estate exposures at individual community banks.
    Ms. Wexton. But it is fair to say that these are 
institutions that are more likely to fail if we see commercial 
loans go bad in large numbers. Is that correct?
    Ms. McWilliams. I would say that it would be one of the 
factors that could lead to their failure if it is not managed 
appropriately and the management doesn't have experience in how 
to deal with it.
    Ms. Wexton. What are some of the indicators or warning 
signs that we are seeing now in the commercial real estate 
sector that give you pause for concern in the FDIC?
    Ms. McWilliams. We are certainly looking at a number of 
buildings. And there was just an article this morning that 
folks are subletting their leases. They are realizing they 
don't need the high level of occupancy in the square footage 
that they have seen in the past. And so, we are working with 
our banks to make sure they understand what the exposure is.
    This is not a--kind of a snapshot-in-time exposure. Most of 
these leases are multi-year, in some case, multi-decade leases. 
And we want to make sure that small banks, in particular, have 
the ability to manage those portfolios, are working proactively 
with their borrowers, they understand where the companies that 
own these buildings are in their economic cycle, and also 
reaching out to both regulators, us, and their examiners to 
charge if they foresee any issues.
    Ms. Wexton. But these losses are slow to materialize 
because of the duration of those loans and everything else? For 
example--
    Ms. McWilliams. I'm sorry. The first part of the--
    Ms. Wexton. --and they didn't peak until 3 years after the 
2009 recession. Is that correct?
    Ms. McWilliams. I'm sorry, the question--it broke up in the 
first part of the question. Can you repeat it, please?
    Ms. Wexton. I was just saying that it takes a while for 
these losses to materialize because of the duration of the 
loans.
    Ms. McWilliams. It generally does, yes.
    Ms. Wexton. Right. But the fallout when these loans go bad 
won't just be contained to the banking sector, because--can you 
talk a little bit about the exposure to pension funds and 
others and what that will mean?
    Ms. McWilliams. Sure, and it truly is an ecosystem. The 
reason that some of those folks who are renting commercial 
space are unable to make their payments is because the 
commercial activity has subsided, which is generally a sign of 
the economic downturn. And so, that is something we have tried 
frankly to prevent with some of the actions we have taken over 
the past few months.
    Certainly, the ecosystem doesn't stop with the borrower and 
the lender. There are investors in the banks that have exposure 
here as well. To the extent that these commercial real estate 
loans get securitized, we have exposure in the secondary 
market, as you mentioned. So it is not a simple formula whether 
it is--
    Ms. Wexton. I am running out of time, and so I just would 
ask, other than banks increasing their reserves to absorb loan 
losses, what else should we be doing to head off this 
situation? Is there anything else that you would recommend?
    Ms. McWilliams. I can tell you from our perspective, we are 
working with individual banks that have high concentrations in 
the affected industries, including commercial real estate 
throughout the country. I can't think of any recommendations 
right off the bat. If we exhaust our regulatory discretion in 
how we can address and work with these, I will certainly let 
you know. But the best thing we could do is--
    Ms. Wexton. In my last 15 seconds--I am sorry to interrupt 
you, but do you think that you have the authority to extend the 
troubled debt restructuring theory beyond 6 months as a 
regulatory matter of course, or do you need statutory 
authorization to do that?
    Ms. McWilliams. There are two different TDRs: one in the 
CARES Act: and the other is our personal individual FASB to 
take concurrent by FASB to do so for us.
    Mr. Green. The gentlelady's time has expired. The Chair now 
recognizes Ms. Porter for 5 minutes.
    Ms. Porter. Thank you.
    Mr. Quarles, the Fed is largely responsible for dispensing 
the $500 billion in taxpayer money that Congress provided as a 
bailout for corporate America, the biggest bailout in our 
country's history, potentially. Using taxpayer dollars to buy 
bank debt was never part of that plan. In fact, the Federal 
Reserve stated, explicitly in this document, that it would not 
be purchasing bank debt. What happened?
    Mr. Quarles. I couldn't quite tell. I am on the grid, but I 
couldn't quite see what the document was, so I am not quite 
sure what document you are referring to.
    Ms. Porter. It was the Federal Reserve's own rules 
regarding the frequently asked questions for the Primary Market 
Corporate Credit Facility. And what it says, in fact, is that--
what bonds will be included. And it says, those that are issued 
by an issuer that is not an insured depository institution 
holding company or subsidiary of a depository holding company, 
in other words, a bank. So, the Secondary Market Liquidity 
Facility--
    Mr. Quarles. Yes.
    Ms. Porter. The Corporate Credit Facility and the Secondary 
Market Corporate Credit Facility said they weren't going to be 
buying bank debt. That is in the FAQs, which I am going to put 
into the record, so what happened then? Why are you buying--why 
is the Fed bailing out the big banks?
    Mr. Quarles. Yes. I understand the question now. No, we 
haven't bought bank debt in those Facilities. To begin the--
    Ms. Porter. Mr. Quarles, reclaiming my time, has the Fed, 
as part of a coronavirus bailout, purchased bank debt, yes or 
no?
    Mr. Quarles. No. We have purchased--
    Ms. Porter. Okay. What is an exchange-traded fund (ETF), 
Mr. Quarles?
    Mr. Quarles. As I was getting ready to say, we have 
purchased exchange-traded funds at the very beginning of the 
process in order to jump-start the reignition of the economy, 
and we stopped purchasing exchange-traded funds several months 
ago.
    Ms. Porter. Exchange-traded funds, for everyone who is 
watching, are just baskets basically of stocks issued by a 
variety of companies. And is it not correct that the Fed bought 
$1.3 billion in ETFs?
    Mr. Quarles. That number sounds right.
    Ms. Porter. Okay. So, this is our--
    Mr. Quarles. But that is not $1.3 billion of bank debt.
    Ms. Porter. Okay. No, so it is $1.3 billion in exchange-
traded funds. And my question for you is, how much of that was 
bank debt in those exchange-traded funds?
    Mr. Quarles. Yes. I can get that information for you. I 
don't have the numbers in front of me.
    Ms. Porter. Well, it was a lot, right? The bank money that 
is in these exchange-traded funds, this is companies like 
JPMorgan Chase. Their debt is in there. And it is a big problem 
that you did this.
    A White Paper published by the Yale School of Management 
showed that, in fact, 15 percent of all that ETF purchased was 
for big banks, and ultimately, to the tune of more than $2 
billion in taxpayer money.
    Mr. Quarles. I am not--
    Ms. Porter. This is a headline from Bloomberg, ``Despite 
Stated Exclusion, the Fed Is Buying Bank Debt.'' Would you like 
to revise your statement about--your earlier answer when I 
asked you whether or not the Fed had purchased bank debt as 
part of coronavirus relief?
    Mr. Quarles. No. That answer was entirely accurate. We have 
not purchased bank debt. We purchased ETFs. Those ETFs--
    Ms. Porter. Do those ETFs contain bank debt?
    Mr. Quarles. The ETFs contain a portion of bank debt. We 
stopped buying the ETFs several months ago. It was important to 
buy the ETFs in order to jump-start the general process of 
restoring the economy, which has benefited everyone.
    Ms. Porter. So, what happened here is you said you wouldn't 
buy bank debt. Then, you crafted a loophole using ETFs so the 
Fed could buy bank debt, a loophole buried in a subparagraph of 
rules on the Fed's website, and this loophole essentially 
swallowed up $2 billion in taxpayer money during COVID to bail 
out big banks, even as you told the public that the money could 
not go to any bank?
    Mr. Quarles. We did not purchase any bank debt. If we had 
not purchased the ETFs, we would have had a credit market 
implosion that would have been devastating to the economy. No 
one would have wanted that. As soon as that was no longer 
necessary, we stopped purchasing ETFs.
    Ms. Porter. Reclaiming my time, who is the world's largest 
issuer of ETFs?
    Mr. Quarles. I don't know, off the top of my head.
    Ms. Porter. BlackRock.
    Mr. Quarles. Probably BlackRock.
    Ms. Porter. BlackRock, yes. I think you do know that. 
BlackRock. Who is Larry Fink?
    Mr. Quarles. Larry Fink is the CEO of BlackRock.
    Ms. Porter. Did the Fed hire Larry Fink and BlackRock to 
advise it--and this seems beyond belief to me--to buy 
BlackRock's own ETF products?
    Mr. Quarles. I'm sorry, the alarm had gone off.
    Mr. Green. The gentlewoman's time has expired. The answer 
may be submitted for the record.
    Mr. Quarles. Thank you.
    Ms. Porter. Mr. Chairman, may I submit these documents for 
the record?
    Mr. Green. Without objection, it is so ordered.
    Ms. Porter. Thank you.
    Mr. Green. Mr. Rose is now recognized for 5 minutes.
    Mr. Rose. Thank you, Chairwoman Waters and Ranking Member 
McHenry, and thank you to our witnesses for being here today. 
Like many of my colleagues, I also want to thank you for the 
great work done by our regulators throughout this pandemic 
response. Your swift efforts to accommodate regulatory and 
supervisory policies were extremely important, and moving 
forward, I urge you to continue to be flexible to ensure a 
strong economic recovery.
    Nearly 60 percent of the automated teller machines in the 
United States are independent, nonbank terminals. It is those 
ATMs that are typically found in low-income communities and 
thinly-populated rural areas in which there are few, if any, 
bank offices or bank-owned ATMs.
    The widespread closures and denials of bank accounts to 
businesses within the independent nonbank ATM industry present 
a serious threat to the financial stability, not only of 
consumers who live in the area served almost exclusively by 
independent nonbank ATMs, but also the tens of thousands of 
retail and service businesses serving these consumers on a 
daily basis.
    In a Financial Services hearing on February 15, 2018, the 
National ATM Council's Tim Baxter testified about the, 
``widespread and severe consequences that in, recent years, 
have resulted from financial institutions' practice of de-
risking,'' and I might add, the prejudicial treatment that was 
a direct result of Federal regulators' implementation of 
Operation Choke Point in 2013.
    He noted that it is impossible for ATM operators to do 
business without having a bank account. But even with the end 
of the Operation Choke Point initiative, independent ATM 
providers were increasingly being notified by their banks, 
without explanation, that their deposit accounts were to be 
closed, or, in some cases, already had been closed.
    My question for you, Chairman McWilliams, Vice Chair 
Quarles, and Acting Comptroller Brooks, is, could each of you 
describe what the regulators are doing to address the fallout, 
the ongoing fallout from Operation Choke Point and its effect 
on ATM owners and the operators who are still having their 
accounts closed? Chair McWilliams, you may begin.
    Ms. McWilliams. Sure. And I suspected the question was 
coming my way, so I reached out for the pronouncements we have 
issued in the past. Certainly, we have made, I would say, very 
concentrated and concerted efforts to make sure that our 
institutions understand and offer services to the businesses in 
their communities, including businesses that might have been 
ostracized in the past by so-called Operation Choke Point.
    I have a statement I issued in November of 2018 telling our 
colleagues at the FDIC to make sure that when we examine banks, 
we were clear in our communication. We have resolved a lawsuit 
that was pending against the FDIC in connection with Operation 
Choke Point, even though that operation wasn't necessarily 
named Operation Choke Point by the FDIC.
    But in any case, we have issued a statement basically 
saying that financial institutions should have the ability to 
assess the risk profile of individual clients, and do so in 
accordance with their risk appetite and management practices.
    And then, we have a statement that we issued in 2015, 
basically saying that the FDIC encourages institutions to take 
a risk-based approach in assessing individual customer 
relationships, rather than declining to provide banking 
services to entire categories of customers without regard to 
the risks presented by an individual customer or the bank's 
ability to manage the risk.
    I don't know what else to say, to tell you the truth, to 
make sure that it resonates down to individual institution's 
level that they should not shut out the entire industry, or the 
entire type of business, but that they should manage that risk 
based on their risk appetite and management's experience in 
handling the type of risk that they may be concerned about.
    Mr. Rose. Thank you, Chair McWilliams.
    And I see our time is about to expire. I recently led a 
bipartisan letter to the three of you, Chair McWilliams, Vice 
Chair Quarles, and Comptroller Brooks, and I would just 
encourage you, the three of you, to respond to that in a timely 
manner.
    And thank you for your answer, Chair McWilliams.
    And with that, I yield back the balance of my time. Thank 
you.
    Mr. Green. The gentleman's time has expired. Mr. Taylor is 
now recognized for 5 minutes.
    Mr. Taylor. Thank you, Mr. Chairman. I appreciate this 
hearing. I think this is important.
    I wanted to dig down on forbearance with our banking 
institutions. I recall the March 13th guidance that came out 
about forbearance for banks. This question, by the way, Mr. 
Brooks, is for you in your capacity as Acting Comptroller of 
the OCC. My question is, at what point are you going to start 
telling banks you have forbeared long enough, it is time that 
you start looking at foreclosure for assets?
    This borrower cannot pay. How are you thinking about the 
end of forbearance? And I will say that forbearance is 
extremely important. We have seen real trouble in the 
commercial real estate space, building on what Ms. Wexton was 
talking about earlier, where you have CMBS loans that don't 
have a forbearance mechanism in them that the OCC has been able 
to guide for banks.
    So, that has made banks much more flexible as a credit 
facility, but at some point, that flexibility ends. Where do 
you think it will end, Mr. Brooks?
    Mr. Brooks. Congressman, that is a great and really 
important point. I would start by saying, one of the lessons we 
learned in the financial crisis is that two things in a 
downturn like this are equally important: one is making sure 
that you provide loss mitigation guidance and forbearance for 
everybody during a crisis; and the other is unwinding all of 
that as soon as the crisis abates.
    And the reason I say that is so important is that the data 
in the financial crisis shows that those States that extended 
long eviction moratoriums and long foreclosure prevention 
programs long after the immediate crisis was there had the most 
sustained real estate downturns, the longest term unemployment, 
and the most sustained sort of decline in overall real estate 
prices relative to States that came back to normal faster.
    So our basic view is it was appropriate to put forbearance 
programs in place right away, as soon as the pandemic was 
recognized as a crisis, but it will be equally important to go 
back to normal with not one moment to spare, lest we repeat the 
mistakes of kind of the 2012, 2013, 2014 era post-financial 
crisis.
    And so, the way we look at things is basically this: First 
of all, banks learned in the financial crisis that it is in 
their interest to make net present value positive loan 
modifications. They get that. And every CEO I talk about is 
fully aware of the fact that anybody who reasonably can repay 
should be kept in the loan or kept in the property until such 
point as they are able to start doing that.
    There will come a time, almost certainly, where there will 
be some amount of long-term permanent economic damage here. And 
in those circumstances, we are not doing anybody a favor by 
pretending like those assets are still assets on the balance 
sheet of a property.
    The reason that mortgages and secured loans are a lot 
cheaper than credit card loans and unsecured loans, obviously, 
is because they are secured by collateral, and at a certain 
point the safety and soundness of the system requires that 
execution against the collateral occur.
    I don't think we are there yet. It is very clear that at 
this point, we are still in the midst of the late stages of the 
pandemic, but I would be surprised if in one or two quarters, 
given the vaccine, the therapeutics, and the economic upturn, 
that at some point, the data will suggest that a return to 
normal is required, and at that point, we are going to need to 
go back to normal treatment of collateral.
    Mr. Taylor. Okay. That is helpful. So you are sort of 
saying one to two quarters. And then are you--as you go and do 
your inspections with banks, with institutions, when it is 
clear to you, look, this company is in bankruptcy, or their 
customer base is completely gone, there is just no way they 
are--they are not coming back any time in the near future, are 
you pushing those institutions to start to foreclose and move 
with the collateral, or are you still saying, just keep it on 
your books, forbear, let's just keep your balance sheets strong 
or make it look strong even though it is not strong?
    Mr. Brooks. No, Congressman, I say just the opposite. One 
thing I have been very clear about, and I have been speaking to 
State bank trade associations about this twice a week for the 
last 6 or 8 weeks, is that we are not blaming any banks for 
originated good credits that went south in the pandemic. But 
what we are very focused on is making sure that banks are 
classifying loans as it becomes clear that they are not going 
to repay so that we can assess that risk, they can take 
provisions and they can prepare to do charge offs and 
foreclosures on the back end of that. We have been very focused 
on that.
    Having said that, there is good news still in the system, 
and this picks up on a point that Vice Chair Quarles made a 
couple of hours ago, which is, there is still some amount of 
dry powder in the system from the PPP program, a series of 
other programs put in place. So we can still see in bank--in 
deposit accounts that there is enough runway, even for some 
small businesses that are not currently doing business to 
continue to make payments out of the proceeds of those loans.
    That runway, obviously, will expire, and when it expires 
and there is no reasonable prospect of those customers going 
back in business, there will be foreclosures and defaults at 
that point. It is one of the reasons that I emphasize the need 
to look at--
    Mr. Taylor. My time has expired. Thank you, Mr. Brooks. I 
yield back.
    Mr. Green. The gentleman's time has expired.
    And I must announce at this time that Mr. Casten will be 
the last person to ask questions. Mr. Casten, you are now 
recognized for 5 minutes.
    Mr. Casten. Thank you, Mr. Chairman. And thank you all for 
being here.
    As those on this committee know, I am here in Congress 
because I am deathly concerned about climate change. It affects 
every aspect of our lives, our health, our national security, 
and our financial system. And the effects of climate change, 
both physically and financially, are nonlinear, but our human 
brains think in linear patterns, which makes us prone to 
massive undershoot, which is what we have done over the last 30 
years.
    In that context, I was very pleased to see that the Fed 
finally listed climate change among risks in its biannual 
Financial Stability Report, and I was happy to hear that the 
Fed is going to join the Network for Greening the Financial 
System (NGFS), reversing its earlier position.
    I want to start with just a quick yes or no across the 
panel. Do you believe that climate change poses a significant 
financial risk, yes or no, Vice Chair Quarles?
    Mr. Quarles. I believe that it certainly poses a risk that 
we need to understand. I should state that we did not reverse 
our position on joining the NGFS. We have always--
    Mr. Casten. I understand.
    Mr. Quarles. --been talking with them about joining.
    Mr. Casten. Well, participating, but were not joining. Yes 
or no, Chair Hood, do you believe climate change poses a 
significant financial risk?
    Mr. Hood. I believe it is a risk that is worth 
understanding more so we can get better clarity and so we can 
really try to mitigate it.
    Mr. Casten. Chair McWilliams, yes or no?
    Ms. McWilliams. It's a risk we have asked our banks to take 
into account when underwriting loans and considering risk 
management in general.
    Mr. Casten. Acting Comptroller Brooks, yes or no, does it 
present a significant financial risk?
    Mr. Brooks. I would echo the comments of my colleagues.
    Mr. Casten. Okay. I am a little troubled that you all seem 
to be hedging on the word, ``significant,'' but moving on from 
there, Vice Chair Quarles, the Fed has previously said to your 
point that they would stay on the sidelines in the NGFS, but 
this week announced that you would request membership. Can you 
give any color on what prompted the change in approach, Vice 
Chair Quarles?
    Mr. Quarles. There was no change in the approach. We have 
been talking with the NGFS about joining them for some time. 
They had indicated that would not be possible until recently.
    Mr. Casten. Okay. Well, I am glad that you joined.
    About an hour ago, I was pleased that Chairman Powell, 
said, ``We do think that central banks and we here at the Fed 
have a contribution to make. The focus is on incorporating 
climate change risk into financial stability and bank 
regulation.'' And, ``It follows from our assigned legal 
mandates that we do this work.''
    Vice Chair Quarles, do you believe that we currently have 
enough insight into banks' climate risks to appropriately 
assess the overall health of the banks and the financial system 
as a whole?
    Mr. Quarles. I think we can always improve it, but we do 
have mechanisms to understand risk of the banks, including 
[inaudible]--
    Mr. Casten. Do you believe that the Fed has the existing 
authority to stress test financial institutions for potentially 
systemic risks, including, but not limited to, climate change, 
in the absence of congressional mandate?
    Mr. Quarles. Oh, yes, but we certainly don't need a 
congressional mandate to do that. There is a great deal of work 
that would be needed to do that properly. The Bank of England 
is probably--has done most of the--has probably most advanced 
in thinking about that, and they are still very preliminary in 
doing that. They have had [inaudible] Their approach on stress 
testing for climate.
    Mr. Casten. I don't know if there was a difference of 
opinion in the way that you all answered the question at the 
start, but let me be very clear: There is a significant risk 
associated with climate change. There are hundreds of billions 
of dollars of loss in assets.
    If you were to agree with me that there is a significant 
risk to the financial system, do you believe you have the 
obligation to stress-test the financial institutions for those 
potentially systemic risks?
    Mr. Quarles. We will stress-test all of the risks that are 
modelable. We do that.
    Mr. Casten. I hope that you can appreciate my question. We 
have huge amounts of loss on coastal properties, huge amounts 
of loss from forest fires across the country. We are going to 
be through the Greek alphabet pretty soon and into the Hebrew 
alphabet if we are not careful on the hurricanes that are 
hitting our shores this year. I don't know actually if the 
Hebrew alphabet follows the Greek alphabet; I just know that we 
are getting near the end of the first one.
    But if what it takes is congressional direction to act, 
then the bill that I have been leading with Senator Schatz, the 
Climate Change Financial Risk Act, is necessary. But I would 
hope that you all are willing and able and have the obligation 
to do that beforehand because these risks are massive, and as I 
said at the start, our human brains don't do very well with 
nonlinear change. Albert Einstein's great line was that the 
most amazing thing ever invented was compound interest, and we 
are in a very nonlinearly changing world.
    Thank you, and I yield back my time.
    Mr. Green. The gentleman's time has expired.
    On behalf of the chairwoman, I would like to thank our 
distinguished witnesses for their testimony today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    This hearing is now adjourned.
    [Whereupon, at 3:34 p.m., the hearing was adjourned.]

                            A P P E N D I X



                           November 12, 2020
                           
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