[Senate Hearing 116-411]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 116-411

               THE QUARTERLY CARES ACT REPORT TO CONGRESS

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                                   ON

EXAMINING TESTIMONY FROM THE SECRETARY OF THE TREASURY AND THE CHAIRMAN 
  OF THE FEDERAL RESERVE, AS REQUIRED UNDER TITLE IV OF THE CARES ACT

                               __________

                           SEPTEMBER 24, 2020

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


                Available at: https: //www.govinfo.gov /

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
43-349 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------  


            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                      MIKE CRAPO, Idaho, Chairman

RICHARD C. SHELBY, Alabama           SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      JACK REED, Rhode Island
TIM SCOTT, South Carolina            ROBERT MENENDEZ, New Jersey
BEN SASSE, Nebraska                  JON TESTER, Montana
TOM COTTON, Arkansas                 MARK R. WARNER, Virginia
MIKE ROUNDS, South Dakota            ELIZABETH WARREN, Massachusetts
DAVID PERDUE, Georgia                BRIAN SCHATZ, Hawaii
THOM TILLIS, North Carolina          CHRIS VAN HOLLEN, Maryland
JOHN KENNEDY, Louisiana              CATHERINE CORTEZ MASTO, Nevada
MARTHA McSALLY, Arizona              DOUG JONES, Alabama
JERRY MORAN, Kansas                  TINA SMITH, Minnesota
KEVIN CRAMER, North Dakota           KYRSTEN SINEMA, Arizona

                     Gregg Richard, Staff Director

                Laura Swanson, Democratic Staff Director

                        Catherine Fuchs, Counsel

                Brandon Beall, Professional Staff Member

                    Tanya Otsuka, Democratic Counsel

           Corey Frayer, Democratic Professional Staff Member

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                      THURSDAY, SEPTEMBER 24, 2020

                                                                   Page

Opening statement of Chairman Crapo..............................     1
    Prepared statement...........................................    47

Opening statements, comments, or prepared statements of:
    Senator Brown................................................     4
        Prepared statement.......................................    48

                               WITNESSES

Steven T. Mnuchin, Secretary, Department of the Treasury.........     7
    Prepared statement...........................................    50
    Responses to written questions of:
        Senator Brown............................................    55
        Senator Toomey...........................................    56
        Senator Tillis...........................................    56
        Senator Menendez.........................................    57
        Senator Cortez Masto.....................................    58
        Senator Jones............................................    59
        Senator Sinema...........................................    61
Jerome H. Powell, Chairman, Board of Governors of the Federal 
  Reserve System.................................................     8
    Prepared statement...........................................    51
    Responses to written questions of:
        Senator Brown............................................    62
        Senator Toomey...........................................    66
        Senator Tillis...........................................    71
        Senator Reed.............................................    72
        Senator Van Hollen.......................................    73
        Senator Cortez Masto.....................................    75
        Senator Jones............................................    76
        Senator Sinema...........................................    78

              Additional Material Supplied for the Record

Statement of NAFCU, submitted by Chairman Crapo..................    82
Statement of CUNA, submitted by Chairman Crapo...................    85
Statement of ICSCS, submitted by Chairman Crapo..................    88
COVID-19 Revenue Loss Dashboard Data, submitted by Senator Jones.    92
Statements of South Dakota bankers, submitted by Senator Rounds..    95

                                 (iii)

 
               THE QUARTERLY CARES ACT REPORT TO CONGRESS

                              ----------                              


                      THURSDAY, SEPTEMBER 24, 2020

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., in room SD-106, Dirksen 
Senate Office Building, and by videoconference, Hon. Mike 
Crapo, Chairman of the Committee, presiding.

            OPENING STATEMENT OF CHAIRMAN MIKE CRAPO

    Chairman Crapo. This hearing will come to order.
    Today's hearing is a hybrid format, and the hearing room 
has been configured to maintain the recommended 6-foot social 
distancing between Senators, witnesses, and other individuals 
in the room necessary to operate the hearing, which we have 
kept to a minimum.
    For those joining remotely, a few videoconferencing 
reminders. Once you start speaking, there will be a slight 
delay before you are displayed on the screen. To minimize 
background noise, please use the ``Mute'' button until it is 
your turn to speak or ask questions. If there is a technology 
issue, we will move to the next Senator until it is resolved.
    I again remind all Senators and our witnesses that the 5-
minute clock still applies, and both of you who are remote 
should all have a box on your screen labeled ``Clock'' that 
will show how much time is remaining. We will try to give you a 
gavel reminder when your time is almost expired.
    To simplify the speaking order process, Senator Brown and I 
have again agreed to go by seniority for this hearing.
    With that, I welcome our witnesses to this hearing: the 
Honorable Steven T. Mnuchin, Secretary of the Department of 
Treasury; and the Honorable Jerome H. Powell, Chairman of the 
Board of Governors of the Federal Reserve System. Welcome to 
both of you.
    Today's witnesses will provide testimony as required under 
Title IV of the CARES Act.
    Congress has appropriated nearly $3 trillion to protect, 
strengthen, and support Americans, to fight the pandemic, and 
also to stabilize the infrastructure of our economic system.
    Title IV of the CARES Act provided a $454 billion infusion 
into the Exchange Stabilization Fund to support the Federal 
Reserve's 13(3) emergency lending programs and facilities that 
facilitate liquidity in the marketplace and support eligible 
businesses, States, municipalities, and tribes.
    So far, approximately $195 billion of funds under Title IV 
of the CARES Act have been leveraged to provide trillions of 
dollars in liquidity back into the markets, supporting credit 
flow and helping to stabilize the economy through the Primary 
Market and Secondary Market Corporate Credit Facilities, the 
Term Asset-Backed Securities Loan Facility, the Main Street 
Lending Program, and the Municipal Liquidity Facility.
    That leaves around $250 billion in funding remaining under 
Title IV of the CARES Act.
    There has been significant interest in exploring ways that 
the Main Street Lending Program, which offers financial support 
to smaller and medium-sized businesses and nonprofits, can be 
improved to expand its access and utilization.
    Earlier this month, the Banking Committee held a hearing on 
the status of 13(3) facilities where witnesses made the case 
for and provided recommendations to change the terms of the 
Main Street Lending Program to broaden its access and use and 
to address commercial real estate markets.
    In that hearing, Hal Scott, president of the Committee on 
Capital Markets Regulation, shared his view that, `` . . . 
small and medium-sized businesses will need financial support 
for several years to recover from the impact of the COVID-19 
pandemic.''
    He continued, ``While our economy is improving, given the 
depth to which it fell, there is still a long way to go. Small 
business revenues continue to be well below prepandemic levels, 
and the recovery has stalled since July. A key part of this 
financial support should come from the Main Street Program 
authorized by the CARES Act.''
    In that same hearing, Jeff DeBoer, president and CEO of the 
Real Estate Roundtable, painted a bleak picture of the 
condition of the commercial real estate market.
    He said, `` . . . it is impacting their ability to meet 
their debt service obligations, which increases pressure on 
financial institutions, pension fund investors, and others.''
    And he said, `` . . . it is pushing property values down to 
the detriment of local governments. It is causing much stress 
in pools for commercial mortgage-backed securities, and it is 
threatening to result in countless commercial property 
foreclosures. The situation must be addressed.''
    In July, I sent a letter to each of you, Secretary Mnuchin 
and Chairman Powell, urging you to expand access to the Main 
Street Lending Program, including by setting up an asset-based 
lending program and addressing the commercial real estate 
market.
    In addition to expanding the Main Street Lending Program, 
there has been meaningful interest in opportunities to allocate 
remaining CARES Act funds.
    In August, House Financial Services Committee Ranking 
Member McHenry and I sent a letter to each of you urging you to 
implement the remaining funds under Title IV to work to the 
fullest extent, including by expanding the Main Street Lending 
Program, to further support Main Street businesses, their 
workers, and the American economy.
    The Federal Reserve's 13(3) facilities play a critical role 
in strengthening the economic recovery.
    It is important to continually assess what areas of the 
economy and financial markets continue to be in need of support 
and identify options for providing additional needed support, 
whether through expanding existing facilities or creating new 
facilities.
    In July, I sent a letter to the Federal banking regulators 
urging each of them to extend and expand critical CARES Act 
relief where there is discretion, including relief for the 
Community Bank Leverage Ratio to at least December 31, 2021; 
the Troubled Debt Restructurings to at least January 1, 2022; 
and the Current Expected Credit Losses, or CECL, to at least 
January 1, 2023.
    Since that letter, I have heard additional concerns from 
both banks and credit unions.
    Not only have banks and credit unions experienced a 
significant inflow of deposits during this pandemic, but 
Congress also has tasked them with supporting the economy, 
particularly through the Paycheck Protection Program.
    Their role and these unique circumstances threaten to cause 
key regulatory thresholds to be breached and a ratcheting up of 
regulation that would otherwise not occur that could keep them 
on the sidelines.
    The regulatory framework should account for these unique 
circumstances and enable banks and credit unions to continue 
supporting the recovery.
    Title IV also contains robust oversight provisions.
    Section 4026 is what brings us here today, and it also 
established the Congressional Oversight Commission, which has 
held two public hearings and issued four reports to date, and 
the Special Inspector General for Pandemic Recovery, who has, 
to date, issued one report and continues his important work.
    During today's hearing, I look forward to hearing how the 
financial resources provided under the CARES Act have benefited 
the American people and economy; an update on the status of the 
13(3) emergency facilities, including an assessment of the 
opportunities for and need to expand the Main Street Lending 
Program; steps the Fed and Treasury have taken and will 
continue to take to provide transparency into the loans, loan 
guarantees, and other investments under the CARES Act; 
opportunities to utilize any remaining funds of the CARES Act 
to provide financial support and additional liquidity to the 
economy; and opportunities to tailor the regulatory framework 
to account for the unique circumstances of the pandemic and 
role of the financial institutions, and whether congressional 
action is needed.
    Although there have been positive economic signs in recent 
months, Americans are continuing to still struggle with and 
feel the effects of the COVID-19 pandemic and still need 
relief.
    Unfortunately, Republicans' repeated efforts to deliver 
targeted relief in areas where we can agree has been rebuffed 
by the Democrats.
    Negotiating toward a realistic package that can actually 
get passed and signed into law would best serve the American 
people during this difficult time.
    I appreciate the work of both Secretary Mnuchin and 
Chairman Powell in response to this horrible pandemic to 
support financial markets, businesses, and the economy.
    Thank you again to each of you for joining the Committee 
today.
    Senator Brown, are you with us?

           OPENING STATEMENT OF SENATOR SHERROD BROWN

    Senator Brown. I am. Mr. Chairman, thank you. It is a 
pleasure to be here again. While I am disappointed this hearing 
was not held fully remote, I am glad to see masks in the 
hearing room. Chair Powell, I want to thank you for your 
leadership in calling for a national mask mandate--something no 
other Republican I am aware of has done. I know many of my 
colleagues, Republicans and Democrats, cringe when they see 
these Trump rallies, when they see people packed together, 
shouting, not wearing masks. We should be trying--elected 
officials from the President to the rest of us, should be 
trying to stop this virus, not spread it.
    Today there are more people out of work than there were 
during the 2008 financial crisis. But you would not know it 
from the way President Trump and Secretary Mnuchin act, as if 
we are through the crisis and well on the road to recovery. 
That is what happens when you measure the health of the economy 
only through the stock market.
    There continue to be about 1,000 deaths per day from the 
coronavirus. That does not show up in the corporate quarterly 
earnings reports, apparently. In 22 States, coronavirus cases 
are surging rather than receding, and scientists and public 
health experts predict it will only get worse as fall and 
winter begin.
    Families are under unbearable stress. Most of my colleagues 
know that. Most of you have children and grandchildren, trying 
to either educate their kids at home, or worrying as schools 
open without sufficient plans to protect children and teachers 
and cafeteria workers and security guards and custodians. That 
does not even include our sons and daughters and the risk they 
face at colleges and universities.
    But you would not know any of that if you only looked at 
corporate profit forecasts.
    The President and this Administration continue to act like 
everything is business as usual--because, for them, it is.
    The coronavirus is not really affecting them or their 
wealthy friends or their comfortable jobs. CEOs are not the 
people working the cash registers or cleaning hospital beds. 
They are not risking their lives every day to keep food on the 
table. Most CEOs do not live in the neighborhoods where black 
and minority-owned restaurants and businesses are shutting 
down.
    Think for a moment, all of us should think for a moment, of 
the anxiety of an essential worker, the stress she faces. Think 
about coming home at night and worried you might have picked up 
the virus at work, and you might be exposing your children and 
your family.
    Cleveland is always a pretty good barometer of where the 
country is heading.
    Long before the Great Recession, our trade and tax policy 
essentially abandoned the industrial Midwest. Communities 
watched factory after factory close, with no plan to rebuild 
our local economies. Entire neighborhoods and entire towns 
hollowed out. My Zip code, 44105 in Cleveland, had the most 
foreclosures in the United States at the beginning of 2007. By 
the next year, thousands of cities across the country were 
suffering; millions of families lost their homes. The story of 
our Zip code became the story of the whole country, because the 
Government took care of Wall Street, it took care of the 
biggest banks; it failed to take care of everybody else.
    Just 10 years later, we have yet another crisis where 
Cleveland is a harbinger of what is happening across the 
country. ProPublica illustrated it pretty well recently. They 
covered a big company called ``TransDigm'' that has offices in 
downtown Cleveland. TransDigm has gotten plenty of help from 
the taxpayers to get through this pandemic. The company is 
borrowing money at record low interest rates; it is collecting 
yet more tax breaks, while at the same time it is laying off 
its workers. Three thousand workers in Cleveland are going to 
lose their jobs during the pandemic, while the company's 
executives keep making money. The CEO of TransDigm, the 
chairman, made at last count $60 million a year.
    And this is happening all around the country. Government 
help is readily available for big corporations, while small 
businesses struggle to survive and workers are on their own.
    Millions have lost their jobs. At the beginning of August, 
600,000 workers in my State, millions across the country lost 
their $600 a week unemployment insurance payment because this 
President and my Republican colleagues allowed it to expire. 
That $600 a week kept more than 12 million people out of 
poverty.
    What are these families to do? How are they going to make 
rent or their mortgage payment on October 1st? You cannot tell 
them, ``Oh, just go out and get a job.'' There are no jobs 
because the President has not controlled the virus.
    Millions of people are stuck inside their homes and are 
separated from loved ones to stay safe, trying to avoid 
contracting this disease. Black and brown communities, 
including Native American tribes, have been hit the hardest by 
the pandemic, but still do not have equal access to the Federal 
Reserve lending facilities or PPP loans.
    We know that it would not have been this bad if back in 
February and March the President of the United States had done 
his job. We all know that, Republicans and Democrats alike. We 
were not shocked by the quotations of the President and the 
discussion of the President when he talked to the Washington 
Post reporter. But imagine if the President, instead of lying 
to us, had treated the American people like adults and leveled 
with us.
    Imagine if he had worn a mask, the President had worn a 
mask, and practiced social distancing. Imagine if he had had a 
real plan to mobilize all of America's vast ingenuity to scale 
up production of tests and contact tracing and personal 
protective equipment.
    More small businesses would be open right now. Our children 
would be back in school safely, or almost all of them. Workers 
would still have their jobs, and tens and tens and tens of 
thousands of parents and grandparents would still be alive. We 
know that.
    And now Americans are watching the stock market surge and 
their President and his economic advisers saying the economy is 
great. They are wondering what great economy they are talking 
about.
    The Ohioans I talk to, and anyone who actually understands 
economics, know workers are the foundation of our economy. They 
know all too well what happens when you let Wall Street run 
things and ignore Main Streets across the country.
    Ohioans have watched for decades as factories closed, 
investment dried up, and storefronts were boarded over in 
communities that once were thriving. They know what it is like 
to wake up one day and realize the only jobs to be had are at a 
big-box chain for rock-bottom wages, with no health care, no 
paid sick days, and no power over your schedule.
    Those Ohio workers know what it is like to be treated as 
expendable by large corporations and, too often, by this 
Government.
    And remember, as Ohio goes, so goes the Nation. Americans 
are waking up and realizing they have a President who thinks 
much of the country is expendable.
    I know not everyone in Government feels that way. The 
Chairman of the Fed has said over and over that we need more 
actions from Congress--more money to unemployed workers, more 
money for schools, more money to help families with their rent 
or mortgage. In short, we need the Government to actually lead 
and use our country's vast resources to avoid a catastrophic 
recession.
    In our last hearing in this Committee, all of the expert 
witnesses, the one chosen by the minority and the two chosen by 
the majority, they all agreed on one thing: people need their 
Government to actually step in to support our families, 
something the Senate majority has failed to do.
    It seems the only people who are not getting this message 
that we need Government to step up in a big way for unemployed 
workers, for emergency rental assistance, reopen our schools 
safely, for local governments, the Postal Service, the 
elections. It seems the only people who are not getting that 
message are President Trump, Secretary Mnuchin--sitting in 
front of us today--and Republican Senators scattered around the 
room.
    It is not as if Republicans are not capable of taking 
action. Mitch McConnell moves heaven and earth to do huge 
favors for big corporations.
    Look at the tax giveaway. We spent $2 trillion dollars 
making the richest people in our country richer. The President 
promised he would grow the economy; he promised it would pay 
for itself. Not even close. He promised it would mean workers 
got a $4,000 raise. None of that happened.
    It was incredibly unpopular, but McConnell got all of his 
Republican Senators, as he always does, to vote for it. Trump 
wanted it, then McConnell wants it, then the entire Senate 
Republican caucus wants it.
    Senator McConnell has made sure Trump's corporate judges 
are approved. He has bent over backwards to stack the Supreme 
Court that will gut the Affordable Care Act, rip away 
protections for preexisting conditions--almost half the people 
in my State have preexisting conditions--and always side with 
corporations over workers.
    Now we know he is even willing to reverse his own position 
to confirm yet another Supreme Court Justice.
    When it comes to doing the bidding of Wall Street and the 
wealthy, Mitch McConnell can whip the Senate into action. He 
thinks everything else can wait.
    Most Americans cannot afford, Mr. Chairman, to wait any 
longer. We are up against a global health crisis that will 
spiral into a global economic crisis unless we act now. We face 
a challenge that requires this Government to be at its best, to 
work together to do big things.
    We need an economic rescue package for everyone, help to 
keep families in their homes, and to protect workers at their 
jobs, help for seniors and veterans and students who are at 
risk, give them help. We need it fast.
    Democrats are ready to meet this moment. House Democrats 
passed the HEROES Act 5 months ago. President Trump and Senate 
Republicans move heaven and earth to help Wall Street and their 
wealthy friends. When will they be ready to do the same for 
everyone else?
    Chairman Crapo. We will now move to the testimony of our 
witnesses. Secretary Mnuchin, you may go first. Please proceed.
    Secretary Mnuchin. Can you hear me, Chairman Crapo?
    Chairman Crapo. Yes, it is on now.

 STATEMENT OF STEVEN T. MNUCHIN, SECRETARY, DEPARTMENT OF THE 
                            TREASURY

    Secretary Mnuchin. Chairman Crapo, Ranking Member Brown, 
and Members of the Committee, I am pleased to join you today to 
discuss the critical steps the Department of Treasury and the 
Federal Reserve have taken over the last 6 months to provide 
economic relief to the American people, as well as to provide 
liquidity to the credit markets, business, and households. We 
are fully committed to getting every American back to work as 
quickly as possible.
    America is in the midst of the fastest economic recovery 
from any crisis in U.S. history. The August jobs report showed 
that the economy has gained back 10.6 million jobs--nearly 50 
percent of the jobs lost due to the pandemic. The unemployment 
rate reduced to 8.4 percent, a notable achievement considering 
some people had expected as high as 25 percent. Thanks to the 
programs provided by the CARES Act, we never got close to that 
figure.
    I believe we will see strong third quarter growth, fueled 
by strong retail sales, housing starts, existing home sales, 
manufacturing growth, and increased business activity. The Blue 
Chip survey projection for third quarter GDP is 24 percent.
    The recovery has been strong because the Administration and 
Congress worked together on a bipartisan basis to deliver the 
largest economic relief package in American history. The 
Federal Reserve has been instrumental to the recovery by 
implementing 13 unique 13(3) lending facilities.
    Economic reopenings, combined with the CARES Act, have 
enabled a remarkable economic rebound, but some industries 
particularly hard hit by the pandemic do require more relief.
    The President and I remain committed to providing support 
for American workers and business. We continue to work with 
Congress on a bipartisan basis to pass a Phase IV relief 
package. I believe a targeted package is still needed, and the 
Administration is ready to reach a bipartisan agreement.
    I would also encourage the Senate to pass promptly the 
bipartisan continuing resolution that was passed in the House.
    Treasury has been working hard to implement the CARES Act 
with transparency and accountability. We released a significant 
amount of information to the public on our website, 
Treasury.gov, and USAspending.gov. We have released more 
information than is required by the statute. The Federal 
Reserve has also posted information on its website regarding 
the lending facilities.
    We have provided regular updates to Congress, this marking 
my seventh appearance before Congress for CARES Act hearings. 
Additionally, we are cooperating with various oversight bodies, 
including the Inspector General, the Treasury Inspector 
General, the Treasury Inspector General for Tax, the new 
Congressional Oversight Commission, and the GAO.
    We appreciate Congress' interest in these issues and have 
devoted significant resources to inquiries. We remain committed 
to working with you to accommodate Congress' legislative needs 
and the whole-of-Government approach to defeat COVID-19.
    I would like to thank the Members of this Committee for 
working with us to provide critical economic support to the 
American people. Thank you.
    Chairman Crapo. Thank you, Mr. Secretary.
    Chairman Powell.

STATEMENT OF JEROME H. POWELL, CHAIRMAN, BOARD OF GOVERNORS OF 
                   THE FEDERAL RESERVE SYSTEM

    Mr. Powell. Thank you. Chairman Crapo, Ranking Member 
Brown, and other Members of the Committee, thank you for the 
opportunity to update you on our ongoing measures to address 
the hardship wrought by the pandemic. The Federal Reserve, 
along with others across Government, is working to alleviate 
the economic fallout. We remain committed to using our tools to 
do what we can, for as long as it takes, to ensure that the 
recovery will be as strong as possible, and to limit lasting 
damage to the economy.
    Economic activity has picked up from its depressed second 
quarter level, when much of the economy was shut down to stem 
the spread of the virus. Many economic indicators show marked 
improvement. Household spending looks to have recovered about 
three-quarters of its earlier decline, likely owing in part to 
Federal stimulus payments and expanded unemployment benefits. 
The housing sector has rebounded, and business fixed investment 
shows signs of improvement. In the labor market, roughly half 
of the 22 million payroll jobs that were lost in March and 
April have been regained as people return to work. Both 
employment and overall economic activity, however, remain well 
below their prepandemic levels, and the path ahead continues to 
be highly uncertain. The downturn has not fallen equally on all 
Americans; those least able to bear the burden have been the 
most affected. The rise in joblessness has been especially 
severe for lower-wage workers, for women, and for African 
Americans and Hispanics. This reversal of economic fortune has 
upended many lives and created great uncertainty about the 
future.
    A full recovery is likely to come only when people are 
confident that it is safe to reengage in a broad range of 
activities. The path forward will depend on keeping the virus 
under control and on policy actions taken at all levels of 
Government.
    Since mid-March, we have taken forceful action, 
implementing a policy of near-zero rates, increasing asset 
holdings, and standing up 13 emergency lending facilities. We 
took these measures to support broader financial conditions and 
more directly support the flow of credit to households, 
businesses of all sizes, and State and local governments. Our 
actions, taken together, have helped unlock more than $1 
trillion of funding, which, in turn, has helped keep 
organizations from shuttering, putting them in a better 
position to keep workers on and to hire them back as the 
economy continues to recover.
    The Main Street Lending Program has been of significant 
interest to this Committee and to the public. Many of the 
businesses affected by the pandemic are smaller firms that rely 
on banks for loans rather than public credit markets. Main 
Street is designed to facilitate the flow of credit to small 
and medium-sized businesses. In establishing the facility, we 
conducted extensive outreach, soliciting public comment and 
holding in-depth discussions with lenders and borrowers of all 
sizes. In response to feedback, we have continued to make 
adjustments to Main Street to provide greater support to small 
and medium-sized businesses and to nonprofit organizations such 
as educational institutions, hospitals, and social service 
organizations.
    Nearly 600 banks, representing well more than half of the 
assets in the banking system, have either completed 
registration or are in the process of doing so. About 230 loans 
totaling roughly $2 billion are either funded or in the 
pipeline. Main Street is intended for businesses that were on a 
sound footing prepandemic and that have good longer-term 
prospects but have encountered temporary cash-flow problems due 
to the pandemic and are not able to get credit on reasonable 
terms as a result. Main Street loans may not be the right 
solution for some businesses, in part because the CARES Act 
states clearly that these loans cannot be forgiven.
    Our credit facilities have improved lending conditions 
broadly, including for potential Main Street borrowers. The 
evidence suggests that most creditworthy small and medium-sized 
businesses can currently get loans from private sector 
financial institutions.
    Many of our programs rely on emergency lending powers that 
require the support of the Treasury Department and are 
available only in unusual circumstances. By serving as a 
backstop to key credit markets, our programs have significantly 
increased the extension of credit from private lenders. 
However, the facilities are only that--a backstop. They are 
designed to support the functioning of private markets, not to 
replace them. Moreover, these are lending, not spending powers. 
Many borrowers will benefit from these programs, as will the 
overall economy, but for others, a loan that could be difficult 
to repay might not be the answer. In these cases, direct fiscal 
support may be needed.
    Our economy will recover fully from this difficult period. 
We remain committed to using our full range of tools to support 
the economy for as long as is needed.
    Thank you.
    Chairman Crapo. Thank you, Chairman Powell.
    For my first question, I would like you to keep your 
answers to this as brief as you possibly can because I want to 
get on to a few others. But I want to talk about the need for 
additional relief in terms of further coronavirus relief 
legislation.
    I think both of you have said that what we have done so far 
has been very helpful--it is having the results that you have 
talked about--but that some more is needed, and I believe both 
of you have said that we need to in this next legislation be 
more targeted. Is that correct?
    Secretary Mnuchin. That is correct.
    Chairman Crapo. Chairman Powell, correct?
    Mr. Powell. Yes. I would, of course, defer to the Secretary 
and to you on the actual contents of the legislation.
    Chairman Crapo. Sure, and I understand that.
    There is clearly a big gap between the House and the Senate 
negotiations and the positions on the next COVID-19 relief. 
That being said, there is also a very significant amount of 
agreement in specific areas where I believe, if we were to pick 
up those specific areas where we do have relief and pass those, 
that we could have a significant positive impact. And I would 
just like to ask each of you to comment on whether you 
believe--and I realize you have a hard time, Mr. Chairman, 
talking about what Congress should do. But would it be 
beneficial to our relief efforts if we were able to pass at 
least the agreements that we have already reached, if we could 
take those targeted areas where we do have agreement in 
Congress and move forward on them?
    Secretary Mnuchin. I believe there is significant 
bipartisan support for legislation that supports kids and jobs, 
particularly for extending the PPP to those hard-hit industries 
that need a second payment. And, yes, I think that would be 
very meaningful for the economy broadly and for those most 
impacted as a result of COVID.
    Chairman Crapo. All right. Thank you.
    Do you want to say anything, Mr. Chairman, on that?
    Mr. Powell. I just would briefly add that I do think it is 
likely that additional fiscal support will be needed, and I 
think these are great areas to be looking at.
    Chairman Crapo. And in terms of targeting how we approach 
this, on July 31st I sent both of you a letter regarding 
expanding the Main Street Lending Facility to allow for asset-
based lending and for a commercial real estate facility. 
Yesterday I met with many of the restaurant owners from Idaho, 
and there is a bill, as you are probably aware, to try to 
establish targeted legislation to deal with our restaurant 
industry.
    You have both responded to me that there is some difficulty 
in putting together the kind of relief I requested for asset-
based lending and for the commercial real estate markets. Could 
both of you just expand quickly--we have got about a minute 
left for each of you on my time--as to what the difficulties 
are there and how we may proceed to get some targeted relief in 
those areas?
    Secretary Mnuchin. Yes, Mr. Chairman, I think as it relates 
to commercial real estate, the Chair and I have spent a lot of 
time on this, and we are very sympathetic to the issue. There 
are structural issues because in many cases these loans are in 
commercial mortgage-backed securities that have prepayment 
penalties and do not allow for additional funding behind them. 
But we continue to look at solutions.
    And I would just say as it relates to the restaurant and 
broader hospitality industries, we think those industries do 
not need more debt. What they need is economic relief because 
they are shut down as a result of COVID.
    Chairman Crapo. So that would be more of a forgivable loan 
or grant program?
    Secretary Mnuchin. It would be more PPP money, again, 
targeted, in this case very targeted to businesses that have 
decreased revenues, would be very important to saving jobs.
    Chairman Crapo. And would you both agree that the PPP 
program needs to be made even more flexible?
    Secretary Mnuchin. I think the good news is there is strong 
bipartisan support around both flexibility on PPP but also 
additional funds that are highly targeted.
    Chairman Crapo. All right. Chairman Powell, do you want to 
add anything to that?
    Mr. Powell. Not really, no.
    Chairman Crapo. All right. Then let me just conclude by 
saying I agree with the need to move forward. I think the 
comments you have made highlight the fact that there is--you 
are the one who is negotiating in most of the arenas here, 
Secretary Mnuchin. But you were probably surprised to hear the 
attack today that you are not negotiating, that we are not 
negotiating. But the fact is there is broad bipartisan support 
for many major efforts that need still to be taken, and I 
believe that your testimony highlights the fact that that is 
something we ought to be able to get going forward on. We ought 
to do what we can reach agreement on and get it done soon.
    With that, Senator Brown.
    Senator Brown. Thank you, Mr. Chairman.
    Secretary Mnuchin, President Trump said that, with regard 
to the coronavirus, ``I think we did a great job.'' Do you 
agree with that? Do you think the President has done a great 
job on the coronavirus?
    Secretary Mnuchin. I do. I think we have made tremendous 
progress on testing. We just committed to a hundred----
    Senator Brown. Mr. Secretary, I am sorry to cut you off. I 
hope that you and the President do not dislocate your shoulders 
by patting yourself on the back saying, ``Good job.'' You know, 
we are 4 percent of the world's population; we are 22 percent 
of the world's deaths. You bragged about the economy growing so 
far--your words. Our unemployment rate is significantly higher 
than Germany's, significantly higher than France's, twice what 
Taiwan's is, almost three times what South Korea and Japan's 
is, much higher than Australia, twice what Britain's rate is, 
twice what New Zealand's rate is. I mean, I know you think the 
economy is doing well if you are talking to your wealthy 
friends on Wall Street, but things are pretty bad for most 
working Americans and are going to get worse unless you come up 
with a real package. So let me talk about the package that you 
just discussed.
    Senate Republicans, as you know, offered a paltry, some 
call it ``emaciated,'' piecemeal coronavirus bill. You and the 
President said you wanted a bigger number than the $500 billion 
which Republicans offered. So if you want a bigger deal, they 
came up with something so small, which Republicans are opposed 
to going higher, Mr. Secretary?
    Secretary Mnuchin. Well, let me just clarify. I am not 
bragging about the economy. What I have said is we have made a 
major recovery from a shutdown, but we have more work to do, 
and that is why the President and I want more support. I have 
probably spoken to Speaker Pelosi----
    Senator Brown. You said it was the fastest economic growth 
we have seen.
    Secretary Mnuchin. I have probably spoken to Speaker Pelosi 
15 or 20 times in the last few days on the CR, and we have 
agreed to continue to have discussions about the CARES Act. And 
I would encourage--like we had bipartisan support in this 
Senate, 96-0 and 100-0. We are very proud, and I specifically 
worked with you on many pieces of the legislation.
    Senator Brown. But I want to go back. The Senate offered a 
paltry $500 billion plan. Economists all over the country 
wanted three and four and five times that amount. You and the 
President said you want something larger. The President of the 
United States typically--and sorry for the cliche--when he 
says, ``Jump,'' Mitch McConnell and Senate Republicans usually 
say, ``How high?'' But the President of the United States wants 
something bigger. You have said you want something bigger. So 
what is the hold-up? You have always been really good--look at 
the tax cut. A trillion and a half--way more than a $1 trillion 
tax cut, and 70 percent of it went to the richest people in the 
country. That is what you wanted. That is what your Cabinet 
wanted. That is what the President wanted. You got all the 
Senate Republicans to go along with that even though it blew a 
hole in the Federal budget. You knew all that. So why can't you 
get Senate Republicans to go along on a bigger number than the 
$500 billion package? What gives here, Mr. Secretary?
    Secretary Mnuchin. Again, I would just emphasize--I think 
you know this, but this requires 60 votes in the Senate, and I 
would encourage the Democrats in the Senate to work with us. I 
think there are areas of support. Let us pass things that we 
agree on quickly, and we can always come back and do more. So 
it is less of the issue of what the absolute number is, and I 
am sure you and I agree on there are areas that need to be 
passed.
    Senator Brown. Mr. Secretary, I know you will say pass 
something minimalist that mostly affects Wall Street and does 
not much affect workers, and then we will come back. But 
considering Senator McConnell, for 4 months after the House 
passed a bill that would matter for schools, for local 
governments, for unemployed workers, for the Postal Service, 
for people who might be evicted, Senator McConnell said there 
is no sense of urgency, and all of his spineless Republican 
colleagues went along with it. You know that. And you went 
along with it. So let me ask it a different way.
    Millions of people lost their jobs; another 800,000 workers 
filed for unemployment. The $600 unemployment insurance came 
every week and kept literally, studies show, 12 million people 
out of poverty, that $600 a week. That evaporated in early 
August. You know that. It evaporated because the Senate 
Republicans refused to act. The House had done it. The Senate 
Republicans refused to act. Workers obviously cannot get a loan 
or grant through any of the facilities, and I appreciate the 
work that the Chair of the Federal Reserve has done. But those 
people that lost their $600 that could face foreclosure, what 
do you suggest they do? What do you suggest those people who 
lost their $600 do if they do not have the money they need to 
buy groceries this week or with October 1 coming they cannot 
pay their mortgage or their rent? What are they to do, Mr. 
Secretary?
    Secretary Mnuchin. Well, I think as you know, because that 
expired the President was forced to move forward with Executive 
action, so we are still providing those people. And, again, I 
would encourage both----
    Senator Brown. Well, you are providing----
    Secretary Mnuchin. ----the Democrats and the Republicans to 
sit down together. There is an agreement on extended 
unemployment.
    Senator Brown. Mr. Secretary, I am sorry my time has 
expired. The President was not forced--the President could have 
gotten his Majority Leader, who always does his bidding, and 
the Republican caucus to go along with the Democrats to keep 
the $600 coming. Do not act like the President was forced to do 
something. You simply did not step up for these workers. Six 
hundred dollars a week, 600,000 people in my State lost their 
unemployment insurance, and essentially you and Senator 
McConnell and the President of the United States are simply 
saying to those 600,000 Ohioans, ``Sorry, you are on your 
own.''
    Secretary Mnuchin. I think that is just a gross 
misstatement and exaggeration. And, again, if the Democrats are 
willing to sit down, I am willing to sit down anytime for 
bipartisan legislation in the Senate. Let us pass something 
quickly.
    Chairman Crapo. And I would just add----
    Senator Brown. You could get 47 Democratic votes for $600 a 
week this afternoon if you are willing to do it for every one 
of those workers. We all know what that means in our States. We 
would all vote for it. Bring it forward.
    Chairman Crapo. And before we go to Senator Shelby, I will 
just add, as the Secretary was saying, this is one of those 
areas I was talking about in my questions. We have the ability 
to move forward on this if we have a willingness to move 
forward on pieces of this plan that we have agreement on.
    Senator Shelby.
    Senator Shelby. Thank you, Mr. Chairman. First of all, I 
believe I can change hopefully the tone and the substance of 
where we are today.
    Mr. Secretary and Chairman Powell, I want to commend you 
for what you have done, the leadership you have done under 
difficult, difficult circumstances and what you want to do and 
your candor with this Committee about a lot of things.
    Mr. Secretary, my first observation is you have talked 
about this, and that is the economy. We are all interested in 
it. We have seen the unemployment drop and the unemployment go 
up. In my State of Alabama, for example, we were in double 
digits, and now we are at about 5 percent. We would like to go 
to about 3 or 4 percent. We know it takes awhile to do this. It 
takes years sometimes. But we have made a lot of recovery 
thanks to a lot of the leadership that you two working together 
with the financial situation that we face.
    Chairman Powell, you not only, you know, run the monetary 
system, you are the regulator of our largest banks. Tell us 
here today--I asked you this I believe in February here. What 
is the basic condition of our banking system from your 
perspective? And how does this change in contrast with 2008?
    Mr. Powell. I would say it is a completely different and 
much better situation than we faced in 2008. So as you know, we 
spent a decade working on strengthening capital requirements, 
liquidity requirements, better ability to understand and manage 
the risks that institutions are running. And I think you see 
the results of that now. So our banks so far have really been, 
you know, a source of strength. They have been able to absorb 
deposits----
    Senator Shelby. Considering all the problems that we are 
facing right now, they have shown resilience, have they not?
    Mr. Powell. They have, they have. Now, of course, it is 
early days.
    Senator Shelby. Yes, I know.
    Mr. Powell. We cannot claim victory, but, yes, so far they 
have been a source of strength.
    Senator Shelby. You have talked about different views from 
the Fed as far as deflation, inflation and so forth and 
basically said we need a little inflation, and we do, when we 
are trying to deal a recovery. What is your outlook on that? 
Because we are dealing with price stability, we are dealing 
with the job market, everything that goes with it.
    Mr. Powell. Of course, for many years the problem was too 
high inflation. I think we can both remember that very well, 
those days, and it was very important for the Fed to get high 
inflation under control. We did.
    Today's challenge is a little bit different. There are 
disinflationary pressures widely around the world, and you see 
in Europe and in Japan, for example, extremely low interest 
rates, very low inflation, and the central bank, because rates 
are so low and inflation is so low, the central bank really 
does not have as much fire power as it would like to respond. 
So we just want inflation to be 2 percent on average, not much 
higher. Just 2 percent on average, that is what we want, and 
that will give us the ability to have significant ability to 
cut rates when the economy turns down.
    Senator Shelby. Mr. Secretary, we have made great strides. 
You have talked about it. I do not think you were bragging. You 
were just stating what is happening here, which we all know. 
The data is there, and you have to play with it and face it, 
and you are doing a good job there.
    How do we move to the next step? Because I believe we are 
on the threshold maybe of a robust and sustained economic 
recovery that maybe we have not seen. People are saving money. 
They are staying home. The retail sales are down, but people 
ultimately are going to get out and buy and push this economy, 
I think.
    What is your belief on all that?
    Secretary Mnuchin. I think the progress that we are going 
to make over the next few months on testing and vaccines is 
going to create tremendous encouragement for people to feel 
safe.
    Senator Shelby. Confidence. Confidence.
    Secretary Mnuchin. Confidence. By the way, I also want to 
just personally thank you for your work on the CCR. You have 
been instrumental----
    Senator Shelby. We worked with you. We want to keep the 
Government going at whatever cost, and I think it is important. 
You do, too.
    Secretary Mnuchin. Thank you. And, again, I would encourage 
more targeted relief for businesses, particularly small 
businesses that through no fault of their own have been shut 
down or have Government restrictions or State restrictions 
because of COVID. And I think that we should act quickly 
because they need the support now. They do not need the support 
next year.
    Senator Shelby. Thank you. Thank you both for your service.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator.
    Senator Reed.
    Senator Reed. Thank you, Mr. Chairman. And welcome, Mr. 
Secretary, and welcome, Chairman Powell. Thank you for your 
presence here today.
    Chairman Powell, you have indicated that we cannot succeed 
economically until we defeat the disease, and you have stressed 
the need for social distancing, wearing masks, et cetera. Could 
you elaborate on the economic effects of wearing masks and 
doing things that are public health?
    Mr. Powell. Yes, I would be glad to. So everyone, I think 
unanimously, wants to reopen the economy and get back to full 
employment as quickly as possible, but doing that is going to 
go hand in hand with doing things like wearing masks and 
keeping social distancing and that sort of thing because that 
is what will help keep the spread of the disease in check, and 
that is what will enable more and more parts of the economy to 
reopen. And I am thinking particularly of parts of the economy 
where there is close personal contact.
    So it is very important. In fact, doing those things is 
very much aligned with a fast reopening, as far as is 
sustainable.
    Senator Reed. I find it interesting that your comments are 
almost identical to the head of the CDC, the Centers for 
Disease Control, and yet they are not being accorded any weight 
at all by the President. He effectively is rejecting both 
medical advice and economic advice, and I think that is a 
phenomenon that is continuing to see us ineffective in dealing 
with the disease. I hope it changes.
    You also indicated that there are downside risks, 
particularly outside of Wall Street on Main Street, situations 
where small businesses and their customers, mom-and-pop 
landlords, State and local governments. Can you elaborate on 
the consequences of continuing to fail to provide real support 
for these entities through a stimulus package?
    Mr. Powell. Yes. So let me say that I think the CARES Act 
provided great support and should get a lot of the credit for 
the recovery we have so far, which has been faster and stronger 
than most forecasters anticipated, certainly faster and 
stronger than I anticipated. And so the risk going forward is 
that people now are spending because they have got money in the 
bank, even though they are unemployed. They may have saved part 
of the checks that they got or the unemployment insurance. The 
risk is that they will go through that money ultimately and 
have to cut back on spending and maybe lose their home or lose 
their lease. And so that is the downside risk of no further 
action. We do not see much of that yet, but it could well be 
out there in the not-too-distant future.
    Senator Reed. Well, with respect to rentals and mortgages, 
we know there is a tsunami brewing because through Federal and 
local legislation, there has been a ban on eviction and a ban 
on foreclosures, but that ban will end one day, and it will 
come unless we move in dramatically now and provide resources 
to help.
    One of the key actors in this whole process is State and 
local governments, and in the CARES package, we provided 
resources for them. I think they could be used more liberally. 
I think the Secretary could by rule expand access and 
flexibility, indeed including taking care of lost revenue, and 
I hope he can do that.
    But the facilities that the Federal Reserve has used are 
sort of stopgap measures, and they have not really worked out 
very well from the feedback I am getting on the ground. The 
Municipal Facilities, for example, I do not think recognize the 
fact that most States require legislative approval of a bond 
issue and, indeed, municipalities have to go to their voters to 
get approval. That is very difficult. With respect to the 
nonprofit functions, asking for significant revenue versus 
other aspects, it makes it difficult.
    Can you comment on these facilities? They seem almost 
destined not to work. We need direct grants to the States and 
localities. Chairman Powell.
    Mr. Powell. These loans cannot replace direct grants at 
all. They are really there to provide liquidity and, of course, 
State and local governments are generally not allowed to borrow 
to fund deficits.
    So what has happened is since we announced our facility, 
borrowing among State and local governments has been at record 
levels, and the rates that they have been borrowing at have 
been at record low levels, and that goes right across the yield 
curve and right across the rating spectrum.
    So I would say that the municipal finance market is now 
working pretty well and has accomplished what we can accomplish 
as a liquidity provider. We cannot do transfers and, of course, 
that is why our facility is structured the way it is.
    Senator Reed. Just a final point. It seems that you are 
acquiring sort of tests of their assets and the liquidity, 
which if they had those assets and liquidity, they would not be 
borrowing from you. So I think, again, this is not the right 
approach, and there is apparently a lot of money involved here, 
but it is not going to get to States and local governments. As 
you just said, they need the grants.
    Thank you.
    Mr. Powell. If I can just say, in the Municipal Liquidity 
Facility, we go by the ratings, not by any particular financial 
requirements. We have got a transparent set of requirements, 
and that is what dictates access.
    Chairman Crapo. Thank you.
    Senator Toomey.
    Senator Toomey. Thanks very much, Mr. Chairman, and Mr. 
Secretary and Mr. Chairman, thanks for joining us.
    Just as a quick follow-up, I think it is important to keep 
some context in mind when we talk about direct grants to State 
and local governments. Moody's Analytics estimated that the 
grand total of lost revenue and additional expenses incurred by 
States and municipalities is going to end up somewhere between 
$250 billion and $600 billion, the latter of which is only 
likely to occur if there is a very severe, further outbreak of 
the coronavirus this fall.
    We sent $500 billion to State and local governments with 
the last bill, probably, quite possibly already covering the 
full amount of the lost revenue and added expenses. Why we 
would be talking about sending still more at this point is not 
clear to me.
    But I want to return our focus to the 13(3) facilities 
themselves. I hear a lot of criticism about these facilities 
that seems to reflect the view that if the facilities have not 
been drawn down to a great degree, then, therefore, that is 
evidence that they have failed. And I really think we need to 
remember what the purpose was in the first place. The whole 
purpose behind setting up these facilities and making them 
available was to allow private markets to function again.
    Back in March, we had frozen capital markets. We had 
inability to access credit. We had the risk of a very 
frightening and very, very damaging catastrophe because credit 
was not flowing, was not able to flow. And what these programs 
were meant to do, in my view, is to get the private markets 
functioning again. They were not meant to replace the private 
market. They were not meant to systematically bail out 
companies or bail out companies at all. They were not meant to 
be a substitute for fiscal policy. They were not meant to be 
subsidies for business and municipality. They were meant to 
stabilize markets and make sure that creditworthy borrowers, be 
they corporate of municipal, would be able to access credit.
    And when I look at what has happened since then, certainly 
whether you are looking at macroeconomic data, which, as the 
Treasury Secretary pointed out and the Chairman, I think, also, 
has come back faster and more robustly than most of us thought 
it would. But even more importantly, when I look at the private 
capital markets, they are functioning. In fact, they are 
functioning at record levels--record levels of volume of 
issuance both in the corporate market and in the municipal, 
nearly record low interest rates. And so I think the rational 
conclusion to come to here is this has been remarkably 
successful. It did exactly what we had hoped.
    Now, look, there are some sectors, especially some narrow 
categories, where we have still got some problems. Asset-backed 
lending we have talked about. But I would like to ask the 
Treasury Secretary and the Chairman of the Fed both to just 
comment, if you would, on the availability of credit for 
creditworthy borrowers. What is it like? What are the capital 
markets like? What are the lending markets like? Are 
creditworthy borrowers in America able to access credit as a 
general matter?
    Secretary Mnuchin. Well, I would agree with you, exactly 
what you said, and, again, I would just remind people the Chair 
and I executed the first two facilities even before the CARES 
Act was passed when the markets were literally shut down. These 
are emergency facilities. They are not intended to be 
subsidies. And the best success is us not having to use them. 
So in many cases, the mere announcement and commitments 
unlocked the markets. As I have said in the past, companies 
like Boeing were able to borrow $25 billion in the private 
markets and not have to come to the Government. Many of the 
large airlines turned down the loans that we were offering them 
for the same reason.
    So I think they have been enormously successful, and in the 
areas where they have not worked, it is primarily entities that 
really need subsidies, and it is not just a lack of financing.
    Mr. Powell. I would agree with all of that. We have not 
made a single loan to a corporate directly, and yet something 
like $1 trillion in financing has happened. So, clearly, for 
corporates, the financial market is working. But the same is 
also true--I think it is $250 billion in issuance among the 
municipals, including some of the ones that accessed our 
facility have also been able to access the public market. So 
public markets are out there, and they are working, and the 
pricing is pretty good. So I do think those two--the market-
based facilities and the earlier ones that we did pre-CARES Act 
have all done their jobs pretty well.
    Senator Toomey. Thank you, Mr. Chairman.
    Chairman Crapo. Thank you, Senator Toomey. I think that is 
a very important clarification, and it is appreciated.
    Senator Menendez.
    [No response.]
    Chairman Crapo. If Senator Menendez is not available, 
Senator Tester.
    Senator Tester. Thank you Mr. Chairman, and I want to thank 
Secretary Mnuchin and Chairman Powell for being here today.
    This question is for you, Secretary Mnuchin. The Chairman 
referred to this hearing a couple of weeks ago when we heard 
from three witnesses that had varying views of what needed to 
be done to move forward, but they were all in agreement that 
what is happening now is insufficient. The $500 billion 
Treasury slush fund is not making it to Main Street businesses, 
as has already been pointed out. The workers, the families, 
those are the folks that need the most assistance right now. 
PPP is long gone. Many of the small businesses and their 
employees continue to struggle. There has been help for 
airlines, which I agree with. But what about the restaurants, 
the gyms, the venues, the breweries, distilleries, the seasonal 
businesses, and others who are bearing the brunt of this 
crisis? The health and economic crisis is still there. These 
folks still need our help. And I see a lot of big names when I 
look at the disclosures, and those businesses may need support. 
But the only Montana lenders that have been able to utilize the 
facilities are for PPP, and no--I repeat no--Montana businesses 
have benefited from the program.
    So my question to you, Secretary Mnuchin, is: What are you 
doing to help the real Main Street businesses that are in 
distress?
    Secretary Mnuchin. Well, let me just first say if this was 
a Treasury slush fund that I could use however I want, I would 
reallocate it to help those businesses immediately. But, 
unfortunately, I need congressional authority. I have 
encouraged Congress that we would be willing to give back $200 
billion of unspent money to be reappropriated. There is also 
$130 billion of unspent money in the PPP. So I would encourage 
that we work together on a bipartisan basis to specifically 
help the types of small businesses that you are referring to.
    Senator Tester. Have you asked for congressional authority 
to move that money to Main Street businesses?
    Secretary Mnuchin. I have asked for congressional authority 
to reallocate that. That is in the most recent proposed 
legislation. And I have also repeatedly asked for the PPP to be 
reauthorized so we could use the $130 billion that is sitting 
there. That will help Main Street businesses.
    Senator Tester. Once again, and I say this for the Senators 
that are on this call, look, we had a proposal by Senator 
McConnell here a week ago that had poison pills in it to 
privatize education, which is what DeVos has wanted for a long 
time, and to impediments on our legal system. My God, why this 
cannot be brought to the floor for the congressional authority 
at a minimum makes no sense to me. And I will tell you 
Democrats are not holding that up.
    Chairman Powell, I have been told that the reason the stock 
market looks so good is because the Fed is buying a lot of bad 
debt. Could you enlighten me on what kind of bad debt you are 
buying and how much money the Fed has put out to buy bad debt?
    Mr. Powell. Well, that must be a reference to the Secondary 
Market Corporate Credit Fund, which I think has bought--it is 
in the range of $10 billion in total. We have bought no debt 
from any large companies in the Primary Corporate Credit Fund, 
which was the main facility. And of that $10 billion that we 
bought in the secondary market, almost all of that will be 
investment grade. So I think we have bought very, very little 
noninvestment grade debt. We have bought some, and we bought it 
in the form of ETFs as well as in regular bonds, but in terms 
of the broader financial markets, it would be a drop in the 
ocean.
    Senator Tester. So you do not agree with that statement, 
that the stock market is actually performing as well as it is?
    Mr. Powell. I do not agree with the premise that we have 
bought a lot of so-called bad debt. You know, I do not want to 
comment on the level of the stock market, directly or 
indirectly, but it just is not the case that we bought a lot of 
so-called bad debt. We have not.
    Senator Tester. OK. Secretary Mnuchin, after the first 
quarterly CARES Act oversight hearing, I submitted questions 
for the record to you and Chairman Powell, and while I received 
answers from the Chairman, I finally received yours last night. 
They were inadequate, to put it gently. So you are here. I am 
going to give you another opportunity. What measures has the 
Treasury put in place to prevent another tribal coronavirus 
relief data breach from occurring?
    Secretary Mnuchin. I am sorry. Could you repeat that? I had 
a hard time----
    Senator Tester. I am sorry. What measures has the Treasury 
put in place to prevent another tribal coronavirus relief data 
breach from occurring again?
    Secretary Mnuchin. I am sorry. I could not hear. Something 
about a data breach, but I apologize. What was the question?
    Senator Tester. I thought we had better technology than 
this. What measures has the Treasury put in place to prevent 
another tribal coronavirus relief data breach from occurring 
again?
    Secretary Mnuchin. I am going to have to look into that. I 
am not familiar with the tribal data breach that you are 
referring to, but I will get back to you quickly.
    Senator Tester. We will remind your staff on that. Thank 
you guys very, very much.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Scott, are you with us?
    Senator Scott. I will start with a question for Chairman 
Powell. On Monday the House passed unanimously legislation that 
would require the Federal Reserve to expand access to emergency 
credit facilities by removing a bias against the nonincumbent 
credit rating agencies that serve the middle market. Senator 
Sinema and I introduced similar legislation late last week. I 
am optimistic that the Senate will act on this legislation 
soon. However, I do not believe congressional action should be 
necessary given you have the authority to resolve this issue 
immediate.
    What are your plans to level the playing field in your 
facilities for nonincumbent NRSROs?
    Mr. Powell. We actually have broadened the circle of those 
who are included to include those who have a fairly broad 
business, those whom the capital markets rely on in particular 
areas. So we have done that. We started off with three NRSROs, 
and now I think we are at six. We could come back to you on 
that. We could look at broadening that.
    Senator Scott. OK.
    Mr. Powell. That is not something we have looking at 
recently.
    Senator Scott. That would be helpful, sir. I would 
appreciate you getting back with me on that, and certainly, 
Secretary Mnuchin, I thank you for your hard work on the 13(3) 
facility. I think we still need to create more flexibility 
where we see more folks having access to those resources. That 
would be helpful.
    Next question: As you both know, I have been fairly 
outspoken on this Committee about the goal of building access 
to credit and increasing economic opportunity for minority 
communities and for the same businesses. Given my passion on 
this issue, it is especially tough to witness the seismic 
impact that this pandemic has had on black-owned businesses. 
When I see reports like the one released last month by the U.S. 
Chamber of Commerce, which found that 66 percent of minority 
businesses are concerned about having to permanently close 
their doors and 13 percent of minority-owned businesses that 
have applied for a loan to help survive the economic downturn 
have failed to secure funding, I am really shocked at how 
direct these statistics are. Couple that with the CEO of Wells 
Fargo Charlie Scharf's recent comments that he cannot find 
talented black individuals to be employed at Wells Fargo, I 
perhaps better understand the plight of so many minority-owned 
businesses if the CEO of Wells Fargo believes that he cannot 
find enough talent, that is stunning. And if he needs any help, 
please have him give me a call.
    It is imperative that our most vulnerable and underserved 
communities are not left out of the economic recovery by making 
sure that those businesses can have access to the full benefits 
of the CARES emergency assistance programs that it sought to 
provide.
    Can you, Chairman Powell, describe some of the actions the 
Fed has taken to address the disproportionate impact this 
pandemic has had on black-owned businesses and minority 
businesses as well?
    Mr. Powell. Sure. So let me agree that this is a very 
troubling situation. More broadly, the pandemic is falling 
heavily on minority and other groups. So we have done quite a 
lot of outreach to minority depository institutions, MDIs, and 
tried to pull them in and make sure that they are taking part 
in the PPP Liquidity Facility and eligible to lend in Main 
Street. We have done the same thing with the community 
development financial institutions, and, again, we have held 
Webinars, we have done lots and lots of outreach to make sure 
they are included in the program.
    I think in terms of the loans that we are making, you know, 
our loans are broadly available to everyone who qualifies, but 
these are loans--Main Street is for, you know, somewhat larger 
companies. I do think a lot----
    Senator Scott. Mid-sized businesses and larger, yes.
    Mr. Powell. Yeah, I think that is larger than a lot of 
minority businesses, and I do think PPP is also an excellent 
solution there.
    Senator Scott. I do think, Chair Powell--and I think 
Secretary Mnuchin would agree with this--that the utilization 
of the MBDAs to help to market the smaller businesses under 300 
or 500 employees to the PPP, using the MBDAs has been an 
effective strategy. There are few--not many, but few small 
minority businesses that qualify for the Main Street Lending 
Program, and I certainly would love to see more success in 
figuring out how to connect the dots, and I would imagine that 
if I am discouraged by the comments of the Wells Fargo CEO, 
many entrepreneurs and small businesses, minority businesses, 
see the entire financial industry with a bit of a raised 
eyebrow on the access to that when you see that 13 percent of 
those small businesses were unable to get the credit necessary, 
even though we are the guarantor of those loans that become 
grants.
    Thank you very much.
    Chairman Crapo. Thank you.
    Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman. Thank you to 
both of our witnesses. And, Secretary Mnuchin, I just want to 
say I appreciate your responsiveness. I do not always 
necessarily like what I hear, but I appreciate your 
responsiveness, and in this business no one ever says that. So 
thank you for whenever we have called you, you have been very 
responsive.
    So, Chairman Powell, Secretary Mnuchin, is it a good idea 
for States to raise taxes and send hundreds of thousands of 
essential public workers off the front lines into the 
unemployment lines during a pandemic and a recession?
    Secretary Mnuchin. No, it is not a good idea.
    Senator Menendez. Chairman Powell.
    Mr. Powell. I would agree. It is not a good idea.
    Senator Menendez. So you both agree that, despite facing a 
historic $3 trillion deficit this year as well, fiscal 
austerity is bad economic policy which would cause additional 
pain during this recession. Is that a fair statement?
    Secretary Mnuchin. Well, I think we have to be careful, but 
I am supportive of additional fiscal measures, as I noted 
earlier.
    Mr. Powell. I just would add I think there is a time coming 
when we are going to need to get back on a sustainable fiscal 
path, but I wouldn't not prioritize that in the very near term 
when we are still in the middle of the pandemic.
    Senator Menendez. And I agree, and that is my point. It is 
while we are in the midst of a pandemic.
    I would just note that Moody's, once again, its latest 
calculus shows that States and local governments are still 
somewhere in the $500 billion area of need, and like the 
Federal Government, our local communities are facing 
skyrocketing costs and declining revenues due to the pandemic. 
But unlike the Federal Government, they cannot borrow money to 
get through the crisis. Instead, they are being forced to do 
the unthinkable: lay off hundreds of thousands of teachers, 
nurses, firefighters, and other essential workers at a time 
when we need them the most. But there is bipartisan support to 
avoid such a disaster. The $500 billion included in the SMART 
Act, which I authored and introduced with three Republicans and 
three Democrats back in May, mirrors the bipartisan House bill 
that exists. And even President Trump said he supports, and I 
quote, ``something like the $1.5 trillion bipartisan 
proposal.''
    So, Mr. Secretary, as the lead negotiator for the White 
House, are you optimistic about getting Senate Republicans to 
support President Trump's call for a much larger stimulus 
package that includes State and local funding?
    Secretary Mnuchin. Well, the President has expressed 
flexibility to give more money to State and local governments 
and also flexibility for the money we have already sent. And as 
I said before, I look forward to sitting down with both 
Democrats and Republicans to see if we can agree on bipartisan 
support that is very necessary across the economy targeted.
    Senator Menendez. Well, I appreciate that. I think that 
your bigger challenge is going to be with those in the 
Republican caucus, of which Senator McConnell himself has said 
there are about 20 members of his caucus who do not want to 
vote for anything more. And I think there is not any economists 
I have seen that suggest that not doing anything more in the 
midst of this pandemic is going to meet the challenges of 
families and small businesses and getting us back in shape.
    Secretary Mnuchin, in June, Chairman Powell issued a 
statement on racial equality that said, ``Everyone deserves the 
opportunity to participate fully in our society and in our 
economy. These principles guide us in all that we do, from 
monetary policy to our work to ensure fair access to credit 
across the country.''
    And on Tuesday, before the House Financial Services 
Committee, he stated, ``The rise in joblessness has been 
especially severe for lower-wage workers, for women, and for 
African American and Hispanics.''
    Mr. Secretary, would you agree with those statements?
    Secretary Mnuchin. I would.
    Senator Menendez. So I have heard from a number of 
minority-owned businesses, and I know that in a previous answer 
there was a suggestion that PPP--well, there are minority-owned 
businesses in the 500-plus category. For example, in our 
Nation, Hispanic broadcasting, which serves an essential--an 
essential--need in informing, you know, a large part of the 
American society, would be in that middle market, but they are 
just some. I think we have an opportunity right now to 
demonstrate our commitment to serving minority communities in 
your implementation of the Main Street Program.
    So, Mr. Secretary, could you commit to reviewing the terms 
of the Main Street Program to identify what changes could 
strengthen minority-owned business participation and share that 
analysis with me?
    Secretary Mnuchin. I will, and let me just say I know 
Senator Warner has been working on it. I have spoken to Senator 
Crapo and Senator Scott and others about reallocating some of 
our money and committing $10 billion to CDFIs that could be 
leveraged to $100 billion of immediate lending into those 
communities that are especially hard hit. So I would encourage 
this Committee to continue to look at that proposal.
    Senator Menendez. Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Sasse.
    Senator Sasse. Thank you, Chairman. Thanks to both of you 
for being here, Chairman and Secretary.
    Secretary Mnuchin, when I am home in Nebraska every 
weekend, the most common question I am getting in this space is 
about the PPP forgiveness simplification issue for loans under 
$150,000, and I am just curious as to whether or not you see a 
simplified forgiveness form coming, and given that we are 
approaching the 6-month deadline, what should small businesses 
do if we do not have certainty on that answer yet?
    Secretary Mnuchin. Well, we did create an easy form. I know 
there is bipartisan support for going much further, which we 
think we need legislation for, and we would support if there is 
legislation to have loans under $150,000 have a presumption but 
allow for us to audit them as needed. And I know that is 
something that has been discussed.
    Senator Sasse. Thanks. Do you have any views of any of the 
specific proposals on, A, where your regulatory authority ends 
and where you need legislation, but then on the specific 
legislative proposals?
    Secretary Mnuchin. We believe we need additional 
legislation to simplify it beyond what we have done, but would 
want to maintain, as I said, fraud protection.
    Senator Sasse. I completely agree with you on the fraud 
protection. So is it your view, though, that small businesses, 
given what you know about where we are in the negotiation and 
all the hard work you have been doing in that space, as we get 
under 6 months from deadline, would you recommend that 
businesses that took $145,000, do you think they should fill 
out the current what is called ``medium-length form,'' your 
easy form but not really simplified yet?
    Secretary Mnuchin. Yes, I would. I would encourage them--
the portal is open. I would encourage them to move quickly and 
fill that out and not wait for legislation. But if we can get 
legislation to help them, that would be great.
    Senator Sasse. Thanks. I would be interested in both of 
your views on the implications for the real estate markets of 
the transition to home remote work that we have seen over the 
last 6 months. Chairman Powell, maybe if you would start, I am 
interested in both housing and the commercial real estate 
markets.
    Mr. Powell. You know, there are clearly going to be 
significant implications. We do not know how long they will 
last, but for now, you know, the prices of homes in the suburbs 
and second homes have gone up, and if you own an apartment in 
the downtowns of a lot of cities right now, probably the value 
has gone down. It is going to be hard to say. Probably some of 
this will be sustained. People will work from home more. It is 
hard to say, though. You know, if you think 10 years ahead will 
it really be different than it would have been otherwise? Maybe 
at the margin. It is something we will be watching carefully.
    Senator Sasse. Secretary Mnuchin.
    Secretary Mnuchin. I think there is no question on the 
commercial real estate markets, particularly in the big cities, 
there is going to be an impact, and perhaps the only good thing 
that has come out of this is that many businesses and us in 
Government have figured out that we can actually--part of the 
economy sometimes can work effectively remotely. So I think 
partial remote work is here to stay.
    Senator Sasse. Thank you. I was in a conversation with a 
Fortune 500 CEO of an entity that has a lot of commercial real 
estate property maybe 6 weeks ago, and he was saying that 
during the height of COVID time--pre-COVID they had 70 percent 
``butts in seats'' any given day. You have some people who were 
sick, some people who are on personal leave, some people who 
are on work travel, or some people who might have been on 
vacation or sick or remote working. But when they came back 
post--you know, being at 0 percent occupancy post-COVID, they 
came back and they started at about 29 percent. And the 
experience they had is that so many of their folks that were in 
their commercial real estate spaces were still having to Zoom 
and engage telephonically with people who were on a remote work 
situation anyway, but they do not see themselves getting back 
to anything like the density potentially ever. So I appreciate 
your point, Chairman Powell, that we cannot see into a 5- or 
10-year crystal ball, but I think it is important for us to 
keep conversing between Article 1 and Article 2 as you are 
learning about this, that you would keep our Committee here 
given our housing purview in this domain as well.
    The Chairman had to step out. I was supposed to call on 
someone, but he has returned.
    Chairman Crapo. Thank you, Senator Sasse.
    And next is Senator Warner.
    Senator Warner. Thank you, Mr. Chairman. And I again want 
to welcome our witnesses.
    I want to step back for one moment, and we have got 
differences, but I want to commend Chairman Powell, Secretary 
Mnuchin, and, frankly, Members of this Committee. I think we 
rose to the occasion back with the first couple of CARES Acts. 
We made historic investments. I think history will treat us 
well. I appreciate the--I know the Ranking Member, I, the 
Chair, and others were in a number of sessions with the 
Secretary. The approach we took, I think we desperately need to 
get back to that approach. I have never seen a bigger 
disconnect between the stock market and the real economy than 
right now.
    I also want to echo what Senator Scott and Senator Menendez 
have said. I want to thank them for being part of the Jobs and 
Neighborhood Assistance Act that the Secretary referenced. I 
want to thank the Chair and the Ranking Member as well for 
their willingness to work on this legislation. This would take 
billions of unallocated funds from the CARES Act and directly 
invest into MDIs and CDFIs, which the Secretary explained would 
dramatically leverage those dollars and help minority 
businesses that, as Senator Scott has so accurately pointed 
out, really have been disproportionately hurt, 420,000 black-
owned businesses shut down, and we can and must do better. And, 
Chairman Powell, I know we have gone back and forth on 13(3) on 
this packet there, but I would argue--I know you said earlier 
in the week in your testimony that you were concerned about 
Main Street going smaller, below 250, and the Fed's capacity to 
deal literally with hundreds of thousands, if not millions of 
loans. I would argue the way to deal with that or at lest one 
tool to deal with that would be the direct equity infusion into 
those MDIs and CDFIs whose goal and purpose is to lend to these 
smaller institutions. You would not have to necessarily grapple 
with all the individual loans, but you could make these kind 
of, I think, investments and Fed support programs for these 
institutions that service that community. And I again just 
really am very, very hopeful that we are going to come to an 
agreement and make that additional COVID relief package.
    I do want to get to a question, but I want to--I guess the 
question I will start with for Chair Powell is, you know, your 
two predecessors, a series of both liberal and conservative 
economists said we need to make substantial stimulus investment 
that is in the trillions of dollars. I would echo my Democratic 
colleagues that when the Majority Leader put forward a plan 
that was one-third of the size of what even the Trump 
administration suggested, that was not a good-faith effort. I 
would strongly urge all my colleagues that we ought to not 
break. We ought to get another COVID package out. It is 
essential. People in my State are hurting. I agree with Senator 
Sasse. We need to go ahead and give the Secretary the 
presumption on those loans $150,000 and under that they can be 
presumed to be grants and really make that form shorter.
    But, Chairman Powell, can you address again this issue that 
we desperately need this larger relief and that targeted relief 
does not mean small, it just means we need to target it to 
those most affected? Can you address that?
    Mr. Powell. Sure. So, again, I will leave the details--it 
is not appropriate for me to express a view on the particular 
details of that, but I would say that the recovery we have had 
so far owes in significant degree to the CARES Act and the 
support that Congress provided in conjunction with the 
Administration. And I think while the economy has been doing 
better than expected, I think there is downside risk to that if 
there is no further fiscal support. The people who are--there 
are still something like 11 million whose payroll jobs have 
not--they have not gotten their jobs back. Those people are 
able to spend now because of the checks that they got and 
because of the unemployment insurance that they got, the 
enhanced unemployment insurance. There is downside risk to the 
economy probably coming if some form of that support does not 
continue.
    Senator Warner. I guess what I would ask--and I know I am 
down to 35 seconds. I would ask both you, Chairman Powell, and 
Secretary Mnuchin: Is the risk to the economy long term greater 
or less if we undershoot versus overshoot? I would ask you to 
simply say, you know, should we understimulate or overstimulate 
when we are at this critical point on the margin recognized?
    Mr. Powell. Again, I would just say we are going to have 
to. We will come back to a place where we need to get the U.S. 
Federal Government on a sustainable fiscal path. But I would 
not prioritize that now when we are in the middle of a 
pandemic.
    Senator Warner. Secretary Mnuchin? I know I am over time.
    Secretary Mnuchin. What I would say is forget the long 
term. The issue is now. And I would just say some is better 
than none, so I would encourage again bipartisan support.
    And, again, let me also recognize this Committee and the 
great work they did, and, Chairman Crapo, if you and the 
Ranking Member and other Members want to sit down, I would be 
willing to come here anytime to continue to work with you.
    Chairman Crapo. Thank you.
    Senator Cotton.
    Senator Cotton. Probably of people who work in almost any 
workplace in America, the Members of this Committee, like the 
100 Senators of the U.S. Senate, have been traveling as much as 
anyone on airlines, going back to May, and I think we have all 
probably had the experience that I have had multiple times of 
gate agents or flight attendants or pilots asking me about the 
status of negotiations related to additional relief for 
airlines. Just this past weekend, flying back to Washington, I 
had a flight attendant literally come up and hug me in my seat 
because she recognized me--quickly apologized for violating 
physical distancing protocol, but that is OK because we both 
had our masks on and it was brief--to tell me that she had been 
working for over 20 years with this airline, she was afraid she 
was about to lose her job in early October, and it would be the 
first time in her life she had ever gone on unemployment. And I 
told her that we are still working to do everything we could in 
Washington to try to avoid that fate, because not a single 
person in the airline industry or any of its ancillary 
industries or, for that matter, in any business in America from 
the frontline workers all the way up to the CEO and the board 
is responsible for the fate that these businesses and 
industries find themselves in. It is the responsibility of the 
Chinese Communist Party and its incompetence and malignancy in 
covering up this disease from the very beginning.
    Secretary Mnuchin, what is the status of the 
Administration's efforts to try to find some relief for the 
airline industry in particular? I know that you and the 
President and others have been meeting with the leaders of the 
companies as well as the leaders of their employees' unions, 
and I would just like to hear what you have to say. And I am 
sure that those workers would like to hear what you have to say 
as well?
    Secretary Mnuchin. Thank you. First of all, I just want to 
say that the work that was done in the first bill was 
extraordinary and literally saved the entire industry. I know 
Senator Wicker and others have proposed extending more payroll 
support payments in return for not having layoffs, and the 
President and I do support that approach.
    Senator Cotton. Is there anything that you have under 
existing authorities, either the CARES Act authorities or prior 
law, that could help the airlines avoid these coming layoffs?
    Secretary Mnuchin. Unfortunately, there is not, but, again, 
we are encouraged. There is a lot of money in the loan program 
that we are not going to use specifically for the airlines and 
reallocating that.
    Senator Cotton. Thank you.
    Chairman Powell, you just noted there are still 11 million 
Americans who have not gotten back to work. Almost as many have 
gotten back to work who lost their jobs at the height of the 
uncertainty about the pandemic in the spring. Obviously, the 
airline and related industries are one big one. Could you give 
us a sense of the other industries and the kinds of businesses 
in which those 11 million Americans who are still out of work 
are concentrated?
    Mr. Powell. Yes. There are big numbers of people still 
unemployed in the businesses that involve a lot of contact with 
the public. So it is hotels, entertainment, retail, 
restaurants, bars, all of the places where we are getting 
people in groups together and facing them face to face. That is 
not all of it, but that is a big chunk of the remaining 
unemployed.
    Senator Cotton. Yes. And I think, again, elected officials 
probably experience this as much as anyone in America given the 
amount of time we travel and the time we spend in hotels, or we 
used to spend in public venues speaking, and I for one am very 
mindful--I know most of our Members are as well--about the 
impact this virus has had on them in those industries. Is the 
single best thing we can do to get a vaccine and get the virus 
under control? Putting aside what kind of fiscal or monetary 
relief we may provide to them, just given the nature of the 
travel and hospitality and tourism and event industry, is the 
vaccine the single best thing that we could get?
    Mr. Powell. Yes, and in the long run, I think that is what 
it is going to take to get business travel back to, you know, 
near where it was, for example.
    Senator Cotton. OK. A final question. Chairman Powell, you 
have cited a couple times as well as in your written testimony 
the 13 different programs that the Federal Reserve has stood 
up. Which of those programs in your opinion has performed the 
best given its stated objectives?
    Mr. Powell. So I think the original ones that dealt with 
the funding markets stopped pretty quickly what was a budding 
run on short-term wholesale financing markets very early on. 
Those succeeded.
    I would also cite the Corporate Credit Facility for having 
opened up the market really without making a single loan.
    After that, I would cite--well, the PPLF was very 
successful in letting small banks make their PPP loans and then 
get them off their balance sheet so they could make more loans.
    I think the Municipal Facility has worked in the sense that 
we have a quarter of a trillion dollars in muni issuance, which 
is much higher than even last year before the pandemic and at 
attractive rates.
    So I think there is a lot of success. I think there is also 
some difficulties. For example, Main Street is much harder, 
much more difficult.
    Senator Cotton. Thank you.
    Senator Crapo. Thank you.
    Senator Warren.
    Senator Warren. Thank you, Mr. Chairman.
    The pandemic and the recession it created have hit 
communities of color the hardest, and I have said before that I 
believe that we need a policy response that acknowledges that. 
But it is equally important to recognize that racial inequality 
was amplified by the pandemic. It was not created by it. And 
even during periods of strong economic growth, measures of 
economic well-being for black and brown Americans has lagged 
far behind those for white Americans.
    Now, Chairman Powell, the last time that you were before 
this Committee, you told me that the persistent economic gap 
between black and white Americans was an unhealthy feature of 
our economy. Is that still your view?
    Mr. Powell. Yes. Yes, it is, Senator.
    Senator Warren. Good, and I agree with you on this. Since 
it was created in 1913, Congress has spelled out in law the 
mission of the Federal Reserve: to keep unemployment as low as 
possible and make sure that we have a stable financial system--
the twin goals of the Fed.
    Now, you have policy tools at your disposal to accomplish 
those goals. For example, your decisions affect how much a 
family pays on a mortgage or a car loans. Your decisions 
determine how quickly someone gets credit in their bank account 
after a paycheck is deposited. But as you and I have discussed 
before, black and white families face very different economic 
realities in this country, and that means decisions from the 
Fed affect those families differently.
    So the Fed recently took a step in the right direction by 
making it clear that fulfilling its mandate means keeping 
interest rates low long enough to allow growth to reach all 
households, not just those who are doing well already, and this 
is especially important because, historically, in a time of 
crisis, black unemployment jumps faster and then takes longer 
to go down. And the Fed should not slow economic stimulus 
before black workers see real economic gains.
    This updated statement interpreting your mandate is a good 
first step. But I believe the Fed could be doing more, and that 
is why I have introduced a bill with Chair Waters and Senator 
Gillibrand to require the Fed to use all of its tools to close 
racial economic gaps.
    So, Mr. Chairman, when you were here 3 months ago, you said 
that the Fed would be looking for ways to use your economic 
tools to do more to address racial disparities, so I want to 
follow up. Have you identified a comprehensive list of policies 
the Fed can pursue in order to make good on these commitments? 
What is on your list, Mr. Chairman?
    Mr. Powell. I think you see on our part a heightened focus 
on economic disparities, including racial economic disparities, 
and you see that if you look on our website--on the front page 
of our website, we have all of the things we are working on in 
that area, and it has really become quite a broad set of 
efforts from data collection to research and things like that. 
And the reason we do that is that, you know, you give us 
maximum employment as the goal, and maximum employment we now 
view in our new framework as a broad and inclusive goal, which 
really means we are not just looking at the aggregates; we are 
going to look at different demographic groups and different 
measures.
    So I think we are doing the things that we can do with our 
tools to address these issues of disparate economic outcomes. I 
actually think that the far stronger and more important tools 
are not those of the Fed. Nonetheless, I think that we are and 
should be using our tools to the extent we can. And, actually, 
I would just close by saying that all of that is taking place 
under our current legislative mandate. I do not really think 
you need to change the law to get us to do this. We are doing 
it already.
    Senator Warren. Well, I appreciate that, Mr. Chairman, that 
you are trying to do this. But I asked you two things. The 
first one is just name a couple of the specific things you are 
doing. What did you put on your list in the last 3 months?
    Mr. Powell. OK----
    Senator Warren. I appreciate that you say you have given 
focused attention or attention on this. What changes did you 
make?
    Mr. Powell. The first and most important one is the one 
that I mentioned, which was to define our maximum employment 
goal as a broad and inclusive----
    Senator Warren. But I mentioned that one. What other 
things?
    Mr. Powell. What other things? You know, I would point to 
the fact that we have been outspoken at the Fed on our 
commitment to diversity and to, you know, racial justice.
    Senator Warren. I appreciate that, Mr. Chairman, but, you 
know, words are not good enough on this issue. Every economic 
policymaker, including the Fed, should be taking steps to 
confront racial economic disparities head on. And, frankly, 
this cannot just be a one-time exercise. I appreciate that you 
say it is important to you, but the Fed needs to focus on this 
issue during your tenure and during the tenure of all future 
Federal Reserve Chairs. And that is why I have legislation that 
would require the Fed to talk about these gaps as part of its 
regular reporting to Congress. And my legislation would also 
ensure that the Fed uses everything in its toolkit to eliminate 
those racial disparities.
    You know, there is so much more the Fed could be doing. 
Consider access to credit for black borrowers when evaluating 
merger applications. Make sure that payments hit bank accounts 
faster. Use the Fed lending facility to prevent layoffs in 
State and local government. I get it. The Fed cannot solve 
every economic problem on its own, but the Fed is not a 
helpless bystander. Its decisions matter, and they matter most 
in our vulnerable communities, and it is time for the Fed to 
step up on this responsibility.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Rounds.
    Senator Rounds. Thank you, Mr. Chairman. Thank you to both 
of you for joining us today.
    Despite the challenges that we have faced in standing up 
the Paycheck Protection Plan in the first place, South Dakotans 
have been overwhelmingly supportive of the relief that the PPP 
brought to small businesses. Recently, however, I have started 
to hear concerns from dozens of business owners and bankers who 
have experienced challenges with the PPP forgiveness portal.
    Senator Sasse began this line of questioning and comments, 
and I want to add some emphasis to it because I think the 
message that we have received back has been considerably 
different than just simply having a little bit of time to fill 
out these forms. What I would like to do--one lender in 
particular sent me a note, and he is pretty direct on it, but I 
would like to share it because it kind of points out the 
frustration that our lenders have in terms of helping these 
small businesses. This is a quote that they sent to me:
    ``The forgiveness piece of the PPP is a disaster. I have 
750 loans out of 1,381 under $20,000. Fifty are under $2,000. 
They have basically the same forgiveness process as the loans 
of my largest borrower of our $4 million. The simplified 
version is not that simple. The GAO has studied it and says it 
takes a borrower 15 hours to complete it, and the lender an 
additional 75 hours to process. Our borrowers are not happy, 
nor are we as bankers. This is not what we signed up for in 
order to get disaster payments to our customers. We are trying 
to hold off those borrowers under $150,000, but they are 
getting anxious. We busted our tails off to get this money out, 
and we are getting absolutely screwed by the process. Lenders 
feel as though they have really been let down. There is more 
than a little fatigue.''
    Mr. Chairman, I would like to ask unanimous consent that 
additional statements that I have received from South Dakota 
bankers expressing frustration with the PPP forgiveness process 
to also be entered into the record.
    Senator Kennedy [presiding]. Without objection.
    Senator Rounds. Thank you.
    Secretary Mnuchin, I understand that you are limited in 
terms of what you can do with regard to forgiveness, but 
simplification should be something that I think we need to take 
a second look at. And I would just ask if you would work with 
us to see if there is not a way to find a path forward in the 
near future, even if we cannot get any more legislation out of 
Congress, to find a way to simplify this for both small 
borrowers and these lenders, who really did go above and beyond 
to try to get this set up in the first place and did a 
marvelous job of getting that money out.
    Secretary Mnuchin. Thank you, and we will work with you. 
And, again, as I have said before, we would support legislation 
that simplified this. It does not cost any money, and we would 
still retain our right to have the SBA audit as appropriate.
    Senator Rounds. And, Mr. Secretary, I agree with you. I 
think in whatever number we put together or whatever simplified 
form we put together, the ability to be able to go back and to 
audit at a date in the future is critical. We do not want to 
have fraud involved. But it looks to me like there is a huge 
amount of work out there that we are expecting lenders to do 
that basically they are not going to get done in a timely 
fashion. And we will have a problem that we will have to 
address if we do not find a way to resolve this particular 
issue.
    Chairman Powell--Mr. Secretary, did you want----
    Secretary Mnuchin. No. I was just going to say I am going 
to go back and, again, address this with the SBA this 
afternoon.
    Senator Rounds. Thank you, Mr. Secretary.
    Chairman Powell, I understand the focus in the near term 
needs to be on getting our economy back to a place where it is 
firing on all cylinders. But can you briefly discuss how you 
are viewing the evolution of the Fed's balance sheet, 
recognizing that this is a different type of a situation than 
we had back in 2007, 2008, and 2009. We talked a lot back then 
about what was on the balance sheet and how it was going to be 
moving around. Can you share with us briefly the philosophy 
that you would like to follow with regard to the balance sheet 
today?
    Mr. Powell. Sure. So the balance sheet continues to grow 
because of our asset purchases. It turns out that the volume of 
loans that we are making under the programs is much less than 
might have been the case, which is not to say the facilities 
have not worked, just that we have not had to buy a lot. And, 
you know, we are a buy-and-hold investor. After the financial 
crisis, we allowed assets to mature and run off on their own. 
And that would be certainly--by the way, we are a long way away 
from that at this point. We will not start doing that until way 
down the road. But then we will. You know, we--and the economy 
will grow, and the size of the balance sheet relative to the 
economy is really the metric, and we will be able to get that 
down over time. But it is not something we will be focused on 
in the near term.
    Senator Rounds. Thank you.
    Thank you, Mr. Chairman.
    Senator Kennedy. Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman and Ranking 
Member, and I want to thank Chairman Powell and the Secretary 
for being here.
    I have been listening to the testimony, and, Mr. Secretary, 
I understand that both you and the Chairman agree that 
additional fiscal help is needed to help working families and 
the economy. I also hope we would all agree that we should 
provide that relief in the most effective way possible for 
working families and to boost the economy. And the 
Congressional Budget Office just issued a report on September 
18th about the impact of the CARES Act on economic impact. Have 
you had a chance to review that report, the CBO report?
    Secretary Mnuchin. I have not yet had a chance, but will do 
so this afternoon.
    Senator Van Hollen. Thank you. I encourage you to do that. 
We had a Budget Committee hearing yesterday, and I asked the 
Republican-appointed Director of the CBO about the provision in 
the report that indicated that aid to State and local 
governments was among the most effective tools for helping 
working families and boosting the economy. So I really 
encourage you to do that.
    You are aware of the fact that during the negotiations over 
the CARES Act, the original proposal put forward by Senator 
McConnell on the floor of the Senate did not include a penny of 
appropriations for State and local governments, right?
    Secretary Mnuchin. Well, it provided money to education, 
which would have saved State and local governments significant 
amounts of money. So, in essence, that was.
    Senator Van Hollen. Mr. Secretary, that goes directly to 
education departments, which is good, and, of course, we 
increased that at the time. But there was not a penny--and then 
subsequently, when this issue came up, Senator McConnell talked 
about letting, you know, States and local governments go 
bankrupt. And, of course, the most recent proposal he put on 
the floor of the Senate does not include a penny of money for 
State and local government even though the CBO report indicates 
that is one of the most effective ways.
    But as I understand your testimony, you agree that 
additional State and local support would be helpful, right?
    Secretary Mnuchin. Yes, we do support some additional aid.
    Senator Van Hollen. Got it. So I would like to ask you 
about a statement you made on national television a few weeks 
ago on September 6th, and I am quoting what you said. You said, 
``I think before we got into COVID-19, I thought the debt was 
very manageable. We were having extraordinary growth. We were 
creating growth that would pay down the debt over time.'' That 
was the statement you made on Fox.
    I asked the Republican-appointed CBO Director about that 
statement yesterday at a Budget Committee hearing, and with 
respect to the claim that we were creating growth that would 
pay down the debt, he simply said that was untrue, just the 
budget did not show that. It was flat-out wrong.
    But I want to focus on the part of your statement where you 
said that, prior to the pandemic, we were experiencing 
``extraordinary growth,'' because in 2019, before COVID-19 hit, 
economic growth was 2.3 percent. Is that the ``extraordinary 
growth'' that you were referring to in that TV interview?
    Secretary Mnuchin. We were on track for significant growth 
beyond that, and that is correct.
    Senator Van Hollen. All right. Mr. Secretary, you were not 
on track for significant growth. You have overestimated the 
growth repeatedly. You know, President Trump has talked about 4 
percent growth. And the reason I ask is that during the second 
term of the Obama/Biden administration, the economy grew at 2.4 
percent per year, in fact, slightly higher than the economic 
growth you were talking about just before the pandemic. So by 
your definition, those 4 years of the Obama/Biden 
administration experienced extraordinary growth. Is that right?
    Secretary Mnuchin. No. Again, I would be happy to go 
through my projections with you offline, but we were beyond all 
of our projections, and, again, we had projected 3 percent over 
time, which is something that has not been done in years, and 
we believe the economic----
    Senator Van Hollen. Mr. Secretary, it is simply the 
difference between projections and reality, and the reality is 
that economic growth over the, you know, 4 years of the Obama/
Biden administration was actually slightly higher than the 
economic growth in 2019, which you called ``extraordinary 
growth.''
    Let me ask you now about President Trump's payroll tax 
deferral proposal where workers do not have their Social 
Security taxes taken out of their paychecks through the end of 
the year, but then they owe the money and have to pay it back. 
As you know, the private sector really wants nothing to do with 
this. It really is a shell game. But I wrote to you about this 
along with a number of my colleagues who sent a bipartisan 
letter simply asking you this, that with respect to folks in 
our military and our Federal civil servants, that you at least 
give them the choice as to whether or not to participate, that 
you do not force folks in the military or Federal employees to 
participate if they do not want to do it.
    Senator Kennedy. Could you give us a brief answer, Mr. 
Secretary?
    Senator Van Hollen. And when we are going to get an answer 
to the letter and also what your answer is.
    Secretary Mnuchin. I would be happy to follow up with OMB 
who is responsible to have the agencies. I think that is 
reasonable issue if people do not want to participate with 
them, but let me follow up with them.
    Senator Kennedy. Thank you, Mr. Secretary.
    Senator Van Hollen. Thank you.
    Senator Kennedy. Senator Perdue.
    [No response.]
    Senator Kennedy. He is not here? OK. I think am next.
    Mr. Chairman, can you tell me how much money is left, not 
without leverage, in the Main Street Lending Program?
    Mr. Powell. I am sorry. Without--can you say----
    Senator Kennedy. Without the leverage.
    Mr. Powell. Without the leverage.
    Senator Kennedy. Yes, sir.
    Mr. Powell. Well, I think that would just be the equity.
    Senator Kennedy. Right.
    Mr. Powell. So Treasury committed $75 billion, so most of 
that.
    Senator Kennedy. Is left?
    Mr. Powell. Yes, with no leverage.
    Senator Kennedy. Assuming that we are not going to use that 
in the next 6 months, of all of our alternatives to try to 
stimulate the economy, what is the single highest and best use 
of that money?
    Mr. Powell. I think we will use some of it. We are using 
some of it even as we are speaking here today.
    Senator Kennedy. How much do you think you will use?
    Mr. Powell. You know, I think that the total loans might 
be--I do not know--you know, $10, $20, $30 billion by the end 
of the year.
    Senator Kennedy. OK. Let us suppose----
    Mr. Powell. But that is with leverage.
    Senator Kennedy. Let us suppose we have $50 billion left 
in, that we will not be--well, let me put it another way. Is 
there a higher and better use of that money in the Main Street 
Lending Program given what we know about the program right now?
    Mr. Powell. I have a strong desire to not get too deeply 
into these specific fiscal questions, but I would say, though, 
that there are some things that you have talked about today 
that would be----
    Senator Kennedy. What is the single higher and better use?
    Mr. Powell. To me it would be PPP, and then after that I 
would say something more for those who remain unemployed.
    Senator Kennedy. OK. Mr. Secretary, do you disagree or 
agree with that?
    Secretary Mnuchin. I do agree with that, not just that 
money but the $200 billion that I have on the sidelines.
    Senator Kennedy. OK. So if we could agree to take $50 
billion of equity from the Main Street Lending Program and 
commit it to, for example, PPP, you think that will help the 
economy?
    Secretary Mnuchin. I do, on top of the $130 billion that is 
sitting there unused.
    Senator Kennedy. Right. Do you agree with that, Mr. 
Chairman?
    Mr. Powell. I do. There is this $200 billion, though, that 
I think you--I would take that first rather than taking it 
directly from Main Street.
    Senator Kennedy. Right.
    Mr. Powell. Sorry, the part that has not been allocated at 
all is $200 billion.
    Senator Kennedy. I understand. Mr. Chairman, what is going 
to happen if we do not pass another coronavirus bill?
    Mr. Powell. Well, I think the risk is that spending will 
weaken and that these 11 million-and-change people--and, 
actually, there are many more than that whose working lives 
have been disrupted, but there are 11 million in the payroll 
survey that are unemployed, and some of those are going to have 
a hard time getting back to work because they work in those 
difficult areas of the economy. And so they have money in the 
bank now from the checks that they got and from the 
unemployment insurance, and I think they will go through that. 
And so we will see sooner or later--probably sooner, we will 
see that the economy has a harder time sustaining the growth 
that we have seen. That is the risk.
    Senator Kennedy. OK. Mr. Secretary, if we in the Senate, 
along with our colleagues in the House, could agree to do one 
thing to improve our economic situation, what would you 
recommend that we do?
    Secretary Mnuchin. I would allow us to spend the $130 
billion that is sitting in the PPP, money that has been 
appropriated by Congress, and allow us to send second checks to 
those businesses that are hardest hit and small businesses.
    Senator Kennedy. And that would be your number one 
priority?
    Secretary Mnuchin. That would be.
    Senator Kennedy. OK. I am about to run out of time, so I 
want to slightly change the subject here. Mr. Secretary, I know 
you are part of the President's Working Group on China Markets. 
Is that correct?
    Secretary Mnuchin. Yes.
    Senator Kennedy. And I appreciate your good work on that. 
Two of my Democratic friends in the House have told me that 
Speaker Pelosi has decided not to move any Senate China bill 
that is sponsored or cosponsored by a Republican. How do we 
address that?
    Secretary Mnuchin. I am not aware of that, but, again, we 
would be happy to work with you and follow up.
    Senator Kennedy. Could you bring that up with the Speaker?
    Secretary Mnuchin. I would be happy to.
    Senator Kennedy. Thank you very much.
    Thank you, gentlemen, both for your good work. I want to 
associate myself with my colleagues' remarks complimenting you. 
You have had to do it with happy thoughts and spit and duct 
tape, but you have held this thing together, and I want to 
thank you.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you. Gentlemen, thank you for 
being here as well, and I, too, want to thank you for your 
responsiveness always and so appreciate that.
    Let me talk about something that I know I have talked to 
both of you about over the phone and in person, the hard-hit 
tourism and hospitality industry. In April, almost 8 million 
jobs in the leisure and hospitality sector were lost. I know 
you both know that. Workers in the leisure and hospitality 
industry experienced a peak decline in employment of more than 
52 percent. Nevada's economy has cratered as tourism and travel 
stopped. Nevada's unemployment rate is more than 13 percent. 
More than 300,000 people continue to claim unemployment 
insurance. And in a recent survey from the American Hotel and 
Lodging Association, nearly three-quarters of hotels will have 
to lay off employees if they do not receive additional 
Government funding. In Las Vegas and Reno, employment in our 
hospitality and leisure sector is down by nearly 25 percent, 
the most among all sectors.
    So let me start with you, Secretary Mnuchin, and you and I 
have had this conversation, and I know you appreciate how hard 
hit our industry is. You talk about there needs to be an 
additional targeted relief. Can you identify what that targeted 
relief would look like specifically for this industry?
    Secretary Mnuchin. Well, I think the PPP is the most 
effective way of getting targeted relief to those jobs that you 
are referring to, and, again, we would put a revenue decline 
test to make sure that it was allocated to the businesses that 
really needed it.
    Senator Cortez Masto. But it has not been. Listen, I just 
heard Senator Rounds even say the PPP was not working in his 
State, and it has not worked in Nevada because, clearly, there 
are too many of our businesses that are still suffering around 
the hospitality industry as well, from live events to 
restaurants. So what do we need to do to target it? That is 
what I am looking for, because my concern is a comment that you 
made earlier that some sort relief is better than nothing. So I 
am not about picking winners and losers, and I think that 
comment is, unfortunately. I do not see how you can identify an 
individual or business that gets relief when some do not. I do 
not know how you can identify that maybe the airline industry, 
who needs relief and those workers need relief, when we are not 
giving direct payments to those who are unemployed and still 
working on the unemployment and how we do not still target 
funding for State and local governments, how we still do not 
target what is necessary right now around the health care 
industry, because we all know that is the cause of our economic 
woes right now, and we should still be funding that.
    All of the things that I have seen put forth in this skinny 
bill, they do not fund any of those things. So don't we really 
need a comprehensive package? And let me ask both of you, isn't 
that what we need here to stimulate and continue to stimulate 
our economy to get out of this, a comprehensive package so 
nobody is left behind?
    Secretary Mnuchin. I just want to clarify. My comment on 
some relief was better than no relief was implying that we 
should have a compromise and have bipartisan support, because 
right now with no legislation that does not do any good.
    And I would also just say I think the PPP has helped those 
industries an enormous amount. They have just run out of money, 
and they need a second check.
    Senator Cortez Masto. Right. I do not disagree with you 
there. I think we still have to target money to small 
businesses. I absolutely agree, and I think that is part of the 
concern here, is that by the conversation that I am hearing is 
that we are looking at only lifting up some within the 
communities and not everyone. And I guess my question again to 
you is: Don't we need comprehensive relief here?
    Secretary Mnuchin. I do think we need comprehensive relief. 
It was not a question of some versus none. It was a question of 
right now we are stuck because the Democrats have a commitment 
of if it is not less than $2.2 billion, they are not willing to 
sit down and talk. And----
    Senator Cortez Masto. Well, listen, Secretary. Listen, 
Secretary Mnuchin. I can debate this with you all day, but the 
public does not care right now. The American public wants some 
relief. And you can talk about Democrats, you can talk about 
Republicans. Look, we can also talk about the fact that the 
Republicans, instead of negotiating with the Democrats in the 
Senate behind closed doors, put together a skinny package, 
threw it on the floor of the Senate without even going through 
Committee, without even any negotiation. And in Mitch 
McConnell's own words, there are 20 of his members who do not 
want to do anything. We can debate that all day long, but that 
does not get us to where we need to be, which is too many 
people across this country are suffering, and right now it 
requires us to come together and do a comprehensive package. 
That is all I am looking for from your is your commitment. You 
have done it before. You did it four times before. I want to 
see the commitment that you are still there to do a 
comprehensive package with everyone.
    Secretary Mnuchin. Yes, you have my commitment. I am 
available anytime. And, again, I will reiterate this Committee 
has been very effective. Mr. Chair, if you and other Members of 
this Committee on a bipartisan basis want to sit down, I am 
available anytime.
    Senator Cortez Masto. Thank you.
    Chairman Crapo [presiding]. Thank you, Senator Cortez 
Masto, and thank you, Secretary Mnuchin. Your commitment to 
trying to put together the kind of package we need, a 
comprehensive package, is unmistakable. Your commitment is 
solid, and I appreciate your restatement of that commitment to 
sit down with us and try to work this out.
    Next is Senator McSally.
    Senator McSally. Thank you, Mr. Chair. Good to see you, 
Secretary Mnuchin, Chairman Powell.
    Thanks for your work, Secretary Mnuchin. We worked together 
on putting together additional COVID relief that I voted yes on 
just a few weeks ago. And just for a review, that included $257 
billion, second round of PPP that was really targeted for the 
smaller mom-and-pop shops and the hardest hit small businesses, 
like many of them in Arizona. They were grateful for the first 
round of PPP, but some of them are still struggling trying to 
stay afloat, and this really would have been a lifeline for 
them.
    Also, commonsense liability protections for schools and 
hospitals and businesses to protect them from an epidemic of 
trial lawyers coming after them while they are following best 
practices.
    The $300 extra a week in unemployment for that social 
safety net, for those who are still unable to work as we 
continue to defeat the virus and move the economy forward, you 
know, short-term assistance that I championed for child care 
providers so that they could reopen and stay open. This is 
particularly important for working moms to be able to balance, 
get that safe place for their kids to have child care while 
they can safely return to work.
    Also, I fought to extend the deadline to September 30, 
2021, for spending of the already appropriated money in the 
CARES Act for States, tribes, and local governments under the 
Coronavirus Relief Fund. This was something we have heard from 
communities, especially the tribes. It is so important to 
extend that, so it was great to see that in the bill. The $31 
billion for vaccine therapeutic diagnostic development, vaccine 
distribution, restocking the strategic stockpile; $20 billion 
of additional farm assistance, again, going out to farmers and 
ranchers and growers who do need that support; and $105 billion 
for schools to get students safely back to school, both higher 
education, K-12, with school choice; and support to the Postal 
Service.
    I know I am hearing from small businesses. They are doing 
everything they can. They are grateful for PPP, and this was a 
targeted, strong relief package to get relief out the door. 
People are tired of hearing the blame game going on in D.C. 
This was going to get needed relief out the door.
    Secretary Mnuchin, can you just share, with that $257 
billion, as we see the economy--the status of the economy and a 
lot of small businesses still struggling, how many small 
businesses could we have saved if that $257 billion was out the 
door right now and helping small businesses across the country?
    Secretary Mnuchin. I do not know the exact number, but it 
is an awful lot.
    Senator McSally. Yeah, it is. I mean, in Arizona alone, 
over 86,000 small businesses took advantage of PPP, and that 
was 1 million jobs saved. So just this second round would 
really be impactful. If you can just share your views kind of 
on the economic recovery and how important this second round of 
PPP would be. I mean, look, let us just vote on that on the 
floor. Let us just continue to vote on things that we can agree 
upon. We should be moving this relief out to small businesses. 
So can you just kind of share your view, and Chairman Powell, 
of the importance of getting this out the door to support these 
small businesses?
    Secretary Mnuchin. As I said earlier, I think it would be 
the single most impactful area, and, again, I would just 
emphasize this does not even require additional funds to be 
appropriated.
    Senator McSally. Yes.
    Secretary Mnuchin. We can have the $130 billion there and 
allocate some of the money that we are not going to use on the 
Fed facilities. So it would not cost an extra penny.
    Senator McSally. Exactly. Chairman Powell, do you have 
anything to add just on the importance of getting additional 
relief out to small businesses like what I voted yes on a few 
weeks ago?
    Mr. Powell. Not much. I just would agree that, you know, 
this is something that would help the economy.
    Senator McSally. Great. Thank you.
    And a follow-up on extending the deadline. Again, this is 
not additional money. This is money that was already sent out, 
the Tribal Relief Fund which I championed, $8 billion out to 
tribes, and the resources out to States and local governments. 
We were able to get included into that legislation we voted on 
in the Senate, extending that for a year.
    Now, I have been in the military where we see if we have 
got to spend money by the end of the year, you often, you know, 
use it or lose it, spend it on not the best things you could 
spend it on. And we have heard from tribes, for example, the 
Navajo Tribe, who they have got a plan to invest it. But if you 
are talking about infrastructure projects, water infrastructure 
right-of-way, things that would really be impactful to address 
some of the underlying challenges they have had in dealing with 
coronavirus, they just cannot get there by the end of the year.
    So, again, this is not one additional dollar. It is just an 
extension. Could you share again, Secretary Mnuchin, just your 
support or your views on----
    Secretary Mnuchin. Yes, I strongly support that as well.
    Senator McSally. OK, great. Thank you.
    And just one last question. I am almost running out of time 
here, but maybe we can follow up, because I have heard from 
many small businesses they either took advantage of PPP or they 
could not, but really they are still struggling related to 
managing their bills, managing their debt, and I appreciate we 
engaged on this in response to this pandemic, the troubled debt 
restructuring provision in the CARES Act. And so the statement 
issued directly by the Fed encourages lenders to work with 
customers that are experiencing financial hardship to try and 
help them, you know, restructure if needed and not have it be a 
ding on them.
    Unfortunately, I am out of time, but I would like to hear 
what you have seen in regards to uptake related to this and the 
implementation of this policy and what other actions regulators 
or lenders are taking to ensure individuals and businesses 
across Arizona and the country where there are options beyond 
PPP or the Main Street Lending Program to just help give them 
some relief here. So I look forward to following up on the 
record.
    Chairman Crapo. Thank you, Senator McSally.
    Senator McSally. I yield back.
    Chairman Crapo. Senator Jones.
    Senator Jones. Thank you, Mr. Chairman. I appreciate this 
opportunity. Thank you to both the witnesses for their presence 
here. I really appreciate that.
    Also, you know, I just listened to a review about what was 
all in the bill that was voted on a couple of weeks ago. 
Unfortunately, time does not permit me to go through all of the 
inadequacies of that bill, and they are legion. The fact of the 
matter is that that bill was less than half of what was being 
floated out there in August, and the Majority Leader had to 
reduce that in order to get members of his own caucus to join 
it. Clearly, it was more of a partisan bill. It was more of a 
partisan vote rather than any effort at all to reach bipartisan 
agreement.
    I would like to associate myself some with Senator 
Menendez's comments about city and local governments. My home 
town of Fairfield has suffered. They have had to file 
bankruptcy. Just this last Friday in Birmingham, 150 Birmingham 
public library employees had to be furloughed.
    Mr. Chairman, I would like to submit for the record a chart 
detailing the loss for 60 Alabama cities of $40 million that 
they have not been able to recoup. I will ask unanimous consent 
that that be submitted for the record.
    Chairman Crapo. Without objection.
    Senator Jones. The Alabama League of Municipalities says 46 
percent of those are for lodging taxes. There is a lot that we 
can do. I think Senator Menendez covered that appropriately.
    Secretary Mnuchin, let me ask you real quick about the 
stimulus checks, because while I also hear about PPP and small 
businesses, I also hear from a lot of folks about either a next 
round or either the 150,000 Alabamians that have not got their 
money from the CARES package. The GAO report that was released 
this past Monday shows nearly 9 million Americans, 150,000 of 
those in Alabama, that have still not received their $1,200 
stimulus checks. These are folks that do not make enough that 
they do not file taxes. I understand that there was a letter 
that was going out in September about urging people to do that, 
but there is also an October 15th deadline that I am afraid a 
lot of people are not going to make.
    Can you commit to extending that October 15th deadline for 
a month or so, maybe until December, in order to get these 
folks their checks now rather than waiting on some kin of tax 
credit that may or may not even work for them?
    Secretary Mnuchin. Let me go back and see if we have the 
ability to do that, yes.
    Senator Jones. OK. Well, that would be great. I think you 
do have that ability, but if you could get back with our office 
about that, I would very much appreciate it. And I agree with 
Senator Menendez about your responsiveness, and I have really 
appreciated that during the course of this.
    Chairman Powell, real briefly, I think by now folks 
recognize that the stock market is not always the best 
indicator of where the economy is going. We have seen it has 
been like one of my favorite roller coasters down in Georgia, 
the Great American Scream Machine. It is up, it is down. It 
just depends on how the day traders are looking at the end of a 
day--not that it is a bad one, but it is just not the only one.
    During the pandemic, many hardworking Americans lost their 
child care with daycares closing and elderly relatives worried 
about exposure to illness. Without the flexibility of working 
from home, many have had to cut back on their hours, and some 
cannot work at all, which this means smaller paychecks or no 
paychecks whatsoever.
    The hardest-hit folks, I think, in my view, are not just 
those--if you go to one demographic, it is single moms. In 
Alabama, more than 25 percent of Alabama households--25 percent 
of Alabama households are headed by single mothers. Of those, 
50 percent of those are women and children who live in poverty. 
Without some kind of deal in sight that includes a stimulus 
check or the ability, if they have not got one already, to get 
it, how are these single moms going to put food on the table? 
How are they going to pay for the necessities?
    So my simple question, Chairman Powell, is: What impact 
will consumers with less discretionary spending like these 
folks have, what impact will that have on the economy going 
forward?
    Mr. Powell. Let me just start by agreeing with you that the 
burdens of this pandemic have really fallen hard on people just 
like the ones you are describing. You know, if people start to 
run through what resources they have, they are at risk of 
losing their homes or having to move out of the place they are 
renting, maybe move back in with family, and those things are 
not necessarily good for controlling the spread of the virus.
    In addition, of course, they will cut back their spending, 
and, again, I would just point to the CARES Act really did a 
lot of good in putting money in people's hands and keeping them 
in their homes and keeping them spending, keeping them in one 
piece. And, you know, going forward, more of that may be 
needed.
    Senator Jones. Right. Thank you, Mr. Chairman. Thank you, 
Secretary Mnuchin. I appreciate you both being here.
    Thank you, Mr. Chairman.
    Chairman Crapo. Thank you.
    Senator Smith.
    Senator Smith. Are we there?
    Chairman Crapo. Yes, Senator Smith, is that you?
    Senator Smith. Yeah, there you go. Can you see me?
    Chairman Crapo. Yes, we see you now. Go ahead.
    Senator Smith. Thank you, Mr. Chair and Ranking Member 
Brown, and I want to also thank Secretary Mnuchin and Chair 
Powell for being here.
    Chair Powell, I would like to start with you. You know, I 
sit in the seat that was once held by Senator Hubert Humphrey, 
who was a champion for full employment. In fact, his name is on 
the Humphrey-Hawkins bill that sets the dual mandate for the 
Fed of maximum employment and stable prices and that you are 
charged with implementing. And you have noted several times--I 
appreciate your comments about how COVID has not been the great 
equalizer, that is disproportionately is affecting people in 
low-wage jobs, essential workers, often women and women of 
color, black and brown people, indigenous people.
    So my question is this: As you think about your mandate at 
the Fed and you think about the decisions that you make around 
monetary policy, could you just talk a little bit about how you 
see the impact of monetary policy on supporting households of 
color? We know Fed research has shown that workers of color 
tend to recover their lost wages more slowly, for example. I am 
interested in knowing how you think about this and how you 
might want to bake that more into your work as you go forward.
    Mr. Powell. The single best thing we can do is support a 
tight labor market, a strong labor market. We saw in the last 
few years of the last long expansion that the gains began to go 
more and more to people at the lower end of the income 
spectrum, more and more to minorities and women, and that was, 
we think, significantly because unemployment was very low, 
companies were having to look hard to find workers, and it is a 
state of affairs that we would love to get back to.
    I just would add, though, you know, it took us 8 years to 
get from the global financial crisis to that tight labor 
market. It just takes a while. And so I think there are other 
tools that can help in the meantime, and those are really the 
fiscal tools. It is not a good strategy to be waiting, you 
know, for unemployment to get really low again, although that 
will work ultimately. So that is the main thing that we can do.
    Of course, we also have tools where, you know, we supervise 
banks to make sure that there is not discrimination along 
racial lines and things like that. But by far the most 
important thing we can do is seek maximum employment and in 
doing so, you know, take account of all groups, all disparate 
demographic groups and not just the headline number.
    Senator Smith. And what about the relationship between low 
interest rates and how communities of color do? What is that 
relationship like? And how do you see that?
    Mr. Powell. Low interest rates support higher economic 
activity over time, and that supports lower unemployment--
higher employment and lower unemployment. It also supports 
higher inflation. As the economy gets closer and closer to full 
employment and to full capacity, you will see inflation rise--a 
little bit, not a lot. So it is a virtue that over time helps 
everybody.
    Now, in the short run, of course, if you are relying on 
interest on your bank account, it does not help you much there. 
But over the medium and longer term, it supports job growth and 
economic growth generally.
    Senator Smith. Thank you. Chair Powell, I appreciate that. 
I hope that you will continue to look at how--you know, keep 
workers, and especially low-wage workers and workers of color, 
in the forefront as you think about monetary policy as well as 
what we need to do on fiscal policy. So thank you.
    Secretary Mnuchin, I wanted to follow up on something that 
I wrote to you about recently. I just received some information 
back from you late last night. This has to do with how the 
Treasury Department is working to get economic impact 
statements--or payments, pardon me, out to folks that are 
homeless. People in Minnesota and all over the country are 
living in shelters and encampments and cars. In fact, there is 
a large tent encampment just a block from where Archie and I 
live in Minneapolis, and those folks are not getting their 
economic impact payments.
    So could you just tell me what you are doing? You said in 
the information I received last night that you have some 
special tools that you are working on. Of course, I know about 
your nonfilers website, but a lot of the folks that I am 
talking to do not have access to that website. So what are you 
doing, and especially what are we doing with this deadline that 
is approaching in just a few weeks?
    Secretary Mnuchin. Well, as I mentioned earlier on the 
deadline, we will go back and explore that and see what we can 
do.
    Senator Smith. I appreciate that.
    Secretary Mnuchin. But I think, as you have said, we need 
to help the homeless. I think the best way to do that is to 
work with community organizations that locally can help them 
and facilitate obviously for us to be able to do this.
    Senator Smith. And do you have any information about how 
many folks who are experiencing homelessness have been able to 
get their checks? Do you know how you are doing with the 
results, what results you are getting?
    Secretary Mnuchin. On that specific issue, I will follow up 
with your staff and try to get you some statistics.
    Senator Smith. OK. That would be helpful, because it is 
getting cold in Minnesota, and I do not know what is going to 
happen to those folks that are living--literally do not have a 
safe place to call home right now. Thank you.
    Chairman Crapo. Thank you. And I believe we have Senator 
Sinema with us by telephone only. Senator Sinema.
    Senator Sinema. Thank you, Chairman Crapo, and thank you to 
our witnesses for being here today.
    While we saw positive job growth last month in Arizona, a 
significant part of those gains appear to be Government jobs we 
knew would return, specifically Arizona teachers returning to 
schools. Private sector job growth continues to be slow due in 
large part to the coronavirus' effect on business operations, 
consumer spending, and, most importantly, public health.
    One of the emerging issues I am watching is housing. 
According to the Census Bureau's Household Pulse Survey, over 
300,000 Arizona families missed their July rent payments. Two-
thirds of those households are families with children. This 
experimental survey was last taken when Arizona was still 
providing an additional $600 per week of enhanced unemployment 
insurance. And now that that enhanced UI is no longer 
available, it is all but certain the situation has gotten 
worse. By the way, a reminder: Arizona's unemployment insurance 
tops out at $240 per week, the second lowest rate in the 
Nation.
    When you cannot make rent, you risk getting evicted. The 
National Low Income Housing Coalition projects that 770,000 
Arizonans will be at risk of eviction at the end of this year.
    So, Secretary Mnuchin and Chairman Powell, thank you both 
for being here. Have either of you ever personally experienced 
eviction or foreclosure?
    Secretary Mnuchin. I fortunately have not, but let me just 
say we do support rental assistance. I have spoken to Chairman 
Crapo and others, and as part of potential legislation, we 
would look forward to working with you.
    Mr. Powell. For me, just a no, I have not.
    Senator Sinema. Well, as you may know, I was homeless for a 
number of years as a child, and I would not wish it on anyone. 
I know the challenges that Arizona families are facing right 
now, and it is an important perspective for people here in 
Washington to understand.
    When I was in elementary school, you know, my Dad lost his 
job, and my parents got divorced. We lost our car and our home, 
and we were homeless for almost 3 years. We lived in an 
abandoned gas station without running water or electricity. 
Now, this might sound like an extraordinary story, but it is 
actually much more common than you would think. And it is 
something that millions of Americans could face in the coming 
months: receiving a notice of eviction or foreclosure and 
having your home taken from you, being forced to abruptly pack 
up all of your family's possessions, not knowing where you will 
go next. These are incredibly difficult and painful 
experiences, and they are hard to explain or understand unless 
you have been through them yourself. Too often politicians in 
Washington understand evictions and foreclosures as strictly 
economic events. But in Arizona, we know that losing your home 
does more than hurt your credit. It does more than jeopardize 
your financial standing. It takes away your dignity. It is 
personal, and at times it can seem like it is impossible to get 
back on your feet.
    We have an interest in minimizing evictions whenever 
possible, but especially during a pandemic. And while the CDC 
recently acted to halt evictions until the end of the year, 
this decision simply prolongs the inevitable. Without some sort 
of rental assistance for families, it shifts the burden but 
provides no means of paying for it. And, unfortunately, 
Arizona's rental assistance, which was riddled for months with 
delays and bureaucracy, is now completely out of money. 
Arizona's situation will go from bad to worse if we see mass 
evictions and record homelessness during a public health 
crisis. This housing crisis could also destabilize our real 
estate market, hurt retail businesses by further depressing 
consumer spending, and tighten access to credit, all when 
Arizona families and businesses can least afford it.
    So, Chairman Powell, if Congress fails to pass rental 
assistance and hundreds of thousands of Arizonans are evicted 
come January, do you anticipate that those evictions would have 
a positive or a negative impact on Arizona's economy?
    Mr. Powell. Clearly a negative impact.
    Senator Sinema. I agree, which is why I am working with 
Senators on this Committee to provide targeted rent, mortgage, 
and utility assistance to keep Arizonans safely housed during 
these challenges times, also working with industry partners and 
housing affordability advocates to build broad bipartisan 
support so that these proposals could be included in the next 
coronavirus relief package.
    As we work to get businesses in our economy back on their 
feet--and I am pleased to have worked with a number of my 
Republican colleagues on these efforts--we cannot forget that 
families are struggling. We should have taken action months 
ago, and now the needs are more urgent than ever. Arizona 
families face tough choices right now, and it is time that 
Congress recognize these challenges and take action.
    Thank you, Mr. Chairman, thank you, Ranking Member Brown. I 
call on us to find a solution for Arizonans and for families 
who are struggling across the country. I yield back.
    Chairman Crapo. Thank you, Senator Sinema.
    That concludes the questioning for today's hearing. Senator 
Brown has asked for a minute or two to make an additional 
statement, and then we will wrap up the hearing. Senator Brown.
    Senator Brown. Thank you, Mr. Chairman, for always giving 
me an opportunity at the end of a hearing to ask one more 
question of the witnesses and make a short statement.
    I first want to thank Senator Sinema for bringing up the 
importance of rental assistance, and as you know, we have asked 
for $100 billion, which probably as the pandemic goes on barely 
covers the assistance we need.
    A question, Mr. Secretary, for you briefly. I mentioned an 
article about how small businesses--it was in ProPublica--how 
small businesses in Cleveland are suffering while big 
corporations benefit from access to cheap loans. Did you read 
the article that we sent you?
    Secretary Mnuchin. I did. I looked at it very quickly on 
the way up. I did not have a chance to read the whole thing, 
but I saw it briefly.
    Senator Brown. OK. I hope you will--I know how busy I am. I 
know you are way more busy than almost any of us. I hope that 
you will pay some attention to how risky, overleveraged 
companies can benefit from a Government backstop while they lay 
off workers to keep prices up--keep profits up and bolster 
their stock prices. I hope you will read that and really take 
it to heart.
    Just a statement in closing, Mr. Chairman. Thanks to both 
of you, and I agree that both of you--and I speak more 
obviously--I speak more to Chair Powell, but both of you are 
always responsive to Members of the Senate and to our staffs, 
so thank you for that.
    Secretary Mnuchin, you and the President and the Fed Chair 
all agree we need a large, aggressive, comprehensive bill to 
keep the economy working. We cannot do it piecemeal. You know 
how this place works by now. It takes months to get a bill 
done. Families do not have that kind of time. It has been 6 
months, as we know, since CARES passed. Mr. Secretary, you and 
the President need to bring Republican Senators to the table 
supporting your ideas and our ideas in a bigger package. Get 
your act together. Tell Mitch McConnell he needs to put--even 
if he has 20 people in his caucus that do not want to do 
anything, which Senator Van Hollen said, they need to put a 
serious bill forward, because we will get all the Democrats to 
work with half or so of the Republican caucus. If we do not get 
direct funding, as our witness last week said, with others, the 
Republican witnesses chiming in, we could have another Great 
Depression on the horizon. The stock market does fine, but Main 
Street businesses and restaurants are shutting down. Black and 
brown businesses in communities are taking a huge hit for the 
second time this decade. Airline executives are doing well. 
Airline workers, as Senator Cotton said, are facing job cuts. 
We can do better. It comes down to whose side are you on.
    As you know, Mr. Secretary and Mr. Chairman, the 
Administration and many of my Republican colleagues have, 
frankly, not seen the country through the eyes of workers, 
which is so important, and they have not really tried. The 
House passed the HEROES Act in May. It has been June, July, 
August, September, almost all of September. The President 
should urge Senate Republicans to take it up or come up with 
their own comprehensive--not emaciated, not skinny but 
comprehensive package to help all working families. Thanks to 
the two of you for testifying.
    Chairman Crapo, thanks for your indulgence always and 
cooperation.
    Chairman Crapo. Thank you. I have just been notified that 
one of our Senators, Senator Cramer, may be joining us remotely 
and would like to have an opportunity to ask his questions. If 
you are with us, Senator Cramer, please let us know, and you 
may ask your questions at this point.
    [Pause.]
    Chairman Crapo. It sounds like Senator Cramer has not been 
able to make that connection, and so we will conclude the 
hearing.
    I would just like to say in response to Senator Brown and 
to some of the other comments that have been made, there is a 
commitment on the part of the President, on the part of many of 
us in Congress to put a strong, fully effective relief package 
together. At this point I personally believe that we have not 
had the willingness from the other side to engage in a 
reasonable package and that the demands continue to be our way 
or the highway. And, frankly, I believe that there are many 
items that we have already reached agreement on or which we 
could reach agreement on very rapidly if we would take them up, 
if we had the willingness to simply take them up and do them 
individually. And so my hope is that while we continue to work 
on a meaningful comprehensive package, that we also recognize 
that we need to act and we need to act now, and there is a 
significant amount of good, solid relief that we can put 
forward rapidly if we can just get agreement to move forward to 
do what we can do and continue working on putting the rest of 
that package together.
    I want to know if those electronic sounds mean that Senator 
Cramer has been able to join us. Senator Cramer, are you with 
us?
    [No response.]
    Chairman Crapo. All right. With that, then that concludes 
today's hearing. For Senators who wish to submit questions for 
the record, those questions are due to the Committee by 
Thursday, October 1st. To each of the witnesses, we ask that 
you respond to those questions as promptly as you can. And, 
again, thank you for taking your time and for all of the effort 
that you have put forward in our response to this coronavirus 
crisis.
    This hearing is adjourned.
    Mr. Powell. Thank you, Mr. Chairman.
    Secretary Mnuchin. Thank you.
    Chairman Crapo. Thank you.
    [Whereupon, at 12:25 p.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]
               PREPARED STATEMENT OF CHAIRMAN MIKE CRAPO
    Today we welcome our witnesses to this hearing: The Honorable 
Steven T. Mnuchin, Secretary of the Department of the Treasury; and The 
Honorable Jerome H. Powell, Chairman of the Board of Governors of the 
Federal Reserve System.
    Today's witnesses will provide testimony as required under Title IV 
of the CARES Act.
    Congress has appropriated nearly $3 trillion to protect, 
strengthen, and support Americans, to fight the pandemic, and also to 
stabilize the infrastructure of our economic system.
    Title IV of the CARES Act provided a $454 billion infusion into the 
Exchange Stabilization Fund to support the Federal Reserve's 13(3) 
emergency lending programs and facilities that facilitate liquidity in 
the marketplace and support eligible businesses, States, 
municipalities, and tribes.
    So far, approximately $195 billion of funds under Title IV of the 
CARES Act have been leveraged to provide trillions of dollars in 
liquidity back into the markets, supporting credit flow and helping to 
stabilize the economy, including through the: Primary Market and 
Secondary Market Corporate Credit Facilities; Term Asset-Backed 
Securities Loan Facility; Main Street Lending Program; and Municipal 
Liquidity Facility.
    That leaves around $250 billion in funding remaining under Title IV 
of the CARES Act.
    There has been significant interest in exploring ways that the Main 
Street Lending Program, which offers financial support to smaller and 
medium-sized businesses and nonprofits, can be improved to expand its 
access and utilization.
    Earlier this month, the Banking Committee held a hearing on the 
status of 13(3) facilities where witnesses made the case for and 
provided recommendations to change the terms of the Main Street Lending 
Program to broaden its access and use, and to address the commercial 
real estate market.
    In that hearing, Hal Scott, President of the Committee on Capital 
Markets Regulation, shared his view that, `` . . . small and medium-
sized businesses will need financial support for several years to 
recover from the impact of the COVID-19 pandemic.''
    He continued, ``While our economy is improving, given the depth to 
which it fell, there is still a long way to go. Small business revenues 
continue to be well below prepandemic levels, and the recovery has 
stalled since July. A key part of this financial support should come 
from the Main Street Program authorized by the CARES Act.''
    In that same hearing, Jeff DeBoer, President and CEO of the Real 
Estate Roundtable, painted a bleak picture of the condition of the 
commercial real estate market.
    He said, `` . . . it is impacting their ability to meet their debt 
service obligations, which increases pressure on financial 
institutions, pension fund investors, and others.''
    And, `` . . . it is pushing property values down to the detriment 
of local governments. It is causing much stress in pools for commercial 
mortgage-backed securities. It is threatening to result in countless 
commercial property foreclosures. The situation must be addressed.''
    In July, I sent a letter to each of you, Secretary Mnuchin and 
Chairman Powell, urging you to expand access to the Main Street Lending 
Program, including by setting up an asset-based lending program and 
addressing the commercial real estate market.
    In addition to expanding the Main Street Lending Program, there has 
been meaningful interest in opportunities to allocate any remaining 
CARES Act funds.
    In August, House Financial Services Committee Ranking Member 
McHenry and I sent a letter to the each of you urging you to implement 
the remaining funds under Title IV to work to the fullest extent, 
including by expanding the Main Street Lending Program, to further 
support Main Street businesses, their workers and the American economy.
    The Federal Reserve's 13(3) facilities play a critical role in 
strengthening the economic recovery.
    It is important to continually assess what areas of the economy and 
financial markets continue to be in need of support; and identify 
options for providing additional needed support, whether through 
expanding existing facilities or creating new facilities.
    In July, I sent a letter to the Federal banking regulators urging 
each of them to extend and expand critical CARES Act relief where there 
is discretion, including relief for: The Community Bank Leverage Ratio 
to at least December 31, 2021; Troubled Debt Restructurings to at least 
January 1, 2022; and The Current Expected Credit Losses to at least 
January 1, 2023.
    Since that letter, I have heard additional concerns from both banks 
and credit unions.
    Not only have banks and credit unions experienced a significant 
inflow of deposits during this pandemic, but Congress also tasked them 
with supporting the economy, particularly through the Paycheck 
Protection Program.
    Their role and these unique circumstances threaten to cause key 
regulatory thresholds to be breached and a ratcheting up of regulation 
that would otherwise not occur that could keep them on the sidelines.
    The regulatory framework should account for these unique 
circumstances, and enable banks and credit unions to continue 
supporting the recovery.
    Title IV also contains robust oversight provisions.
    Section 4026 is what brings us here today, and it also established 
the Congressional Oversight Commission, which has held two public 
hearings and issued four reports to date, and the Special Inspector 
General for Pandemic Recovery, who has, to date, issued one report and 
continues its important work.
    During today's hearing, I look forward to hearing: how the 
financial resources provided under the CARES Act have benefited the 
American people and economy; an update on the status of 13(3) emergency 
facilities, including an assessment of the opportunities for and need 
to expand the Main Street Lending Program; steps the Fed and Treasury 
have taken and will continue to take to provide transparency into the 
loans, loan guarantees, and other investments under the CARES Act; 
opportunities to utilize any remaining funds of the CARES Act to 
provide financial support and additional liquidity to the economy; and 
opportunities to tailor the regulatory framework to account for the 
unique circumstances of the pandemic and role of the financial 
institutions, and whether congressional action is needed.
    Although there have been positive economic signs in recent months, 
Americans are continuing to still struggle with and feel the effects of 
the COVID-19 pandemic still need relief.
    Unfortunately, Republicans' repeated efforts to deliver targeted 
relief in areas where we can agree has been rebuffed by Democrats.
    Negotiating toward a realistic package that can actually get passed 
and signed into law would best serve the American people during this 
difficult time.
    I appreciate the work of both Secretary Mnuchin and Chairman Powell 
in response to this horrible pandemic to support financial markets, 
businesses, and the economy.
    Thank you to each of you for joining the Committee today.
                                 ______
                                 
              PREPARED STATEMENT OF SENATOR SHERROD BROWN
    Thank you, Chair Crapo. While I'm disappointed this hearing wasn't 
held fully remote, I'm glad to see masks in the hearing room. Chair 
Powell, I also want to thank you for your leadership in calling for a 
national mask mandate--something no other Republican I'm aware of has 
done. I know many of my colleagues cringe when they see these Trump 
rallies when they see people packed together, shouting and not wearing 
masks. We should be trying to stop this virus, not spread it.
    Today, there are more people out of work than there were during the 
2008 financial crisis. But you wouldn't know it from the way President 
Trump and Secretary Mnuchin act, as if we are through the crisis and 
well on the road to recovery. That's what happens when you only measure 
the health of the country by the stock market.
    There continue to be almost 1,000 deaths per day from the 
coronavirus--that doesn't show up in the quarterly earnings reports. In 
22 States, coronavirus cases are surging rather than receding, and 
scientists and public health experts predict it will only get worse as 
fall and winter begin.
    Families are under unbearable stress--my colleagues know that. Most 
of you have children and grandchildren, trying to either educate their 
kids at home, or worrying as schools open without sufficient plans to 
protect kids and teachers and custodians and bus drivers. And that 
doesn't even include our sons and daughters at risk at colleges and 
universities.
    But you wouldn't know any of that if you only looked at corporate 
profit forecasts.
    This President and this Administration continue to act like 
everything is business as usual--because, for them, it is.
    The coronavirus isn't really affecting them or their wealthy 
friends or their comfortable jobs. CEOs aren't the people working the 
cash registers or cleaning hospital beds--they aren't risking their 
lives every day to keep food on the table. Most CEOs don't live in the 
neighborhoods where Black and minority-owned restaurants and businesses 
are shutting down.
    Think of the anxiety of an essential worker, and the stress she 
faces--think about coming home at night and worried you picked up the 
virus at work, and are bringing it home to your family.
    Cleveland is always a pretty good barometer of where the country is 
heading.
    Long before the Great Recession, our trade and tax policy 
essentially abandoned the industrial Midwest. Communities watched 
factory after factory close, with no plan to rebuild our local 
economies. Entire neighborhoods and entire towns hollowed out. My zip 
code, 44105, had the most foreclosures in the United States at the 
beginning of 2007. By the next year, thousands of cities across the 
country were suffering, as millions of families lost their homes. The 
story of our zip code became the story of the whole country, because 
the Government took care of Wall Street, it took care of the biggest 
banks--but it failed to take care of everybody else.
    Just 10 years later, we have yet another crisis where Cleveland is 
a harbinger of what's happening across the country. ProPublica 
illustrated it pretty well recently--they covered a big company called 
TransDigm that has offices in downtown Cleveland. TransDigm has gotten 
plenty of help from the taxpayers to get through this pandemic--the 
company is borrowing money at record low-interest rates and it's 
collecting yet more tax breaks--while at the same time, it's laying off 
its workers. More than 3,000 workers in Cleveland are going to lose 
their jobs during a pandemic, while the company's executives keep 
making money. Their chairman made $60 million a year at last count.
    And this is happening all over the country--Government help is 
readily available for big corporations, while small businesses struggle 
to survive, and workers are on their own.
    Millions have lost their jobs. And at the beginning of August, they 
lost the $600 a week unemployment insurance, because of this President 
and my Republican colleagues. That $600 a week kept more than 12 
million people out of poverty.
    What are these families to do? How they are going to make rent or 
their mortgage payment next week on October 1st? You can't tell them, 
``oh go out and get a job.'' There are no jobs, because the President 
hasn't controlled the spread of the virus.
    Millions of people are stuck inside their homes and are separated 
from loved ones to stay safe, trying to avoid contracting this disease. 
Black and brown communities, including Native American tribes, have 
been hit the hardest by the pandemic, but still don't have equal access 
to the Federal Reserve lending facilities or PPP loans.
    We know that it would not have been this bad if the President had 
done his job. Imagine if instead of lying to us, the President had 
treated us like adults and leveled with the American people.
    Imagine if he'd worn a mask and practiced social distancing. 
Imagine if he'd had a real plan to mobilize all of America's vast 
ingenuity and talent to scale up production of tests and PPE.
    More small businesses would still be open right now and kids would 
still be in school and workers would still have their jobs and parents 
and grandparents would still be alive.
    And now Americans are watching the stock market surge, and their 
President and his economic advisers saying the economy is great. 
They're wondering what great economy they are talking about.
    The Ohioans I talk to--and anyone who actually understands 
economics--know workers are the foundation of our economy. And they 
know all too well what happens when you let Wall Street run things, and 
ignore Main Streets across this country.
    Ohioans have watched for decades as factories closed, investment 
dried up, and storefronts were boarded over, in communities that once 
were thriving. They know what it's like to wake up one day, and realize 
the only jobs to be had are at a big-box chain for rock-bottom wages, 
with no health care, no paid sick days, and no power over your 
schedule.
    Those Ohio workers know what it's like to be treated as expendable 
by corporations, and too often, by their own Government.
    And remember--as goes Ohio, so goes the Nation. Americans are 
waking up, and realizing they have a President who thinks much of the 
country is expendable.
    I know not everyone in Government feels that way. The Chairman of 
the Fed has said over and over that we need more action from Congress--
more money to unemployed workers, more money for schools, more money to 
help families with their rent or mortgage--in short, we need the 
Government to actually lead, and use our country's vast resources to 
avoid a catastrophic recession.
    In our last hearing in this Committee all of the expert witnesses, 
those chosen by the minority and those chosen by the majority, agreed 
on one thing--people need their Government to actually step in to 
support our families, something the Senate majority has failed to do.
    It seems the only people who aren't getting that message are 
President Trump, Secretary Mnuchin, and Republican Senators.
    It's not as if Republicans are not capable of taking action. Mitch 
McConnell moves heaven and earth to do huge favors for big 
corporations.
    Look at the tax giveaway--we spent two trillion dollars making the 
richest people in our country richer. The President promised it would 
grow the economy, he promised it would pay for itself, he promised it 
would mean workers got a $4,000 raise. Of course, none of that 
happened.
    It was incredibly unpopular, but Senator McConnell got all of his 
Republican Senators to vote for it.
    Senator McConnell has made sure Trump's corporate judges are 
approved. He's bent over backwards to stack a Supreme Court that will 
gut the Affordable Care Act, rip away protections for preexisting 
conditions, and always side with corporations over workers.
    Now we know he's even willing to reverse his own position to 
confirm yet another Supreme Court Justice.
    When it comes to doing the bidding of Wall Street and the wealthy, 
Mitch McConnell can whip the Senate into action. He thinks everything 
else can wait.
    Most Americans can't afford to wait any longer. We are up against a 
global health crisis that will spiral into a global economic crisis 
unless we act now. We are facing a challenge that requires this 
Government to be at its best, to work together to do big things.
    We need an economic rescue package for everyone, help to keep 
families in their homes, and to protect workers at their jobs, help for 
seniors and veterans and students who are at risk. And we need it fast.
    Democrats are ready to meet this moment. House Democrats passed the 
HEROES Act 5 months ago. President Trump and Senate Republicans move 
heaven and earth to help Wall Street and their wealthy friends--when 
will they be ready to do the same for everyone else?
                                 ______
                                 
                PREPARED STATEMENT OF STEVEN T. MNUCHIN
                 Secretary, Department of the Treasury
                           September 24, 2020
    Chairman Crapo, Ranking Member Brown, and Members of the Committee, 
I am pleased to join you today to discuss the critical steps the 
Department of the Treasury and the Federal Reserve have taken over the 
last 6 months to provide economic relief for the American people, as 
well as to provide liquidity to credit markets, businesses, and 
households. We are fully committed to getting every American back to 
work as quickly as possible.
Economic Recovery
    America is in the midst of the fastest economic recovery from any 
crisis in U.S. history. The August jobs report showed that the economy 
has gained back 10.6 million jobs since April--nearly 50 percent of all 
jobs lost due to the pandemic. The unemployment rate has also decreased 
to 8.4 percent, a notable achievement considering some people were 
expecting up to 25 percent unemployment at the height of the pandemic. 
Thanks to the programs provided through the CARES Act, we never got 
close to that figure.
    I believe we will see tremendous third-quarter growth, fueled by 
strong retail sales, housing starts and existing home sales, 
manufacturing growth, and increased business activity. The September 
Blue Chip survey increased its projection for third-quarter GDP growth 
by 5.3 percentage points to 24 percent.
    The recovery has been strong because the Administration and 
Congress worked together on a bipartisan basis to deliver the largest 
economic relief package in American history. The Federal Reserve has 
also been instrumental to the recovery by implementing 13 unique 13(3) 
lending facilities.
    Economic reopenings, combined with the CARES Act, have enabled a 
remarkable economic rebound, but some industries particularly hard hit 
by the pandemic require additional relief.
Phase IV Relief
    The President and I remain committed to providing support for 
American workers and businesses. We continue to try to work with 
Congress on a bipartisan basis to pass a Phase IV relief package. I 
believe a targeted package is still needed, and the Administration is 
ready to reach a bipartisan agreement.
Transparency
    Treasury has been working hard to implement the CARES Act with 
transparency and accountability. We have released a significant amount 
of information to the public on our website, Treasury.gov, and on 
USAspending.gov. In many instances, we have released more information 
than what is required by the statute. The Federal Reserve has also 
posted information on its website regarding its lending facilities.
    We have provided regular updates to Congress, with this marking my 
seventh appearance before Congress for a CARES Act hearing. 
Additionally, we are cooperating with various oversight bodies, 
including the new Special Inspector General for Pandemic Relief, the 
Treasury Inspector General, the Treasury Inspector General for Tax 
Administration, the new Congressional Oversight Commission, and the 
Government Accountability Office (GAO).
    We appreciate Congress' interest in these issues and have devoted 
significant resources to responding to inquiries from numerous 
congressional committees and individual Members of Congress on both 
sides of the aisle. We remain committed to working with you to 
accommodate Congress' legislative needs and to further our whole-of-
Government approach to defeating COVID-19.
Conclusion
    I would like to thank the Members of the Committee for working with 
us to provide critical economic support to the American people. I am 
pleased to answer any questions you may have.
                                 ______
                                 
                 PREPARED STATEMENT OF JEROME H. POWELL
        Chair, Board of Governors of the Federal Reserve System
                           September 24, 2020
    Chairman Crapo, Ranking Member Brown, and other Members of the 
Committee, thank you for the opportunity to update you on our ongoing 
measures to address the hardship wrought by the pandemic. The Federal 
Reserve, along with others across Government, is working to alleviate 
the economic fallout. We remain committed to using our tools to do what 
we can, for as long as it takes, to ensure that the recovery will be as 
strong as possible, and to limit lasting damage to the economy.
    Economic activity has picked up from its depressed second-quarter 
level, when much of the economy was shut down to stem the spread of the 
virus. Many economic indicators show marked improvement. Household 
spending looks to have recovered about three-fourths of its earlier 
decline, likely owing in part to Federal stimulus payments and expanded 
unemployment benefits. The housing sector has rebounded, and business 
fixed investment shows signs of improvement. In the labor market, 
roughly half of the 22 million payroll jobs that were lost in March and 
April have been regained as people return to work. Both employment and 
overall economic activity, however, remain well below their prepandemic 
levels, and the path ahead continues to be highly uncertain. The 
downturn has not fallen equally on all Americans; those least able to 
bear the burden have been the most affected. The rise in joblessness 
has been especially severe for lower-wage workers, for women, and for 
African Americans and Hispanics. This reversal of economic fortune has 
upended many lives and created great uncertainty about the future.
    A full recovery is likely to come only when people are confident 
that it is safe to reengage in a broad range of activities. The path 
forward will depend on keeping the virus under control, and on policy 
actions taken at all levels of Government.
    Since mid-March, we have taken forceful action, implementing a 
policy of near-zero rates, increasing asset holdings, and standing up 
13 emergency lending facilities. We took these measures to support 
broader financial conditions and more directly support the flow of 
credit to households, businesses of all sizes, and State and local 
governments. Our actions, taken together, have helped unlock more than 
$1 trillion of funding, which, in turn, has helped keep organizations 
from shuttering, putting them in a better position to keep workers on 
and to hire them back as the economy continues to recover.
    The Main Street Lending Program (Main Street) has been of 
significant interest to this Committee and to the public. Many of the 
businesses affected by the pandemic are smaller firms that rely on 
banks for loans, rather than public credit markets. Main Street is 
designed to facilitate the flow of credit to small and medium-sized 
businesses. In establishing the facility, we conducted extensive 
outreach, soliciting public comment and holding in-depth discussions 
with lenders and borrowers of all sizes. In response to feedback, we 
have continued to make adjustments to Main Street to provide greater 
support to small and medium-sized businesses and to nonprofit 
organizations such as educational institutions, hospitals, and social 
service organizations.
    Nearly 600 banks, representing well more than half of the assets in 
the banking system, have either completed registration or are in the 
process of doing so. About 230 loans totaling roughly $2 billion are 
either funded or in the pipeline. Main Street is intended for 
businesses that were on a sound footing prepandemic and that have good 
longer-term prospects but which have encountered temporary cash flow 
problems due to the pandemic and are not able to get credit on 
reasonable terms as a result. Main Street loans may not be the right 
solution for some businesses, in part because the CARES Act states 
clearly that these loans cannot be forgiven.
    Our credit facilities have improved lending conditions broadly, 
including for potential Main Street borrowers. The evidence suggests 
that most creditworthy small and medium-sized businesses can currently 
get loans from private-sector financial institutions.
    Many of our programs rely on emergency lending powers that require 
the support of the Treasury Department and are available only in 
unusual circumstances. By serving as a backstop to key credit markets, 
our programs have significantly increased the extension of credit from 
private lenders. However, the facilities are only that--a backstop. 
They are designed to support the functioning of private markets, not to 
replace them. Moreover, these are lending, not spending, powers. Many 
borrowers will benefit from these programs, as will the overall 
economy, but for others, a loan that could be difficult to repay might 
not be the answer. In these cases, direct fiscal support may be needed.
    Our economy will recover fully from this difficult period. We 
remain committed to using our full range of tools to support the 
economy for as long as is needed.
    Thank you. I look forward to your questions.
Summary of Section 13(3) Facilities Using CARES Act Funding
The Municipal Liquidity Facility
    The Municipal Liquidity Facility (MLF) helps State and local 
governments better manage the extraordinary cash flow pressures 
associated with the pandemic, in which expenses, often for critical 
services, are temporarily higher than normal and tax revenues are 
delayed or temporarily lower than normal. This facility addresses these 
liquidity needs by purchasing the short-term notes typically used by 
these Governments, along with other eligible public entities, to manage 
their cash flows. By addressing the cash management needs of eligible 
issuers, the MLF was also intended to encourage private investors to 
reengage in the municipal securities market, including across longer 
maturities, thus supporting overall municipal market functioning.
    Under the MLF, the Federal Reserve Bank of New York lends to a 
special purpose vehicle (SPV) that will directly purchase up to $500 
billion of short-term notes issued by a range of eligible State and 
local government entities. Generally speaking, eligible issuers include 
all U.S. States, counties with a population of at least 500,000 
residents, cities with a population of at least 250,000 residents, 
certain multistate entities, and revenue-bond issuers designated as 
eligible issuers by their State governors. Notes purchased by the 
facility carry yields designed to promote private market 
participation--that is, they carry fixed spreads based on the long-term 
rating of the issuer that are generally larger than those seen in 
normal times. With funding from the CARES Act (Coronavirus Aid, Relief, 
and Economic Security Act), the Department of the Treasury has 
committed to make a $35 billion equity investment in the SPV.
    As of September 18, the facility had purchased two issues for a 
total outstanding amount of $1.7 billion.
    The MLF has contributed to a strong recovery in municipal 
securities markets, which has facilitated a historic issuance of more 
than $250 billion of bonds since late March. State and local 
governments and other municipal bond issuers of a wide spectrum of 
types, sizes, and ratings have been able to issue bonds, including long 
maturity bonds, with interest rates that are at or near historical 
lows. Those municipal issuers who do not have direct access to the 
Federal Reserve under the MLF have still benefited substantially from a 
better-functioning municipal securities market.
The Main Street Lending Program
    The Federal Reserve established the Main Street Lending Program 
(Main Street) to support lending to small and medium-sized businesses 
and nonprofit organizations that were in sound financial condition 
before the onset of the COVID-19 pandemic and that have good longer-
term prospects but which have encountered temporary cash flow problems 
due to the pandemic, and are not able to get credit on reasonable terms 
as a result. In addition to providing loans for borrowers in current 
need of funds, Main Street offers a credit backstop for firms that do 
not currently need funding but may if the pandemic continues to erode 
their financial condition.
    Under Main Street, the Federal Reserve Bank of Boston has set up 
one SPV to manage and operate five facilities: the Main Street New Loan 
Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), the 
Main Street Expanded Loan Facility (MSELF), the Nonprofit Organization 
New Loan Facility (NONLF), and the Nonprofit Organization Expanded Loan 
Facility (NOELF). The SPV will purchase up to $600 billion in Main 
Street loan participations, while lenders retain a percentage of the 
loans. Main Street loans have a 5-year maturity, no principal payments 
in the first 2 years, and no interest payments in the first year. 
Businesses with less than 15,000 employees or 2019 revenues of less 
than $5 billion are eligible to apply for Main Street loans. Available 
loan sizes span from $250,000 to $300 million across the facilities and 
depend on the size and financial health of the borrower. With funding 
from the CARES Act, the Department of the Treasury has committed to 
make a $75 billion equity investment in the SPV.
    The business facilities (MSNLF, MSPLF, and MSELF) and nonprofit 
facilities (NONLF and NOELF) have broadly similar terms, but differ in 
their respective underwriting standards.
    The business facilities use the same eligibility criteria for 
lenders and borrowers and have many of the same terms, while other 
features of the loans extended in connection with each facility differ. 
The loan types also differ in how they interact with the borrower's 
outstanding debt, including with respect to the level of precrisis 
indebtedness a borrower may have incurred. Similarly, the nonprofit 
facilities have many of the same characteristics, but some features of 
the loans extended in connection with each facility differ. Eligible 
lenders may originate new loans under MSNLF, MSPLF, and NONLF or may 
increase the size of existing loans under MSELF and NOELF.
    Main Street became operational on July 6. The Federal Reserve and 
Treasury have modified the program several times to reflect extensive 
consultations with stakeholders. As of September 18, nearly 600 lenders 
representing more than half of U.S. banking assets have registered to 
participate in the program, and the program has purchased over $1 
billion in participations.
    Since Main Street became operational, the number of registered 
lenders and the amount of loan participations continue to increase. 
Program usage, will depend on the course of the economy, the demand for 
credit by small and medium-sized businesses, and the ability of lenders 
to meet credit needs outside the Main Street program. Demand for Main 
Street loans may increase over time if the pandemic continues to affect 
the ability of businesses and nonprofits to access credit through 
normal channels and as other support programs expire.
The Secondary Market Corporate Credit Facility
    The Secondary Market Corporate Credit Facility (SMCCF) is designed 
to work alongside the Primary Market Corporate Credit Facility (PMCCF) 
to support the flow of credit to large investment-grade U.S. companies 
so that they can maintain business operations and capacity during the 
period of dislocation related to COVID-19. The SMCCF supports market 
liquidity by purchasing in the secondary market corporate bonds issued 
by investment-grade U.S. companies, U.S. companies that were investment 
grade before the onset of the pandemic and remain near-investment-
grade, and U.S.-listed exchange-traded funds (ETFs) whose investment 
objective is to provide broad exposure to the market for U.S. corporate 
bonds.
    Under the SMCCF, the Federal Reserve Bank of New York lends to an 
SPV that purchases in the secondary market both corporate bond 
portfolios in the form of ETFs and individual corporate bonds to track 
a broad market index. The SMCCF purchases ETF shares and corporate 
bonds at fair market value in the secondary market and avoids 
purchasing shares of ETFs when they trade at prices that materially 
exceed the estimated net asset value of the underlying portfolio. The 
pace of purchases is a function of the condition of the U.S. corporate 
bond markets. With funding from the CARES Act, the Department of the 
Treasury has committed to make a $75 billion equity investment in the 
SPV for the PMCCF and SMCCF, with a $25 billion allocation toward the 
SMCCF.
    The SMCCF staggered its launch of ETF and bond purchases in order 
to act as quickly and effectively as possible. Through ETF purchases 
beginning on May 12, the SMCCF provided liquidity to the corporate bond 
market relatively quickly. The Federal Reserve began direct corporate 
bond purchases under the broad market index purchase program on June 
16. In its first week of bond purchases, the SMCCF was purchasing about 
$370 million per day. As of September 18, purchases have been slowed to 
a current daily pace of approximately $20 million of bonds and no ETFs, 
and the total SMCCF outstanding value has reached $12.8 billion.
    The SMCCF's announcement effect was strong, quickly improving 
market functioning and unlocking the supply of hundreds of billions of 
dollars of private credit. Since late March, more than $800 billion in 
corporate bonds have been issued without direct Government or taxpayer 
involvement. The SMCCF has materially reduced its pace of purchases 
over the past few months as a result of the substantial improvements in 
the functioning of the U.S. corporate bond markets. The pace of 
purchases going forward will continue to be guided by measures of 
market functioning, increasing when conditions deteriorate and 
decreasing when conditions improve.
The Primary Market Corporate Credit Facility
    The Primary Market Corporate Credit Facility (PMCCF) is designed to 
work alongside the Secondary Market Corporate Credit Facility (SMCCF) 
to support the flow of credit to large investment-grade U.S. companies 
so that they can maintain business operations and capacity during the 
period of dislocation related to COVID-19. The PMCFF supports market 
liquidity by serving as a funding backstop for corporate debt.
    Under the PMCCF, the Federal Reserve Bank of New York lends to an 
SPV. The SPV will purchase qualifying bonds and syndicated loans with 
maturities up to 4 years either as the sole investor in a bond issuance 
or as a participant in a loan or bond syndication at issuance, where 
the facility may purchase a maximum of 25 percent of the syndication. 
With funding from the CARES Act, the Department of the Treasury has 
committed to make a $75 billion equity investment in the SPV for the 
PMCCF and SMCCF, with a $50 billion allocation toward the PMCCF.
    As of September 18, there have not been any PMCCF transactions, nor 
have any indications of interest been received.
    The dual announcement of the SMCCF and PMCCF was well received by 
the market. Between March 23 and April 6, credit spreads for 
investment-grade bonds declined substantially. While the PMCCF has not 
purchased any bonds since it opened, it serves as a backstop should 
markets enter another period of stress.
The Term Asset-Backed Securities Loan Facility
    The Term Asset-Backed Securities Loan Facility (TALF) supports the 
flow of credit to consumers and businesses by enabling the issuance of 
asset-backed securities (ABS) guaranteed by newly and recently 
originated consumer and business loans.
    Under the TALF, the Federal Reserve Bank of New York lends to an 
SPV. The SPV will make up to $100 billion of 3-year term loans 
available to holders of certain triple A-rated ABS backed by student 
loans, auto loans, credit card loans, loans guaranteed by the Small 
Business Administration (SBA), and certain other assets. The Federal 
Reserve lends an amount equal to the market value of the ABS less a 
haircut and the loan is secured at all times by the ABS. With funding 
from the CARES Act, Treasury has committed to make a $10 billion equity 
investment in the SPV.
    As of September 18, the TALF has extended $2.9 billion in loans 
since its launch on May 20. Loans have been collateralized by SBA-
guaranteed ABS, commercial mortgage-backed securities (CMBS), and 
premium--finance and student--loan ABS.
    The announcement and presence of the TALF has helped improve 
substantially liquidity in the ABS markets, including those for CMBS 
and collateralized loan obligations, with spreads in some ABS sectors 
returning close to normal levels. The TALF interest rates are 
attractive to borrowers when market conditions are stressed, but not in 
normal conditions. While the facility is authorized to extend up to 
$100 billion in loans, total take-up will likely be much less unless 
ABS market conditions worsen.
        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                     FROM STEVEN T. MNUCHIN

Q.1. Congress gave Treasury and the Fed billions of dollars in 
CARES Act money to support Main Street businesses, States, and 
local governments, and their workers. But instead of setting up 
programs that protect jobs and get money to the businesses and 
localities and tribes that need it most, Treasury has made it 
too difficult and only a tiny fraction of the funds have been 
used. Meanwhile, Treasury has been all too eager to approve 
programs that help the biggest corporations without requiring 
them to keep and pay their employees. How many workers at 
companies that benefited from any of the emergency programs 
established by Treasury and the Federal Reserve have lost their 
jobs between March 15, 2020 and September 30, 2020?

A.1. The recovery has been strong because the Administration 
and Congress worked together on a bipartisan basis to deliver 
the largest economic relief package in American history. The 
Federal Reserve has been instrumental to the recovery by 
implementing 13 unique lending facilities under section 13(3) 
of the Federal Reserve Act. The economic reopening combined 
with the Coronavirus Aid, Relief, and Economic Security (CARES) 
Act have enabled us to have an economic rebound, but some 
industries particularly hard hit by the pandemic require 
additional relief.
    The Chairman of the Federal Reserve and the Secretary 
executed the first facilities even before the CARES Act was 
passed when the markets were literally shut down. These were 
emergency facilities intended to stabilize the markets and, in 
a best scenario, not to be drawn upon. In many cases, the mere 
announcement of the commitments unlocked the capital markets. 
With the Main Street Lending Program, which is targeting the 
private lending market for small and medium-sized businesses, 
borrowers must certify that they will make commercially 
reasonable efforts to retain employees during the term of the 
Main Street loan. Specifically, borrowers committed to 
undertake good-faith efforts to maintain payroll and retain 
employees, in light of its capacities, the economic 
environment, its available resources, and the business's need 
for labor. The President and Secretary remain committed to 
providing support for American workers and business. We 
continue to work with Congress on a bipartisan basis to pass a 
phase 4 relief program. We believe that a targeted package is 
still needed, and the Administration is ready to reach a 
bipartisan agreement.

Q.2. Many companies, without additional funding, may not make 
it through the pandemic, ensuring many jobs won't exist a year 
or two from now. What can Treasury do for workers at companies 
that don't qualify for the Main Street Lending Facilities but 
also do not qualify for a PPP loan?

A.2. Treasury looks forward to working with Congress on a 
bipartisan basis to continue to provide much-needed relief to 
businesses across the country.

Q.3. According to a recent Brookings Institute study, as many 
as 1.5 million State and local government employees have been 
laid off since the beginning of the COVID-19 crisis. \1\ This 
is more State and local government jobs than were lost in the 
entire financial crisis and ensuing recession. \2\ Yet, 
Treasury and the Federal Reserve's pricing terms and 
requirements for the Municipal Liquidity Facility have been too 
high and onerous for municipalities to participate. To what 
extent will this have a disproportionate impact on black, 
brown, and female workers, which make up a significant part of 
the public sector workforce? What does Treasury plan to do to 
mitigate these impacts?
---------------------------------------------------------------------------
     \1\ https://www.brookings.edu/blog/the-avenue/2020/08/03/state-
and-local-governments-employ-the-highest-share-of-essential-workers-
congress-is-failing-to-protect-them/
     \2\ https://www.epi.org/blog/without-federal-aid-many-state-and-
local-governments-could-make-the-same-budget-cuts-that-hampered-the-
last-economic-recovery/

A.3. Consistent with section 4003 of the CARES Act, the purpose 
of the Municipal Liquidity Facility is to ensure that State and 
local governments, and the financial system that supports them, 
have access to liquidity. Following the expansion of the Money 
Market Mutual Fund Liquidity Facility and the launch of the 
Municipal Liquidity Facility, market access for State and local 
government borrowing normalized after March, and primary market 
borrowing costs fell substantially. With the Municipal 
Liquidity Facility serving as an effective backstop, the 
municipal bond market is now allowing State and local 
governments ready access to liquidity at historically low rates 
to finance their operations as they see fit. Neither market 
rates nor Municipal Liquidity Facility rates are onerous, and 
the Municipal Liquidity Facility reduced its rates on August 11 
to ensure it continued to be an effective backstop to the 
market.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                     FROM STEVEN T. MNUCHIN

Q.1. I'm worried about the long-term implications of the 
Federal Government's elevated spending levels. A few weeks ago, 
you told CNBC that ``Now is not the time to worry about 
shrinking the deficit.'' When is that time, and why?

A.1. We are currently facing a large, negative output gap, 
still-elevated unemployment levels, and historically low 
interest rates. However, these circumstances will not last 
forever, and as the economy recovers the output gap will get 
closer to zero, unemployment will converge toward its natural 
level, and interest rates may normalize; as these occur, the 
critical role of deficit reduction will be more evident.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
                     FROM STEVEN T. MNUCHIN

Q.1. The renewable energy sector, and in particular solar 
energy, is suffering significantly from the COVID-19 pandemic. 
I recently led a letter of support that a number of my 
colleagues signed highlighting the need for help for renewables 
whose projects have been put on hold on and where jobs have 
been lost. I have heard from a number of solar energy companies 
in North Carolina that they desperately need the ability to 
monetize the Investment Tax Credit (ITC) in order to save 
numerous projects that came to a halt because of the pandemic. 
Can you commit to helping these clean energy companies?

A.1. As you know, on May 27, 2020, Treasury and the IRS issued 
Notice 2020-41, which extends for 1 year the ITC continuity 
safe harbor for solar energy projects on which construction 
began in 2016 and 2017, and also provides relief for projects 
relying on the 3\1/2\ month rule to start construction. At this 
time, we are continuing to monitor the impacts of COVID-19 on 
these projects and will consider additional extensions or 
modifications as appropriate.

Q.2. A number of small and medium-sized businesses in North 
Carolina are suffering due to COVID-19 related cutbacks in 
Trade Credit Insurance (TCI). They tell me that providers of 
TCI have significantly reduced coverage, which is making it 
difficult for them to make sales and raise working capital. 
They also tell me they could hire more people if the U.S. 
Government established a backstop program that would enable the 
TCI industry to restore coverage. Can you report back what you 
are doing regarding this problem? Are you willing to expand any 
of your existing programs or establish new programs to help 
restore TCI coverage and help businesses in my State?

A.2. Treasury is monitoring TCI issues for small businesses and 
other companies and looks forward to working with you and other 
stakeholders to help respond to the challenges created by the 
COVID-19 global pandemic.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR MENENDEZ FROM STEVEN T. MNUCHIN

Q.1. During our exchange at the hearing, you committed to 
reviewing the terms of the Main Street program to identify what 
changes could strengthen minority-owned business participation 
and share that analysis with me. However, in response to 
questions from the Congressional Oversight Commission at an 
August 7th hearing, the Federal Reserve indicated that it, 
``does not plan to collect information on the minority status 
of borrowing entities.'' I believe collecting data on whether 
small businesses are accessing the Main Street program is 
critical to understanding whether minority businesses are using 
the program and to properly modify the program so as ensure 
minority businesses are benefiting from the program.
    As part of reviewing the terms of the Main Street program, 
will Treasury commit to collect data on the minority status of 
borrowing entities?

A.1. We recognize the importance of minority-owned businesses 
play in the economy during normal times and in the recovery 
from the pandemic. The Main Street Lending Program is designed 
to help credit flow to small and medium-sized for-profit 
businesses and nonprofit organizations that were in sound 
financial condition before the onset of the COVID-19 crisis and 
have good postpandemic prospects, but now need loans to help 
maintain their operations until they have recovered from, or 
adapted to, the impacts of the pandemic. We continue to explore 
options for adjusting the Program to meet the needs of more 
small and medium-sized businesses and minority-owned 
businesses, and on October 30, 2020, reduced the minimum loan 
size for three Main Street facilities available to for-profit 
and nonprofit borrowers from $250,000 to $100,000, as well as 
adjusting the fees to encourage the provision of these smaller 
loans. We are committed to supporting access to credit for 
businesses that were in sound condition prior to the pandemic. 
We will continue to monitor credit conditions for small and 
minority-owned businesses to determine if additional 
adjustments to the Program are needed.

                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
          SENATOR CORTEZ MASTO FROM STEVEN T. MNUCHIN

Q.1. Do you support changes to the Municipal Liquidity Facility 
to offer terms at least as good--such as lower interest rates, 
deferred interest--as those offered in the Main Street Lending 
Programs?

A.1. Treasury does not currently believe the terms of the 
Municipal Liquidity Facility should be changed. The primary 
market is functioning properly with historically low rates in 
large part because the Municipal Liquidity Facility established 
a backstop. State and local governments that seek bond 
financing are able to issue new money or refund securities to 
meet their borrowing needs. In the absence of market 
dislocation, there is not a policy need for public credit to 
displace readily available private credit.

Q.2. Do you support the language in the HEROES Act that lowers 
the Municipal Loan Fund's interest rates to match the Fed Funds 
Rate?

A.2. Treasury believes that the municipal market's recovery, 
with the Municipal Liquidity Facility operating as an effective 
backstop, already provides market access to issuers at rates 
that are still historically low. It is not currently necessary 
to reduce the facility rates further.

Q.3. How does current law prevent Treasury Department from 
making changes to better assist asset-based businesses?

A.3. We recognize that, for asset-based borrowers, collateral 
values or other factors are more indicative of the ability to 
obtain credit than are cash flows, which underpin the existing 
Main Street Lending Program borrower requirements. Our outreach 
and monitoring indicate that some asset-based borrowers are 
seeing a decline in their access to credit. However, these 
borrowers appear to be largely in sectors with declining 
collateral values or deteriorating longer-run prospects; a 
lending program may not be able to address such problems. 
Federal Reserve and Treasury staff continue to monitor lending 
conditions broadly to assess the efficacy of existing 
facilities. And we remain alert to the possibility that 
conditions may warrant changes to the terms and conditions of 
the Federal Reserve's emergency lending programs.

Q.4. Does Treasury plan to implement any extensions to the 
Coronavirus Relief Fund timeline or changes to eligibility?

A.4. Treasury does not have administrative authority to extend 
the period during which eligible Coronavirus Relief Fund 
expenses must be incurred. Section 601(d)(3) of the Social 
Security Act (added by Title V of the CARES Act) requires 
eligible expenses to be incurred by December 30, 2020. Treasury 
continues to respond to questions from recipients regarding the 
eligible use of funds.

Q.5. How does Treasury plan to ensure that future business 
support programs reach businesses that have fewer resources and 
ability to apply?

A.5. Treasury looks forward to working with Congress on a 
bipartisan basis to continue to provide much-needed relief to 
businesses across the country.

Q.6. Will you open the aviation lending program to new 
applicants if all the funds are not allocated?

A.6. Section 4003(a) of the CARES Act authorizes the Department 
of the Treasury to make loans, loan guarantees, and other 
investments to provide liquidity to eligible businesses, 
States, and municipalities related to losses incurred as a 
result of coronavirus. Section 4003(b)(1) provides up to $25 
billion for loans to passenger air carriers and certain other 
eligible businesses; Section 4003(b)(2) provides up to $4 
billion for loans to cargo air carriers. Treasury received 
approximately 200 applications and has worked as quickly and 
transparently as possible to review each loan application, 
conduct necessary due diligence, and finalize transaction 
documentation. At this time, Treasury does not intend to reopen 
applications for passenger air carriers, cargo air carriers, 
and other eligible businesses.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                     FROM STEVEN T. MNUCHIN

Q.1. Economic Impact Payments--As we discussed in the hearing, 
nearly nine million Americans and 150,000 Alabamians still have 
not received their $1,200 stimulus checks, 7 months after the 
CARES Act passed.
    There is an October 15, 2020, deadline to receive a 
stimulus check and during the hearing I asked if you'd be 
willing to push that date until December.
    Was the Treasury Department and the Internal Revenue 
Service able to allow for more time and change the deadline to 
December to allow for Americans who have not received a 
stimulus payment to apply through the nonfiler portal on the 
IRS website?

A.1. The deadline to register for an Economic Impact Payment 
(EIP) using the Internal Revenue Service's (IRS's) nonfiler 
portal has been extended to November 21, 2020. This new date 
will provide an additional 5 weeks beyond the original 
deadline. This additional time is solely for those who have not 
received their EIP and do not normally file a tax return. If 
they miss the Nov. 21 deadline, they can still claim this by 
filing a 2020 tax return early next year. For taxpayers who 
requested an extension of time to file their 2019 tax return, 
that deadline date remains October 15.

Q.2. Paycheck Protection Program (PPP)--Demographics: Last May, 
I asked about if you'd work with the SBA Administrator to 
require the collection of demographic information by banks who 
made PPP loans. In response, you decided to make it optional.
    According to the Center for Responsible Lending, little of 
the $659 billion funding for the Paycheck Protection Program 
made it to Latino and Black-owned businesses, despite being the 
communities hit hardest by the crisis.
    If the Paycheck Protection Program is reinstated, will you 
require demographic information be collected?

A.2. Treasury and the Small Business Administration (SBA) are 
committed to implementing the CARES Act with transparency and 
accountability. Information regarding approved PPP loans and 
program participation is regularly provided on our websites. 
Updated information was posted after the program closed to new 
loan applications on August 8, 2020. Treasury and SBA are 
working to gather additional information on program 
participants. The PPP Loan Forgiveness Application Form 3508S, 
3508, and Form 3508EZ all request voluntary disclosure of 
veteran status, gender, race, and ethnicity from loan 
recipients.

Q.3. Outreach to Underserved Communities: At the hearing in 
May, you said you were committed to serving the ``underserved 
communities with the money you have left'' in the Paycheck 
Protection Program. What did the Treasury Department and Small 
Business Administration do to follow through on ensuring that 
underserved communities were helped in getting PPP funds?

A.3. Treasury shares your interest in making the Paycheck 
Protection Program (PPP) available to as many of America's job 
creators and their employees as feasible and expects that 
participating lenders will not discriminate against borrowers 
that are otherwise eligible under PPP rules.
    Since enactment of the CARES Act, Treasury and SBA have 
worked closely with Congress, with borrowers, and with lenders 
of all sizes--including regional and community banks, Community 
Development Financial Institutions (CDFIs), and Minority 
Depository Institutions (MDIs)--to ensure the broadest possible 
segment of small businesses can access the PPP. Treasury and 
SBA extensively recruited lending institutions that typically 
operate in underserved communities to participate as PPP 
lenders.
    An important focus of our efforts to serve underserved 
communities has been to harness the role of CDFIs and MDIs. 
Hundreds of CDFIs were contacted and advised of their 
eligibility to participate in the PPP. Guidance was issued to 
all lenders asking them to redouble their efforts to assist 
eligible borrowers in underserved and disadvantaged 
communities. This was done to ensure that entities in 
underserved and rural markets, including veterans and members 
of the military community, small business concerns owned and 
controlled by socially and economically disadvantaged 
individuals, women, and businesses in operation for less than 2 
years, all benefited from the PPP.
    On July 30, 2020, Treasury and SBA participated in a 
roundtable discussion with executives from MDIs; the discussion 
focused on the MDIs' experiences as lenders in the PPP, 
including their work to serve small businesses in low- and 
moderate-income communities. As of August 8, 2020, when the PPP 
closed to new loan applications, 432 MDIs and CDFIs had 
participated from across the country, providing over 221,000 
loans for more than $16.4 billion. The program resulted in $133 
billion provided to businesses in Historically Underutilized 
Business Zones, accounting for more than 25 percent of all PPP 
funding.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                     FROM STEVEN T. MNUCHIN

Q.1. As you know, the commercial mortgage-backed security 
(CMBS) market is under extreme pressure due to this pandemic. 
Collapse of this market would be disastrous to Arizona 
communities that rely on tourism and to the State pension 
funds, endowments, retirement funds, college funds, and other 
investment income tools that rely on the market. You have 
repeatedly indicated it is not within your authority under the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act to 
create a lending facility for CMBS borrowers.
    Can you expand on your authority as it relates to creating 
a new tailored facility?

A.1. Section 4003(b)(4) of the CARES Act authorizes Treasury to 
make loans and loan guarantees to, and other investments in, 
programs or facilities established by the Board of Governors of 
the Federal Reserve System for the purpose of providing 
liquidity to the financial system that supports lending to 
eligible businesses, States, or municipalities. Treasury 
continues to work with the Federal Reserve to assess the 
efficacy of facilities established under the Federal Reserve's 
13(3) emergency lending authority. Treasury does not have plans 
at present to establish a new facility. Treasury continues to 
monitor the market conditions for commercial real estate, 
including for those borrowers whose loans are held in CMBS.

Q.2. Is it the market conditions that do not warrant changes, 
or are you unable to make changes due to your authority or 
structural limitations?

A.2. Treasury's authorities under 4003(b)(4) of the CARES Act 
are primarily to facilitate the functioning of credit markets 
by providing funds to support lending facilities established by 
the Federal Reserve. These facilities provide liquidity to the 
financial system and facilitate lending to a broad base of 
businesses and nonprofit organizations.

Q.3. What other relief options are available to CMBS borrowers, 
such as Arizona hoteliers?

A.3. Treasury continues to monitor CRE markets and to work 
within its authorities to support households and businesses 
impacted by the COVID-19 emergency. Data presently indicates 
that an increasing number of distressed CRE borrowers whose 
loans are held in CMBS have been granted temporary loan 
forbearance, while many others have forbearance requests under 
review by special servicers. CRE servicers can work with 
investors to develop solutions for properties based on the 
unique circumstances of each borrower.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN
                     FROM JEROME H. POWELL

Q.1. Congress gave Treasury and the Fed billions of dollars in 
CARES Act money to support Main Street businesses, States and 
local governments, and their workers. But instead of setting up 
programs that protect jobs and get money to the businesses and 
localities and tribes that need it most, Treasury has made it 
too difficult and only a tiny fraction of the funds have been 
used. Meanwhile, Treasury has been all too eager to approve 
programs that help the biggest corporations without requiring 
them to keep and pay their employees. How many workers at 
companies that benefited from any of the emergency programs 
established by Treasury and the Federal Reserve have lost their 
jobs between March 15, 2020, and September 30, 2020?

A.1. Our purpose in undertaking the emergency lending 
facilities was to support the availability of credit to 
households, businesses, and State and local governments, and to 
create an environment in which employers can maintain their 
operational capacity so they can maintain and restore payroll. 
A key component to this strategy was to restore liquidity to 
markets and facilitate lending to small and medium-sized 
businesses.
    The Primary Market Corporate Credit Facility (PMCCF) and 
the Secondary Market Corporate Credit Facility (SMCCF) were 
established to support employment and spending of large, high 
credit quality businesses. The stabilization of the corporate 
bond market since March 2020 has helped large employers to 
finance their operations effectively and to maintain employment 
and payroll levels. Economic activity and employment have 
continued to recover, although at a more moderate pace than in 
the late spring and early summer 2020.
    Due to the broad effects that the emergency facilities have 
had on the U.S. economy, it is impossible to quantify their 
exact effect on employment. However, after precipitous drops in 
March 2020 and April 2020, and the announcement of the 
emergency lending facilities, employment rose sharply during 
the second half of 2020. As a result, of the roughly 22 million 
jobs that had been lost, around half had been regained as of 
the January 2021 payroll report. Job gains have slowed somewhat 
in recent months as restrictions tightened in response to a 
surge in COVID-19 cases. The unemployment rate has also fallen 
significantly in recent months and was 6.3 percent in January 
2021, well below the peak of 14.7 percent in April 2020. These 
figures show both how much improvement the labor market has 
seen since April 2020, and also how much further improvement is 
needed.
    COVID-19 has had a severe and lasting impact on many 
sectors of the economy. Many of those suffering permanent job 
loss are in industries that have been adversely affected by 
COVID-19 and are likely to continue to struggle. Over time, a 
process of reallocation will unfold and new opportunities will 
open up. However, this process may take some time. In support 
of our dual mandate of maximum employment and price stability, 
the Federal Reserve is dedicated to using its full range of 
tools to preserve the productive capacity of the U.S. economy 
and create an environment in which the millions of Americans 
who have lost work have the best chance to return to their old 
jobs or find new ones.

Q.2. Many companies, without additional funding, may not make 
it through the pandemic, ensuring many jobs won't exist a year 
or two from now. What can the Federal Reserve do for workers at 
companies that don't qualify for the Main Street Lending 
Facilities but also do not qualify for a PPP loan?

A.2. The Main Street Lending Program (Main Street) was 
established to support lending to small and medium-sized for-
profit businesses and nonprofit organizations that were in 
sound financial condition before the onset of COVID-19. To meet 
the needs of a broad range of borrowers and lenders and to make 
the program more accessible to a greater number of businesses, 
the minimum loan size for Main Street loans in three of the 
five facilities was reduced from $250,000 to $100,000 on 
October 30, 2020. In addition to lowering the minimum loan 
size, the Federal Reserve increased the fees that lenders may 
receive for originating and servicing loans with a principal 
amount of $100,000 to $250,000 in recognition of the higher 
relative costs associated with such loans. The increased fees 
paid to lenders did not result in higher fees charged to 
borrowers, as fees paid to and by the SPV were redirected to 
lenders.
    As you know, in accordance with section 1005 of the 
Consolidated Appropriations Act, 2021, Main Street ceased 
extending credit on January 8, 2021.

Q.3. Do FOMC projections of GDP and unemployment assume 
additional fiscal aid or do they assume current conditions? Can 
you describe the short-term and long-term impact on those 
measures if Congress does not provide additional fiscal 
stimulus?

A.3. The Summary of Economic Projections (SEP), most recently 
released in December 2020, are a compilation of the projections 
of each of the members of the Federal Open Market Committee 
(FOMC). The individual projections, are based on each member's 
views of appropriate monetary policy as well as their views of 
the underlying condition of the economy, likely fiscal policy 
actions, foreign economic developments, and a host of other 
factors that may affect macroeconomic outcomes.
    Consequently, projections of gross domestic product (GDP) 
growth and the unemployment rate highlighted in the SEP were 
based on a range of assumptions regarding fiscal aid. The 
December 2020 FOMC Minutes do not indicate whether members had 
built in additional fiscal aid into their projections, but the 
Minutes do indicate financial markets were expecting action on 
fiscal policy and that some participants thought that past 
measures had ``provided essential support to many households'' 
and that additional aid would ``help businesses weather the 
ongoing surge in the pandemic.''
    My own view is that the support provided by fiscal policy 
has been absolutely essential to replace the income lost by the 
many millions who have been out of work due to the pandemic, 
support small businesses that are trying to make it to the 
other side of the pandemic, and State and local governments 
that provide critical services.

Q.4. According to a recent Brookings Institute study, as many 
as 1.5 million State and local government employees have been 
laid off since the beginning of the COVID-19 crisis. \1\ This 
is more State and local government jobs than were lost in the 
entire financial crisis and ensuing recession. \2\ Yet, 
Treasury and the Federal Reserve's pricing terms and 
requirements for the Municipal Liquidity Facility (MLF) have 
been too high and onerous for municipalities to participate. To 
what extent will this have a disproportionate impact on black, 
brown, and female workers, which make up a significant part of 
the public sector workforce? What changes can the Federal 
Reserve make to the MLF to mitigate these impacts?
---------------------------------------------------------------------------
     \1\ https://www.brookings.edu/blog/the-avenue/2020/08/03/state-
and-local-governments-employ-the-highest-share-of-essential-workers-
congress-is-failing-to-protect-them/
     \2\ https://www.epi.org/blog/without-federal-aid-many-state-and-
local-governments-could-make-the-same-budget-cuts-that-hampered-the-
last-economic-recovery/

A.4. The purpose of the Municipal Liquidity Facility (MLF) was 
to enhance the liquidity of the primary short-term municipal 
securities market through the purchase at issuance of Tax 
Anticipation Notes (TAN), Tax and Revenue Anticipation Notes 
(TRAN), Bond Anticipation Notes (BAN), Revenue Anticipation 
Notes (RAN), and similar short-term notes from eligible 
issuers. Following the announcement and implementation of the 
MLF, conditions in the municipal bond market improved, with 
spreads on general obligation bonds steadily decreasing and 
primary issuance activity picking. By supporting the smooth 
functioning of the municipal securities market after the onset 
of the pandemic in the U.S., the Federal Reserve helped private 
markets provide significant amounts of credit to municipal bond 
issuers, thereby supporting communities across the Nation.
    The Federal Reserve recognizes the important role minority 
and female workers play in the economy as a whole, and public 
sector in particular. It is important to note, however, that 
our monetary policy tools and emergency facilities are not 
designed to target particular groups of people or communities. 
Rather, the way in which the Federal Reserve can best 
contribute to addressing these problems is through the 
steadfast pursuit of its statutory mandate to secure maximum 
employment and price stability. This promotes a stable, 
prosperous backdrop against which more targeted actions by 
Congress and the Administration are likely to be most 
effective.

Q.5. In the June 2020 Monetary Policy Report, the Federal 
Reserve found that this economic crisis is having a devastating 
impact on economic inequality. Job losses are significantly 
greater among low-income workers and communities of color. 
Federal Reserve data show that high-wage workers had lost only 
a few percentage points of employment while low- wage workers 
had seen declines in employment of 40 percent or more. Three 
months later, workers are still struggling and we are facing an 
eviction and foreclosure crisis.
    Please provide the most recent Federal Reserve data on the 
impact of this recession on economic and racial inequality.
    Please explain how the Treasury and the Federal Reserve 
plan to use the remaining hundreds of billions in CARES Act 
equity to protect jobs and address economic and racial 
inequality.
    To what extent have the lending and bond purchase programs 
exacerbated inequality by fueling a boom in financial markets 
without corresponding support for employment and incomes among 
workers?

A.5. As you note, the June 2020 Monetary Policy Report 
contained estimates of employment losses for groups of workers 
classified by their pre-COVID-19 wage levels; these estimates 
were produced by the Federal Reserve Board (Board) staff using 
data from the payroll processor ADP. Using more recent ADP 
data, we continue to find that employment losses have been 
largest among jobs at the bottom of the distribution of wages. 
Specifically, the latest data show that, for jobs in the bottom 
quartile of the pre-COVID-19 wage distribution, employment as 
of early January 2021 was still nearly 20 percent lower than it 
was in February 2020. For jobs in the two highest paying 
quartiles, by comparison, employment was about 5 percent below 
pre-COVID-19 levels.
    While the ADP data do not contain information on worker 
race or ethnicity, the effects of COVID-19 on inequality across 
racial or ethnic groups can be seen in the official employment 
statistics published by the Bureau of Labor Statistics (BLS). 
For example, BLS data through January 2021 show that the 
employment-to-population ratio for prime-age white workers was 
4.1 percentage points lower in January 2021 than in February 
2020. (The prime-age category is defined to include workers who 
are 25 to 54 years old.) The corresponding decline in the 
prime-age employment-to-population ratio for African American 
workers over this period was 5 percentage points, and for 
Hispanic workers it was 6.8 percentage points.
    The emergency facilities created under section 13(3) of the 
Federal Reserve Act have generally served to unlock credit 
markets, allowing borrowers access to the credit they need to 
finance their operations and maintain their payrolls. Several 
of these facilities, including the PMCCF, SMCCF, MLF, Main 
Street, and the Term Asset-Backed Securities Loan Facility 
(TALF) were supported using funds allocated to the U.S. 
Department of the Treasury (Treasury) in section 4003 of the 
Coronavirus Aid, Relief, and Economic Security Act (CARES Act). 
These facilities expired on December 31, 2020, following the 
Treasury's decision not to extend them. Remaining funds were 
returned to the Treasury. As Congress originally decided to 
allocate these funds under section 4003, any decision to 
reallocate these funds is also for Congress.
    The Federal Reserve is committed to using its full range of 
tools to foster a strong, broad-based economic recovery that 
benefits our Nation as a whole. It is important to note, 
however, that these tools cannot address the underlying causes 
of racial injustice or income and wealth inequality. Rather, 
the way in which the Federal Reserve can best contribute to 
addressing these problems is through the steadfast pursuit of 
its statutory mandate to secure maximum employment and price 
stability. This promotes a stable, prosperous backdrop against 
which more direct actions by Congress and the Administration 
are likely to be most effective. It is not my role to recommend 
particular actions outside the realm of monetary policy, but I 
strongly support efforts by Congress and the Administration to 
promote racial and economic justice.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                     FROM JEROME H. POWELL

Q.1. My understanding is that the net stable funding ratio 
(NSFR) may be finalized before the end of the year. Some argue 
that the proposed 2016 NSFR was based on flawed cost-benefit 
analysis, miscalculated the impact of the rule on the financial 
system, differed materially from other countries, and could 
have increased volatility in the Treasury market in September 
2016 and last March. Will the Federal Reserve address these 
issues in the U.S. implementation of the NSFR rule, and if so, 
how?

A.1. The Federal banking agencies finalized the net stable 
funding ratio (NSFR) rule on October 20, 2020. As a measure of 
the medium-term funding health of banks, the NSFR final rule 
will complement and reinforce the liquidity coverage ratio 
(LCR) rule, which addresses the risk of short-term cash 
outflows in an acute period of stress.
    The final rule includes several changes relative to the 
proposal issued in 2016 based on further analysis and public 
input on the proposal. We have tailored the scope of the NSFR 
final rule in light of the Economic Growth, Regulatory Reform, 
and Consumer Protection Act to align with the tailored scope of 
application under the LCR rule because the two requirements are 
designed to work together. Specifically, the final rule tailors 
the stringency of the requirements based on a bank's risk 
profile, with the most stringent requirements for the largest 
and most complex banks and less stringent requirements for 
banks with less risk.
    In a change from the proposal, the final rule reduces the 
stable funding requirements to zero for Treasury securities and 
certain secured loans backed by Treasury securities. Carefully 
weighing the micro- and macro-prudential benefits of a nonzero 
stable funding requirement for these assets, the final rule 
does not impose additional costs on banks and thus avoids 
creating potential disincentives for them to participate in 
these key financial markets. Additional changes from the 
proposal include greater recognition of variation margin in 
derivatives transactions, of the stability of certain affiliate 
sweep deposits, and of nondeposit retail funding.
    The impact analysis in the NSFR final rule improves on the 
impact analysis in the proposal by comprehensively covering 
intermediate holding companies of foreign banks. Based on data 
from regulatory reports, as of the second quarter of 2020, 
nearly all banks subject to the NSFR final rule would have had 
sufficient stable funding to meet minimum NSFR requirements. As 
of that date, in aggregate, banks held a surplus of about $1.3 
trillion over their estimated NSFR requirements. We estimate 
that, among all banks that would have had an NSFR shortfall in 
that quarter, the total expected shortfall would have been 
between $10 and $30 billion of stable funding. This amount is 
small relative to the total stable funding of these banks.

Q.2. At the beginning of the year, the possibility of reviewing 
the Federal Reserve's supervisory process to improve its 
transparency was raised. I was pleased to see this because 
supervisory guidance should never act like a rule and impose 
binding constraints on banking organizations. Can you elaborate 
on the Federal Reserve's plan to provide more transparency and 
adhere to the rule of law for supervisory guidance? What is the 
timeline for completing this process?

A.2. On October 20, 2020, the Federal banking regulatory 
agencies invited comment on a proposal outlining and confirming 
the use of supervisory guidance for regulated institutions. The 
proposal would codify, as amended, a statement issued in 
September 2018 by the agencies that clarified the differences 
between regulations and guidance. Unlike a law or regulation, 
supervisory guidance does not have the force and effect of law, 
and we do not take enforcement actions or issue supervisory 
criticisms based on noncompliance with supervisory guidance. 
Rather, supervisory guidance outlines supervisory expectations 
and priorities, or articulates views regarding appropriate 
practices for a given subject area. Further, supervised 
institutions at times request supervisory guidance, and such 
guidance is important to provide insight on supervisory 
perspectives and practices to industry and supervisory staff in 
a transparent way that helps to ensure consistency in 
supervisory approach. The proposal indicates that supervisory 
criticisms (matters requiring attention or matters requiring 
immediate attention) should continue to be specific as to 
practices, operations, financial conditions, or other matters 
that could have a negative effect on the safety and soundness 
of the financial institution, could cause consumer harm, or 
could cause violations of laws, regulations, final agency 
orders, or other legally enforceable conditions. Comments on 
the proposal were accepted through January 4, 2021, and staff 
are carefully considering those comments as we draft the final 
rule.

Q.3. When will the Federal Reserve update its scoping 
mechanisms for SR letters, stress testing (e.g., CCAR's global 
market shock and large counterparty default), recovery and 
resolution planning, and other supervisory exercises in light 
of the Federal Reserve's recently finalized tailoring 
categories?

A.3. In 2019, the Federal Reserve Board (Board) finalized a 
framework that sorts large firms into four different categories 
of capital, liquidity, and enhanced prudential standards based 
on their size and risk profiles. Under the tailoring framework, 
the least stringent standards apply under Category IV to large, 
noncomplex firms, and the most stringent standards apply under 
Category I to U.S. Global Systemically Important Holding 
Companies (U.S. GSIBs). \1\
---------------------------------------------------------------------------
     \1\ See https://www.federalreserve.gov/newsevents/pressreleases/
bcreg20191010a.htm.
---------------------------------------------------------------------------
    In January 2021, the Board finalized a rule that would 
update the Board's capital planning requirements to be 
consistent with the tailoring framework. \2\ The Boards capital 
planning requirements for these large banks help ensure they 
plan for and determine their capital needs under a range of 
different scenarios. In particular, firms in the lowest risk 
category are on a 2-year stress test cycle and not subject to 
company-run stress test requirements. The rule applies the 
capital planning requirements to large savings and loan holding 
companies that are not predominantly engaged in insurance or 
commercial activities.
---------------------------------------------------------------------------
     \2\ See https://www.federalreserve.gov/newsevents/pressreleases/
bcreg20210119a.htm.
---------------------------------------------------------------------------
    Along with the rule change, to align the Board's capital 
planning guidance with the tailoring framework, staff 
separately revised the capital planning guidance. As revised, 
the Supervision and Regulation (SR) letter, SR 15-18, is now 
applicable to firms subject to Category I standards, and SR 15-
19 is now applicable to firms subject to Category II or III 
standards. The Board remains in the process of reviewing the 
scope and applicability of other rules and SR letters that were 
affected by the tailoring rules.
    The Federal Reserve recognizes the importance of 
transparency and accountability to both Congress and the 
public.

Q.4. As I mentioned last February, one difficulty with 
replacing LIBOR is that LIBOR has an embedded credit risk 
element as an interbank rate, whereas SOFR is a risk-free rate 
because it is essentially a repo rate. This mismatch could 
create problems when banks fund themselves in an interbank 
market that is subject to market conditions that SOFR may not 
reflect. When I asked you about this problem you stated that 
``a number of banks have come forward and said that they want 
to work on a separate rate which would not replace SOFR but 
would be credit sensitive'' and that you were open to that. Can 
you provide an update on this process?

A.4. The Federal Reserve and other agencies have been deeply 
engaged with stakeholders affected by the London Inter-Bank 
Offered Rate (LIBOR) transition, including both banks and 
borrowers. We have held a series of workshops to understand the 
interest on the part of some regional banks in adding a credit 
sensitive spread to Secured Overnight Financing Rate (SOFR). 
Those workshops have made progress in better understanding the 
issues involved so that both banks and borrowers can determine 
plans for a smooth transition away from LIBOR.
    In late October 2020, the U.S. Department of the Treasury 
(Treasury), the Board, the Federal Reserve Bank of New York, 
the Office of the Comptroller of the Currency (OCC), the 
Securities and Exchange Commission (SEC), the Federal Deposit 
Insurance Corporation (FDIC), and the Commodity Futures Trading 
Commission (CFTC), sent a letter to a number of U.S. regional 
banks noting that innovation is central to the development and 
evolution of financial markets, and that the official sector 
supports the continued innovation in, and development of, 
suitable reference rates, including those that may have credit 
sensitive elements. The Board, the FDIC, and the OCC 
subsequently released supervisory guidance supporting continued 
innovation in the development of robust reference rates. SOFR 
is a robust alternative to LIBOR, but we have been clear that 
its use is voluntary, and that market participants can use 
other suitable replacement rates.

Q.5. As I mentioned last February, I have always been skeptical 
of the Federal Reserve's proposal to develop its own real-time 
payment system.
    First, I am particularly concerned with the possibility 
that we will end up with different payment systems that are not 
interoperable. In response to my concern, you mentioned that 
``full interoperability is the goal'' but ``it will be 
challenging to reach it.''
    Second, I am concerned that the Federal Reserve will not 
provide a flat price to all participants in the payments 
system, which could make it expensive for small banks to 
participate. In response you said that the Federal Reserve has 
not committed to flat pricing.
    Can you provide an update on both issues?

A.5. The Federal Reserve is committed to advancing the goal of 
interoperability for instant payments, but we cannot accomplish 
it alone. Banks, bank service providers, and services operators 
must work together towards a common goal to move the industry 
forward. We have made significant progress, and the work we are 
doing now lays a critical foundation for accomplishing 
interoperability with The Clearing House's (TCH) Real-Time 
Payments System (RTP).
    We are currently designing the FedNow Service towards 
compatible standards and operating procedures with RTP for the 
initial launch of the FedNow Service. This will support 
interoperability through ``routing,'' which paves the way for 
nationwide access to instant payments and is highlighted as a 
model for accomplishing interoperability by the U.S. Faster 
Payments Council, an industry-led body dedicated to 
facilitating broad adoption of instant payments. \3\
---------------------------------------------------------------------------
     \3\ Routing is where the sending bank choses the path to the 
recipient based on available options and other criteria, such as price 
and features. The Faster Payments Council's white paper explores 
different models for achieving payments interoperability and is 
available at https://fasterpaymentscouncil.org/blog/2756/Faster-
Payments-Interoperability.
---------------------------------------------------------------------------
    A key part of this design work is our commitment to using 
the International Organization for Standardization (ISO) 20022 
standard, which also is used by RTP and other payment systems 
globally, for payment messages. Using this widely accepted 
standard should remove barriers to interoperability, such as 
unnecessary and burdensome incompatibilities imposed on banks 
that choose to use both services. We are in the process of 
finalizing our ISO specifications with input from an industry 
group that includes financial institutions of all sizes and 
service providers. We have also engaged with TCH on 
specifications as part of our collaborative process. These 
efforts are examples of how the industry can work together 
toward a common goal of laying the foundation for 
interoperability while also supporting choice through healthy 
competition, one of the benefits of having more than one 
instant payments provider in the market.
    We also have heard the industry would like the Federal 
Reserve and TCH to work towards interoperability based on 
``message exchange'' where two payment services send payments 
between each other, such as in automated clearing house (ACH) 
today. Message exchange interoperability between the Federal 
Reserve and TCH for ACH payments took years to accomplish due 
to the technical, operational, and legal complexities involved 
with connecting two services. We expect the same would be true 
for instant payments. The Federal Reserve, however, is open to 
interoperability through message exchange and equally 
recognizes that such an approach will require significant 
coordination between TCH and the Federal Reserve.
    We have not yet determined the pricing that will be 
applicable to the FedNow Service. The fee structure and 
schedule will be informed by our assessment of market practices 
at the time of implementation and will be published in advance 
of the launch of the service.
    Based on prevailing market practices, the Board expects 
that the fee structure would include a combination of per-item 
fees, charged to sending and potentially to receiving banks, 
and fixed participation fees.

Q.6. The recently amended Federal Reserve Statement on Longer-
Run Goals and Monetary Policy Strategy, published on August 27, 
2020, includes a new framework for a flexible form of average 
inflation targeting, in which deviations from the longer-run 
inflation rate goal of 2 percent will prompt policymakers to 
aim for an equal opposite deviation for a period. Currently, 
monetary policy rates are expected to remain lower for longer 
than they would be historically because inflation has been 
running below 2 percent in recent years. In February, the 
Federal Funds Rate was lowered to 0 percent-0.25 percent to 
respond to economic disruption stemming from the COVID crisis. 
Are you concerned that holding the Federal Funds Rate at the 
zero lower bound for an extended period, neutralizes its 
ability to be used as a stimulus tool to combat a possible 
economic downturn within this period?

A.6. As indicated in our public communications, we expect that 
it will be appropriate to maintain the current target range for 
the federal funds rate of 0 to 0.25 percent until labor market 
conditions have reached levels consistent with the Federal Open 
Market Committee's (Committee) assessments of maximum 
employment and inflation has risen to 2 percent and is on track 
to moderately exceed 2 percent for some time. This forward 
guidance underscores the Committee's strong commitment to its 
statutory goals of maximum employment and price stability, and 
reflects the Committee's strategy to achieve these goals 
articulated in the revised Statement on Longer-Run Goals and 
Monetary Policy Strategy. By allowing inflation to moderately 
exceed 2 percent for some time after it has persistently run 
below 2 percent, the Committee aims to achieve an inflation 
rate that averages 2 percent over time and longer-term 
inflation expectations that are well-anchored at 2 percent. 
Such a strategy does not imply that shortfalls of inflation 
from 2 percent will be offset by equal and opposite deviations 
under all circumstances. As always, the appropriate course of 
monetary policy will continue to reflect a broad array of 
considerations.
    Holding the Federal funds rate near zero does not 
neutralize our ability to respond to future economic downturns. 
Maintaining accommodative conditions today helps ensure that 
the economy will be on a stronger footing in the future if 
faced with adverse shocks. In addition, our forward guidance 
about the federal funds rate is outcome-based and focused on 
the Committee's stated goals, so that the amount of policy 
accommodation implied by that guidance increases automatically 
when the economy needs it. For example, if the economic outlook 
were to weaken, our existing guidance would imply a more 
prolonged period of very low interest rates--and so would 
further reduce longer-term interest rates, lowering borrowing 
costs for businesses and households. Furthermore, were it 
deemed necessary, the Federal Reserve has other means of 
providing additional policy accommodation within its existing 
toolkit, including by altering the size and/or composition of 
its balance sheet.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TILLIS
                     FROM JEROME H. POWELL

Q.1. Does the Federal Reserve intend to implement Executive 
Order 13924 of May 19, 2020, and implementing Memorandum M-20-
31 issued by the Office of Management and Budget on August 31, 
2020, with respect to its administrative proceeding and 
enforcement practices?

A.1. The Federal Reserve Board (Board), as an independent 
agency, has implemented its practices regarding administrative 
enforcement proceedings in a manner intended to promote 
fairness. Consistent with the broad discretion vested in the 
Board by law in implementing rules of its administrative 
proceedings, the Board continues to review its practices to 
ensure that its rules provide a fair, reliable, and expeditious 
process for all respondents.

Q.2. The idea to either create a 13-3 facility or use funds 
from an existing facility that would specifically be designed 
to get liquidity to small business suppliers immediately is 
something I have heard floated by policymakers and regulators 
alike. Under this concept, larger corporates would have access 
to a liquidity facility with a strict requirement to use funds 
to pay their small business suppliers within 24-48 hours. Large 
corporates have a vested interest in protecting their supply 
chain so the take-up rate would likely be substantial and small 
business suppliers who have accounts receivable from the larger 
companies would get the money owed to them quickly instead of 
seeing payment terms stretched out 60, 90, even 120 days. This 
would address the liquidity crisis immediately and suppliers 
would avoid a sometimes lengthy approval process. Can you 
commit to continue to giving serious consideration to this 
approach?

A.2. The Federal Reserve has used its emergency lending 
authority under section 13(3) of the Federal Reserve Act to 
help ensure creditworthy borrowers across all segments of the 
economy have access to credit. We expanded our initial programs 
and adopted new programs as necessary to help meet the credit 
needs of the economy. In particular, the Main Street Lending 
Program (Main Street) was created to support lending to small 
and medium-sized for-profit businesses and nonprofit 
organizations and was a viable option for small business 
suppliers in need of liquidity.
    As of January 8, 2021, and as required by statute, when the 
program ceased making new purchases, the total outstanding 
assets were approximately $16.6 billion.
    It is important to note that our lending programs were 
designed to be broad and not to engage in credit allocation to 
particular segments of the economy.
                                ------                                


         RESPONSES TO WRITTEN QUESTIONS OF SENATOR REED
                     FROM JEROME H. POWELL

Q.1. If Congress does not pass another large relief package 
this year, would the economic outlook worsen relative to 
current Federal Reserve projections?

A.1. The Coronavirus Aid, Relief, and Economic Security Act 
(CARES Act) and other fiscal policy actions have provided 
important direct help to families, businesses, and communities. 
And the Coronavirus Response and Relief Supplemental 
Appropriations Act is providing additional assistance. This 
support has made a critical difference to helping both families 
and businesses in a time of need, as well as limiting the 
damage to our economy. The expiration of fiscal policy support 
would tend to lower the economic outlook, all other things held 
the same. Ultimately, however, it is the responsibility of 
Congress and the Administration to decide on the appropriate 
timing, size, and composition of additional fiscal stimulus.

Q.2. If so, what additional action could the Federal Reserve 
take to fulfill its dual mandate in a timely manner?

A.2. There are multiple dimensions along which the Federal 
Reserve could adjust its policy stance if we judged it 
appropriate to fulfill the dual mandate. Throughout the current 
crisis, we have provided extensive communications about the 
future path of the Federal funds rate to ensure that monetary 
policy will continue to deliver powerful support to the economy 
until the recovery is complete. In September, we enhanced this 
forward guidance by conveying that it likely would be 
appropriate to maintain the current target range for the 
Federal funds rate of 0 to \1/4\ percent until labor market 
conditions have reached levels consistent with the Federal Open 
Market Committee's (Committee) assessments of maximum 
employment and inflation has risen to 2 percent and is on track 
to moderately exceed 2 percent for some time. In December, we 
enhanced our guidance regarding asset purchases. We said we 
will continue to increase our holdings of Treasury securities 
by at least $80 billion per month and of agency mortgage-backed 
securities by at least $40 billion per month until substantial 
further progress has been made toward the Committee's maximum 
employment and price stability goals. These asset purchases 
help foster smooth market functioning and accommodative 
financial conditions, thereby supporting the flow of credit to 
households and businesses.
    Importantly, this combined forward guidance is outcome-
based and focused on our longer-run goals, so that the amount 
of policy accommodation implied by that the guidance adjust 
automatically when the economy needs it. For example, if the 
economic outlook were to weaken, our existing guidance would 
imply a more prolonged period of very low interest rates--and 
so would further ease financial conditions. In response to 
COVID-19, the Federal Reserve also deployed several credit 
facilities--many of which under authority provided in section 
13(3) of the Federal Reserve Act and in conjunction with the 
U.S. Department of the Treasury--that were key to addressing 
financial stresses and preventing COVID-19 from doing greater 
damage to the financial system and economic activity. We 
continue to closely monitor credit market conditions. In sum, 
the Federal Reserve stands ready to deploy all of its policy 
tools on the scale required to achieve its statutory goals of 
maximum employment and price stability. At the same time, we 
recognize that our actions are part of a broader public-sector 
response, a point underscored by the important roles played by 
fiscal and health policies in response to the current crisis.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
            SENATOR VAN HOLLEN FROM JEROME H. POWELL

Q.1. Chair Powell, when you last testified before the Banking 
Committee, I asked you how when purchasing high-yield bonds 
would help Main Street. You responded that those companies 
employ thousands of people, so buying their bonds in effect 
supports workers.
    If you examine the Fed's Broad Market Index (since you last 
testified) many of these companies have actually laid off 
employees: Boeing, Disney, Caterpillar, to name just a few. At 
the same time, many of these same companies continue to pay 
dividends while they lay off workers. The Fed had the authority 
under the CARES Act to impose proworker conditions on firms as 
a condition of aid. Why didn't the Fed do so? Doesn't it 
undermine public confidence in the Fed when the public sees 
companies getting rescue money and then laying off workers and 
paying dividends?

A.1. The Primary Market Corporate Credit Facility (PMCCF) and 
the Secondary Market Corporate Credit Facility (SMCCF) 
(together, the CCFs) were established to ensure that 
creditworthy companies that rely on capital markets to fund 
their operations had access to credit during last year's 
unusual and exigent circumstances in which financial markets 
experienced extraordinary disruptions, volatility, and 
illiquidity. The U.S. Department of the Treasury supported the 
CCFs with funds appropriated through the Coronavirus Aid, 
Relief, and Economic Security Act (CARES Act). Accordingly, the 
CCFs complied with all applicable CARES Act provisions. Under 
the terms and conditions of the PMCCF, and consistent with the 
CARES Act, an eligible issuer in the PMCCF must have been 
created or organized in the United States or under the laws of 
the United States and must have significant operations in and a 
majority of its employees based in the United States. Before 
participating in the PMCCF, issuers were required to certify to 
CARES Act requirements, such as the United States business 
requirement and the conflicts of interest requirement under 
section 4019 of the Act. As you are likely aware, in accordance 
with section 1005 of the Consolidated Appropriations Act, 2021, 
the CCFs ceased extending credit on December 31, 2020.

Q.2. Section 13(3) requires that emergency loans to 
corporations have to be backed by collateral, and requires 
that, quote,``the security for emergency loans is sufficient to 
protect taxpayers from losses.'' 13(3) also requires the Fed to 
establish that participants in any broad-based program or 
facility must be, quote, ``unable to secure adequate credit 
accommodations from other banking institutions.''
    As of September 8th, three of the top four issuers in the 
Federal Reserve's Secondary Market Corporate Credit Facility 
are the U.S. financing arms of Volkswagen, Toyota, and Daimler. 
The other top issuers include large corporations like Apple, 
Verizon, AT&T, General Electric, and Microsoft.
    Has the Fed actually established that these companies are 
unable to secure adequate credit from banks? And has the Fed 
secured guarantees or other collateral from the companies 
themselves that is sufficient to protect taxpayers from losses 
and, if so, how is that credit secured?

A.2. The Federal Reserve established the Secondary Market 
Corporate Credit Facility (SMCCF) to support credit to 
employers by providing liquidity to the market for outstanding 
corporate bonds. The SMCCF did not extend new credit to U.S. 
corporate issuers; rather, the facility purchased debt 
instruments that already existed in the secondary market. 
Through secondary market purchases, the SMCCF helped stabilize 
the U.S. corporate bond market and improve conditions for new 
issuances but did not directly transfer funds to specific 
issuers. As such, and consistent with the Federal Reserve 
Board's (Board) Regulation A, the Federal Reserve Bank of New 
York obtained evidence of inadequate credit by evaluating 
economic conditions in the U.S. corporate credit market, which 
is the market that the SMCCF was intended to address. \1\
---------------------------------------------------------------------------
     \1\ See 12 CFR 201.4(d)(8)(ii).
---------------------------------------------------------------------------
    The SMCCF did not secure guarantees or collateral from 
specific issuers. Instead, to meet the statutory requirement to 
protect taxpayers from losses, the SMCCF is secured by all the 
assets in Corporate Credit Facilities LLC, the special purpose 
vehicle that is used to implement the SMCCF and Primary Market 
Corporate Credit Facility (PMCCF). The assets in Corporate 
Credit Facilities LLC include the market value of exchange-
traded fund holdings; the amortized cost of corporate bonds; 
the equity investment from the U.S. Department of the Treasury 
(Treasury) and related reinvestment earnings; cash equivalents; 
and interest and other miscellaneous receivables. The value of 
these assets substantially exceeds the amount of the Federal 
Reserve extensions of credit in connection with the SMCCF and 
PMCCF. In its monthly reports to Congress pursuant to section 
13(3) of the Federal Reserve Act, the Federal Reserve has 
provided updates on the total value of collateral pledged in 
connection with the PMCCF and SMCCF. These reports are 
available on the public website of Board. \1\
---------------------------------------------------------------------------
     \1\ See https://www.federalreserve.gov/publications/reports-to-
congress-in-response-to-covid-19.htm.
---------------------------------------------------------------------------
    As you know, the CCFs have been supported by funding from 
the Coronavirus Aid, Relief, and Economic Security Act (CARES 
Act), which assigns sole authority over its funds to the 
Treasury Secretary, subject to the statute's specified limits. 
The former Secretary has indicated that these limits do not 
permit the CARES Act-funded facilities to make new loans or 
purchase new assets after December 31, 2020.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR CORTEZ MASTO FROM JEROME H. POWELL

Q.1. Do you support the language in the House-passed HEROES Act 
that lowers the Municipal Loan Fund's interest rates to match 
the Fed Funds Rate?

A.1. Response not received in time for publication.

Q.2. Is the Federal Reserve able to provide 6-month notes to 
cash-strapped local governments and commit to rolling them over 
for 20 years or more if a locality is unable to take on long-
term debt?

A.2. Response not received in time for publication.

Q.3. Can the Federal Reserve change the Municipal Lending 
Facility to meet the needs of tribes?

A.3. Response not received in time for publication.

Q.4. Are there any plans to reallocate funds in the Municipal 
Lending Facility or the Main Street Lending Facility?

A.4. Response not received in time for publication.

Q.5. How does current law prevent the Federal Reserve from 
making changes to better assist asset-based businesses?

A.5. Response not received in time for publication.

Q.6. What does the Federal Reserve plan to do with the 
remaining funds provided through the CARES Act if a relief deal 
is not reached? Are there other ways you can use that money to 
help the travel and tourism industry?

A.6. Response not received in time for publication.

Q.7. What changes can be made to the Main Street Lending 
Program so it is viable for borrowers and encourages banks to 
participate?

A.7. Response not received in time for publication.

Q.8. The Main Street Lending Program requires that banks share 
security pari passu under the Boston Fed's Main Street program. 
Have any banks been willing to concede part of their security 
interests, and if so, what percentage of debt to value did the 
secured loans cover?

A.8. Response not received in time for publication.

Q.9. Recently, the group Americans for Financial Reform 
reported that the Federal Reserve is paying more for bond 
purchases than the par value. If you look at the Fed reports on 
its corporate bond purchases and loans under the CARES Act to 
Congress, it seems the Fed overpays an average of 7 percent. 
Please explain this discrepancy in payments and why the Federal 
Reserve is paying more for bond purchases.

A.9. Response not received in time for publication.

Q.10. Why does the nonprofit loan facility impose certain 
liquidity, asset, and reserve requirements that are not 
required in Main Street New Loan Facilities available to for-
profit businesses?

A.10. Response not received in time for publication.

Q.11. The IRS includes a public support test on the annual Form 
990 that requires nonprofits to maintain a rate above 33 
percent--\1/3\--in order to ensure that nonprofits are relying 
more heavily on donations from the public, rather than other 
funding sources like investment income. Why does the Federal 
Reserve's criteria require organizations to have revenues from 
donations that are less than 40 percent, which would be a 
significant barrier to many nonprofits who operate from 
contracts but who also wish to be eligible for the loan 
facility? Would the Fed consider eliminating this requirement 
that no more than 40 percent of an organization's 2019 revenues 
come from donations?

A.11. Response not received in time for publication.

Q.12. One of the eligibility criteria for borrowers is that 
they must have ``a ratio of adjusted 2019 earnings before 
interest, depreciation, and amortization (EBIDA) to 
unrestricted 2019 operating revenue, greater than or equal to 2 
percent.'' This criteria requires nonprofits to essentially 
have a 2 percent profit. Nonprofits function in a model that 
does not turn a profit, and where any surpluses are used fund 
critical services to the public such as social services and 
health research. Would the Fed consider eliminating this 
requirement, which would be disqualifying for many nonprofits?

A.12. Response not received in time for publication.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR JONES
                     FROM JEROME H. POWELL

Q.1. Minority-Owned Small Businesses--Last month in Birmingham, 
I hosted a roundtable with minority business owners, 
entrepreneurs, and investors. I heard firsthand how hard it is 
for minority business owners to get capital, including PPP 
loans.
    Congress passed the CARES act to help small businesses 
weather the pandemic--yet the number of women and minority 
businesses unable to access capital remains still distressingly 
high. A survey in April found that of Black and Latino 
businesses who applied for PPP loans, only 12 percent got PPP 
loans and 41 percent were denied. The rest got partial 
assistance or were still waiting to hear back.
    What steps is the Federal Reserve taking to ensure that 
minority businesses owners have access to capital while not 
being forced to pay predatory rates?

A.1. The Federal Reserve appreciates the critical role that 
small businesses play in our economy; they account for almost 
half of all employees and more than half of all job growth. The 
Federal Reserve is monitoring small business conditions, 
including borrowing and lending activities, and is in active 
conversation with small businesses across the country to better 
understand their needs. In addition, staff are reaching out to 
banks, credit unions, community development financial 
institutions (CDFI), other nonprofit lenders, and small 
business groups to gather insights on the current financial 
challenges of small businesses across various industries, size, 
markets, demographic and geographic characteristics. In 
supporting economic stabilization and recovery throughout 
COVID-19 and implementing the provisions of the Coronavirus 
Aid, Relief, and Economic Security Act (CARES Act), we have 
been focused on the credit needs of these important employers. 
We have acted aggressively to stabilize financial markets and 
bring interest rates down, which has directly helped small 
businesses and their customers by supporting the recovery, in 
particular to provide credit support to financial institutions 
lending to small businesses through the Main Street Lending 
Program (Main Street) and the Paycheck Protection Program 
Lending Facility (PPPLF). \1\ To ensure that these programs 
were responsive and effective, the Federal Reserve Board 
(Board) made adjustments to ensure that the facilities were as 
successful as possible in meeting the goal of supporting jobs 
and the broader economic recovery while balancing risk to 
taxpayer funds. \2\
---------------------------------------------------------------------------
     \1\ For more information about these programs, see https://
www.federalreserve.gov/funding-credit-liquidity-and-loan-
facilities.htm.
     \2\ See Press Release, ``Federal Reserve Board Adjusts Terms of 
Main Street Lending Program To Better Target Support to Smaller 
Businesses That Employ Millions of Workers and Are Facing Continued 
Revenue Shortfalls Due to the Pandemic'', https://
www.federalreserve.gov/newsevents/pressreleases/monetary20201030a.htm. 
Also see Press Release, ``Federal Reserve Expands Access to Its 
Paycheck Protection Program Liquidity Facility (PPPLF) to Additional 
Lenders, and Expands the Collateral That Can Be Pledged'', https://
www.federalreserve.gov/newsevents/pressreleases/monetary20200430b.htm.
---------------------------------------------------------------------------
    To increase awareness and utilization of the these 
programs, the Federal Reserve has conducted extensive outreach, 
including a series of webinars, to ensure that eligible 
institutions have the information needed to access the program. 
These webinars have had over 10,000 registrations. In addition, 
Federal Reserve System community development staff conducted 
specific outreach with national organizations that support 
CDFIs and minority depository institutions (MDI), including the 
Opportunity Finance Network, the Community Development Banker's 
Association, and the National Bankers Association to ensure 
that MDIs and CDFI banks and loan funds are able to access the 
PPPLF. Currently there are approximately 82 PPPLF participants 
with outstanding balances that are either MDIs or CDFIs (or 
both). This figure includes some nonbank CDFIs, entities with 
which the Fed has not traditionally had lending relationships. 
We are committed to continuing to conduct outreach as needed to 
support the broadest possible access to the PPPLF by Paycheck 
Protection Program (PPP) lenders.
    With respect to concern about fair treatment in accessing 
the facilities, the Federal Reserve's fair lending supervisory 
and enforcement program reflects its commitment to promoting 
financial inclusion and ensuring that the financial 
institutions under our jurisdiction fully comply with 
applicable Federal consumer protection laws and regulations. 
The Equal Credit Opportunity Act and the Federal Reserve's 
Regulation B's prohibition on lending discrimination applies to 
all creditors and to all forms of credit, and includes credit 
extended to small businesses, and the Federal Reserve evaluates 
fair lending risk at every consumer compliance examination 
based on the risk factors set forth in the interagency fair 
lending examination procedures.
    These procedures include risk factors related to potential 
discrimination in pricing, underwriting, redlining, and 
steering. If warranted by risk factors, staff conduct in-depth 
analyses of a state member bank's underwriting policies and 
practices. If there are concerns about a pattern or practice of 
any type of lending discrimination, a bank is required to 
provide additional data and information. For example, if the 
risk profile of a bank warrants a more in-depth review of 
particular loan products, a request for additional information 
would be made to the bank to determine whether there is a fair 
lending violation. This could include collection of 
supplemental data items related to small business lending.
    When exercising supervisory and enforcement 
responsibilities in evaluating banks' lending activities during 
COVID-19, the Board will take into account the unique 
circumstances affecting borrowers and institutions during this 
time. The Board will take into account an institution's good-
faith efforts demonstrably designed to support consumers and 
comply with consumer protection laws. The Board expects that 
supervisory feedback for institutions will be focused on 
identifying issues, correcting deficiencies, and ensuring 
appropriate remediation to consumers.

Q.2. Retail + Restaurant Industry Losses Due to the 
Coronavirus--In May, you highlighted how many of the COVID 
related job losses were in the lower paying service sector, 
like in restaurants, hotels, tourism, and retail where you 
interact with others.
    The service sector remains especially hard hit as some 
folks are hesitant to travel or eat out until there's a better 
handle on the virus. In Alabama alone, 14,397 direct hotel-
related jobs have been lost since February. My State's lodging 
tax loss is expected to be $105.2 million from diminished 
travel during the coronavirus pandemic.
    What do the Federal Reserve's economic models demonstrate 
if Congress fails to act in meaningful way to help the retail, 
entertainment, and restaurant industries?
    Further, what do the Federal Reserve's economic models 
demonstrate if Congress fails to provide another coronavirus 
relief package without any additional economic impact payments 
to households, assistance for State and local governments that 
might be forced to lay off first responders, extending Federal 
unemployment insurance for workers unable to return to work, 
hazard pay for frontline workers, and streamlined loan 
forgiveness for the Paycheck Protection Program (PPP)?

A.2. The CARES Act and other fiscal policy actions have 
provided important direct help to families, businesses, and 
communities--including both workers and employers in the 
retail, entertainment, and restaurant industries. The 
Coronavirus Response and Relief Supplemental Appropriations Act 
is providing additional help. These two Acts have made a 
critical difference to helping both families and businesses in 
a time of need, as well as limiting the damage to our economy. 
The expiration of fiscal policy support would tend to lower the 
economic outlook, all other things held the same. Ultimately, 
however, it is the responsibility of Congress and the 
Administration to decide on the appropriate timing, size, and 
composition of additional fiscal stimulus.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                     FROM JEROME H. POWELL

Q.1. As you know, the commercial mortgage-backed security 
(CMBS) market is under extreme pressure due to this pandemic. 
Collapse of this market would be disastrous to Arizona 
communities that rely on tourism and to the State pension 
funds, endowments, retirement funds, college funds, and other 
investment income tools that rely on the market. You have 
repeatedly indicated it is not within your authority under the 
Coronavirus Aid, Relief, and Economic Security (CARES) Act to 
create a lending facility for CMBS borrowers.
    Can you expand on your authority as it relates to creating 
a new tailored facility?
    Is it the market conditions that do not warrant changes, or 
are you unable to make changes due to your authority or 
structural limitations?
    What other relief options are available to CMBS borrowers, 
such as Arizona hoteliers?

A.1. Although hotels, shopping malls, restaurants, and many 
other businesses remain challenged or closed, lending programs 
for particular industry sectors are outside the scope of the 
Federal Reserve's powers. As a central bank, one of our core 
principles is to avoid credit allocation. However, actions 
taken by the Federal Reserve to support the broader economy 
have alleviated some of the strains in the commercial real 
estate market. More specifically, the Federal Reserve's 
purchases of agency commercial mortgage-backed securities 
(CMBS), as part of open market operations and the inclusion of 
legacy CMBS as Term Asset-Backed Securities Loan Facility 
(TALF)-eligible collateral, have improved spreads and liquidity 
in the CMBS market.
    The Consolidated Appropriations Act, 2021, amended the 
Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 
to require that, after December 31, 2020, the Federal Reserve 
shall not make any new purchases under facilities that are 
supported using funds allocated to the U.S. Department of 
Treasury (Treasury) under the CARES Act. In addition, the 
Consolidated Appropriations Act, 2021, rescinded the 
appropriation authority for the unobligated portion of these 
funds and limits the ability of the Treasury to use funds in 
the Exchange Stabilization Fund. As part of its fiscal 
provisions unrelated to Federal Reserve lending, the 
Consolidated Appropriations Act, 2021, included support to 
specific industries in the form of grants and investments, 
including industries and businesses that remain challenged or 
closed.

Q.2. Under the Main Street Lending Program, eligible nonprofits 
must obtain no less than 40 percent of their donations from the 
public, rather than other funding sources like investment 
income. The Internal Revenue Service (IRS) only requires 
nonprofits to maintain a rate above 33.33 percent. Some 
nonprofits have claimed 40 percent is a significant barrier to 
entering the Program. Why does the Federal Reserve maintain a 
higher percentage of public donations than the IRS?

A.2. The nondonation revenues test was established to ensure 
that nonprofit organizations that receive Main Street Lending 
Program loans have stable sources of funding, such as longer-
term contracts or fees earned for services provided, to repay 
the loan over time. This requirement is intended to address the 
risk that the current uncertain economic situation may create 
temporary or permanent shifts in philanthropy.
    In response to public feedback to proposals released for 
comment on June 15, 2020, the nondonation revenues requirement 
was lowered from 70 percent to 60 percent of expenses. The 
revised Nonprofit Organization New Loan Facility (NONLF) and 
Nonprofit Organization Expanded Loan Facility (NOELF) term 
sheets also amended the definition of ``donations'' to reduce 
the stringency of this test and make it easier for nonprofit 
organizations to calculate. Additionally, the term sheets apply 
the test using a 3-year average to avoid disadvantaging 
nonprofits that had a large, one-time donation in 2019.
    We believe the revised nondonation revenues test 
sufficiently balanced our desire to support the flow of credit 
to nonprofit organizations that play a vital role in providing 
critical services to our communities, while also safeguarding 
taxpayer funds.
    As you know, the NONLF and NOELF have been supported by 
funding from the Coronavirus Aid, Relief, and Economic Security 
Act (CARES Act), which assigns sole authority over its funds to 
the Treasury Secretary, subject to the statute's specified 
limits. The former Secretary indicated that these limits do not 
permit the CARES Act-funded facilities to make new loans or 
purchase new assets after December 31, 2020. In order to allow 
more time to process and fund loans that were submitted to the 
Main Street lender portal on or before December 14, 2020, the 
Federal Reserve Board (Board) extended the termination date of 
Main Street facilities to January 8, 2021.
    The Board will continue to monitor conditions in financial 
markets and the broader economy. We are prepared to use our 
full range of tools to support the economy, maintain the flow 
of credit to households and businesses, and promote our maximum 
employment and price stability goals.

Q.3. During the September 24 hearing, you stated that the 
Federal Reserve had expanded the number of national recognized 
statistical rating organizations (NRSRO) the Facilities will 
accept. It is my understanding that eligible businesses must 
still have a rating from a major credit rating agency, even if 
they have an acceptable rating from another NRSRO.
    Can you detail this expansion?
    Are businesses able to apply with and only with a credit 
rating from an NRSRO that is not one of the major players?
    Why is the Federal Reserve not treating all reputable 
rating agencies equally as it relates to access to the 
Facilities?

A.3. The Federal Reserve's emergency lending facilities were 
established to help support the flow of credit to employers, 
households, and businesses. In addition, under the Federal 
Reserve Act, any loans extended by the Federal Reserve must be 
satisfactorily and sufficiently secured to protect taxpayers 
from loss.
    The Federal Reserve's initial priority was to announce the 
establishment of these facilities as quickly as possible, and 
therefore the facilities first used credit ratings from just 
the three largest nationally recognized statistical rating 
organizations (NRSRO), given that the most widespread credit 
ratings used are from these three NRSROs.
    Consistent with our objectives to promote the flow of 
credit in a manner consistent with the law, the Federal Reserve 
undertook an analysis to determine whether to expand the list 
of eligible NRSROs. As part of this analysis, the Federal 
Reserve considered the design and focus of each facility, and 
the role that each NRSRO plays in the relevant market. 
Specifically, the Federal Reserve sought to balance the 
benefits of using ratings from the NRSROs most relied on by 
investors with the need to ensure broad access to our programs. 
That analysis led the Federal Reserve to include three 
additional NRSROs in its facilities along with the three 
largest NRSROs. The approach taken by the Federal Reserve, in 
continuing to require a rating from one of the three largest 
NRSROs, balances the investor usage of these three NRSROs with 
the benefit of expanding eligibility to other NRSROs that are 
used by investors to a material extent in a way that is 
relevant for each of our facilities.
    While we understand the interest in ensuring that no 
distinctions are made among registered NRSROs, inclusion of all 
NRSROs would have impaired, not improved, the effectiveness of 
the facilities. If we had included all NRSROs, absent any other 
eligibility criteria, we would accept ratings issued by NRSROs 
that are not used to a material extent by investors in that 
market. Accordingly, we may have needed to include additional 
eligibility criteria, or conduct additional credit 
underwriting, to ensure that taxpayers are protected from 
losses and that we are satisfactorily secured.
              Additional Material Supplied for the Record
              
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

                          [all]