[Senate Hearing 117-]
[From the U.S. Government Publishing Office]


 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2022

                              ----------                              


                        WEDNESDAY, JUNE 23, 2021

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2 p.m., in room SR-138, Dirksen 
Senate Office Building, Hon. Chris Van Hollen (Chairman) 
presiding.
    Present: Senators Van Hollen, Leahy, Coons, Hyde-Smith, 
Moran, and Kennedy.

                       DEPARTMENT OF THE TREASURY

             OPENING STATEMENT OF SENATOR CHRIS VAN HOLLEN

    Senator Van Hollen. Welcome Madam Secretary; and everybody 
joining us. The subcommittee hearing will come to order.
    And I want to begin by welcoming Ranking Member Hyde-Smith; 
and our colleagues on the Senate Appropriations Subcommittee on 
Financial Services and General Government.
    Madam Secretary, welcome. Thank you for joining us to 
testify on the fiscal year 2022 Department of Treasury budget. 
And I would also like to acknowledge now some of the members of 
our second panel for today's hearing, who are joining us to 
discuss: The Community Development Financial Institutions 
Program.
    They are deputy assistant secretary, Noel Poyo, from the 
Department of Treasury; Mr. Joseph Haskins, the chairman of 
Harbor Bank in Baltimore; and Mr. Andy Anderson, president of 
the Bank of Anguilla, in Anguilla, Mississippi.
    It was welcome news, Madam Secretary, to see that this 
year's budget request proposes an increase in funding for the 
CDFI Program, and not the elimination of the program that we 
saw in budgets from the previous administration. Since its 
inception, the Department of Treasury has played a central role 
in maintaining a strong economy, spurring economic growth and 
promoting opportunity in the United States.
    That mission has been essential to our Nation's financial 
health, as we work urgently to build back better and stronger 
from the economic damage of COVID 19. Under the leadership of 
Secretary Yellen, the Department of Treasury has been charged, 
not only with providing historic relief in close coordination 
with Congress, but also supporting a dynamic economy that 
harnesses the potential of each and every American.
    This work is far from simple and requires our full effort 
and attention but, thankfully, the Department has moved full 
steam ahead to help those hardest hit, jumpstart our recovery, 
and pave the way to a fairer economy. We are already seeing 
proof of that fact. In particular, I would like to salute you, 
Madam Secretary, for helping to ensure a quick and efficient 
rollout of the expanded child tax credit benefits that were 
secured in the American Rescue Plan.
    Under that plan eligible families will now receive $3,600 
for each child under 6 years old, and $3,000 for each child 
between the ages of 6 and 17. And starting in mid-July, 
families will start receiving their expanded child tax credit 
in monthly payments of up to $300 per child. It is estimated 
that this move will cut child poverty in half this year. And I 
hope we can work together to extend that credit beyond 2021, as 
proposed in President Biden's budget.
    Madam Secretary, I also want to commend you on the success 
in moving toward a global minimum tax rate for corporations to 
help stop the current race to the bottom that we are seeing 
between nations as many seek the shelter of tax havens. 
Congratulations on reports of today's news of the G20, and we 
will be following up with some questions on that front. It is 
really important that our major multinational corporations pay 
their fair share of taxes, and your work has moved us closer to 
that point.
    The fiscal year 2022 budget proposes an appropriation for 
the Treasury Department of almost $15 billion, an increase of 
$1.4 billion over last fiscal year. There is no question that 
the Treasury has been asked to play a large role in addressing 
the pandemic, and making sure that the United States economy 
recovers, and to achieve these goals, they have asked us for 
additional funding for departmental offices, so everyone at the 
Treasury can do their job.
    There is no doubt that we have asked your Department to do 
a lot more over the last year-and-a-half. Within that total, 
you have requested $13.2 billion for the IRS, an increase of 
$1.2 billion. Your budget also request $80 billion over 10 
years in additional funding for the IRS, split between 
mandatory funds and a discretionary cap adjustment for tax 
enforcement activities, which would be $417 million for fiscal 
year 2022.
    This subcommittee heard from the IRS Commissioner on many 
of these issues. He laid out a very solid case for providing 
these funds to close the tax gap, somewhere between $500 
billion to $1 trillion in each--taxes that are owed mostly by 
very wealthy individuals, but not paid. And the additional 
information can go to address badly needed services to provide 
all Americans, through the IRS, with respect to the 
Department--with the IRS functions.
    Before I end, Madam Secretary, I would just like to commend 
you and your staff on your responsiveness to our questions, and 
grateful for the assistance your team has provided as we 
prepared for this hearing.
    With that, let me end where I began, by thanking all of you 
for coming today to share your perspectives. And now I want to 
turn it over to Ranking Member, Senator Hyde-Smith for her 
opening statement.

             OPENING STATEMENT OF SENATOR CINDY HYDE-SMITH

    Senator Hyde-Smith. Thank you, Mr. Chairman. And I welcome 
you, Secretary Yellen, to our hearing today, and I look forward 
to your testimony this afternoon, and the testimony of our 
second panel as well. I am very pleased to have a Mississippian 
with me today, a friend, Mr. Andy Anderson of the Bank of 
Anguilla in Mississippi; and Mr. Joseph Haskins from The Harbor 
Bank of Maryland; and Mr. Poyo, deputy assistant secretary at 
the Treasury.
    Thanks for being part of this, and thank you for your 
willingness to serve and doing all you do. And we are here 
today to examine the Treasury's Department budget request for 
fiscal year 2022. Treasury's offices execute multi functions, 
important functions that promote economic growth, and combat 
illicit finance, administer the internal revenue code, and 
operate the Federal Government's collection systems, and 
deposit system.
    Secretary Yellen, in addition to the traditional 
responsibilities, you really have a full plate. You have also 
are going to execute emergency response programs for a variety 
of industries and businesses. And since the beginning of the 
pandemic, the Treasury Department has been at the forefront of 
all of these relief programs. But unfortunately under the Biden 
administration, we have seen government programs that were 
intended to be targeted and temporary during the pandemic 
become permanent.
    And we are also seeing some spending levels warranted only 
in times of crisis become common. As these health threats of 
the pandemic recede, the Biden administration continues to 
press ahead with even greater spending and higher taxes, which 
is a concern for me and many Americans, concerning the budget. 
But the first time in American history a president submitted a 
budget to Congress that proposes annual deficits exceeding $1 
trillion deficits in every single year of the next decade.
    In fiscal year 2019, the Federal Government spent $4.4 
trillion, which is still a truly remarkable sum. Now the Biden 
administration proposes to be spending more than $6 trillion 
next year, and in every fiscal year thereafter. As a result, 
the Biden budget would add $15 trillion to the national debt, 
over the last 10 years.
    And 10 years ago I remember being really concerned about 
the debt levels, and now in 2011, that just doesn't seem that 
long ago that, you know, just recently this has been occurring, 
and I think about the timeframes and timelines when Prince 
William married Kate Middleton that year in the so-called 
``wedding of the century'', just wasn't that long ago. But in 
2011, the U.S. debt stood at $14 trillion total, in 2011. And 
in 2031, 10 years from now, the national debt will rise to $39 
trillion under the Biden administration's spending plan. Let me 
say that again, $39 trillion, from $14 trillion to $39 trillion 
in 10 years.
    So I look forward to hearing from you, but these are 
certainly the concerns that I have for the Department and your 
funding request.
    Thank you, Mr. Chairman.
    Senator Van Hollen. Thank you, Senator.
    We have been joined by Senator Kennedy as well. Welcome.
    And Madam Secretary, let me turn it over to you for your 
opening statement.
STATEMENT OF HON. JANET YELLEN, SECRETARY OF THE 
            TREASURY
    Secretary Yellen. Thank you. Chairman Van Hollen, Ranking 
Member Hyde-Smith, thank you for inviting me to join you today, 
I look forward to your questions.
    But first I want to briefly discuss the state of our 
economy and the state of the Treasury Department, because I 
believe one depends on the other. When I took office back in 
January, the most urgent problem confronting our economy was 
obviously the pandemic, helping people make it to the other 
side of the crisis, and ensuring they were met there by a 
robust recovery.
    Thanks to this Congress and its passage of the American 
Rescue Plan, I believe we are well on our way toward that goal. 
However, the ARP and its predecessor legislation are not self-
executing. As you know, in order for relief dollars to 
effectively reach their intended targets, we have to stand up 
and manage new Federal programs.
    Treasury has been tasked with much of this work and we are 
proud to do it, but our challenge is that while our portfolio 
has grown to match the urgency of this moment, our annual 
budget has not grown in tandem, and the funding provided to 
administer new programs is temporary. Not accounting for 
inflation, our annual budget is still at the same enacted level 
as in 2010, and critical policy offices like domestic finance, 
economic policy, and tax policy have seen their budgets cut by 
as much as 20 percent since 2016.
    The mismatch is very stark, when you take a moment to scan 
the new bodies of work we have undertaken. Treasury has built a 
$350 billion program to help State, local, and Tribal 
governments start operating normally again. The CERTS program 
will provide $2 billion to bus and ferry companies. There are 
two separate multi-billion-dollar programs to help people pay 
their rent and mortgages. And of course, Treasury administers 
economic impact payments. The IRS entered the pandemic as an 
agency that processes tax filings and returns once a year, and 
managed to marshal its forces to disperse more than 460 million 
payments totaling approximately $800 billion across three 
separate tranches.
    Now the IRS is preparing to make monthly payments of the 
expanded child tax credit to families of more than 88 percent 
of American children. Our team has done valiant work 
implementing these programs with the resources at our disposal. 
But we cannot continue to be good stewards of this recovery, 
and tackle the new bodies of work that Congress assigns to us 
in the years beyond, with a budget that was designed for 2010.
    Our Administration has released its formal budget, and 
there are several critical areas where funding is needed. For 
instance, the Financial Crimes and Enforcement Network, FinCEN, 
is tasked with building a massive database that collects and 
secures beneficial ownership information, but Congress has not 
yet provided any funding to do it.
    Then there are the Community Development Financial 
Institutions. Congress has dramatically expanded funding for 
CDFIs with supplemental appropriations, and rightly so. These 
institutions are very effective at injecting capital into areas 
the financial sector has not traditionally served well. 
However, it is challenging for the CDFI Fund to distribute 
greater resources and scale these programs without additional 
administrative funding.
    The IRS is in need of additional resources, too. Over the 
next 10 years, the American people could see roughly $7 
trillion dollars fall through the cracks of our tax system. 
Why? Because many of the country's wealthiest taxpayers do not 
pay their full tax bill, and the IRS is not nearly staffed up 
enough to ensure compliance.
    Today, the IRS has fewer auditors than at any time since 
World War II. Our proposal would give the IRS the funding it 
needs. For fiscal year 2022, it includes $13.2 billion from 
discretionary appropriations, plus $417 million for the first 
year of a program integrity allocation adjustment as part of 
the multi-year American Families Plan.
    Let me just say one final word about the IRS: Many of you 
have expressed concern about the recent ProPublica report. I am 
deeply troubled by it as well. And it is important to stress 
that an unauthorized disclosure of taxpayer information is a 
crime, and that it has been referred to the FBI, Federal 
prosecutors, and Treasury Department oversight authorities.
    We don't yet know what occurred, but all is being done to 
get to the bottom of this criminal activity. And we will be 
sure to update you as we learn more.
    With that, I am happy to take your questions.

    [The statement follows:]
               Prepared Statement of Hon. Janet L. Yellen
    Chairman Van Hollen, Ranking Member Hyde-Smith, thank you for 
inviting me to join you today. I look forward to your questions, but 
first, I want to briefly discuss the state of our economy and the state 
of the Treasury Department. Because I believe one depends on the other.
    When I took office back in January, the most urgent problem 
confronting our economy was obviously the pandemic: helping people make 
it to the other side of the crisis and ensuring they were met there by 
a robust recovery. Thanks to this Congress--and its passage of the 
American Rescue Plan--I believe we are well on our way toward that 
goal.
    However, the ARP and its predecessor legislation are not self-
executing. As you know, in order for relief dollars to effectively 
reach their intended targets, we have to stand up and manage new 
Federal programs.
    Treasury has been tasked with much of this work. We are proud to do 
it. But our challenge is that while our portfolio has grown to match 
the urgency of this moment, our annual budget has not grown in tandem, 
and the funding provided to administer new programs is temporary.
    Not accounting for inflation, our annual budget is still at the 
same enacted level as 2010, and critical policy offices--like Domestic 
Finance, Economic Policy, and Tax Policy--have seen their budgets cut 
by as much as 20 percent since 2016.
    The mismatch is very stark when you take a moment to scan the new 
bodies of work we've undertaken.

  --Treasury has built a $350 billion program to help State, local, and 
        Tribal governments start operating normally again.
  --The CERTS program will provide $2 billion to bus and ferry 
        companies.
  --There are two separate multi-billion-dollar programs to help people 
        pay their rent and mortgages.
  --And of course, Treasury administers economic impact payments. The 
        IRS entered the pandemic as an agency that processes tax 
        filings and returns once a year--and managed to marshal its 
        forces to disburse more than 460 million payments totaling 
        approximately $800 billion across three separate tranches.
  --Now, the IRS is preparing to make monthly payments of the expanded 
        child tax credit to families of more than 88 percent of 
        American children.

    Our team has done valiant work implementing these programs with the 
resources at our disposal. But we cannot continue to be good stewards 
of this recovery--and tackle the new bodies of work that Congress 
assigns to us in the years beyond--with a budget that was designed for 
2010.
    Our Administration has released its formal budget, and there are 
several critical areas where funding is needed.
    For instance, the Financial Crimes and Enforcement Network--
FinCEN--is tasked with building a massive database that collects and 
secures beneficial ownership information, but Congress has not yet 
provided any funding to do it.
    Then there are the Community Development Financial Institutions. 
Congress has dramatically expanded funding for CDFIs with supplemental 
appropriations--and rightly so. These institutions are very effective 
at injecting capital into areas the financial sector hasn't 
traditionally served well. However, it is challenging for the CDFI Fund 
to distribute greater resources and scale these programs without 
additional administrative funding.
    The IRS is in need of additional resources, too. Over the next 10 
years, the American people could see roughly $7 trillion dollars fall 
through the cracks of our tax system. Why? Because many of the 
country's wealthiest taxpayers do not pay their full tax bill, and the 
IRS is not nearly staffed up enough to ensure compliance. Today, the 
IRS has fewer auditors than at any time since World War II.
    Our proposal would give the IRS the funding it needs. For fiscal 
year 2022, it includes $13.2 billion from discretionary appropriations, 
plus $417 million for the first year of a program integrity allocation 
adjustment as part of the multi-year American Families Plan.
    Let me just say one final word about the IRS: Many of you have 
expressed concern about the recent ProPublica report. I am deeply 
troubled by it, as well. It is important to stress that an unauthorized 
disclosure of taxpayer information is a crime, and that it has been 
referred to the FBI, Federal prosecutors, and Treasury Department 
oversight authorities. We don't yet know what occurred--but all is 
being done to get to the bottom of this criminal activity. And we will 
be sure to update you as we learn more.
    With that, I'm happy to take your questions.

    Senator Van Hollen. Thank you, Madam Secretary. And I am 
pleased we have been joined by Senator Coons as well. And we 
will have 7-minute questioning periods for our subcommittee 
Members.
    Madam Secretary, one of the key planks, the central planks 
of the American Jobs Plan is to ensure that big multinational 
corporations pay their fair share of taxes, and that we stop 
giving companies perverse tax incentives to ship jobs and 
equipment overseas.
    You have talked about ending the global race to the bottom 
where countries cut corporate taxes to keep up with each other, 
and that the only winners are those multinational corporations 
and their stockholders, not the people in the countries in 
which they do business.
    I referenced that in my opening statement, today's report 
from Reuters, about the G20, to endorse the deal on global 
minimum corporate tax. Could you elaborate on why this is 
really important to American workers, and American jobs and 
wages that we move forward with this proposal?
    Secretary Yellen. Thank you for that question. So we are 
hoping to gain endorsement, at the G20 for the core pieces of 
our international tax proposal. Most importantly, we are trying 
to get a very large number of countries through an OECD 
process, almost 140 countries are participating in that, and we 
are trying to gain agreement that all countries will establish 
a minimum tax that their corporations must pay, wherever they 
operate in the world.
    At the G7 in London week before last, the G7 supported the 
idea that this global minimum tax should be set at least at 15 
percent. And we are working toward an agreement, a similar 
agreement at the G20. Now I think this is really important 
because what has happened globally is that labor is a factor of 
production that is not mobile. Most people continue to live 
where they were born in their native countries.
    But capital is highly mobile, and it can move from one 
place to another in response to tax differentials and other, 
other discrepancies. And that has triggered, over decades now, 
what we refer to is a race to the bottom. Countries try to 
attract business to their shores by setting lower tax rates 
than their neighbors. And then our corporations feel if we have 
higher taxes that they are not competitive, and we see them 
offshoring activity, real activity, and also profits activity, 
and tax havens particularly benefit from that.
    And as countries try to out-compete one another, in terms 
of cutting their corporate tax rates to attract business to 
their shores, we see a race to the bottom in corporate 
taxation. And this is really a global problem. And we think 
that the only way to solve this problem is to try to get an 
agreement among almost all countries and certainly among the 
G20 countries that we will stop doing this. That we will agree 
that tax--our tax rates will be set at a level, and we are 
negotiating on what the rate is, but we are looking for 
agreement at least 15 percent.
    You know, I think corporations contribute corporate tax 
revenue to the Federal coffers amounting to only around 1 
percent of GDP. Now, that is less than before the tax law was 
passed in 2017, and it is less than in most of our neighbors. 
And to raise revenue for the important programs that we truly 
need, investment in public infrastructure, investment in R&D, 
investment in our people to make our companies truly 
competitive and to make our workers and people who live and 
grow up in this economy, able to compete, we need tax revenue 
to support those programs.
    So we are very hopeful that this initiative will enable 
companies, globally, to compete on the things that should 
really matter, the quality of their ideas, and the skills of 
their people.
    Senator Van Hollen. Thank you, Madam Secretary. Of course, 
the corporations here in the United States benefit from an 
educated workforce, a well-trained workforce, and that does 
require investments.
    With my remaining time, Reuters published an analysis 
yesterday, finding that U.S. corporations currently pay 
significantly less than their foreign competitors today, and 
that this would remain the case even if the full Biden tax plan 
was enacted. In fact, they found that U.S. corporations 
currently pay an effective tax rate of 16 percent compared to 
24 percent for their foreign competitors. And that if the Biden 
plan was enacted, those U.S. corporations would pay an 
effective rate that is 5 points higher, or about 21 percent.
    Does that analysis, line up with your Treasury Department 
analysis? And what does that say with respect to some of the 
concerns that have been raised about the Biden tax plan?
    Secretary Yellen. So I have read the Reuters article, I 
have not had a chance to review the analysis carefully, but it 
is in line with our own thinking. I can tell you that at this 
level of statutory rates, as well, the United States' corporate 
rate, including Federal and State, is below the G7 average, and 
if we were to raise it in line with the President's proposals, 
it would remain in the middle of the pack.
    Senator Van Hollen. Thank you, Madame Secretary.
    Senator Hyde-Smith.
    Senator Hyde-Smith. Thank you, Mr. Chairman.
    Madam Secretary, you have already referenced the article 
that was in ProPublica, a leaning--a left-leaning media outlet 
that has published a series of articles that disclose some very 
confidential information in very significant detail. But these 
unauthorized disclosures occurred amid renewed calls that 
significantly increased taxes, and expand the funding and 
responsibilities of the IRS.
    The same agency that pursued a vendetta against 
conservative groups during the Obama administration, and since 
you have referenced that, can you tell me what the Department 
is doing to prevent further unauthorized disclosures?
    Secretary Yellen. Well, there are very important 
safeguards, many of them in place to protect taxpayer privacy. 
And this is an extremely important priority, and one that we at 
Treasury care deeply about. Part of the money that we are 
asking to be allocated to the IRS would better enable it to 
modernize its IT systems, and put in place investments that 
would better enable it to protect against threats to the 
security of the tax system.
    So I do think we need to modernize the technology that the 
IRS has. A striking statistic I can share with you is that the 
IRS faces 1.4 billion cyber attacks each year, and they are 
running the tax system on technological infrastructure that 
dates back to the 1960s. So it is a priority for Treasury. It 
is a priority for the IRS. We will keep it absolutely top 
priority to protect private information, but we also need to 
beef up the resources of the IRS to enable it to enhance its 
defenses.
    Senator Hyde-Smith. And in addition to the private taxpayer 
data that was leaked, a separate Treasury employee was 
sentenced to prison earlier this month, following her 
conviction for unlawfully disclosing suspicious activity 
reports, and other sensitive information, and your budget calls 
for new reporting requirements to the IRS for inflows and 
outflows for businesses, as well as personal accounts. How are 
Americans to trust the security of the Treasury Department data 
when private information is shared publicly again and again?
    Secretary Yellen. Well, again, I agree that protection of 
private information is critically important, and we must take 
every step to ensure that it is protected. The IRS obtains 
billions of reports every year on W-2 forms, and 1099s, and 
other information that is provided to the IRS to enable them to 
check returns, to make sure that income is being reported 
accurately.
    I can tell you that studies by the IRS show that, for 
example, wage and salary income that is reported to them on W-
2s is almost completely 98 percent, 99 percent reported 
faithfully on tax returns. That $7 trillion over the next 
decade tax gap that I have cited, largely reflects individuals 
or corporations where sources of income are not reported on a 
regular basis to the IRS.
    And that is why adding to the information flow is really 
critical at trying to reduce the size of that gap. And the 
proposal that, the President has put forth in the American 
Families Plan, it is really only calling for two additional 
pieces of information that would be added to the Form 1099-INT 
on which financial institutions routinely provide the IRS with 
an annual report of interest paid on accounts.
    And the two pieces of information would be the aggregate 
inflows into the account during the year, and the aggregate 
outflows. And those would not be detailed transaction level 
information. This would be directly communicated along with 
other routine information to the IRS, and it would better help 
the IRS tax audit crew, target their resources in deciding 
where audits are in order. So, of course, every step would be 
taken to protect that information.
    Senator Hyde-Smith. Okay. And referring to the trillions of 
dollars, Congress has appropriated nearly $6 trillion in 
emergency spending during this pandemic. And there are some 
calls in Congress for an additional $6 trillion in 
``infrastructure'' spending that seems to include everything 
under the sun. And these are mounts are in addition to the 
regular discretionary and mandatory spending levels each year. 
But consumer prices rose by 5 percent last year, the largest 
increase since 2008. And according to a survey conducted by the 
Federal Reserve Bank of New York, consumer expectations, are 
that inflation will be 4 percent over the next year.
    These trends are vastly different than your budget's 
assumption of inflation reaching only 2 percent. And you have 
called these trends transitory and the result of the economy 
reopening after the pandemic. Do you still believe this? And 
what data points would cause you to change your mind on these 
trends only being temporary?
    Secretary Yellen. Well, I do continue to believe that I 
think that for 2021 inflation will come out at a high rate, as 
you mentioned, but remember that in the previous years, 
inflation was exceptionally low. And part of what is going on 
is that prices that fell dramatically, when the pandemic hit 
the economy, airfares, hotel, room rates and the like, now that 
the economy is opening back up again, some of those prices are 
reverting toward more normal levels.
    So we do have a bunch of supply bottlenecks. It is a bumpy 
path to reopening, but the economy is growing successfully, and 
creating jobs, and I believe that after the year is over 
inflation rates will go back to normal. Most measures of 
inflation expectations remain low, and well contained and most 
professional forecasters and the signals we get from markets 
about inflation expectations that are--we can read from 
inflation compensation in the treasury market suggests that 
beyond this brief period of, say, a year in which inflation is 
high, that inflation expectations going further out are very 
stable in the neighborhood of 2 percent, and that inflation 
will revert to those levels.
    Senator Hyde-Smith. Okay. I would like to thank you for 
your time. Thank you.
    Senator Van Hollen. Thank you, Madam Secretary.
    Please, we are joined by the Chairman of the Full 
Committee. And I recognize Senator Leahy.
    Chairman Leahy. Thank you very much. Secretary Yellen, it 
is awfully good to see you, and thank you for being here. What 
is the saying about, may you live in interesting times. You 
have done that both at the Federal Reserve, and now. I am 
delighted you are there. I know that the Treasury Department 
over the past year has had to undertake all kinds of 
initiatives to administer the funding as directed by Congress 
through the CARES Act, the historic American Recovery Act, and 
so on.
    But let me go me go into that a little bit. The American 
Recovery Plan provided $350 billion to support State, local, 
Tribal, and territorial governments to deal with the 
consequences of COVID. It was specifically allocated money to 
States and territories, separately to counties, cities, and 
towns. Now, some of the States, of course, do not have a county 
government, like my own State of Vermont. In those cases, the 
law states, pretty clearly, the money be provided directly to 
the States, then passed from the State onto the local 
municipalities based on population.
    In most of the country, that is happening, but the Treasury 
Department has somehow chosen to rely on a definition from the 
Census Bureau to define what constitutes a county government--a 
definition that was not specified in the law. I remember when 
the law was written, and it was not specified there. It gives a 
totally strange conclusion in our State.
    Counties in Vermont are not generally units of government. 
We have 14 counties; the only county officials in Vermont are 
part-time side judges. I think they get paid a certain amount 
per day. They run our county courts, but even that is a minimal 
thing to make sure the lights get turned on, and the doors get 
opened. No other services.
    All our health, education and government services are 
provided by local municipalities. Yet, under the Treasury's 
arbitrary decision to apply the Census Bureau's definition, 
these side judges who might, throughout the whole State, 
normally handle a few thousand dollars, are now going to be 
required to administer over $121 million of COVID relief 
dollars. They are kind of like: What do we do with this? Or 
just say: You know, we have no way of administering this. We 
will give it back to the Treasury.
    Well that is not what the law intended. It was supposed to 
go to the States and municipalities. Now, your Department has 
been speaking with my staff, and with the others in the Vermont 
delegation. I just want to know when will the Treasury 
Department administer the law--as we specifically wrote it, and 
intended it--and release the money to the State of Vermont?
    Secretary Yellen. So Senator, I certainly understand your 
concern and, you know, our staff has done its best to 
administer the funds in line with its understanding of the law. 
The country is complicated, counties in different States have 
different kinds of governmental responsibilities and they try 
to make those distinctions.
    But we want to work with you to find a path forward and to 
resolve the concerns that you have. And I--you know, you have 
pointed out that there are distinguishing factors with respect 
to how Vermont counties operate relative to counties in many 
other States across the country. You know, if you will work--
have your office work with our staff, we will try to find a----
    Chairman Leahy. We are doing that now. I thought the law 
was pretty clearly written. If you don't have a county 
government as such, I mean if you have got a county government 
where two people arrange to have the snow plowed around the 
courthouse and they suddenly got 10- $15 million. They are 
like, even in our best year we don't get that much snow.
    I think it is written in such a way, the law--read it, as I 
read it--is written the money goes to the States, and the 
States can then distribute it to the municipalities. We do have 
municipalities, of course, we do have everything from police 
forces to normal town, city government, and they could use the 
money. So we are working with your staff, but please tell them 
to go back and read, read the law. I think it is pretty clear 
on the face.
    Secretary Yellen. I think part of the issue was: Do the 
counties have governmental responsibilities, and it sounds like 
in Vermont, they have some, but they are exceptionally limited.
    Chairman Leahy. It is like, turn the lights on in the 
courthouse. If it is a county with a county court.
    Secretary Yellen. So my staff understand that this is a 
significant concern and we will work closely with you to try to 
find a resolution.
    Chairman Leahy. Well, I would also point out another thing. 
In rural States the IRS is one of the only elements of the 
Federal Government that taxpayers interact with annually. Now, 
if you don't have Internet service, or they rely on phone or in 
person, it is a problem because the IRS is nearly impossible to 
reach by phone or in person, they are getting less and less 
centers.
    I live 6 miles outside of our State capital, I pay premium 
amount for my Internet service and there have been days that it 
has worked. We usually mark it down the calendar as a very 
special day. We celebrate those. I think I paid for it for a 
year, and I can count on at least a week or two out of the 
year.
    But the point is, I don't have to worry. I go to my office 
at Montpelier or Burlington or home down here. I have got 
things I have to go back and forth. I can do it. But in many 
rural areas, in States that we all represent, that is not the 
case. So, take a look at this because we can joke about it, but 
it is a real problem in rural America.
    Secretary Yellen. And the funds can be used for broadband 
and the Rescue Plan contained other funds and programs also 
that can be used for broadband.
    Chairman Leahy. But again, I am delighted to see you here, 
and I offer you congratulations.
    Secretary Yellen. Thank you.
    Chairman Leahy. Or condolences, whichever they might be.
    Secretary Yellen. Thank you very much, Senator Leahy.
    Senator Van Hollen. Thank you, Senator.
    Senator Kennedy.
    Senator Kennedy. Thank you, Mr. Chairman.
    Madam Secretary, thank you for being here. According to the 
Department of Labor, I believe inflation was--annualized was 5 
percent in May. I know you are not clairvoyant, but you are 
experienced. Where do you think inflation will be at the end of 
this year?
    Secretary Yellen. Well, let me go to 2022.
    Senator Kennedy. No, if you could go to the end of 2021 
first for me.
    Secretary Yellen. So I believe that my expectation, 
although there is a lot of uncertainty, is that the monthly 
data, the data that would pertain to what happened in a given 
month, that those numbers will come down, but----
    Senator Kennedy. But by the end of this year, do you expect 
the inflation to be more than 5 percent or less?
    Secretary Yellen. I believe that the monthly numbers are 
likely to generate annual inflation rates. If you take the 
monthly number and ask what would inflation be if it continued 
at that pace for a year, I believe that will come down toward 2 
percent, but typically inflation rates----
    Senator Kennedy. Madam Secretary, I am sorry to interrupt 
you, but my question was pretty simple. Right now in May, on an 
annualized basis, we both know what that means, inflation was 5 
percent. I know you are not clairvoyant, but where do you think 
it will be at the end of this year?
    Secretary Yellen. So most, the type of inflation number you 
are talking about compares to the level of prices this month 
with what they were a year prior.
    Senator Kennedy. That is correct.
    Secretary Yellen. And that is different than what happened 
over the span of the month.
    Senator Kennedy. I understand that, but I am asking you----
    Secretary Yellen. But by the end inflation----
    Senator Kennedy [continuing]. Based on a year ago, this is 
not a complicated question. I am not trying to be rude, but 
this is not a complicated question. We are at 5 percent now 
based on where it was a year ago. So now we know what we are 
both talking about.
    Secretary Yellen. For the rest of this----
    Senator Kennedy. Will it be higher at the end of this year, 
or will it be less?
    Secretary Yellen. Twelve month--I believe it will come 
down.
    Senator Kennedy. Do you think it will be less by the end of 
this year.
    Secretary Yellen. Than 5 percent. Yes.
    Senator Kennedy. Okay. What makes you think that?
    Secretary Yellen. Because I believe that as the economy is 
opening up again, prices that fell enormously at the beginning 
of the pandemic are returning now back toward normal levels. 
And so what we are seeing in these year-over-year comparisons 
is of prices which are now reasonably normal, or in many cases 
at levels that are still somewhat below normal, we are 
comparing those levels with highly depressed prices----
    Senator Kennedy. I understand that.
    Secretary Yellen [continuing]. The year before.
    Senator Kennedy. I understand that.
    Secretary Yellen. And that will----
    Senator Kennedy. I have got a limited amount of time, Madam 
Secretary. If you are thinking 5 percent inflation in May, and 
you think it will be less at the end of the year.
    Secretary Yellen. Yes.
    Senator Kennedy. Then why did the Federal Reserve announce 
that it was going to--thought they were going to have to move 
their interest rate increases sooner and faster than what they 
had originally expected?
    Secretary Yellen. Well, I don't really want to comment on 
the Fed, but I would simply say that is not an announcement 
that they made.
    Senator Kennedy. Well, the market sure reacted; sounds like 
the Federal Reserve is worried about inflation.
    Secretary Yellen. I would just refer you to the comments 
that Chair Powell made in testifying yesterday, and at his 
press conference.
    Senator Kennedy. But I am talking about the action the 
Federal Reserve took. The Federal Reserve met recently, and 
they said: Look, we know we told you this, but things have 
changed. And we are now telling you that we are likely to have 
to raise rates sooner and faster----
    Secretary Yellen. And----
    Senator Kennedy [continuing]. Let me just finish--than we 
originally told you. Why do you think they did that?
    Secretary Yellen. That is the----
    Senator Kennedy. Because they are concerned about 
inflation, aren't they?
    Secretary Yellen. That is not what they did. Several 
individuals----
    Senator Kennedy. Sure it is.
    Secretary Yellen [continuing]. Several individuals wrote 
down in their own individual forecasts, which were published, 
that they saw it appropriate to raise rates sooner than 
previously.
    Senator Kennedy. Why then did the Federal Reserve last week 
raise the interest rate on excess reserves?
    Secretary Yellen. That is a technical adjustment that they 
made because the Federal funds rate had fallen to the very 
bottom of their target range. And it was a purely technical 
adjustment. Look, it is not appropriate for me to discuss Fed 
policy, or I don't want to comment on----
    Senator Kennedy. With no disrespect, but it is. It is. I am 
not asking you to make Fed policy. I am asking your opinion. 
And usually when the Federal Reserve raises interest rates on 
excess reserves, they are trying to contract money supply.
    Secretary Yellen. No. It is----
    Senator Kennedy. And the reason they are trying to contract 
money supply is because they are worried about inflation.
    Secretary Yellen. It is a purely technical adjustment. They 
made clear in that the stance of monetary policy has not 
changed at all, but because short-term, overnight rates were 
drifting to the very bottom of their target range, they made 
small adjustments to the policy rates----
    Senator Kennedy. Okay. Let me--I will stop because I have 
only got a minute left. Here is my worry, Madam Secretary. And 
I hate to have to interrupt you, but we only have so much time. 
I know your job is to put the best face on it, and I understand 
the Federal Reserve's job is to put the best face on it. But 
inflation at 5 percent annualized gets my attention.
    When the Federal Reserve says, or even certain Members, 
they say: nothing to worry about here, nothing to see, but by 
the way, we are probably going to have to raise interest rates 
sooner and faster than we thought. And when I see them raise 
the interest rate on excess reserves, to get money out of the 
money supply; that tells me they are worried about inflation.
    And here is my question. Nobody is clairvoyant. A lot of 
these experts that you talked about never called the recession 
in 2008, 2009, and a lot of these were experts at the Reserve--
at the Federal Reserve, what if they are wrong?
    And the President has been adamant that he is not going to 
raise taxes on middle-class Americans. He is allowing that to 
happen right now, because inflation prices are rising higher 
than wages, and 5 percent inflation is a tax, it is a tax on 
food, it is a tax on energy, and it is a tax on everything. And 
we can say it is temporary, but the actions of the Fed indicate 
to me, they don't think it is temporary. Your thoughts?
    Senator Van Hollen. Madam Secretary. I am going to have to 
leave it at that, Senator. We will have another round, but----
    Senator Kennedy. Well, others went over, Mr. Chairman.
    Senator Van Hollen. But Senator----
    Senator Kennedy. Others went over.
    Senator Van Hollen. Actually they went over about the same 
time. But let me call him on----
    Senator Kennedy. Well, can I get an answer?
    Senator Van Hollen [continuing]. On the next--we will have 
another round, because I am just trying to keep everything 
within the fair range here. I understand that Senator Coons has 
been very patient, has been understanding. Let Senator Moran 
have a short statement, and then we will go to Senator Coons.
    Senator Moran. Chairman, thank you. And Senator Coons, 
thank you for allowing me 30 seconds. I hope that is not a 
terrible burden on your schedule. Thank you.
    Madam Secretary, you and I visited, I questioned you in the 
Banking Committee in March, and I just wanted to be here today. 
I have two other hearings that are ongoing at the same time, 
but I wanted to be here to thank you for making clear in 
Treasury's, updated frequently-asked-questions. It was just 
released today, that the Coronavirus State and local fiscal 
recovery funds may be used, may be used for grants to small 
businesses, to nonprofits, to cover utility costs.
    This will alleviate a lot of consternation across Kansas 
and Midwestern States impacted by a February cold snap and 
elevated natural gas prices in the midst of dealing with the 
economic impacts of the pandemic. So thank you for making that 
clear. And I assume that I am telling the story as it is, as 
true.
    Secretary Yellen. I believe so. Thank you.
    Senator Moran. Yes ma'am.
    Senator Van Hollen. Thank you, Senator.
    Senator Coons.
    Senator Coons. Well, thank you, Chairman Van Hollen, 
Ranking Member Hyde-Smith. Senator Moran is going back to serve 
as the Ranking on the CJS subcommittee hearing that I, too, I 
am supposed to go back to. I am very much looking forward to 
the second panel.
    Appreciate Secretary Yellen's testimony and leadership; and 
Chairman Van Hollen, good to see you leading this subcommittee 
so ably; and to see the team that supports and makes possible 
the work of FSGG.
    Madam Secretary, if I might, you and five other former 
Treasury secretaries have noted year-after-year, Congress-
after-Congress, that the IRS lacks the resources to effectively 
and fully enforce tax payment. In fact, you made the somewhat 
striking and memorable assertion that the IRS at this point has 
the fewest auditors since the Second World War, and the tax gap 
is estimated as somewhere between $600 billion and a trillion a 
year, and it is something that is the topic of active 
negotiation right now, in terms of how to pay for a bipartisan 
infrastructure bill.
    How would the IRS ensure that new auditors, new enforcement 
efforts are focused on high net worth individuals, individuals 
with complex financial situations, and international, and 
multinational corporations, which are more difficult to audit, 
as opposed to lower-income people whose returns are more simple 
to audit?
    Secretary Yellen. Well, the purpose of the mandatory 
funding that the President has requested for the IRS, he has 
requested $80 billion over a decade, is really supposed to be a 
long run, program allotment that would enable IRS to hire, 
train auditors who have the skills and a long-term perspective 
to be able to focus on high-net-worth individuals, high-income 
individuals, and partnerships and complex arrangements in 
corporations. That is where the tax gap is.
    Senator Coons. Right.
    Secretary Yellen. And the purpose of that funding would be 
to improve compliance in those groups where underreporting is 
highest.
    Senator Coons. And what is your rough estimate at this 
point of the multiplier for dollars spent on additional 
enforcement dollars received in terms of additional compliance?
    Secretary Yellen. I believe we estimate that the $80 
billion appropriation would generate around $240 billion over 
10 years. The long-run payoff is, I think it is estimated by 
the IRS to be close to five to one. And I want to emphasize, 
you know, it takes a long time----
    Senator Coons. Right.
    Secretary Yellen [continuing]. Both to build up the 
resources.
    Senator Coons. Understood.
    Secretary Yellen. And these complex cases take many years, 
and so there are enormous gains beyond the 10-year horizon, as 
well, that you would see in the budget. So I believe the IRS 
estimates are something like five to one in terms of income 
collected per dollar spent.
    Senator Coons. Madam Secretary, for the years that I served 
on FSGG, I have also paid close attention to the most frequent 
complaints from Delawareans who often reach out to my 
constituent services folks to say that they are having 
difficulty getting someone on the phone, getting their tax 
returns and refunds processed, more recently getting the 
economic impact payments. I am assuming that an increased 
budget for IRS taxpayer services will directly benefit and 
impact that. And I would love to hear your thoughts on that.
    But first, I am going to go to a more complex subject for a 
minute, since we may have a return of another Member who wants 
to question. I am very interested in how you see carbon border 
adjustments working out, both competitively for the United 
States and in terms of its impact. I am someone who is 
introduced to a number of bills, one bipartisan, more recently 
ones that are just Democrats that would place a price on 
carbon, and I am convinced that that has the single greatest 
leverage in terms of achieving progress on climate change.
    I am the co-chair of the bipartisan Climate Solutions 
Caucus, and we have debated and discussed this with many 
leaders, from the private sector, from financial services, 
different advocates and organizations. And I think that there 
is a moment here where, as discussed at the G7, the EU is on 
the verge of implementing a border carbon adjustment, and there 
is the possibility that the United States, without imposing a 
fee on carbon, could simply deem the social cost of carbon and 
of other greenhouse gases at a certain amount, and begin to 
implement that in order to avoid other countries imposing a 
carbon tariff against our exports and making us less 
competitive.
    How do you see that playing forward? What do you think are 
the models for the actual cost of greenhouse gases sufficiently 
detailed for us to be able to implement something like this? 
And how is the administration thinking about border carbon 
adjustments in ways that would keep American industries and 
services competitive globally?
    Secretary Yellen. So I think we are just beginning to get a 
handle on this question. There is a lot of work to do to think 
this through. I mean, as you know, the President has proposed 
an ambitious and comprehensive agenda to try to reduce U.S. 
greenhouse gas emissions, and he has made our nationally-
determined contribution----
    Senator Coons. Right.
    Secretary Yellen [continuing]. Is an ambitious one. And, 
you know, he has proposed to do that through a whole variety of 
different carrots and sticks. Remove existing subsidies for 
fossil fuels, tax credits for renewables and for electric 
vehicles. He hasn't taken the approach that some countries have 
of simply having one system with a single carbon price.
    Senator Coons. Right.
    Secretary Yellen. But I think that if we do make the 
progress that we hope for that the areas that are covered will 
be covered, say by EU carbon border adjustment, that we will 
also be producing those goods in a manner that is 
environmentally friendly. And if we are able to do that, my own 
view would be that we should not be subject to, say, the EU's 
carbon adjustment price.
    Senator Coons. Right. So if I hear you right to summarize, 
in a larger sense, if the Biden administration's plan and 
agenda is fully implemented, we ought to be able to go to our 
Canadian neighbors, to our EU trading partners and say, we 
shouldn't be subject to this border adjustment tax, because we 
are making robust progress towards our national goals. Let me 
just close, and I would love to hear more from you about this.
    Secretary Yellen. Certainly.
    Senator Coons. I was talking to ``Jay'' Powell about this 
yesterday, and the research that is being done within the 
Federal Reserve System, because there is a lot of research to 
be done for this to be better understood. I just want to thank 
you for what I think is an appropriately robust request for 
funding for the GEF and the Green Climate Fund, a modest but 
necessary request for $15 million to continue to implement the 
Tropical Forest and Coral Reef Conservation Act. I am working 
with Senator Portman on reauthorizing it.
    And I will just simply note for the record that my 
constituents are pleased when the wait times go down, and just 
desperately annoyed and angry when the wait times go up, and 
improving IRS service standards is something that I would hope 
all of us could agree is well worth investing in.
    Secretary Yellen. I completely agree. I mean, that will be 
an important use of funds, is to greatly improve taxpayer 
service.
    Senator Coons. Thank you very much, Madam Secretary. Thank 
you, Mr. Chairman.
    Senator Van Hollen. Thank you, Senator Coons.
    Madam Secretary, we are going to do another 5-minute round 
of questions.
    Secretary Yellen. Okay.
    Senator Van Hollen. I don't know if--whether other Members 
of the subcommittee will or will not be returning. But I do 
want to quickly turn to the debt ceiling, because as you well 
know, the debt ceiling is currently suspended until July 31, 
just end of next month. After that point, the Treasury 
Department can prevent a default for a brief period of time 
with its so-called ``extraordinary measures'', but Congress 
must ultimately raise the debt ceiling to prevent a default of 
the full faith and credit of the United States.
    There are murmurings that some Members of the Senate may 
want to try to use this as a political cudgel to extract 
concessions on other things. Could you speak briefly to the 
consequences of a default on our national debt, or even 
creating uncertainty around whether or not we are going to make 
good on our full faith and credit?
    Secretary Yellen. I think defaulting on the national debt 
should be regarded as unthinkable. Failing to increase the debt 
limit would have absolutely catastrophic economic consequences. 
It would be utterly unprecedented in American history for the 
United States Government to default on its legal obligations. I 
believe it would precipitate a financial crisis. It would 
threaten the jobs and savings of Americans, and at a time when 
we are still recovering from the COVID pandemic.
    I would plead with Congress simply to protect the full 
faith and credit of the United States by acting to raise or 
suspend the debt limit as soon as possible. Preferably, you 
mentioned July 31 is the date that the debt limit suspension 
ends, and I would really urge that the debt limit be raised or 
suspended again before that.
    And, you know, this is not about authorizing additional 
spending, this is simply about the government paying its bills, 
making good on the payments that are implied by the tax and 
spending decisions that Congress has made.
    Senator Van Hollen. I appreciate your underscoring that 
very important point. And this is about paying the bills that 
are already due and owing. Do you have an estimate as to how 
long use of the emergency measures would last us in this 
current economic environment?
    Secretary Yellen. Well, we are constantly trying to refine 
our notions on that. I don't have anything specific but, you 
know, these are times, especially because of the pandemic and 
the programs that we are engaging in when there is a lot of 
uncertainty around payment flows, and the timing of payment 
flows. And, you know, we don't want to just look at what is the 
most likely time that we could make it too with extraordinary 
measures.
    We can't tolerate any chance of defaulting on the 
government debt. And there is a lot of uncertainty. It is 
possible that we could reach that point while Congress is out 
in August. And I would really urge prompt action on raising--
raising the limit or suspending it.
    Senator Van Hollen. Thank you, Madam Secretary. I just want 
to put two issues on your radar screen. And I don't expect an 
answer today but--so Senator Toomey and I, in the last 
Congress, authored the Hong Kong Accountability Act, it was 
passed into law. I was pleased to see the Biden administration 
sanction a number of officials who have been complicit in 
undermining democracy and human rights in Hong Kong. But that 
law also requires sanctions against any financial institutions 
that are aiding and abetting, or facilitating those 
individuals.
    And Treasury has not imposed sanctions on those financial 
institutions. Maybe you haven't been able to identify any such 
institutions yet.
    Secretary Yellen. We have not.
    Senator Van Hollen. I think Secretary Toomey and I are in 
the process of asking for a briefing, with respect to 
treasuries capacity to monitor these things.
    The other thing I wanted to mention is the BRINK Act. This 
is also legislation that Senator Toomey and I, and others 
pushed for, did apply secondary--secondary sanctions on North 
Korea.
    Secretary Yellen. Yes.
    Senator Van Hollen. And here there is a discrepancy because 
the U.N., a panel of experts just earlier this year, you know, 
found that there were huge holes in the sanctions regime, that 
there were Chinese entities that were essentially facilitating, 
you know, payments to North Korea that would be subject to 
secondary sanctions. And so, we do want to follow up with you 
on that as well.
    Secretary Yellen. We would be--we would be glad to discuss 
that in follow up.
    Senator Van Hollen. Thank you, Madam Secretary. I don't 
know if--great.
    Madam Secretary, thank you for your testimony. Thank you 
for requesting this increase in funds for CDFIs, which play an 
essential role. And now we are going to get some first-hand 
accounts of how important they are. Thank you. Thank you very 
much.
    Secretary Yellen. Thank you very much.
    Senator Van Hollen. All right. Next, we are going to bring 
up our distinguished next panel. All right, welcome, everybody. 
We have three terrific witnesses for our next panel.
    Mr. Noel Andres Poyo, who is the deputy assistant secretary 
at Treasury, for Community and Economic, Development, and is a 
real expert in this area of CDFIs, and I have had the privilege 
of talking to him previously, and grateful for your being here.
    We also have Mr. Joseph Haskins, Jr. He is the chairman and 
CEO of The Harbor Bank of Maryland, which is in Baltimore. And 
on a personal note, somebody who I really rely on for advice on 
how we can make sure that our most distressed businesses, and 
businesses that are sometimes left out of the financial system, 
get the support and help they need, which was important, of 
course, during the pandemic, but also important to make sure we 
build an economy and a community that ensures that everybody 
has a chance to succeed. So I am really grateful that he is 
here.
    And I am going to turn it over to Ranking Member Hyde-Smith 
to introduce our third panelist.
    Senator Hyde-Smith. Thank you, Mr. Chairman. And I am 
really pleased to have with us Andy Anderson of Anguilla, 
Mississippi, and that is kind of hard to pronounce, and we are 
a long way from Anguilla, Mississippi, right now, but I so 
appreciate each of you coming, and be willing to give of your 
time, because it is really important that we hear from you and 
what you go through.
    And Andy Anderson chairs the Board of Directors and 
Executive Committee at the Mississippi Bankers Association, he 
is the chairman this year. He has 37 years' experience in the 
banking business, and all at the Bank of Anguilla. So if you 
ever visit Mississippi, be sure to come by and visit with him. 
Thank you.
    Senator Van Hollen. Thank you.
    Mr. Poyo, why don't we start with you as the administration 
witness, and then we will turn to our other two witnesses.
STATEMENT OF NOEL ANDRES POYO, DEPUTY ASSISTANT 
            SECRETARY, COMMUNITY AND ECONOMIC 
            DEVELOPMENT, U.S. DEPARTMENT OF THE 
            TREASURY
    Mr. Poyo. Very good. Thank you, Chairman Van Hollen, 
Ranking Member Hyde-Smith. It is my honor and pleasure to speak 
with you today. My name is Noel Andres Poyo, I am the deputy 
assistant secretary of Community and Economic Development at 
the Treasury Department. And I am also a former CEO of a CDFI.
    And I appreciate the opportunity to provide testimony on 
Treasury's fiscal year 2022 budget, and specifically about 
community development, financial institutions, and Treasury 
CDFI. So CDFIs, as you both know, are specialized financial 
institutions, including loan funds, credit unions, community 
banks, venture capital entities that have a common goal of 
filling financing gaps in underserved and low-income areas, 
with responsible financial products and services.
    CDFIs are accountable to the communities they serve, and 
possess a particular sensitivity to the needs of local 
residents and businesses. This is a key reason that CDFIs often 
deliver capital in places where traditional banks have not met 
the market demand. CDFIs provide not only financing, but also 
development services to help prepare borrowers for success.
    Since the creation of the CDFI fund more than 25 years ago, 
CDFIs have played an increasingly important role in opening 
access to capital and economic opportunity in low-income 
communities and for low-income people. And so keep in mind that 
at the end of 1997 there were 196 certified CDFIs with total 
assets of $4 billion. Now, there are more than 1,200 certified 
CDFIs operating in every State and with assets of over $220 
billion.
    The collective capacity of this field to deliver fair and 
responsible financing is growing rapidly. And before this year, 
the CDFI Fund had awarded nearly $4 billion to CDFIs and other 
community development entities. CDFI Fund has also allocated 
$61 billion in tax credits to the New Markets Tax Credit 
Program and guaranteed $1.6 billion in bonds through the CDFI 
Bond Guarantee Program. And as you well know, the CDFI Fund 
investments are leveraged many times over.
    So the Consolidated Appropriations Act, 2021, made 
available historic funding for CDFIs under three programs being 
implemented by Treasury. $1.25 billion in grants to CDFIs under 
the Rapid Response Program, through the CDFI Fund $1.75 billion 
in grants to CDFIs under the Minority Lending Program, and then 
$9 billion for Treasury investments under the Emergency Capital 
Investment Program, which is available to credit unions and 
banking entities that are either CDFIs or minority depository 
institutions.
    You may have heard on June 15, the Vice President and 
Secretary Yellen announced that the CDFI fund was awarding 
$1.25 billion through the Rapid Response Program to 863 CDFIs 
across the country. More than 70 percent of all certified CDFIs 
submitted applications. The RRP awards will provide CDFIs with 
an unprecedented level of flexible capital that will allow for 
growth across the industry.
    The Minority Lending Program, the $1.75 billion program 
will be rolled out later this year. And ECIP, the Emergency 
Capital Investment Program, will encourage low- and moderate-
income community financial institutions to augment their 
lending to support small businesses and consumers in their 
communities.
    Under this program, Treasury will invest up to $9 billion 
in capital into depository institutions that are CDFIs and 
MDIs, minority depository institutions.
    I want to turn to the CDFI budget. The CDFI funds currently 
offers programs to help CDFIs and other community development 
entities access financial products and services in low-income 
communities. And in fiscal year 2022 the CDFI Fund request $330 
million that is approximately $60 million above the fiscal year 
2021 enacted level, an increase of 22 percent. It includes 
primarily increases in the mainline CDFI Program, the FA 
Program, about a 30 percent increase, similarly about a 30 
percent increase in the Native American CDFI Assistance 
Program. And about a $4.6 million increase in administrative 
dollars.
    Additionally, we are requesting $500 million in a 
commitment authority and proposing legislation to expand the 
Capital Magnet Fund as a part of the American Jobs Plan.
    So on behalf of everyone at Treasury, and particularly 
within the CDFI Fund, I would like to express our gratitude to 
the subcommittee, to the subcommittee for its support, and look 
forward to working with you in this coming year.

    [The statement follows:]
                 Prepared Statement of Noel Andres Poyo
                              introduction
    Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the 
subcommittee, it is my honor and my pleasure to speak with you today. 
My name is Noel Andres Poyo. I am the Deputy Assistant Secretary for 
Community and Economic Development at the Treasury Department. Thank 
you for the opportunity to provide testimony on Treasury's fiscal year 
2022 budget and specifically about Community Development Financial 
Institutions (CDFIs) and Treasury's CDFI Fund.
    CDFIs are specialized financial institutions, including loan funds, 
credit unions, community banks, and venture capital entities, that have 
a common goal of filling financing gaps in underserved and low-income 
areas with responsible financial products and services. CDFIs are 
accountable to the communities they serve and possess a particular 
sensitivity to the needs of local residents and businesses--this is a 
key reason that CDFIs often deliver capital in places where traditional 
banks have not met the market demand. CDFIs provide not only financing 
but also development services to help prepare borrowers for success.
    Since the creation of the CDFI Fund more than 25 years ago, CDFIs 
have played an increasingly important role in opening access to capital 
and economic opportunity in low-income communities and for low-income 
people. At the end of 1997, there were 196 certified CDFIs, with total 
assets of $4 billion. There are now more than 1,200 certified CDFIs, 
operating in every State, with assets of over $220 billion. The 
collective capacity of this field to deliver fair and responsible 
financing is growing rapidly.
    Before this year, the CDFI Fund had awarded nearly $4 billion to 
CDFIs, community development organizations, and financial institutions 
through its funding programs. The CDFI Fund has also allocated $61 
billion in tax credits through the New Markets Tax Credit Program and 
guaranteed $1.6 billion in bonds through the CDFI Bond Guarantee 
Program. The CDFI Fund's investments are leveraged many times over. 
Though the leverage ratio varies from program to program, and 
recognizing that leverage ratios may vary in the future, one analysis 
of past transaction level reporting found that on average CDFI Fund 
investments attract at least $8 of private capital for every $1 of 
Federal spending.\1\
---------------------------------------------------------------------------
    \1\ CDFI Fund analysis of Awardee Transaction Level Reports, 2017
---------------------------------------------------------------------------
    In fiscal year 2020, CDFI Program award recipients reported 
originating more than 1 million loans, financing more than 41,000 units 
of affordable housing, and funding more than 87,000 businesses--all in 
distressed and underserved communities lacking access to traditional 
lending or banking institutions. It is also worth noting that, over the 
past year, CDFIs provided many small business owners and nonprofit 
organizations with access to the Paycheck Protection Program.
     status of funds from the consolidated appropriations act, 2021
    The Consolidated Appropriations Act, 2021 made available historic 
funding for CDFIs under three programs being implemented by Treasury:

  --$1.25 billion in grants to CDFIs under the CDFI Rapid Response 
        Program (RRP), to respond immediately to the economic impact of 
        the pandemic;
  --$1.75 billion in grants to CDFIs under the Minority Lending 
        Program; and
  --$9 billion for Treasury investments under the Emergency Capital 
        Investment Program (ECIP), which is available to credit unions 
        and banking entities that are either CDFIs or Minority 
        Depository Institutions.

    On June 15, 2021, the Vice President and Secretary Yellen announced 
that the CDFI Fund was awarding $1.25 billion through the RRP to 863 
CDFIs across the country. More than 70 percent of all certified CDFIs 
submitted an application. RRP recipients included 58 organizations 
receiving a total of $54.6 million that committed to direct their 
awards to investments in Native American, Native Alaskan, and Native 
Hawaiian communities, and 90 organizations designated as minority 
depository institutions receiving a total of $133.9 million in awards. 
The RRP awards will provide CDFIs with an unprecedented level of 
flexible capital and will allow CDFIs to help businesses keep their 
doors open, help families make ends meet, and help maintain important 
community facilities as the country continues to grapple with and 
recover from the economic crisis caused by the COVID-19 pandemic.
    Under the Minority Lending Program, Treasury will provide $1.75 
billion of grants to CDFIs to expand financial activity in distressed 
minority communities and to minorities that have significant unmet 
capital or financial services needs. The Minority Lending Program will 
be rolled out later this year.
    The ECIP will encourage low- and moderate-income community 
financial institutions to augment their efforts to support small 
businesses and consumers in their communities. Under the program, 
Treasury will invest up to $9 billion of capital directly in depository 
institutions that are CDFIs or minority depository institutions (MDIs) 
to, among other things, provide loans, grants, and forbearance for 
small businesses, minority-owned businesses, and consumers, especially 
in low-income and underserved communities, that may be 
disproportionately impacted by the economic effects of the COVID-19 
pandemic. Treasury has conducted extensive outreach to the private 
sector, including through meetings with CDFIs, minority depository 
institutions, trade associations, community groups, and civil rights 
groups. Treasury has also consulted extensively with the Federal 
banking agencies regarding the terms of Treasury's investments under 
this program. Based on this input and consultation, Treasury 
anticipates releasing additional guidance for applicants in the near 
future.
                            cdfi fund budget
    The CDFI Fund currently offers programs to help CDFIs, Community 
Development Entities, banks, credit unions, and community development 
organizations generate economic opportunity by increasing access to 
financial products and services in low-income communities. In fiscal 
year 2022 the CDFI Fund requests $330 million broken down as follows:

  --$215.4 million for the CDFI Fund's flagship program, the CDFI 
        Program, which spurs economic growth and increases access to 
        capital in low-income communities;
  --$23.0 million for the Healthy Food Financing Initiative, which 
        supports investment in businesses that increase access to 
        healthy and affordable food in low-income communities;
  --$21.5 million for the Native American CDFI Assistance Program, 
        targeting support to CDFIs primarily serving Native 
        communities;
  --$26.0 million for the Bank Enterprise Award Program, which awards 
        FDIC-insured depository institutions that successfully 
        demonstrate an increase in investment in mission-driven lenders 
        or in their own lending, investing, or service activities in 
        distressed communities;
  --$8.5 million for the Small Dollar Loan Program, which enables CDFIs 
        to provide consumers access to mainstream financial 
        institutions and combat high-cost small-dollar lending;
  --$2.0 million for the AmeriCorps CDFI Economic Mobility Corps to 
        place national service members at certified CDFIs to strengthen 
        their capacity; and
  --$33.6 million for administration of the CDFI Fund, which includes 
        support for the New Markets Tax Credit Program and the CDFI 
        Bond Guarantee Program.

    The fiscal year 2022 budget request is approximately $60 million 
above the fiscal year 2021 enacted budget, an increase of 22 percent. 
The budget includes:

  --$50.4 million increase for the CDFI Program (increase of 28.9 
        percent);
  --$5 million increase for the Native American CDFI Assistance Program 
        (Increase of 30.3 percent); and
  --$4.6 million increase for administration (increase of 15.9 
        percent).

    The proposed increase in support for the CDFI Program can support 
larger Financial Assistance awards to increase the loans and financial 
products offered by CDFI Program award recipients, as well as 
additional Technical Assistance awards for emerging CDFIs. Additional 
support for the Native American CDFI Assistance Program can support 
larger Financial Assistance awards and improving technical assistance 
and capacity-building for Native CDFIs.
    Additionally, we are requesting $500 million in commitment 
authority and proposing legislation to expand the Capital Magnet Fund 
as part of the American Jobs Plan.
                               conclusion
    On behalf of everyone at Treasury and the CDFI Fund, I would like 
to express our gratitude for the support of this subcommittee, and I 
look forward to working with you.

    Senator Van Hollen. Thank you for your testimony. You 
probably heard the bells going off. So Senator Hyde-Smith is 
going to go vote, and then return. And I will have to go vote 
after that.
    But let me now turn it over to Mr. Haskins. Thank you for 
being here.
STATEMENT OF JOSEPH HASKINS, JR., CHAIRMAN AND CEO, THE 
            HARBOR BANK OF MARYLAND
    [Clerk's Note: Materials were submitted for the hearing 
record by the Harbor Bank of Maryland, and are in the 
``Submitted Materials for the Hearing Record'' section at the 
end of the hearing.]

    Mr. Haskins. Thank you very much, Senator Van Hollen. I 
just have to take a moment to acknowledge the Senator and his 
commitment to our State of Maryland, and particular Baltimore 
City, because he has actually made a visit to my institution, 
and that is somewhat unusual. And to me I am deeply gratified, 
and proud to say that you represent our community.
    Also I would like to acknowledge Senator Hyde-Smith for her 
role and participation in this panel, and to the other 
representatives who are present. So I thank you again for the 
opportunity to be able to present the role of Harbor Bankshares 
Capital Corporation, the parent Harbor Bank of Maryland, before 
this subcommittee, the Financial Services and General 
Government Committee.
    My name, again, is Joseph Haskins. And by way of 
background, again, I am chairman, CEO, but because of my 
commitment to the community very early on, and I am now in my 
46th year of banking and financial services, having started at 
what is now the JPMorgan Chase, I returned home to Baltimore to 
help found a bank. So not only do I chair, but I am one of the 
founding members of an institution that is now 39 years old.
    So by way of history, Harbor Bank was founded with the 
intent of addressing issues that we saw that reflected an 
absence of access to capital by the minority community of 
Baltimore City. So at the end of the late-1960s and the early-
1970s, there were members of the community that said: How can 
we improve economic opportunities to those who have not had 
ready access to capital, or had ready access to banking and 
financial services.
    And as a result of those questions, and having identified 
that shortcoming, The Harbor Bank was founded. I am proud to 
say that we opened the doors in 1982, and I am proud to say 
that for the first 16 years of operation, the Bank was a 
profitable organization. It wasn't until the great recession 
that we experienced a real loss. And many of you know that 
period.
    But the founding of Harbor Bank was focused in three areas, 
which we saw as vital to providing access to capital, banking 
services, and economic opportunities. Those three areas we 
identified involve small business lending, faith-based lending, 
and residential mortgages. So today we have now grown to a bank 
of $350 million in size, and as the $350 million bank, we have 
been able to operate an offer great financial benefits and 
services to the community.
    In 1992 we formed a holding company because we found that 
they were great needs--needs beyond what the Bank could 
contribute. And as such, we formed three additional 
subsidiaries.
    And so what I would want this subcommittee to know is that 
in our community, we have been instrumental in revitalizing 
communities that were pretty much dormant, distressed, 
forgotten, and overlooked. The Inner Harbor of Maryland was led 
in terms of financing by Harbor Bank. The Canton community was 
led by Harbor Bank with the development of housing, the 
restoration of all abandoned warehouses, as well as creating 
retail space for business enterprise.
    A couple of significant projects that we worked on that we 
saw that brought to the table all of the programs--is East 
Baltimore's redevelopment of 88 acres. In that case, we were 
able to bring BEA-related loans, we were able to bring advisory 
service, we were able to bring lower cost funding, and we used 
New Market Tax Credits to stimulate the development of a 
science park. The first two science buildings done in that 
Johns Hopkins, Science Park were done and initiated resulting 
from the New Market Tax Credits that provided the incentive for 
that development.
    The New Markets Tax Credit Program, as we see it, is 
critical in addition to the BEA Program, the FA Program, the TA 
Program, because when you can bring all of those programs to 
the table at once, you can revitalize the area. Resulting from 
our efforts, we have created more than $3 billion of economic 
development in the Baltimore community, which represents more 
than 4,000 additional jobs as a success that is now a national 
model.
    So with this, I ask the subcommittee to strongly support 
the request for additional financing, new subsidy of the CDFI 
Program. And I thank you, Senator Van Hollen, and Senator Hyde-
Smith for allowing me the opportunity to speak to this critical 
issue, and the critical needs in our respective communities.

    [The statement follows:]
               Prepared Statement of Joseph Haskins, Jr.
    Chairman Van Hollen, Ranking Member Hyde-Smith, and Members of the 
subcommittee, good afternoon. Thank you for inviting me to discuss the 
important work of Community Development Financial Institutions (CDFIs).
    My name is Joseph Haskins. I am a founding Director, Chairman and 
CEO of Harbor Bankshares Corporation, headquartered in Baltimore, 
Maryland.
                              bank history
    The Harbor Bank of Maryland (Harbor Bank) opened its door for 
business in September of 1982. The Bank had its origin dating back to 
the early 1970s when Baltimore's African American leadership was 
seeking ways to enhance economic opportunities for minority communities 
in Baltimore City.
    One of the major issues identified as limiting economic 
opportunities was the lack of access to capital and more importantly 
access to banking. To address these issues Harbor Bank was found.

    Harbor Bank focused on providing banking services in the following 
areas:

  --Minority Business/Commercial Lending
  --Faith Based (Church Financing)
  --Residential Mortgages

    Increased demands for financial services coupled with increasing 
bank regulations required and expanded operations.
    In 1992, Harbor Bank formed a holding company, Harbor Bankshares 
Corporation (The Corporation), allowing for additional financial 
services.
    Establishing the holding company led to the formation of three (3) 
subsidiaries and a non-profit Community Development Corporation (CDC).
    Today, The Corporation oversees a $350 million Bank and 
subsidiaries that directly and indirectly control another $300 million. 
While the Bank remains the primary subsidiary, the other operations 
provide the Baltimore community with access to more diverse capital and 
financial services.

    Some of the expanded services include:

  --Lower priced loans
  --Equity investment support
  --Financial literacy programs
  --Real estate development programs
  --Specialized tax benefits

    Over the past thirty-nine (39) years, the significance of the 
Corporation and Bank to the development/revitalization of communities 
is evidenced by:

  --The development of the Inner Harbor East where Harbor Bank was the 
        first money to help build a hotel, office building, and 
        residential housing.
  --The Canton Community where Harbor Bank was the first money to 
        support a residential housing project and the converting of old 
        warehouses to office and retailed space.
  --East Baltimore Development Inc. (EBDI), a non-profit, was aided by 
        Harbor Bank's seed money to help an 88-acre community known for 
        poverty and crime to be revitalized and become livable. Johns 
        Hopkins Science Park is a part of this community's 
        revitalization. This community is now a national model.
  --University of Maryland at Baltimore (UMAB) Science Park where 
        Harbor Bank was the first money to support land and project 
        development West of Martin Luther King Boulevard.

    As a corporation in the financial services space, our role evolved 
to that of being a catalyst and advocate for revitalizing and restoring 
abandoned, forgotten, and disregarded communities in Baltimore.
                             the cdfi role
    The Corporation and Bank seeking to enhance financial services and 
bring more resources to the Baltimore Community applied over 20 years 
ago to become certified Community Development Financial Institutions 
(CDFI). Today, the Corporation and two of its subsidiaries are CDFIs. 
Also, The Corporation's non-profit CDC is a certified CDFI.
    Under the Department of Treasury's CDFI Program, the Corporation 
and its subsidiaries have participated in several of funds programs and 
have successfully won/earned:

  --13 Bank Enterprise Awards (BEA) totaling $3,893,753 which helped to 
        increase lending in lower income communities. The BEA Award is 
        important to CDFI Banks because of its leverage capacity. 
        Records show that 90 percent of BEA monies go to the lowest 
        income census tracts.
  --Financial Assistance (FA) award totaling $649,000. ($500,000 was 
        for loans and $149,000 persistent poverty).
  --Nine rounds of New Market Tax Credit (NMTC) awards totaling $384 
        million helping to leverage over $3 billion of development and 
        create 4,000 jobs. Projects include science buildings, 
        community schools, and healthcare facilities.

    Many projects involve multiple level of participation from The 
Corporation. A project could include New Market Tax Credit (NMTC), 
Harbor Bank loan and advisory services.
                            maryland profile
  --The programs of the CDFI Fund are very important to the State of 
        Maryland. Maryland is home to 15 CDFIs, two of which are banks 
        or bank holding companies, while two additional CDFI banks 
        based in the District of Columbia provide significant services 
        within the State.

    --In 2020, Maryland-based CDFIs and CDFI banks serving Maryland 
            (Maryland and D.C. based) received $6.7 million in CDFI 
            Financial Assistance (FA) and Technical Assistance (TA) 
            awards. CDFI banks serving Maryland received $202,898 in 
            BEA funds.
    --In the past 3 years Maryland-based CDFIs and CDFI banks serving 
            Maryland have received $31.4 million in FA and TA awards, 
            while CDFI banks serving Maryland have received $1.15 
            million in BEA funds.
    --Since the CDFI Fund's inception in 1996, Maryland-based CDFIs and 
            CDFI banks serving Maryland have received $119.5 million in 
            total awards. In that same period, CDFI banks serving 
            Maryland have received $14.5 million in BEA funds.

  --Maryland is among the poorest states in the nation. Like other 
        states with persistent poverty, Maryland has a lot to lose if 
        the CDFI Fund and BEA Program do not have adequate funding.

    --Approximately 9.1 percent of all Marylanders live in poverty--
            with the poverty rate in 8 counties (Somerset, Baltimore, 
            Dorchester, Allegany, Wicomico, Garrett, Kent and 
            Washington) equal to or exceeding the 12.3 percent United 
            States total
    --Baltimore City, Maryland's USDA designated persistent poverty 
            county, has a poverty rate 160 percent higher than the 
            United States total. Somerset County has a poverty rate 190 
            percent higher than the United States total.
                           covid-19 pandemic
    The crisis of COVID-19 highlighted the importance of CDFI banks and 
other community based financial institutions. CDFI banks reached and 
helped the businesses that required loans to survive, the ones 
disproportionately operating in low to moderate income communities and 
desperate for banking services and in particular financial assistance. 
The government offered stimulus programs--especially the Paycheck 
Protection Program (PPP) proved to be a lifeline to many of these 
businesses, especially in the distressed communities.
    Harbor Bank stepped to the front of the line providing assistance 
through the PPP program. Harbor Bank met and assisted over 1,000 
potential PPP applicants and processed 674 applications totaling $67.5 
million. Adjusting out the 10 largest borrowers, the average size of 
Harbor's PPP loan was $52,000.
    The government met the economic call from the community and Harbor 
Bank was a part of the delivering channel.
    In summary, the Treasury's CDFI Program is vital to the growth and 
restoration of the communities that have been depressed or deprived for 
years. It is difficult to provide the capital that these communities 
need without a CDFI Program. My fear today is that the absence of the 
PPP Program will render businesses incapable of continuing on the 
survival path.
    I urge the Members of the subcommittee to recognize the significant 
economic benefits of funding the CDFI Fund programs. Not only do these 
programs provide access to capital in historically disadvantaged 
regions of the country, but they do so by leveraging private 
investment. The CDFI Fund programs are a market-based strategy for 
addressing chronic economic challenges.
    I thank Chairman Van Hollen, Ranking Member Hyde-Smith, and the 
Members of the subcommittee for the opportunity to tell you the story 
of Harbor Bankshares Corporation, the work we do, and the communities 
that we serve.

    Senator Van Hollen. Thank you for your testimony, Mr. 
Haskins. Next we will turn to Mr. Anderson.
STATEMENT OF ANDY ANDERSON, PRESIDENT AND CEO, BANK OF 
            ANGUILLA
    [Clerk's Note: Materials were submitted for the hearing 
record by the Bank of Anguilla, and are in the ``Submitted 
Materials for the Hearing Record'' section at the end of the 
hearing.]

    Mr. Anderson. Good afternoon. My name is Andy Anderson. I 
am the president and CEO of Bank of Anguilla, in Anguilla, 
Mississippi. I am also chairman of the Mississippi Bankers 
Association, and a board member for the Community Development 
Bankers Association.
    Mississippi is home to the largest concentration of CDFI 
banks in the country. Thus the Treasury Department CDFI Fund is 
extremely important to my bank and the communities we serve in 
my entire State. I appreciate the opportunity to testify on 
this topic today.
    I thank the Members of this subcommittee for their long-
standing support of the CDFI Fund, and providing $270 million 
last year in recognition of the important roles CDFIs play in 
promoting economic opportunity in underserved communities. As 
you consider your next appropriation, I strongly urge you to 
increase overall support for the CDFI Program, and particularly 
for the Bank Enterprise Award Program.
    Bank of Anguilla has $171 million in total assets, and it 
is the only financial institution in two persistent poverty 
counties that are among the most economically distressed places 
in the Nation. Established in 1904, helping our neighbors and 
providing a pathway to financial stability is core to the 
purpose of Bank of Anguilla.
    Many people do not grasp all the challenges that rural 
communities like the ones we serve face. Our community and our 
counties have a combined population of only 5,648 people, of 
which 33.6 live in poverty and 69 percent of the population is 
minority. The medium household income is $24,208. There are no 
traffic lights. There are no major retailers or national chain 
restaurants in either county. There is no broadband Internet.
    It is an hour drive to shop at a Walmart, or visit a 
clothing store, or department store, which creates challenges 
for many of our citizens that don't own a vehicle. New home 
construction is nonexistent, and existing housing the quality 
is often poor, as the cost of renovation often exceeds the 
market value. Many of our neighbors struggle to make utility 
payment, put food on the table, or buy school books or clothes 
for children. CDFI banks, like Bank of Anguilla help these 
struggling individuals to meet these challenges.
    Fifty-one percent of the Bank's current loans are consumer 
loans made to local residents. We have no minimum loan amount 
and roughly 10 percent of our total current loans have an 
original balance of $2,500. Like all CDFIs, at least 60 percent 
of our lending and activities target LMI communities. With 
solid underwriting practices, civic pride, and mission-driven 
empathy, CDFI banks, like Bank of Anguilla, bridge the gap for 
financially vulnerable customers.
    Over the past decade, the CDFI fund has played a critical 
role in Bank of Anguilla's ability to serve our communities and 
remain a locally-owned institution. Since 2010 Bank of Anguilla 
has received nine BEA awards totaling $1.7 million. BEA has the 
strongest demand among the CDFI programs, and is far 
oversubscribed compared to other programs.
    In 2020, only $1 in BEA funding was available for every 
$5.68 in request. Given the benefits generated by the BEA 
Program, it is critical to increase funding. Since 2016, the 
number of CDFI banks increased by 48 percent, yet, BEA funding 
increase from only $18.2 million to $25.2 million. Through the 
financial benefits of the BEA program, Bank of Anguilla is able 
to make commercial loans to small minority businesses and 
consumer loans to individuals that need financial help. Most 
financial institutions would decline these requests.
    We recently made two loans with the help of a local 
agency's Minority Business Enterprise Loan Program to help a 
minority owner purchase an established restaurant. We made 
another loan to establish a minority-owned physical therapy 
clinic. We also just financed the opening of a new minority-
owned restaurant. We support our local hospital and clinics, 
where approximately 80 percent of the patients are minority, 
and most of these poor. I could spend hours telling you the 
small-dollar loans we have made, but this would take a whole 
lot of time here.
    Demand for all CDFI-funded programs far exceeds funding 
available. I urge the Members of the subcommittee to recognize 
the significant economic benefits of funding to CDFI Fund 
programs. Not only do these programs provide access to credit 
in historically disadvantaged regions of the country, like 
mine, but they do so by leveraging private investment.
    I urge this subcommittee to support the CDFI Fund Program, 
by providing a robust budget for the CDFI Fund, and include an 
extremely robust increase for the bank enterprise award 
program.
    I thank Chairman Van Hollen, Ranking Member Hyde-Smith, and 
the Members of this subcommittee, for the opportunity to tell 
you the story of Bank of Anguilla, the work we do in the 
communities that we serve. And I look forward to answering your 
questions.
    Senator Van Hollen. Well, thank you very much for your 
testimony, Mr. Anderson, and to all three of you. And I have a 
question which really goes to all three.
    I am going to start with Mr. Poyo, about the emergency 
capital investment program, that was part of the December 
legislation, and legislation after that, providing a $9 billion 
investment into community development financial institutions, 
and minority depository institutions. I understand that 
applications are not due until July 6, but what has the 
response been to date? And how do you anticipate dealing with 
the demand?
    Mr. Poyo. Thank you, Mr. Chairman. So the Emergency Capital 
Investment Program has had a great deal of interest as you 
might imagine from the day that it was passed. And we opened 
the application round quickly, in March, and received a great 
deal of feedback from those institutions that were--that are 
potentially eligible applicants about how to structure the 
program in a way that would most effectively achieve the goals 
laid out by the statute and by Congress.
    And so we have really listened to the banks and the credit 
unions that are eligible applicants here, as well as engaged in 
significant engagement with regulators, who are our partners in 
administering any program, in carrying out a program with 
regulated institutions. And so we are expecting strong demand 
for the emergency Capital Investment Program, insignificant 
part, because I believe that we have listened very carefully to 
the institutions that are eligible for it, work closely with 
regulators.
    And, we will be, soon, releasing some additional updates, 
that help you address many of the questions that we have seen 
from the field. But I think listening to the field has really 
put us in a strong position to see this program be effective.
    Senator Hyde-Smith. Thank you very much. And we are going 
to continue with questions, as Senator Van Hollen had to go 
vote, Van Hollen had to go vote, and I just ran back.
    So I will start with my questions. And this is for Mr. 
Anderson. The Bank of Anguilla is headquartered in the South 
Delta, Mississippi, one of the poorest regions in the country. 
And I have received two statements on the impact that your bank 
has had on the local area that I would like to enter into the 
hearing record. But what would a funding increase to the BEA 
Program mean for your community, there in Anguilla, and where 
your branches are?
    Mr. Anderson. Sure. As I said earlier, BEA is very 
important to Bank of Anguilla, and an increased BEA award means 
we could do so much more. We are only a $170 million bank in 
assets, and we don't have access to capital markets, so grants 
like this from the fund are really impactful for us. We have 
received an award each of the last 10 years, which is great, 
but the amount of the actual dollars we receive is trending 
downward due to the increased demand in the program.
    We are grateful to receive the award, but if we could just 
get the amount bumped up, we could sure do a whole lot more in 
our community. And BEA is important because it is not just a 
one-time allocation. It is award that we have come to depend 
on, and is a tool that helps us mitigate the risks that we 
inherently have to absorb in serving predominantly LMI 
customers.
    Increasing this award could mean that in two of the poorest 
counties in the Nation, borderline profitable small businesses 
could remain open, potential small new businesses could be 
started, and the lives of those in poverty in our area could be 
better improved through the work of the Bank of Anguilla. The 
BEA Program is helping to keep small, rural, impoverished 
communities afloat, and that is a good thing.
    Senator Hyde-Smith. Thank you. And your opening statement 
touches on the difficulty many Americans face in just 
understanding the true meaning of the words ``rural'' and 
``poor'' in our country unless you have experienced regions 
like in the Delta. Will you elaborate on this and the 
communities you serve? And how has prior BEA funding benefited 
them?
    Mr. Anderson. Sure. One important point to state, that Bank 
of Anguilla, like many community banks and CDFIs across the 
country, we literally know most of our customers, our customers 
are our neighbors, and neighbors help neighbors. They come into 
our office and they laugh, they cry, they show pictures of 
their family, and they look for us for guidance and help.
    And banking is more than looking at a loan application to 
see if it will fit into a box. Bankers are missing a blessing 
if they haven't made a $500 loan to an elderly woman to visit 
her dying sister, or made a $300 loan to an elderly lady for 
clothes for a funeral, or made a $400 loan to a man over 100 
years old that needed money for his utilities and to put food 
on his table for Thanksgiving, or made a $1,000 loan to a 
disabled woman to help pay for the funeral expenses of a 
granddaughter that passed away in a fire.
    And we might add that Bank of Anguilla employees made up 
the difference for the expenses of that funeral. We later made 
$5,000 loan to this same lady, so she could take in two 
grandchildren. She had to have beds for them so human services 
wouldn't take them away. All of these loans were made unsecured 
to people that were poor. BEA funds not only help us to make 
business loans that might not otherwise get made, but it helps 
Bank of Anguilla, and other CDFIs who saw the risk of making 
small loans to impoverished individuals who need help with the 
basics of life.
    Senator Hyde-Smith. Wow, tremendous testimony, tremendous 
story, for real people.
    And I am going to turn it over to Senator Coons. I think he 
has a question. I recognize you.
    Senator Coons. Thank you very much, Senator.
    As someone who has long been interested in, and concerned 
about CDFIs, and I am eager to see them play a more significant 
role, I am so excited by this panel. I enjoyed reading your 
testimony beforehand. If I might, forgive me--the questions I 
had hoped to ask.
    Mr. Haskins, The Harbor Bank of Maryland is a certified 
CDFI that helps communities in Baltimore. What impact have you 
seen the COVID-19 relief funding for small businesses and the 
CDFI Fund have on your community? And forgive me, I wanted to 
ask that question, of both witnesses, from CDFIs. Forgive me, 
sir.
    Mr. Haskins. Well, speaking to the Paycheck Protection 
Program, I can tell you that we probably interviewed more than 
1,000 different applicants. We ended up processing 674 
applications for a total of roughly $67 million. If we tease 
out the 30 largest borrowers, our average loan to the borrowers 
was roughly about $52,000. We know that we kept businesses' 
inability to operate and survive because we were there. And I 
don't want to speak to some of my larger brothering, but I can 
tell you that in our community, it was difficult for many of 
them to access loans, especially when they were of a smaller 
size.
    When you looked at loans in, for half-million or in the 
multi-million dollar size, we could process those loans in a 
couple of hours. When we got to the $25- and $30,000 loans, we 
were spending weeks getting those loans processed because you 
had to walk individuals through the process. When you thought 
you had clear understanding you didn't, you ended up actually 
drawing up many of the documents so that they could apply.
    The reason I mentioned that we talked to in excess of 
1,000, because I engage all of our eligible staff to work in 
the processing, because we had such requests and the demands 
were so heavy, there was a third of those that we couldn't get 
to. The reason I think it is important to know that, is because 
those individuals are still struggling, and I will suggest to 
you, many will not survive because they didn't get the lifeline 
that the PPP Program extended for those businesses that were so 
impacted by the pandemic itself.
    And so I would just say to you that it is an extremely 
important role. And I just want to mention, I know it was 
raised about the BEA award, and I want you to know that, as my 
colleague, Andy, pointed out with reference to Mississippi, in 
Baltimore where we are 160 percent impoverished beyond what is 
considered the national average, we find ourselves dealing with 
many of the same issues in terms of meeting those needs.
    Twenty years ago we applied and won CDFI certifications. I 
have been successful in winning 13 BEA awards, which total 
$3,893,000. Those dollars have gone back in to provide some 
financial support for businesses, vital to communities that 
have not readily received. Unfortunately, in many urban 
communities, what we know and hear about as food deserts, have 
become bank deserts. And so they are not easy and readily 
access to financial resources. Harbor Bank has stepped in to 
help bridge that gap and bring financial resources.
    And the last comment I will make is that, Harbor, and in 
our community, we are more than a bank, we are a catalyst for 
economic development, and we are advocates for financial 
resources. So when you talk about these funding sources, you 
are talking about funds that we can point to specific projects 
that are there because of us. We are so knowledgeable of the 
community that we can go into communities that other financial 
institutions will not look at, and invest our dollars to ignite 
economic development. And we bring in the others.
    Senator Coons. Thank you, Mr. Haskins.
    Mr. Anderson, my experience in Delaware has been that we 
have CDFIs that provide access to financial services, much as 
Mr. Haskins was describing, in both the urban core of 
Wilmington, Delaware, and in our most rural, lowest-income 
corners of our State. I was intrigued by reading your testimony 
about your experience in Anguilla, Mississippi.
    If you just please tell me, briefly, if you could, as well, 
about why you support the CDFI Fund. Why the BEA program is 
particularly important, and how you think we can make the best 
use of taxpayer money in deploying CDFIs as economic 
development, access to credit, facilitators across our country 
from both urban and rural communities?
    Mr. Anderson. Sure. As I stated earlier, banks like Bank of 
Anguilla in rural areas have very limited access to capital. We 
just don't have it. Our capital grows by local investors and 
the small amounts we make in profits. If we didn't have the BEA 
designation, if there were--if there wasn't a designation such 
as CDFIs, we would still make the loans that we are making now. 
We would do it, but at much greater risk.
    What the BEA Program allows us to do, is absorb some of 
these risks and go even farther outside the box to help the 
people in our communities, Sharkey. Issaquena counties, where 
we operate, to have just a basic existence in life. So many of 
us take for granted the daily necessities. There are people 
across the country that don't have these basic necessities, and 
they look to us to be able to build--to fund these. And they 
looked to us for advice, as Mr. Haskins said.
    The CDFI Program is important to banks like us. And it is 
very important that that dollar amount continues to grow for 
us, because too often banks get an image as the bad guys, but 
we are there for our customers. Our bank, just like probably 
most of the CDFIs across the country, we have a heart and soul. 
We have a heart and soul for missions, and that is what we do. 
Our employees, each one of my employees, I am so proud of them, 
they have a heart for missions. They seek ways to help out 
people.
    And it all boils down to people, whether it is a business 
loan or a consumer loan, it all boils down to people, 
individuals, and family. And I stress a lot on the individual 
level, the consumer level, but the BEA Fund and CDFI Program is 
so important to economic development too.
    Senator Coons. Well, thank you. Thank you both. I have 
gotten to know CDFIs throughout my State, and I have been 
really struck at the mission orientation, the willingness to 
invest the time to do the hard work, to get to know your 
customers, and to do banking, I would say the good old 
fashioned way, meaning it is a lot of work, but it provides 
people opportunity and access. Thank you. Thank you for your 
testimony.
    Mr. Anderson. Thank you.
    Senator Van Hollen. Thank you, Senator Coons.
    I have a few questions. But let me defer to Senator Hyde-
Smith, if you have some. Sorry, as you can see, we are in the 
middle of voting, so that is why you see everybody being----
    Senator Hyde-Smith. Oh, yes. I just have one more. Of 
course Mississippi is home to more CDFI banks than any State in 
the country. And why is that? And you know, that we have more, 
and what benefits do these institutions bring to our State that 
handle these?
    Mr. Anderson. Mississippi, as so many people know, and it 
is well-publicized, is one of the poorest States in the Nation. 
CDFIs are mission-driven and are committed to serve in 
economically distressed areas. And we have a lot that fit that 
description of Mississippi. And we also have many community 
banks CDFIs that are committed to providing economic 
opportunity for everyone in their communities.
    So there is a natural alignment between Mississippi 
community banks that are committed to growing the economy in 
rural underserved areas and the goals of the CDFI fund. This 
alignment has benefited our State, and provided opportunities 
for banks like mine to finance projects and to help the 
underserved. We have a lot of communities around the State that 
are struggling, particularly in my home of the Mississippi 
Delta, and combining public dollars with private funds for 
targeted impact, like the CDFI Fund does, is really an 
important way to combat persistent poverty. There is a lot of 
work to do, so the fund does a great job of helping all of us 
to do that.
    Senator Hyde-Smith. Thank you.
    Senator Van Hollen. Thank you, Senator.
    And to Mr. Haskins and Mr. Anderson; I had to leave after I 
had asked Mr. Poyo the question about the new capital funds, 
the emergency capital fund that was developed. Are either of 
your two CDFIs applying for those funds?
    Mr. Haskins. Senator, yes we are. And as I reported a 
little bit earlier, and just to reiterate, we are fortunate in 
that not only is the Bank CDFI certified, my holding company is 
CDFI certified, and we have a second subsidiary that is CDFI 
certified with a nonprofit that we have certified. So we intend 
to apply for the max.
    And one of the examples that I can give you, if I can real 
quickly; to say, why it can get used for us, one of the 
stimulus programs early on from last year, the Main Street 
Program, while some institutions had trouble deploying it, in 
the last quarter of 2020, we actually deploy $92 million in 
funds. So I say that to say that there is no lack of 
opportunity there.
    And one other piece that I will give you, if those of you, 
and I always invite people to visit Baltimore and the area, 
north of Johns Hopkins hospital, because many of these 
hospitals, and many of the universities in urban areas are 
surrounded by low-income and highly distressed communities. 
Well, 88 acres north of Johns Hopkins University was 
revitalized because we were able to bring tax credits to the 
table, Harbor Bank direct loans to table, we were able to bring 
CDC, low-income loans to the table, and we provided advisory 
service.
    Well, there are several other projects that need funding 
there, and so we believe that this is a real opportunity for us 
to make major impact far beyond the communities that are 
already identified, and so we will be applying for the full 
amount, which will be $70-some million, in terms of our 
institution.
    Senator Van Hollen. Thank you.
    Mr. Anderson.
    Mr. Anderson. As I stated earlier, we have limited access 
to capital in the markets we serve. So we will definitely be 
applying for capital through the program. In fact, we will have 
our application, and hope to finish by Friday, so we are moving 
forward with that. We think this could be a game changer in our 
area. We hope it will be. We believe we could invest in 
technology to help deploy something like remote deposit 
capture, which we don't have right now, and other mobile 
technology that we think will help banking access across our 
community.
    When you look across our community, it seems that everybody 
has a cell phone. And so we believe that this will help. ECIP 
capital will also help us to grow our lending areas in some 
nearby small communities that no longer have local bank 
branches, these communities are bank deserts now, and we hope 
to be able to lend to the people in those areas. So ultimately 
we plan on using the ECIP capital to broaden the service and 
lending products we are able to offer. And we anticipate that 
this will continue to help us fight poverty in the Mississippi 
Delta.
    Senator Van Hollen. Thank you.
    Mr. Poyo, we have been talking about the additional 
emergency funds that were provided both in capital as well as 
in the Rapid Response Program, but of course, you have got your 
annual appropriation request. And as we said earlier when the 
Secretary was here we appreciate that request. Some have asked, 
you know, given the fact that we have just provided these large 
amounts of funds to CDFIs, through the earlier legislation, 
whether there is the capacity to absorb this additional 
request. What is your response to that based on your current 
experience, and your previous experience in this area?
    Mr. Poyo. Yes. Thank you, Mr. Chairman. So as a former CDFI 
CEO, as well as in my position now, it is my experience that 
the CDFI field is something like parched earth, right. Can soak 
up, still a lot of capital, a lot of that water in the 
metaphor. And what we see is, you know, the Paycheck Protection 
Program, which you were talking about earlier. There was a lot 
of question about whether CDFIs would be able to play a really 
robust role in the deployment of Paycheck Protection Program 
dollars.
    And indeed CDFIs outstripped, I think, anyone's 
expectation. And so the constraint, the fundamental constraint 
that I think the CDFI field faces is capital constraint. And so 
when we talk about capacity, it is very difficult to hire 
staff, or build your IT systems, or all of those things that 
are--that are good for an institution's building capacity, if 
it is not in the service of actually putting capital on the 
street and meeting people's needs.
    And so I believe the capital that we have seen, which is a 
historic investment, and really appreciate that the Congress 
did this, we expect to see that capital absorbed by the field, 
and believe that the annual appropriation--that there is an 
opportunity to grow the annual appropriation to match that 
increase in capacity that we see in the field.
    Senator Van Hollen. Thank you. And, you know, as you know, 
that the Emergency Capital Investment Program, currently only 
applies to ensure depository institutions, bank holding 
companies, savings and loans, and federally insured credit 
unions. You and I have discussed this in the past, but we have 
heard from CDFI loan funds that they would also benefit from 
the longer term capital infusions that would be provided under 
this kind of program.
    Question one: Is there a non-legislative fix to that issue? 
And question two is: Do you believe that the CDFI loan funds 
would also benefit from a capital infusion?
    Mr. Poyo. So taking your first question first. We have 
looked very closely at this question, and really, I think the 
constraint is in the statute. I am not sure that there is any 
way, and we have looked at it from a bunch of angles, to really 
construe that loan funds could be eligible as the statute is 
currently written.
    That being said, loan funds receive significant benefit 
from the Rapid Response Program, which of course was just 
recently announced. And I do believe that loan funds can 
continue to absorb capital. And so I am--really appreciate you, 
sort of, focusing on and thinking through what are ways in 
which dollars could be crafted to loan funds. But of course, we 
have--we have both put the Rapid Response Program on the 
street, and the Minority Lending Program will be coming later 
this year, which will create opportunity for some loan funds.
    Senator Van Hollen. Thank you. No, and I look forward to 
working with you on that issue. And my final question goes to 
both Mr. Haskins and Mr. Anderson, because it is great to have 
you here, as really good, important examples of why the CDFI 
funding is so important to get capital and money into 
communities.
    And two issues have come up, Mr. Haskins, you mentioned as 
well, the New Market Tax Credits in one of your earlier 
responses. And then there was also the discussion of the role 
CDFIs played in the deployment of the PPP Program. I think we 
all remember in the early days of the rollout of the PPP 
Program, a lot of those funds were working there through large 
financial institutions, but at the end of the day, it was the 
smaller financial institutions and CDFIs that really helped 
push that money out.
    So let's start with you, Mr. Haskins. Can you talk about 
the role you played in the deployment of the PPP funds, but 
also some of the other things that you have been able to do 
with New Market Tax Credits, and what important role they play 
in putting together the pieces for some of these important 
investments?
    Mr. Haskins. Thank you again for allowing me to speak about 
the PPP Program. What we found is that Harbor, because of our 
role in the community, and a comfort level that many of these 
businesses have with our institution, there was a greater 
involvement that we were able to have than some of the other 
institutions. And, as my colleague, Andy Anderson, has pointed 
out, we are not just there in the community, we are there with 
a real serious committed interest to the welfare of those 
communities.
    And so we reached out to those that had not reached out to 
us to make sure that they were aware of the opportunity to 
proceed, many kind of automatically believe that when something 
is announced, they automatically know and understand how to 
process, but many don't. And, and so we understand that about 
our community. And so those who had not applied, we were able 
to get to apply.
    And we can point specifically to businesses that are vital 
to the community, the stability of their communities that are 
there. One sector that often people miss in many urban areas, 
especially many areas that are older communities, is the role 
that the churches, the faith-based organizations play in those 
communities. Many of those organizations employ heavily out of 
their respective communities.
    And so we were able to get many of the faith-based 
organizations to apply, and thereby keep employment and keep 
services which were daycare centers, job training centers, food 
preparation centers, et cetera, et cetera, we were able to keep 
those functional because appropriate dollars were allocated 
through the PPP Program for that purpose.
    Switching over to New Market Tax Credits, because while it 
is not a direct funding program, it is significant because it 
focuses on low-income, distress communities, and it is 
formulaic in terms of how it is applied. But so many of these 
communities, both urban and rural have high distress community 
areas based on the demographics, et cetera.
    What we have been successful in winning is nine different 
grounds totaling $384 million, but it is leveraged over $3 
billion worth of development. And as a result of doing that 
because of the way that the definitional requirements are, 
employment is a part of it.
    So one example, and I will say this, and be brief, one of 
the last science buildings we did in East Baltimore is 1812 
Ashland Avenue. Through our working relationship we were able 
to get Starbucks to put a roaster, the only roast in Maryland, 
one of the first roasters in the Delmarva area, in a low-income 
community, and the folks employed in that roaster are from the 
community.
    So we created new jobs that were not identifiable with that 
community. And so what we know and what we see is that through 
these programs, we can help leverage greater opportunities for 
economic revitalization and development. And that's just a 
simple example of one.
    Senator Van Hollen. Wow. That is a great example. And part 
of the success, I think, of this program. Thank you, thank you 
very much.
    Mr. Anderson.
    Mr. Anderson. Sure. Our local economy was hurt of course, 
by the pandemic, just like everybody else. A few restaurants 
that we have, their doors were closed for a certain amount of 
time. And then when they reopened, they were reopened to 
limited capacity. Churches and faith-based organizations are 
very significant in our area in helping where there are needs. 
Church offerings were significantly down, and any donations 
made to these faith-based organizations were down.
    Between the 2019 flood, we had an extensive flood in 2019 
that lasted about 8 months, and the pandemic in 2020, our 
community was really, really hurt. Given the limited number of 
businesses we have, we were still able to make 218 PPP loans in 
an area where there is just over 5,000 people, and limited 
businesses, making these loans helped our county survive, 
tremendously helped our county to survive.
    If there is a business in our two counties, most likely we 
financed that business. I can't think off the top of my head of 
any business that is existing right now we didn't finance. And 
businesses in small, rural counties have a hard time surviving, 
but we are there for them. And the PPP Program helped our area, 
and they all sought out Bank of Anguilla. And like Mr. Haskins 
said, our average loan was about $23,000.
    Most of our applicants had no idea how to fill these forms 
out or what information was needed. So we spent, literally 
spent hours on each loan, helping our customers out. And so 
between the PPP loans that we made all through the pandemic 
that has helped out so much, and with the money that we will 
have coming in through the Rapid Response Program, and then 
through--hopefully through ECIP that is going to be a game 
changer for our communities.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Van Hollen. Well, let me thank all three of you. 
Thank you for your testimony. Most of all, thank you for what 
you are doing to help empower communities, and bring more 
opportunity to more people in small businesses.

    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
              Questions Submitted to Hon. Janet L. Yellen
              Questions Submitted by Senator Patrick Leahy
          county funding under the american recovery plan act
    Secretary Yellen, as we discussed during the hearing, the 
Department of the Treasury has chosen to rely on a definition from the 
Census Bureau to define what constitutes a county government. No such 
definition was specified in the American Recovery Plan Act, and the 
Treasury Department's arbitrary decision to apply it has led to an 
unacceptable result in Vermont.

    Question 1. The Vermont Congressional Delegation, as well as the 
State of Vermont, have expressed disappointment in the Treasury 
Department's response to these concerns. What steps is the Department 
taking to work with the State of Vermont to ensure that Vermonters 
receive the dollars provided under the ARPA, as directed by Congress?

          Answer. On July 30, Treasury issued guidance on CLFRF funds 
        for counties that are not units of general local government 
        (non-UGLG). In this guidance, all of Vermont's 14 counties have 
        been classified as non-UGLG counties. As such, the funds 
        allocated to Vermont's counties will be made available to the 
        State of Vermont for payment to its units of general local 
        government within those counties.

    Question 2. In your testimony, you indicated your intent to work 
with us to find a resolution. It does not help the people of Vermont to 
have the money Congress appropriated sitting in the Treasury here in 
Washington. Please confirm that you have found a resolution so that the 
funds can be allocated to the State, where the money can be used for 
the purposes appropriated.

          Answer. Yes, please see the guidance referenced in the 
        previous question.
                           affordable housing
    Vermont has used significant portions of its State and Local Fiscal 
Recovery Funds from the CARES Act and the American Rescue Plan Act to 
support housing construction. The State hopes to ensure that Vermonters 
can find affordable housing, including the more than 2,000 Vermonters 
currently being sheltered in hotels to prevent homelessness. Vermont 
has a strong history of building affordable housing in areas of 
opportunity. However, recent Treasury guidance on eligible uses of 
State and local relief money does not offer clear guidance for whether 
this funding can be used to construct affordable housing in areas of 
opportunity, leading to confusion among Vermont affordable housing 
groups.
    The guidance states that ``Treasury will presume that certain types 
of services are eligible uses when provided in a Qualified Census Tract 
(QCT), to families living in QCTs, or when these services are provided 
by Tribal governments. Recipients may also provide these services to 
other populations, households, or geographic areas disproportionately 
impacted by the pandemic. In identifying these disproportionately-
impacted communities, recipients should be able to support their 
determination for how the pandemic disproportionately impacted the 
populations, households, or geographic areas to be served.'' I am 
concerned by this guidance for a number of reasons.
    Not explicitly allowing affordable housing construction, 
acquisition or rehabilitation outside of low-income areas (QCTs) runs 
counter to the public policy consensus and mandate to deconcentrate 
poverty and create affordable homes in areas of opportunity. This 
limitation threatens to further segregation and discrimination.

    Question 3. Will you revise Treasury guidance to ensure that 
spending State and Local Fiscal Recovery Funds does not undermine long-
standing housing best practices and policies regarding construction of 
affordable housing in areas of opportunity?

          Answer. The Treasury Department is deeply committed to 
        supporting the creation of and addressing affordable housing 
        needs under each of the programs it administers under the 
        American Rescue Plan Act. Treasury's Interim Final Rule for the 
        State and Local Fiscal Recovery Fund (SLFRF) encourages 
        recipients to prioritize services for low-income individuals 
        and families hard-hit by the pandemic, including those living 
        in Qualified Census Tracts (QCTs).
          The Interim Final Rule explicitly allows affordable housing 
        development to increase the supply of affordable and high-
        quality living units as an eligible service for SLFRF. 
        Recognizing the disproportionate impacts of the pandemic to 
        low-income communities, affordable housing is automatically 
        eligible when provided in a QCT, to families living in QCTs, or 
        when these services are provided by Tribal governments. In 
        addition, recipients may also provide these services to other 
        populations, households, or geographic areas that they identify 
        as disproportionately impacted by the pandemic. This provides a 
        simple and expeditious way for governments to invest in 
        disadvantaged communities, while giving them the flexibility to 
        also identify and serve other populations, households, or 
        geographic areas. For example, a relatively higher-income city 
        could determine that its low-income residents faced 
        disproportionate impacts and develop affordable housing 
        targeted to these households; this could include affordable 
        projects in higher-income neighborhoods near jobs and well-
        resourced schools.
          Treasury's comment public period for the Interim Final Rule 
        has just closed. As part of its review process, Treasury will 
        carefully consider public comments and consult with other 
        Federal agencies as relevant in order to support the 
        development of affordable housing in communities across the 
        country.

    The data used to determine Qualified Census Tracts does not take 
into account other measures of need used by other Federal or State 
agencies, including areas identified in State and local housing plans, 
Difficult Development Areas determined by the Department of Housing and 
Urban Development (HUD) or Rural Economic Area Partnership Zones 
determined by the U.S. Department of Agriculture (USDA).

    Question 4. Will you commit to working with your counterparts at 
other Federal agencies to ensure that areas of identified need beyond 
Qualified Census Tracts can benefit from affordable housing investment 
via State and Local Fiscal Recovery Funds?

          Answer. The Interim Final Rule recognizes that the COVID-19 
        public health emergency disproportionately impacted certain 
        communities, including in QCTs. In addition, the Interim Final 
        Rule provides a framework for recipients to identify other 
        populations that were disproportionately impacted, including 
        considerations for identifying those populations. This approach 
        helps provide recipients with flexibility to respond to their 
        communities.
          Treasury is carefully reviewing comments received on the 
        Interim Final Rule, including on other communities 
        disproportionately impacted.

    Question 5. Will you commit to engaging on the ground stakeholders 
to establish a simple process by which recipients of State and Local 
Fiscal Recovery Funds can determine additional disproportionately 
impacted areas and document these decisions for the Treasury?

          Answer. The Interim Final Rule recognizes that the COVID-19 
        public health emergency disproportionately impacted certain 
        communities, including in QCTs. In addition, Interim Final Rule 
        provides a framework for recipients to identify other 
        populations that were disproportionately impacted, including 
        considerations for identifying those populations. This approach 
        helps provide recipients with flexibility to respond to their 
        communities.
          Treasury is carefully reviewing comments received on the 
        Interim Final Rule, including on other communities 
        disproportionately impacted. It is well-documented that lower-
        income households have been disproportionately impacted by the 
        COVID-19 pandemic, but as part of the Interim Final Rule 
        comment review process, Treasury will carefully consider public 
        comments and consult with other Federal agencies as relevant in 
        order to offer clarity on how a State can demonstrate this 
        disproportionate impact.

    It is well-documented that lower-income households have been 
disproportionately impacted by the COVID-19 pandemic, but current 
Treasury guidance offers no clarity on how a State can demonstrate this 
disproportionate impact. This creates ambiguity that will divert 
administrative capacity and delay urgently-needed new housing.

    Question 6. Will the department consider revising guidance to 
provide clarity that housing affordable for households at or below 100 
percent of the Area Median Income is an eligible use of State and Local 
Fiscal Recovery Funds, if it is located in an area where the need for 
housing has been shown?

          Answer. The public comment period on Treasury's Interim Final 
        Rule recently closed on July 16. Treasury is carefully 
        reviewing comments received and will take public feedback into 
        account when developing the final rule.

    The majority of homes in Vermont are owned rather than rented, but 
Treasury guidance on the provision of affordable housing with State and 
Local Relief Fund money makes no mention of providing support to help 
struggling low and moderate income households become homeowners.

    Question 7. Will you commit to revising Treasury guidance to 
allowing State and Local Fiscal Recovery Funds to be spent on 
homeownership for low- and moderate-income families, such as down 
payment assistance and new construction of affordable homes for 
ownership?

          Answer. The public comment period on Treasury's Interim Final 
        Rule recently closed on July 16. Treasury is carefully 
        reviewing comments received and will take public feedback into 
        account when developing the final rule.
                           taxpayer services
    For many Americans, especially those in rural States like Vermont, 
the IRS is one of the main faces of the Federal Government where 
communities have the ability to interact with the agency on a regular 
basis. Countless taxpayers without Internet service rely on phone or 
in-person IRS services to answer questions and resolve problems with 
their returns. Before the pandemic, the IRS only answered 31 percent of 
the phone calls it received and taxpayers who managed to get through 
waited on hold for an average of 38 minutes.
    With all the tremendous work the IRS is doing to provide 
coronavirus relief and roll out the new child tax credit, along with 
the 18 million or so unprocessed tax returns, taxpayers have even more 
questions for the IRS. Unfortunately, the IRS has become nearly 
impossible to reach, either by phone or in-person as the number of in-
person Taxpayer Assistance Centers continues to decline. The agency's 
growing reliance on digital tools and virtual assistance centers is 
only amplifying the digital inequalities across rural America.

    Question 8. How will the Department ensure that the tax assistance 
services provided by the IRS are accessible in rural America?

          Answer. The President's Budget includes resources to improve 
        the experience of all taxpayers as they interact with the IRS, 
        making sure that customer service representatives stand ready 
        to answer the phones when they call with questions and that 
        they get access to the tax credits, refunds, and other benefits 
        that they are entitled to. This includes investing in Taxpayer 
        Assistance Centers across the country, including in rural areas 
        where their presence is vitally needed. In addition, as you 
        know, the President's budget proposals are estimated to 
        generate over $700 billion in additional tax revenue over the 
        course of the next decade, both through investing in 
        enforcement focused on high-income, partnership, and corporate 
        misreporting--but also through a meaningful investment in 
        taxpayer services, which impact voluntary compliance.

    Question 9. How will the Department ensure that the tax assistance 
services provided by the IRS remains accessible to all Americans, even 
the 19 million Americans who lack sufficient access to affordable, 
high-quality broadband, as the agency continues to virtualize its 
services?

          Answer. In order for the IRS to have the capacity to ensure 
        that tax assistance services are accessible to all Americans, 
        it needs resources to invest in the provision of these 
        essential services. That means updating outdated technological 
        infrastructure to ensure that the agency can communicate with 
        taxpayers in an efficient and timely manner--but it also means 
        investing in telephone customer service and at Taxpayer 
        Assistance Centers. The President's budget includes resources 
        to improve the experience of all taxpayers as they interact 
        with the IRS, making sure that customer service representatives 
        stand ready to answer the phones when they call with questions 
        and that they get access to the tax credits, refunds, and other 
        benefits that they are entitled to.
                                 ______
                                 
          Questions Submitted by Senator Christopher A. Coons
    1. Many smaller municipalities across the Nation, including Dover, 
Delaware, participate in the CDBG program to improve the housing and 
other aspects of life for residents. Many of these municipalities, 
because they are of less than 50,000 population and are part of a 
designated metropolitan area, were adversely impacted by the decision 
to use the CDBG formula to allocate the American Rescue Act's funds. As 
a result, the City of Dover received far less funding ($8.6 million v. 
approximately $20 million) than it would have if the allocation was 
population-based, as applied to Non-Metropolitan municipalities (Non 
Entitlement Units).

    Question 1a. What regulatory or statutory changes would be needed 
for these municipalities to receive at least the same level of funding 
that would have been received if the approach used for NEUs was 
applied?

          Answer. The American Rescue Plan Act defines, for purposes of 
        the Coronavirus Local Fiscal Recovery Fund (CLFRF), 
        metropolitan cities to include those that are currently 
        metropolitan cities under the Community Development Block Grant 
        (CDBG) program, as well as those cities that relinquish or 
        defer their status as a metropolitan city for purposes of the 
        CDBG program. This definition of a metropolitan city is 
        provided in statute. To arrive at the universe of eligible 
        metropolitan cities for CLFRF, Treasury consulted with the 
        Department of Housing and Urban Development, which administers 
        the CDBG program. The allocations to metropolitan cities are 
        based on a number of factors identified in the statute 
        implementing the CDBG program, including population. The 
        allocations to NEUs are based entirely on population numbers.

    2. In the roll out of the $1,400 Economic Impact Payments (EIP), 
thousands of households who were eligible for the payment did not 
receive it. My casework staff have been told by IRS staff that the 
agency is trying to pay these people over the course of this summer, 
but if it is unsuccessful, taxpayers can claim the missing EIP on their 
2021 tax returns, similar to what people had to do for missing EIPs on 
their 2020 tax return.

    Question 2a. What is the status of the IRS trying to pay eligible 
taxpayers the Economic Impact Payments?

          Answer. Shortly after enactment of the American Rescue Plan, 
        the Treasury Department, Bureau of the Fiscal Service, and the 
        IRS disbursed more than 90 million third-round Economic Impact 
        Payments, totaling more than $242 billion. As of July 21, 
        approximately 171 million payments have been disbursed to 
        eligible Americans, which represent a total amount of more than 
        $400 billion.
          For example, during that week, approximately 1.3 million 
        payments were disbursed, which represented a total amount of 
        approximately $2.6 billion. These payments were disbursed to 
        eligible individuals for whom the IRS previously did not have 
        information to issue a third- round Economic Impact Payment but 
        who recently filed a tax return. This payment batch also 
        included additional ongoing supplemental payments for people 
        who earlier this year received initial third-round Economic 
        Impact Payments based on their 2019 tax returns, but who are 
        eligible for a new or larger payment based on their recently 
        processed 2020 tax returns. In the last six weeks, more than 
        900,000 of these ``plus-up'' payments have been disbursed, with 
        a value of more than $1.6 billion. In all, more than 9 million 
        of these supplemental payments have been disbursed this year, 
        worth approximately $18.5 billion.
          The Treasury Department, Bureau of the Fiscal Service, and 
        the IRS will continue to disburse third-round Economic Impact 
        Payments on a weekly basis through December 2021. If eligible 
        individuals do not receive the full amount of third-round 
        Economic Impact Payment to which they are eligible, they can 
        receive the remaining amount by claiming a 2021 Recovery Rebate 
        Credit on their 2021 tax return.
          The IRS has provided an online Non-Filer tool to allow 
        individuals who were not required to file (and have not filed) 
        a tax return for 2020 to file a simplified tax return.\1\ This 
        simplified tax return allows eligible individuals to register 
        for advance Child Tax Credit payments and a third-round 
        Economic Impact Payment, as well as claim the 2020 Recovery 
        Rebate Credit. Free tax return preparation also is available 
        for qualifying people.\2\
---------------------------------------------------------------------------
    \1\ See Child Tax Credit Non-filer Sign-up Tool, available at 
https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-
up-tool.
    \2\ See Free Tax Return Preparation for Qualifying Taxpayers, 
available at https://www.irs.gov/individuals/free-tax-return-
preparation-for-qualifying-taxpayers.
---------------------------------------------------------------------------
          Individuals can check the Get My Payment tool on IRS.gov to 
        view the status of their payments.\3\ An extensive library of 
        information regarding the third round of Economic Impact 
        Payments also is available on IRS.gov.\4\
---------------------------------------------------------------------------
    \3\ See Get My Payment, available at https://www.irs.gov/
coronavirus/get-my-payment.
    \4\ See Coronavirus Tax Relief: Economic Impact Payments, available 
at https://www.irs.gov/coronavirus/economic-impact-payments.

    Question 2b. How is the IRS specifically helping people 
---------------------------------------------------------------------------
experiencing homelessness get Economic Impact Payments?

          Answer. Throughout 2021, the IRS has worked to help homeless 
        individuals receive all of the Economic Impact Payments to 
        which they are eligible by conducting a national public 
        outreach campaign and leveraging partnerships with 
        organizations that work with homeless communities. These 
        efforts have been applied to ensure that the individuals in 
        these communities receive their third-round Economic Impact 
        Payments, the 2020 Recovery Rebate Credit, the Earned Income 
        Tax Credit, and 2021 advance payments of the Child Tax Credit.
          Similar to the first and second rounds of Economic Impact 
        Payments, the IRS has continued to undertake a sweeping 
        outreach and education campaign to help Americans understand 
        their eligibility for a third-round Economic Impact Payment and 
        ensure that those who normally do not have a tax return filing 
        obligation are aware of their eligibility. The IRS continues to 
        share information nationwide, reaching stakeholders inside and 
        outside of the tax community. In addition to providing 
        information materials to news media and on social media and 
        websites, this national public awareness campaign has included 
        IRS partnerships with a wide spectrum of community and 
        professional groups. Throughout this campaign, the IRS has 
        reached homeless organizations, food banks, and social service 
        groups, as well as national, State, and local organizations 
        (and associations to which these organizations belong).
          The IRS continues to hold special weekend summer events to 
        help people who do not normally file taxes receive advance 
        Child Tax Credit payments and Economic Impact Payments. During 
        these events, with the help of a new Non-filer Sign-up Tool on 
        IRS.gov,\5\ volunteers, community stakeholders, and IRS 
        employees provide assistance to eligible families in 
        underserved communities.\6\ The new Non-filer Sign-up Tool is 
        an update of last year's IRS Non-filer Tool on IRS.gov, and 
        allows individuals to complete and file a simplified tax return 
        to register for advance Child Tax Credit payments and the 
        third-round Economic Impact Payment, as well as claim the 2020 
        Recovery Rebate Credit.
---------------------------------------------------------------------------
    \5\ See Child Tax Credit Non-filer Sign-up Tool, available at 
https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-
up-tool.
    \6\ See https://www.irs.gov/newsroom/irs-holds-additional-weekend-
events-july-23-24-to-help-people-with-child-tax-credit-payments-and-
economic-impact-payments.

    3. In May, the Department of the Treasury issued an interim final 
rule to implement the Coronavirus State Fiscal Recovery Fund and the 
Coronavirus Local Fiscal Recovery Fund established under the American 
Rescue Plan Act (ARPA). I've heard concerns from housing advocates in 
Delaware that State, county, and local governments are hesitant to 
---------------------------------------------------------------------------
utilize ARPA funds for the construction of affordable housing.

    Question 3a. From page 35-36 of the interim final rule, how can a 
government define and demonstrate ``disproportionate impact'' for the 
eligible service of ``Affordable housing development to increase supply 
of affordable and high-quality living units?''

          Answer. The Interim Final Rule explicitly allows affordable 
        housing development to increase the supply of affordable and 
        high-quality living units as an eligible service for SLFRF. 
        Recognizing the disproportionate impacts of the pandemic to 
        low-income communities, affordable housing is automatically 
        eligible when provided in a QCT, to families living in QCTs, or 
        when these services are provided by Tribal governments. 
        However, recipients may also provide these services to other 
        populations, households, or geographic areas that they identify 
        as disproportionately impacted by the pandemic.
          This provides a simple and expeditious way for governments to 
        invest in disadvantaged communities, while giving them the 
        flexibility to also identify and serve other populations, 
        households, or geographic areas. Treasury's comment public 
        period for the Interim Final Rule has just closed. As part of 
        its review process, Treasury will carefully consider public 
        comments and consult with other Federal agencies as relevant in 
        order to support the development of affordable housing in 
        communities across the country.
Question Submitted to Noel Andres Poyo, Deputy Assistant Secretary for 
     Community and Economic Development, Department of the Treasury
    4. I appreciate the fiscal year 2022 budget request increases 
funding for the CDFI Fund and requests $2 million to continue funding 
the Economic Mobility Corps program that I helped create. This new 
program in partnership with the Corporation for National and Community 
Service (CNCS) is meant to increase the talent and human capacity at 
CDFIs and help cultivate the next generation of community development 
workforce leaders.

    Question 4a. When will the first awards be announced?

          Answer. On August 11th, the CDFI Fund and AmeriCorps 
        announced $2.5 million in awards for three CDFIs through the 
        inaugural round of the AmeriCorps CDFI Economic Mobility Corps 
        (EMC) Program.

    Question 4b. What impact do think the program will have on the CDFI 
industry?

          Answer. Economic Mobility Corps provides an opportunity to 
        train the next generation of community development finance 
        professionals. It offers a hands-on experience by offering 
        national service members the chance to work in a Community 
        Development Financial Institution to provide substantive 
        financial counseling, planning and literacy activities in 
        distressed and underserved communities across the Nation. The 
        communities served by EMC members will benefit from the 
        increased capacity of CDFIs receiving EMC funding to provide 
        critical financial services. As the community and economic 
        development fields grows in scale to meet the challenge of 
        producing greater and more equitable growth in our economy, 
        there will be a need to scale programs like EMC to build a 
        pipeline of qualified professionals.

    Question 4c. What recommendations do you have to Congress to 
improve or expand the program?

          Answer. Currently, the EMC program is funded as a set-aside 
        in the CDFI Fund's appropriations. Treasury recommends 
        consultation with AmeriCorps on opportunities to expand or 
        improve the program.
                                 ______
                                 
              Questions Submitted to Hon. Janet L. Yellen
              Questions Submitted by Senator John Boozman
    1. The Federal Insurance Office (FIO) recently issued a request for 
information (RFI) for a study on the affordability and availability of 
auto insurance. The RFI notes that the office is undertaking a 
``holistic analysis'' of ``disparities in premium pricing'' and ``the 
impact of non-driving underwriting factors.''
    The auto insurance industry is both one of the most highly 
competitive and closely regulated industries in the country. State 
insurance commissioners are already empowered to monitor their markets 
for unfair pricing or discrimination. The last thing I would want to 
see is the excellent work of Arkansas Insurance Commissioner McClain 
being second-guessed by the Treasury Department applying standards, 
analyses, or methodologies which are wholly unsuited in an insurance 
context.

    Question. Is it Treasury's intention to apply a disparate impact 
standard in its analysis of auto insurance pricing? What kind of 
methodology will FIO apply to analyzing data and information submitted 
for the RFI? What is the ultimate objective of the RFI?

          Answer. The Federal Insurance Office (FIO) is authorized 
        under the Dodd-Frank Act to, among other things, monitor the 
        extent to which traditionally underserved communities and 
        consumers, minorities, and low-and moderate income persons have 
        access to affordable insurance products. The U.S. personal auto 
        insurance sector is a significant part of the U.S. economy, 
        both in terms of its aggregate size and its impact on 
        individual consumers and their economic well-being. FIO plans 
        to undertake a holistic analysis of the personal auto insurance 
        business, focusing on: (1) affordability of coverage and 
        disparities in premium pricing, with particular attention to 
        traditionally-underserved communities and the impact of non-
        driving factors; and (2) market evolution and structural shifts 
        in the conduct of the business, including the effects of 
        technology and the use of big data, as well as changes related 
        to the COVID-19 pandemic. As the next part of its work on auto 
        insurance, FIO will be reviewing the comments received in 
        response to the request for information. FIO looks forward to 
        engaging with interested stakeholders, including your office, 
        on its work relating to personal auto insurance.

    2. The President's budget request includes a proposal to require 
financial institutions to report data on all inflows and outflows over 
just $600, a significantly lower reporting threshold than the current 
$10,000, and would apply to all deposit, loan, and investment accounts.
    I have two concerns. First, this presents serious privacy issues 
for taxpayers. The IRS had a high-profile leak just last month, and 
this would collect the financial information of most Americans. Asking 
the IRS to secure that much data is a huge job for the Federal 
Government.
    I'm also concerned that Treasury would have ``broad authority'' to 
issue implementing regulations. This proposal would impose additional 
costs and complexities on some of our smallest banks, which serve as 
the backbone to our small business community. That burden, coupled with 
broad flexibility for Treasury and the IRS to design new reporting 
requirements, creates the potential for regulatory overreach.

    Question. Are Treasury and the IRS equipped to securely handle that 
much data? And if this proposal becomes law, can you commit to both 
considering existing reporting requirements before issuing regulations 
and ensuring that Treasury won't place onerous, duplicative burdens on 
financial institutions?

          Answer. The Administration has designed this regime with 
        taxpayer privacy concerns front of mind. That is why, as 
        opposed to other compliance proposals that have been advocated 
        by outside actors, in the Administration's framework, 
        information is flowing only one way--from financial 
        institutions to the IRS, as is the case with existing 
        information reporting. The proposal also includes significant 
        resources to protect taxpayer information more broadly, giving 
        the IRS the resources it needs to invest in overhauling 
        antiquated technology and meet threats to the security of the 
        tax system, like the 1.4 billion cyberattacks the IRS 
        experiences annually. In designing this proposal, Treasury 
        spent a lot of time with small financial institutions to think 
        about minimizing burdens associated with a new regime, and we 
        are continuing to work with them to create a simple, 
        implementable regime.

    3. Last year, Congress passed a bipartisan appropriations bill that 
created a $25 billion Emergency Rental Assistance program. Earlier this 
year, the partisan American Rescue Plan created a second round of $21 
billion in rental assistance, and unfortunately changed the parameters 
and safeguards for how the funding can be used. In total, that's 
roughly $46 billion in rental assistance.
    What concerns me is that I've heard from constituents and 
colleagues that Treasury hasn't been able to provide detail about how 
and where that money is being spent and that, as a result, States are 
having difficulties setting up the program.

    Question. Can you commit to working with Congress to address any 
potential mismanagement of the emergency rental assistance program, and 
any other potential areas of mismanagement around Treasury-administered 
programs?

          Answer. Treasury is committed to working with Congress and 
        oversight entities to ensure the integrity and effectiveness of 
        the Emergency Rental Assistance Program, as is the case with 
        all programs that the Department administers. Treasury has 
        rapidly distributed appropriated funding to States, 
        Territories, Local governments and Tribes, consistent with the 
        statute. Treasury has also taken swift action to develop 
        program rules that provide grantees with the flexibility that 
        they need to meet the pressing need for rental assistance in 
        their communities, while protecting program integrity. Treasury 
        has been transparent, publishing data about program performance 
        on a monthly basis. We encourage reporting any specific and 
        credible reports of fraud, waste and abuse to the Treasury 
        Office of the Inspector General.
                                 ______
                                 
              Questions Submitted by Senator John Kennedy
                             savings bonds
    1. As of April 30, 2021, approximately 80 million savings bonds, 
totaling $29 billion, have matured but have not been redeemed.

    Question. How many bonds are totally unrecoverable, damaged, or 
lost?

          Answer. Bond owners, not Treasury, have possession and would 
        know the condition of unredeemed paper savings bonds. Treasury 
        has a process in place that allows bond owners to claim lost or 
        destroyed bonds, including bonds destroyed in natural disasters 
        or other circumstances. Last year, for example, Treasury 
        processed 5,600 claims worth over $50 million. On average, 
        Treasury processes approximately 6,900 claims worth $59 million 
        per year. During the claims examination process, Treasury 
        confirms rightful owners to the bonds. Bond owners can use 
        TreasuryHunt.gov to search for information about savings bonds 
        that may have been lost or damaged.
                               sanctions
    2. In May 2021, the Biden Administration waived mandatory new 
sanctions on Nord Stream II AG, its chief executive officer, and 
corporate officers; Nord Stream II AG is a Swiss-based company that 
Russia's State-owned Gazprom established to construct and operate the 
pipeline.

    Question. What steps are you taking to ensure that unraveling of 
these sanctions will not undermine the European energy independence?

          Answer. The Department of the Treasury is committed to 
        countering Russia's use of energy as a weapon to achieve 
        aggressive political ends.
          On May 21, 2021, Treasury implemented sanctions imposed by 
        the Department of State pursuant to the Protecting Europe's 
        Energy Security Act of 2019, as amended (PEESA), by including 
        additional Nord Stream 2-related entities and vessels on Office 
        of Foreign Assets Control (OFAC) sanctions lists.
          In addition to implementing State Department sanctions 
        pertaining to Nord Stream 2, Treasury has worked with the State 
        Department to engage directly with governments and entities 
        involved with the Nord Stream 2 pipeline to explain the 
        sanctions risks pursuant to multiple U.S. sanctions 
        authorities.
          Treasury is supporting the Administration's efforts to obtain 
        commitments from allies to strengthen European energy security 
        and the security of Ukraine and Central and Eastern Europe. In 
        the July 21, 2021 Joint Statement of the United States and 
        Germany on Support for Ukraine, European Energy Security, and 
        our Climate Goals, for example, Germany committed to utilizing 
        all available leverage to facilitate an extension of up to 10 
        years to Ukraine's gas transit agreement with Russia; committed 
        to taking action and pressing for effective measures at the 
        European level, including sanctions, should Russia attempt to 
        use energy as a weapon or commit further aggressive acts 
        against Ukraine; committed to establishing and administering a 
        Green Fund for Ukraine to support Ukraine's energy transition, 
        energy efficiency, and energy security; committed to expand its 
        engagement with the Three Seas Initiative to strengthen energy 
        security in Central and Eastern Europe; and underscored its 
        support for the European Union's Third Energy Package of 
        diversity and security of supply.
          Treasury is also engaged with the Government of Ukraine to 
        implement long outstanding anti-corruption and good governance 
        reforms for the long-term viability and efficiency of Ukraine's 
        energy sector, and to reduce Russia's ability to manipulate the 
        country's energy infrastructure for political gain.
          More broadly, Treasury takes seriously the range of Russia's 
        harmful foreign activities and has developed a tailored 
        approach that leverages all of our tools and authorities to 
        impose costs upon those acting on or behalf of the Kremlin 
        against U.S. interests while mitigating the potential 
        unintended economic consequences on partners and allies. Under 
        the Biden Administration, Treasury has taken significant action 
        to counter Russian malign influence, including by taking action 
        under Russia-related Executive Order (E.O. 14024), which was 
        signed by President Biden on April 15, 2021, to sanction 
        several technology firms supporting Russian intelligence 
        services and to impose new prohibitions on Russian sovereign 
        debt.

    3. Recent reports indicate the Biden Administration is reevaluating 
how the U.S. imposes sanctions.

    Question a. Will you commit to working with Congress on these 
changes?

          Answer. As I discussed during my confirmation hearing, I've 
        asked Deputy Secretary Adeyemo to lead a review of our use of 
        economic and financial sanctions. This Treasury-led review is 
        focused on identifying successes, opportunities for change or 
        improvements, and steps for implementation, so that our use of 
        sanctions remains relevant, rigorous, and fit to purpose, 
        effectively advancing the national security, foreign policy, 
        and economic aims of the United States. Congress is an 
        important part of this process. Our team has and will continue 
        to engage with Congress as we carry out the review.
          Treasury looks forward to continuing to work with Congress on 
        the use of the sanctions tool.

    Question b. What steps are you taking to ensure these changes do 
not undermine U.S. national security?

          Answer. Economic and financial sanctions are an important 
        tool to advance U.S. national security, foreign policy, and 
        economic objectives. Treasury is committed to working 
        intensively to use sanctions to advance an array of strategic 
        priorities, from pushing back on Russian threats, to addressing 
        challenges from China, to combatting terrorist threats and 
        human rights abusers.
          The sanctions review that Treasury is undertaking is not 
        focused on individual sanctions programs or individual 
        designations, and the determination to apply sanctions to a 
        particular national security, foreign policy, or economic 
        challenge should be made in the context of a broader U.S. 
        strategy to address that threat.

                           SUBCOMMITEE RECESS

    So with that, this hearing is adjourned.

    [Whereupon, at 3:56 p.m., Wednesday, June 23, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]


 
               SUBMITTED MATERIALS FOR THE HEARING RECORD

                              ----------                              


                            BANK OF ANGUILLA


                       ROLLING FORK, MISSISSIPPI


                        Bank of Anguilla Awards


------------------------------------------------------------------------
           Awardee             City   State   Year   Program    Amount
------------------------------------------------------------------------
Bank of Anguilla............  Anguil  MS     2021    RRP      $1,826,265
                               la
Bank of Anguilla............  Anguil  MS     2020    BEA         202,898
                               la
Bank of Anguilla............  Anguil  MS     2019    BEA         245,547
                               la
Bank of Anguilla............  Anguil  MS     2018    BEA         233,244
                               la
Bank of Anguilla............  Anguil  MS     2017    BEA          75,564
                               la
Bank of Anguilla............  Anguil  MS     2016    BEA         227,282
                               la
Bank of Anguilla............  Anguil  MS     2015    BEA         265,496
                               la
Bank of Anguilla............  Anguil  MS     2014    BEA         355,000
                               la
Bank of Anguilla............  Anguil  MS     2013    BEA          90,000
                               la
Bank of Anguilla............  Anguil  MS     1999    BEA           3,750
                               la
------------------------------------------------------------------------


                        Letter From Tracy Harden

    Our hometown bank, Bank of Anguilla, means to me stability, action, 
care, and love. I've seen them back our whole community during some 
difficult years. It is always a comfort to know that you can go to 
anybody at the bank for help, but especially being able to call your 
president of you bank and watch him work things out for you. We've 
struggled through a couple of hard years, not just me, but the whole 
community. All of us, the rich and the poor, have struggled. We've had 
it rough but there has never been a time we could not call on our bank 
to help us. Other business owners and I, didn't know how we would fare 
after all of this flooding, nor how we would come back from it all. 
After the devastating flooding, corona hit us. We started hearing about 
the PPP loans and the potential benefit to business owners. All it took 
was a quick call to the bank and they worked the loans all out for us. 
Not only did they make sure we had the loans to keep our employees 
working but the bank as a whole would go out of its way to support our 
business. They did this by feeding their staff lunch from my restaurant 
or buying lunch in town for people in town who were having it rough. 
Minorities were hit especially hard being that a lot of them worked 
with the farmers and once the farmers couldn't plant, they weren't able 
pay their employees. Bank of Anguilla stepped in and provided small 
loans until they could get on their feet again. All of that just means 
the world to us. We love our little town and community. Without our 
bank, I just don't know where we would be.

Regards,

Tracy Harden


                        HARBOR BANK OF MARYLAND


                          BALTIMORE, MARYLAND


                   Harbor Bank and Affiliates Awards


----------------------------------------------------------------------------------------------------------------
              Awardee                        City             State       Year        Program          Amount
----------------------------------------------------------------------------------------------------------------
Harbor Bank of Maryland Community    Baltimore             MD             2021   RRP                    $526,000
 Development Corporation.
Harbor Bank of Maryland............  Baltimore             MD             2021   RRP                   1,826,265
Harbor Bank of Maryland............  Baltimore             MD             2019   CDFI-FA                 649,000
Harbor Bank of Maryland Community    Baltimore             MD             2019   CDFI-TA                 125,000
 Development Corporation.
Harbor Bankshares Corporation......  Baltimore             MD             2019   NMTC                 50,000,000
Harbor Bank of Maryland............  Baltimore             MD             2018   BEA                      96,300
Harbor Bankshares Corporation......  Baltimore             MD             2018   NMTC                 35,000,000
Harbor Bankshares Corporation......  Baltimore             MD             2017   NMTC                 55,000,000
Harbor Bank of Maryland............  Baltimore             MD             2017   BEA                     233,389
Harbor Bankshares Corporation......  Baltimore             MD             2016   NMTC                 70,000,000
Harbor Bank of Maryland............  Baltimore             MD             2016   BEA                     112,489
Harbor Bank of Maryland............  Baltimore             MD             2015   BEA                      90,771
Harbor Bank of Maryland............  Baltimore             MD             2014   BEA                     355,000
Harbor Bankshares Corporation......  Baltimore             MD             2013   NMTC                 33,000,000
Harbor Bank of Maryland............  Baltimore             MD             2013   BEA                     323,000
Harbor Bank of Maryland............  Baltimore             MD             2012   BEA                     415,000
Harbor Bank of Maryland............  Baltimore             MD             2011   BEA                     500,000
Harbor Bankshares Corporation......  Baltimore             MD             2010   NMTC                 21,000,000
Harbor Bank of Maryland............  Baltimore             MD             2010   BEA                     517,243
Harbor Bankshares Corporation......  Baltimore             MD             2009   NMTC                 20,000,000
Harbor Bankshares Corporation......  Baltimore             MD             2008   NMTC                 50,000,000
Harbor Bankshares Corporation......  Baltimore             MD             2003   NMTC                 50,000,000
Harbor Bank of Maryland............  Baltimore             MD             2003   BEA                     663,818
Harbor Bank of Maryland............  Baltimore             MD             2002   BEA                     231,000
Harbor Bank of Maryland............  Baltimore             MD             2001   BEA                     229,053
Harbor Bank of Maryland............  Baltimore             MD             2000   BEA                     126,690
----------------------------------------------------------------------------------------------------------------
                                     ....................  ...........  .......  .................  $391,020,018
----------------------------------------------------------------------------------------------------------------

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