[Senate Hearing 117-215]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-215

                     THE QUARTERLY CARES ACT REPORT TO 
                                 CONGRESS

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

                                HEARING

                               BEFORE THE

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

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

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

                               __________

                             MARCH 24, 2021

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


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

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-083 PDF                 WASHINGTON : 2022                     
          
----------------------------------------------------------------------------------- 

            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku Chief Counsel

                         Tanya Otsuka, Counsel

                Corey Frayer, Professional Staff Member

                 Dan Sullivan, Republican Chief Counsel

          Hallee Morgan, Republican Professional Staff Member

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                       WEDNESDAY, MARCH 24, 2021

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    39

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     3

                               WITNESSES

Janet L. Yellen, Secretary, Department of the Treasury...........     5
    Prepared statement...........................................    40
    Responses to written questions of:
        Chairman Brown...........................................    49
        Senator Toomey...........................................    49
        Senator Warner...........................................    53
        Senator Cortez Masto.....................................    56
        Senator Smith............................................    58
        Senator Crapo............................................    59
        Senator Rounds...........................................    62
        Senator Daines...........................................    62
Jerome H. Powell, Chairman, Board of Governors of the Federal 
  Reserve System.................................................     7
    Prepared statement...........................................    46
    Responses to written questions of:
        Chairman Brown...........................................    64
        Senator Toomey...........................................    65
        Senator Cortez Masto.....................................    67
        Senator Crapo............................................    69
        Senator Rounds...........................................    73

                                 (iii)

 
               THE QUARTERLY CARES ACT REPORT TO CONGRESS

                              ----------                              


                       WEDNESDAY, MARCH 24, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., via Webex, Hon. Sherrod 
Brown, Chairman of the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Banking, Housing, and Urban 
Affairs Committee will come to order. Thank you all for joining 
us.
    This hearing, again, is in the virtual format. For those 
joining remotely, a few reminders.
    Once you start speaking, there will be a slight delay 
before you are displayed on the screen. To minimize background 
noise, please click the mute button until it is your turn to 
speak or to ask questions.
    You should all have one box on your screens labeled 
``Clock'' that will show how much time is remaining. For all 
Senators, the 5-minute clock still applies for your questions.
    At 30 seconds remaining, you will hear a bell ring to 
remind you the time is almost expired. It rings again when your 
time has expired.
    If there is a technology issue, we will move to the next 
Senator until it is resolved. To simplify the speaking order 
process, Senator Toomey and I have agreed to go by seniority 
for this hearing.
    One year ago, we were weeks into this pandemic. Already the 
United States had the most confirmed infections in the world.
    By April, a million Americans had gotten the virus; 10 
million were out of work. By the end of the year, more than 
350,000 had died. We represent just 4 percent of the world's 
population, but we were 20 percent of the world's deaths.
    A year later, things could not look more different.
    Under President Biden's leadership, we are once again the 
envy of the world, on track to lead the world in vaccinations.
    Think about that. After spending a year falling behind 
other countries, with more cases and more deaths, now in a 
matter of months things have reversed.
    We are leading the world again, reminding everyone what we 
can achieve when we unleash American ingenuity and talent. We 
are showing people what we can do to make all our lives better 
when we invest in and follow, listen to and follow America's 
scientists and public health experts.
    Because of that leadership, this summer we will again have 
hugs and barbecues and birthday celebrations. ``Help Wanted'' 
signs are going to go up in windows again. Customers will feel 
safe going back in stores. Families will be back in local 
restaurants.
    And as Chair Powell has told us again and again, the best 
way to get the economy back on track is to get the virus under 
control.
    This is not happening by accident. This is what leadership 
looks like. This is what a Government that is on your side 
looks like.
    Last March, as we were staring down those staggering job 
losses, the Federal Reserve and Congress both sprang into 
action.
    We came together bipartisanly to pass the CARES Act. It was 
a lifeline for so many, to help them pay their bills, to keep 
them in their homes, to keep businesses from going under.
    And as a side effect of helping everyone else, the bottom 
did not fall out of the financial system. The stock market, as 
we know, did more than just fine.
    That led the last administration and Republicans in 
Congress to think their job was done. After all, the stock 
market rebounded and corporate profits were soaring.
    But for so many Americans, the past year has been the 
hardest of their lives.
    More than 540,000 Americans have lost their lives from this 
virus. That is more than half a million families grieving 
grandparents, mothers, fathers, daughters, brothers.
    We have lost 9.5 million jobs since last February. Many of 
those job losses, as we know, have fallen on women. Too many 
mothers feel like they have lost their livelihoods, lost their 
support system, lost the ability to have a moment to themselves 
to breathe.
    We have missed far too many birthdays and weddings and 
graduations. Many Americans are about to celebrate their second 
Passover or their second Easter in a row without being able to 
attend services or celebrate in person.
    We have missed hugs with grandparents and family dinners--
all the little moments with our loved ones that make our lives 
full and meaningful.
    As President Biden said, while it has been different for 
everyone, we all lost something.
    But today help is here finally. After a year of Americans 
being told by their Government, ``We cannot help you, we cannot 
afford it, you are on your own,'' after a year of inaction and 
indifference, the American Rescue Plan will deliver on the hope 
that Americans voted for: put shots in people's arms, money in 
people's pockets, kids back in school.
    This is the investment we need that will defeat the virus, 
rescue the economy, and begin the work of building a better 
system for the future.
    Our witnesses today, Treasury Secretary Yellen and Federal 
Reserve Chair Powell, play a key role and have played a key 
role for years but especially now in our economic recovery.
    This is Secretary Yellen's first hearing before our 
Committee as head of the Treasury. That makes this the first 
time in American history a woman has come before this Committee 
as the head of our Nation's economic policy. It is about time.
    Welcome, Secretary Yellen. You and your colleagues at 
Treasury will have a huge role to play in making the American 
Rescue Plan a success, making sure that renters and homeowners 
can stay in their homes, getting funding to our communities to 
make sure they can help keep small businesses' doors open.
    I spoke to a Republican mayor in western Ohio this week who 
said she is going to use a big part of the dollars that we have 
sent her to work with local businesses so they can continue to 
exist and again grow.
    You are all charged with expanding the Earned Income and 
Child Tax Credits, to put money directly in the pockets of 
workers, to help millions of working-class and middle- class 
parents keep up with the huge costs of raising a family. And 
you are responsible for getting direct stimulus checks to the 
vast majority of Americans. More than 100 million people 
already have their checks and a little more, just a little 
more, economic security and peace of mind.
    The Fed can also make sure it uses all of its tools to 
support a strong economic recovery that reaches all workers and 
all communities, not just Wall Street.
    That means we just cannot go back to the way things were 
before the pandemic. For too many Americans, the economy did 
not work for them, in fact, has not worked for a very long time 
for them.
    The gap between workers' wages and corporate profits has 
soared over the past few decades. Black and brown workers, and 
women, in so many cases have never had their hard work pay off 
like it should.
    And when Government is set up to benefit the richest 
corporations instead of the people who make our economy work, 
we get growing inequality, wealth concentrated at the very top, 
and a shrinking middle class. We are all too familiar with 
that.
    The past year--not to mention the past third of a century--
makes it obvious: When we funnel money to Wall Street and the 
largest corporations and the richest tiny sliver of people, it 
never trickles down to the rest of us.
    We tried that approach repeatedly. It failed. The American 
Rescue Plan is the beginning of a new era, when we invest 
directly in the people who make our country work.
    That means growing an economy where one job is enough to 
build a middle-class life. It means seizing every opportunity 
to lead the world in clean energy manufacturing and new, clean 
infrastructure.
    It means giving people power over their own money and the 
financial security to weather an emergency.
    It means building an economy where hard work pays off for 
everyone.
    I look forward to hearing from Secretary Yellen and Chair 
Powell about how we will do that together.
    Ranking Member Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Well, thank you, Mr. Chairman, and thank 
you to Chair Powell and Secretary Yellen for appearing today.
    You know, a year ago our economy and markets were roiled by 
COVID-19 and the Government-ordered business shutdowns. We saw 
extraordinary turmoil in credit markets, and that turmoil 
threatened the ability of households and businesses, States and 
municipalities to obtain the credit that they needed. That kind 
of turmoil presented, in my view, the very real threat of a 
full-blown depression that could have taken years to recover 
from.
    In response, Congress passed the CARES Act to provide 
temporary relief to help the country weather a temporary storm. 
It was really an extraordinary response to an extraordinary 
situation, and thankfully, it proved remarkably effective, and 
we are now well on our way to a very strong recovery. The 
vaccine is being administered at a rate of over 2 million doses 
a day, states are reopening, and GDP is set to reach pre-
pandemic levels, maybe as soon as this month--far earlier than 
either the CBO or the Fed originally projected.
    The economy has been in strong recovery mode since last 
summer when we saw 38 percent GDP growth in the third quarter 
and well before our Democratic colleagues enacted a $2 trillion 
spending blowout that had little to do with COVID.
    Congress must not use this pandemic as an excuse to 
permanently increase the size and role of the Federal 
Government. Congress certainly made this clear for the CARES 
Act emergency lending facilities. These facilities were 
established to stabilize turbulent credit markets so that 
households, businesses, States, and municipalities could access 
credit. The intent was clear. The facilities funded by the 
CARES Act were to be temporary, to provide liquidity, and to 
cease operations no later than the end of 2020. These 
facilities were extremely successful in achieving their 
intended purposes of restoring liquidity in the private capital 
markets. And in the December COVID relief bill, Congress 
ensured that these facilities would, in fact, be wound down by 
the year end as Congress had intended and the law required. 
They cannot be restarted or replicated in the future without 
congressional approval.
    In addition to Congress' swift response, the Fed's response 
last spring was massive and played a crucial role in our 
ongoing economic recovery. But as is the case with Congress, 
the Fed also must fight the urge to continue this response 
beyond its original purpose. Last March, the Fed lowered 
interest rates to nearly zero and initiated a record expansion 
of its balance sheet. This accommodation has remained, and by 
both official forecasts and market expectations, it is going to 
continue well beyond the point of full recovery. And that 
raises at least two concerns.
    The first concern is that the Fed's increased footprint is 
almost a permanent feature, and if this is the case and there 
is no eventual reduction in the size of the portfolio, then the 
Fed's quantitative easing to date would amount to a 
monetization of Government debt, and I certainly hope that that 
is not the case.
    The second concern is that such an accommodative stance 
leaves our economy vulnerable to inflation. The Fed has 
signaled that its dovish monetary policy is here for a very 
long time. Its March summary of economic projections does not 
forecast any rate hikes until 2024 at the earliest, and the Fed 
appears to have no plans in place for reducing its monthly 
securities purchases.
    Given the current economic recovery and the recent 
increases in commodity prices, inflation expectations, and Fed 
communications, I do worry that the Fed may be behind the curve 
when inflation inevitably picks up.
    A final point and a warning. Very, very little of the 
Democrats' recent $2 trillion so-called American Rescue Plan 
had anything to do with COVID. It seemed more like a mad dash 
to claim credit for a recovery that was well underway and 
authorize as much money as possible to try to fundamental 
remake our society to one where the State is at the center of 
life for many more Americans. It was a partisan bloated 
spending bill. It contained stimulus checks for people with 
six-figure salaries who had no loss of income, expanded welfare 
benefits that eliminates incentives to work, and minimized 
personal responsibility. There were reparations, as the 
Chairwoman of the Senate Agriculture Committee called the loan 
forgiveness program that is based entirely on race and 
ethnicity. There were bailouts for chronically mismanaged 
States and cities despite their having record revenue in 2020 
and half a trillion dollars in addition that had already been 
provided by Federal aid. And there was a Federal plus-up of 
unemployment insurance that will pay about half of unemployed 
people more money not to work than they make working.
    In the long run, those kinds of policies will reduce 
productivity, diminish economic growth, and that in turn means 
a lower standard of living for all Americans. And it will 
exacerbate societal fractures. Fewer people will be paying 
taxes to an ever more growing Government, and those who do work 
will increasingly resent those who choose not to and yet enjoy 
the same or higher standard of living. That is unhealthy for 
the body politic, for our economy, and for our society, writ 
large.
    I look forward to the testimony of our witnesses and the 
question period later. Thank you, Mr. Chairman.
    Mr. Chairman, I think you are on mute.
    [Pause.]
    Secretary Yellen. Still mute.
    [Pause.]
    Senator Toomey. Mr. Chairman, if you have got a technical 
problem here, would you like for me to kick this over to our 
witnesses and then get back to you? Give me a thumbs up. OK. 
Then in that case, until we can resolve this technical 
difficulty, I will recognize our witnesses.
    I do not have a proper introduction prepared, but if there 
were ever two witnesses who do not need an introduction, it 
would be the two folks here. And I think we are leading off 
with Secretary Yellen, so, Madam Secretary, if you could begin.

  STATEMENT OF JANET L. YELLEN, SECRETARY, DEPARTMENT OF THE 
                            TREASURY

    Secretary Yellen. Thank you, Senator Toomey. Chairman 
Brown, Ranking Member Toomey, members of the Committee, thank 
you for inviting me.
    We are meeting at a hopeful moment for the economy, but 
still a daunting one. While we are seeing signs of recovery, we 
should be clear-eyed about the hole we are digging out of.
    The country is still down nearly 10 million jobs from its 
pre-pandemic peak. When Congress passed the CARES and 
Consolidated Appropriations Acts last year, it gave the Federal 
Government some powerful tools to address the crisis. But upon 
taking office, I worried they were not powerful enough. After 
all, there were--and still are--some very deep pockets of pain 
in the data.
    One in ten homeowners with a mortgage are behind on their 
payments, and almost one in five renters are behind on their 
rent. There are 22 million people who say they do not have 
enough food to eat. One in ten adults are hungry in America.
    I looked at data like these, and I worried that the COVID 
economy was going to keep hurting millions of people now and 
haunt them long after the health emergency was over. We know 
that when the foundations of someone's life fall apart--when 
they lose the roof over their head or the ability to eat dinner 
every night--the pain can weigh on them for years. Their 
earning potential is permanently lowered. I worried about this 
happening on a mass scale.
    That is why I advocated very hard for the American Rescue 
Plan, and it is why my first--and most enthusiastic-- message 
today is: Thank you. With the passage of the Rescue Plan, I am 
confident that people will reach the other side of this 
pandemic with the foundations of their lives intact. And I 
believe they will be met there by a growing economy. In fact, I 
think we may see a return to full employment next year.
    Of course, the speed and strength of our recovery depends, 
in part, on how we implement the legislation. Treasury is 
tasked with much of that work, and there is nothing that I or 
my team take more seriously.
    We appreciate your oversight on this matter, and I want to 
briefly tell you about how we have been working. Since taking 
office 2 months ago, we have been expediting relief to the 
areas of greatest need, for example, small businesses--and 
especially the smallest small businesses, which are 
disproportionately owned by women and people of color.
    The pandemic has hit these businesses hard. The Paycheck 
Protection Program was an early lifeline, but because of issues 
with the program's design, the first rounds often did not reach 
the smallest sole proprietorships. We are addressing that now. 
We worked with SBA to tweak how the program was implemented. It 
is allowing the PPP to reach millions more microbusinesses and 
entrepreneurs, especially in rural and low-income areas.
    We are also building capacity to support these communities 
over the longer term. Because of the December legislation, 
Treasury now has $12 billion to inject into community 
development financial institutions and minority depository 
institutions. In turn, these CDFIs and MDIs can lend that 
capital out, helping people buy homes and start businesses in 
places that the financial services sector traditionally has not 
served well.
    Then there are the families I spoke about, the ones 
struggling to keep a roof over their head and food on the 
table. The American Rescue Plan provides more than $30 billion 
to help renters and homeowners at risk of losing their homes. 
And we are making sure that assistance flows as efficiently as 
possible.
    For instance, the previous administration put in place 
rules that required tenants and landlords to provide quite a 
bit of documentation to get rental assistance, including 
detailed statements about their income. But some people do not 
have access to those documents. We are cutting through the red 
tape for them, while still taking reasonable steps to prevent 
fraud and abuse.
    And, of course, we have been sending direct payments to 
Americans--a lot of Americans. As of last week, we had issued 
over 90 million payments. And all this is just a fraction of 
Treasury's work. There are so many more relief programs, 
including one that will provide $350 billion in aid to State 
and local governments. Implementing all of it is more 
complicated than it sounds, and we are working closely with 
stakeholders to make sure that these programs are both 
efficient and effective.
    Behind these many relief programs, these millions of 
transactions, are a staff of very dedicated--and very tired- -
Treasury and IRS employees. My final word is to them: Thank 
you. You are putting on a master class in how Government should 
work in the furnace of a crisis. I am grateful to be your 
colleague.
    With that, I am happy to answer any questions you have.
    Chairman Brown. Thank you, Secretary Yellen.
    Chair Powell, you are recognized for 5 minutes. And thank 
you, Ranking Member Toomey.

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

    Mr. Powell. Chairman Brown, Ranking Member Toomey, and 
other Members of the Committee, thank you for the opportunity 
to discuss the measures that we have taken to address the 
hardship wrought by the pandemic.
    I would like to start by noting the upcoming 1-year 
anniversary of the CARES Act. With unanimous approval, Congress 
provided by far the fastest and largest response to any postwar 
economic downturn, offering fiscal support for households, 
businesses, health care providers, and State and local 
governments. This historically important legislation provided 
critical support in our Nation's hour of need.
    As the virus arrived in force, our immediate challenge was 
to limit the severity and duration of the fallout to avoid 
longer-run damage. At the Fed, we also acted with unprecedented 
speed and force, using the full range of policy tools at our 
disposal.
    Today the situation is much improved. While the economic 
fallout has been real and widespread, the worst was avoided by 
swift and vigorous action--from Congress and the Federal 
Reserve, from across Government and cities and towns, and from 
individuals, communities, and the private sector. More people 
held on to their jobs, more businesses kept their doors open, 
and more incomes were saved. But the recovery is far from 
complete, so at the Fed, we will continue to provide the 
economy the support that it needs for as long as it takes.
    As we have emphasized throughout the pandemic, the path of 
the economy continues to depend on the course of the virus. 
Since January, the number of new cases, hospitalizations, and 
deaths has fallen, and ongoing vaccinations offer hope for a 
return to more normal conditions later this year. In the 
meantime, continued social distancing and mask wearing will 
help us reach that goal.
    Indicators of economic activity and employment have turned 
up recently. Household spending on goods has risen notably so 
far this year, although spending on services remains low, 
especially in sectors that typically require in-person 
gatherings.
    The housing sector has more than fully recovered from the 
downturn, while business investment and manufacturing 
production have also picked up. As with overall economic 
activity, conditions in the labor market have recently 
improved. Employment rose by 379,000 in February, as the 
leisure and hospitality sector recouped about two-thirds of the 
jobs it lost in December and January.
    The recovery has progressed more quickly than generally 
expected and looks to be strengthening. This is due in 
significant part to the unprecedented fiscal and monetary 
policy actions I mentioned, which provided essential support to 
households, businesses, and communities.
    However, the sectors of the economy most adversely affected 
by the resurgence of the virus, and by greater social 
distancing, remain weak, and the unemployment rate-- still 
elevated at 6.2 percent--underestimates the shortfall, 
particularly as labor force participation remains notably below 
pre-pandemic levels.
    We welcome this progress, but we will not lose sight of the 
millions of Americans who are still hurting, including lower-
wage workers in the services sector, African Americans, 
Hispanics, and other minority groups that have been especially 
hard hit.
    The Fed's response has been guided by our mandate to 
promote maximum employment and price stability for the American 
people, along with our responsibilities to promote the 
stability of the financial system. When financial markets came 
under intense pressure last year, we took broad and forceful 
actions, deploying both our conventional and emergency lending 
tools to more directly support the flow of credit. Our actions, 
taken together, helped unlock more than $2 trillion in funding 
to support businesses large and small, nonprofits, and State 
and local governments between April and December. This support, 
in turn, has helped keep organizations from shuttering and put 
employers in both a better position to keep workers on and to 
hire them back as the recovery continues.
    Our programs served as a backstop to key credit markets and 
helped restore the flow of credit from private lenders through 
normal channels. We deployed these lending powers to an 
unprecedented extent last year. Our emergency lending powers 
require the approval of the Treasury and are available only in 
very unusual circumstances.
    Many of these programs were supported by funding from the 
CARES Act. Those facilities provided essential support through 
a very difficult year. They are now closed, and the Fed has 
returned the large majority of the Treasury's CARES Act equity, 
as required by law. Our other emergency lending facilities are 
following suit imminently, although we recently extended the 
Paycheck Protection Program Lending Facility for another 
quarter to continue to support the PPP.
    Everything the Fed does is in service to our public 
mission. We are committed to using our full range of tools to 
support the economy and to help assure that the recovery from 
this difficult period will be as robust as possible on behalf 
of communities, families, and businesses across the country.
    Thank you. I look forward to your questions.
    Chairman Brown. Thank you, Chair Powell, and thank you, 
Madam Secretary.
    Chair Powell, do you think all this fiscal support will 
help us get to full employment and improve our overall economic 
and GDP growth?
    Mr. Powell. I think that the fiscal support that Congress 
has provided since the beginning has been really at the heart 
of the recovery and deserves much of the credit for the 
strength of the recovery over the course of the last year. I am 
loath to comment on particular fiscal bills, as you know, but I 
would just say generally this situation really called for a 
strong fiscal response, and we certainly had that.
    Chairman Brown. Thank you.
    Secretary Yellen, how does the American Rescue Plan help 
women and people of color and the workers who have so often 
been left behind in our economy?
    Secretary Yellen. Well, the rescue plan is very much 
focused on getting aid in a whole variety of ways to those 
groups, starting with unemployment insurance, rental assistance 
for people who are in danger of losing their homes, food 
assistance, assistance to small businesses, especially in low-
income minority communities, just aid to State and local 
governments, much of which can be directed toward those groups 
that have been most adversely affected by the pandemic. So 
there is also child support, an increase in the child tax 
credit to help families with burdens, household burdens. There 
is an expansion of the child dependent care credit that will 
help women who were at home with family responsibilities get 
back to work. So a broad range of features that are directed at 
those groups.
    Chairman Brown. Thank you, Madam Secretary. And I notice 
one of the first things you mentioned is particularly of 
interest in this Committee, and that is the work that a number 
of my colleagues did to help renters pay their bills and keep 
roofs over their heads. I hope you will continue to work with 
State, local, and tribal grantees to get this help out to 
renters quickly.
    Secretary Yellen. Absolutely.
    Chairman Brown. Thank you. Secretary Yellen, do you think 
getting people vaccinated as fast as possible, as the Biden 
administration and as the American Rescue Plan are doing, does 
getting vaccinated as fast as possible, does that help the 
economic recovery?
    Secretary Yellen. Oh, yes, absolutely. As Chair Powell 
indicated in his own remarks, ultimately the economic recovery 
depends on success in getting the pandemic under control, and 
vaccinations are critical to our ability to accomplish that.
    Chairman Brown. And, Chair Powell, as you had said earlier, 
you obviously agree with Secretary Yellen from what you had 
said earlier. Chair Powell, do you think direct payments to 
families help the economic recovery?
    Mr. Powell. Again, these matters are for Congress, for 
elected representatives, not for us. Nobody has elected us to 
make those decisions. I would just rather say at a high level, 
I think fiscal policy has provided a lot of support, and that 
has been appropriate.
    Chairman Brown. Secretary Yellen, do you want to expand on 
that same question briefly, direct payments helping the 
economic recovery?
    Secretary Yellen. Well, I think the direct payments are 
providing support to families for a wide range of burdens that 
many have suffered over the last years. There is other support 
that is clearly targeted, but I think this is helpful, and this 
spending will speed the recovery.
    Chairman Brown. One last question of both of you. Secretary 
Yellen, do you think that banks buying back their stock helps 
the economic recovery?
    Secretary Yellen. I have been opposed earlier when we were 
very concerned about the situation that banks would face about 
stock buybacks. But the financial institutions look healthier 
now, and I believe they should have some ability to, you know, 
abiding by the rules to make returns to shareholders.
    Chairman Brown. OK. My last--even though I said that was 
the last, my last joint question to both of you, to each of 
you. What are the lessons learned from the pandemic's impact on 
the economy that we should use to make the economy and 
financial system more resilient to the impacts of climate 
change? Do you want to start, Chair Powell, on that? Then we 
will close with Secretary Yellen.
    Mr. Powell. So on climate change, I will just quickly say 
that, you know, we have a mandate to supervise financial 
institutions and one to look at financial stability. So we do 
not have a mandate to do anything in particular regarding 
climate change. We look at it only to the extent it is within 
those particular existing mandates. And as you know, we are in 
the early stages of trying to understand what the implications 
are both for financial stability and on a microprudential basis 
for individual financial institutions, how should they think 
about those risks and ultimately manage them over a longer 
period of time.
    Chairman Brown. Secretary Yellen.
    Secretary Yellen. I agree with that. I think it is very 
important to make sure that financial institutions are 
resilient to the risks from climate change as well as other 
risks, and I think it is important for regulators to assess 
those risks both to understand them and to help the 
institutions themselves understand and manage their risks.
    Chairman Brown. Thank you, Madam Secretary.
    Ranking Member Toomey is recognized.
    Senator Toomey. Thank you, Mr. Chairman.
    I just have to observe, if you pick up almost any newspaper 
in towns across Pennsylvania in the last week or so, a 
prominent story has been recurring all across the State, and 
that is the story of mayors and township commissioners and 
county commissioners meeting to try to figure out what in the 
world they are going to do with this mountain of cash that just 
got dropped on them after having collected all the revenue they 
expected last year. In some cases it is 50 percent of their 
entire budget, really just extraordinary.
    My question, I will start with Chairman Powell, and what I 
would like to do, Mr. Chairman, is follow up on the 
conversation we had last week. I want to kind of understand how 
the recent Fed projections fit together because in some ways 
there are some apparent outliers. At least it appears that way 
to me. What I am referring to is the Fed's recent revisions, 
economic forecasting revisions, have a very significant upward 
revision in GDP growth; 6.5 percent I think is your real GDP 
number for this year, not inconsistent with where a lot of 
private economists are. But that is a 2.3-percentage-point 
increase.
    The unemployment rate that you project is only a decline of 
half of a percent, and the inflation rate over the course of 
the full year, you guys are projecting that it will come in 
lower than it has been for the last 3 months. So, on average, 
for the remainder of the year, you are implicitly projecting 
inflation to decline.
    So I think most economic models that would have that big an 
upward revision in economic growth would have a stronger 
reduction in unemployment and higher likelihood of inflation, 
and my concern is, if your models systemically work to 
understate the progress we are likely to make on employment and 
understate the risk of inflation, of course, it could lead to 
accommodative policy that goes too far for too long.
    So can you walk us through why you have a relatively small 
improvement in the unemployment rate and a declining inflation 
despite the strong GDP growth?
    Mr. Powell. I would be glad to. Let me start by saying that 
what we publish in the Summary of Economic Projections is just 
that. It is individual projections that are totaled up and 
tabulated, really. It is not something we vote on. But I will 
address the medians, which are what we publish.
    So the reason that unemployment does not go down further 
given the level of growth is really just that we see 
participation expanding. It is a different margin. It is people 
coming back into the labor market, and that actually holds the 
unemployment rate up. It is a highly desirable outcome. But 
this was the biggest drop in participation since World War II. 
That is part of it. There are a bunch of other things that go 
into it, and, of course, there is a good amount of uncertainty 
around that.
    Senator Toomey. My concern is, because obviously private 
sector economists are aware of the decline in the workforce 
participation and seem to come to different conclusions. But I 
understand. This is an art, not a science.
    Let me just--because I am going to run out of time here--
direct my next question to Secretary Yellen. But, first, on the 
topic of IMF SDRs, I do want to thank Senator Kennedy for his 
leadership on this issue. Madam Secretary, as you know from our 
conversation, I am very concerned about the issuance of another 
$500, $600 billion of SDRs in the name of helping poor 
countries respond to COVID. SDR allocations are not meant to be 
a source of foreign aid. That is the realm of Congress to 
decide whether or not to extend foreign aid. And as you 
yourself have pointed out, this is an extremely inefficient way 
to deliver that aid since the money goes mostly to G-20 
countries that have no need for this.
    So I am just wondering why it is that you seem to have 
changed your position on the desirability of using SDRs for 
this purpose. And is this a final decision that has already 
been made, or is it still in flux?
    Secretary Yellen. Well, before committing to it, we will 
certainly, as the law requires, consult with Congress. I would 
say that the current crisis has increased the need for global 
reserves, and that is the IMF's assessment. The global economy 
suffered a very severe collapse in 2020. It contracted by 3.5 
percent. The emerging market and developing economies faced 
considerable external financing needs, and the SDR allocation 
will help countries meet this need for reserves without forcing 
them to tighten fiscal policy, which could lead to further 
global divergence.
    While this is a joint effort of the global community and 
there is broad support for an SDR allocation, it is true that 
rich countries will get SDR. That is how it works. It is tied 
to each country's quota in the IMF. But many countries have 
indicated a willingness and desire to recycle the SDRs they 
receive, either in the form of loans or grants, to low-income 
countries. And so that will magnify the impact of the SDR 
allocation in terms of providing resources to low-income 
countries.
    Senator Toomey. I see I am out of time. Thank you, Mr. 
Chairman.
    Chairman Brown. Thank you.
    Senator Reed from Rhode Island is recognized.
    Senator Reed. Thank you very much, Mr. Chairman. Welcome, 
Madam Secretary. Good to see you.
    Secretary Yellen. Good to see you, too.
    Senator Reed. We are all interested in getting everyone 
back to work. You have indicated, though, recently that it 
could be a full year until we reach full employment. In that 
interim, would you support enhanced unemployment benefits? I 
think the American Rescue Plan has done a great deal to help 
the unemployed, but that effort I think should continue. Your 
views, please?
    Secretary Yellen. Well, I think while unemployment remains 
high, it is important to provide the supplementary relief in 
the ARP, and that begins to expire I believe in the fall when I 
believe the economy will be getting back on its feet. People 
who have raised concerns about whether or not this additional 
aid will deter people from going back to work, that is 
certainly not an issue when unemployment is as high as it is 
now. And studies that have been done suggest that people 
receiving this have been accepting jobs. It has not deterred 
work. But I do think it is appropriate as the economy 
recovers--and I hope it will by the fall--that that should be 
phased out.
    Senator Reed. Just a follow-on point. I have noticed, 
coming from Rhode Island, in past recoveries some areas come 
back much faster for many different reasons. Some are slower. 
In the last major recession, Rhode Island and Nevada lagged 
behind significantly. Would it be appropriate for States to 
qualify for extended benefits if they are over a certain level 
of unemployment and even if other States have sort of broken 
through?
    Secretary Yellen. Well, I think, you know, the experience 
we have had suggests that the time may have come to modernize 
our unemployment system and to look for ways to tie the 
generosity of unemployment benefits to local conditions or to 
put in place automatic stabilizers that tie the local 
conditions to national unemployment rates. So that is an 
adjustment that would seem sensible to me.
    Senator Reed. Thank you, Madam Secretary.
    A further question. Let me thank you because you responded 
to a letter that Senator Collins and I sent you with regard to 
the Coronavirus Economic Relief for Transportation Services, or 
the CERTS Act, which actually helps immensely the motorcoach, 
school bus, and passenger vessel companies around the country.
    Can you give us an idea of when you will be issuing the 
guidance for the distribution of these resources? Because these 
companies are really hurting.
    Secretary Yellen. Well, I know they are hurting. They are 
mainly small businesses. It is a highly complex new grant 
program, and, unfortunately, our need to better understand 
eligibility and, you know, how to get money out to and inform 
those who are eligible for it, we have been working very hard 
on this, done a lot over the last couple of months. But we are 
working very hard to build an online application portal and to 
write up the standard agreement. So I hope soon we will be able 
to get it out. It turns out that there are a large number of 
companies that are eligible. We expect the demand to be very 
large relative to $2 billion in funding that is available, and 
we will have to sort through how to allocate it fairly.
    Senator Reed. Thank you. Chairman Powell, I have just a few 
seconds left, but we spoke about this previously, bottlenecks 
in the world economy, and today we have a classic example. The 
Suez Canal is tied up. But how are you reflecting those 
bottlenecks in the supply chain in your outcome, if at all, or 
your projections of economic growth?
    Mr. Powell. We have a literal bottleneck in the Suez Canal 
today.
    Senator Reed. Yeah, we do.
    Mr. Powell. Yes, we are monitoring all of that. Our staff 
is trying to model that as well. So we do have some slowdown in 
production. What has happened is that COVID has changed both 
demand and supply in some cases, and we are seeing it with 
chips that go into cars now. We are seeing it there. We are 
seeing it a various places in the economy. The sense of it, 
though, really is that there will be a little bit slower growth 
and maybe some modest upward pressure on prices of those goods, 
but that should be something that is temporary. You know, a 
bottleneck by definition is temporary as the supply side 
adjusts.
    Senator Reed. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Reed.
    Senator Shelby from Alabama is recognized for 5 minutes.
    Senator Shelby. Thank you, Mr. Chairman.
    Secretary Yellen, in 2017, when you were Chair of the 
Federal Reserve, you noted that it was concerning to you that 
you the U.S. debt-to-GDP ratio was about 75 percent at that 
time. Today the Congressional Budget Office projects debt to 
reach 102 percent of GDP at the end of 2021. Is the Nation's 
growing debt something to be concerned about? And if not, why 
not? Because it seems like we are layering more and more debt 
because of the crisis and so forth.
    Secretary Yellen. So, of course, our finances need to be on 
a sustainable long-run path, and that is a very critical 
responsibility for all of us.
    My views on the amount of fiscal space that the United 
States has, though, I would say have changed somewhat since 
2017 when I said that, and it is partly because the interest 
rate environment has been so very low. And most economists and 
observers believe that interest rates have been trending down 
in developed countries now for several decades, but that trend 
predates the financial crisis, and is likely to continue. And 
what it means is that whereas in 2007 when we had a 35-percent 
debt-to-GDP ratio, now it is closer to 100 percent. In fact, 
interest payments on that debt relative to GDP have not gone up 
at all. And so I think that is a more meaningful metric of the 
burden of the debt on society and on the Federal finances.
    And so I do believe we have more fiscal space, but it 
certainly does not mean that anything goes. I believe in 
responding to a crisis with a needed surge of spending that is 
temporary, that it was fully appropriate not to pay for it 
under the circumstances, but longer run, we do have to raise 
revenue to support permanent spending that we want to do.
    Senator Shelby. What long-term issues could come to haunt 
us dealing with substantial long-term debt to the economy? In 
other words, it cannot be a benefit for the economy except 
temporarily. What are some of the systemic things that could 
happen because of too much debt?
    Secretary Yellen. Well, if a country has too much debt, it 
may drive up interest rates, and in the process of doing that, 
it can crowd out other forms of productive investment in the 
economy, capital investment, housing, or other interest-
sensitive sectors. And that may be a good thing or it may be a 
bad thing. It depends on what the expenditure is for.
    If it were, say, for infrastructure spending or for 
investments in people that had a very high payoff, we might 
decide that that was a worthwhile trade to make, but it does 
have the potential to crowd out private spending.
    Senator Shelby. Chairman Powell, I have a question for you, 
if I could. The 10-year Treasury yield jumped above 1.7 percent 
last week, 1.7, which was its highest level in more than a 
year. I think it has dropped a little since then. But the yield 
curve between the 2-year and the 10- year notes were 160 basis 
points, the steepest since 2015. To what do you attribute this 
uptick in yields in recent weeks? And what about the yield 
curve? Could you get into that for just a minute?
    Mr. Powell. Sure. So it seems that rates have responded to 
news about vaccination and ultimately about growth, so higher 
growth, higher inflation, lower cases of COVID. So, in effect, 
there has been an underlying sense of an improve economic 
outlook, and that has to be part of why rates would move back 
up from the extraordinarily low levels they were at back up 
toward levels that we are more likely to see. And that has been 
an orderly process. I would be concerned if it were not an 
orderly process or if conditions were to tighten to the point 
where they might threaten our recovery.
    Senator Shelby. Mr. Chairman, we are all concerned about 
inflation price stability. That is one of your mandates at the 
Federal Reserve. In the event that inflation does rise 
precipitously and becomes an issue--we hope not, but it could--
what tools would the Federal Reserve utilize or have left to 
maintain and work toward price stability?
    Mr. Powell. Those fundamental and well-understood tools 
really are for that purpose, for the purpose of guiding 
inflation. That is really our tools that create accommodative 
or less accommodative monetary policy. So that is interest 
rates, and it is also asset purchases.
    Let me just say we do not expect the kind of inflation that 
you talked about, but we have those tools, and if we were to 
face inflation that moved up and that threatened to de-anchor 
inflation expectations materially above 2 percent, then we 
would have those tools, and we would use them in a way to guide 
inflation back to 2 percent.
    Senator Shelby. What do you believe is going to be----
    Chairman Brown. Senator Shelby, try to wrap up if you can, 
Senator Shelby.
    Senator Shelby. OK. My last question. What do you think 
will be the growth rate of the economy, real growth, in the 
next 9 months?
    Mr. Powell. Well, you know, I do not have a personal 
forecast I would disclose, but I will just point to the median 
of FOMC participants for this year was 6.5 percent, I believe, 
and, as I think Senator Toomey mentioned, that is very much in 
line with public forecasts. It is going to be a very, very 
strong year in the most likely case. There are, of course, 
risks to the upside and downside, but it should be a very 
strong year from a growth standpoint.
    Senator Shelby. Thank you.
    Thank you, Mr. Chairman.
    Chairman Brown. Thanks, Senator Shelby.
    Senator Tester from Montana is recognized for 5 minutes.
    Senator Tester. Thank you, Mr. Chairman, and I want to 
thank both Secretary Yellen and Chairman Powell for being here. 
Chairman Powell, thank you for your continued service, and, 
Secretary Yellen, it is good to see you back in the game again.
    Secretary Yellen. Thank you.
    Senator Tester. I am going to start with Chairman Powell. 
Following the passage of the American Rescue Plan, the Federal 
Reserve upgraded your economic projections. The FOMC estimated 
last week GDP will rebound and unemployment rates decrease more 
quickly. But as you highlighted already today, we still have a 
ways to go. Over the past year, I have shared your concerns of 
undershooting the economic recovery, and there are still many 
small businesses, workers, and families in Montana and across 
this country that are struggling because of this pandemic and 
the economic crisis that it has created.
    How concerned are you about inflation once the economy gets 
on the plus side?
    Mr. Powell. Well, let me say we take the 2 percent 
inflation target very, very seriously. It is half of our 
mandate, so we are strongly committed to inflation at 2 percent 
over time. To us that means inflation expectations need to be 
anchored at 2 percent, and that means that inflation has to 
average 2 percent over time. So it is absolutely fundamental 
that we achieve that.
    In the near term, we do expect, as many forecasters do, 
that there will be some upward pressure on prices, and also 
there will be a technical thing, base effects, as the very low 
readings from April and March of last year drop out of the 12-
year calculation. We do not expect that that upward pressure 
will produce substantially higher prices or that the effects 
will be persistent. We expect that they will be transitory or 
temporary. If it turns out that we do see substantially higher 
inflation, you know, that would risk persistent inflation 
materially above our goal, then, of course, we would use our 
tools to bring inflation back down to 2 percent.
    Senator Tester. And from what you just said, then, you 
anticipate there could be some upward pressure, but long term 
you do not see this as being an issue?
    Mr. Powell. Long term, we think that the inflation dynamics 
that we have seen around the world for a quarter of a century 
are essentially intact and, you know, we have got a world that 
is short of demand, with very low inflation. The U.S. has had 
low inflation for some time. We think those dynamics have not 
gone away overnight and will not.
    Senator Tester. Thank you, Chairman Powell.
    Secretary Yellen, I see you are working from your home. 
There are a bunch of decisions that you have to make about how 
this money is going to go out and what it can be used for and 
the kind of flexibility that is out there. I am talking about 
from the American Rescue Plan. Different localities face 
different challenges. But the fact is that there was a 
concerted effort to make sure that we get some money to 
municipalities without the States skimming off any money, and 
not only municipalities that are large, but municipalities of 
all sizes.
    The question is: Are you committed to making sure that 
these funds make it to the smallest of towns that have not 
received any assistance yet without the States skimming off any 
money off the top or adding additional restrictions that were 
not included in the legislation or Treasury's guidance?
    Secretary Yellen. Well, we are committed to following the 
instructions that Congress gave us, and I would agree that that 
was Congress' intention where we have about 60 days to write 
the guidance on the use of those State and local funds. We are 
consulting broadly. Congress intended for there to be a lot of 
flexibility in how States and localities can use those funds, 
and we will certainly try to make sure that they are 
distributed as Congress intended and that the flexibility is 
there, although we also want to make sure that there--you know, 
we have requirements to make sure the money is used responsibly 
in accordance with Congress' direction.
    Senator Tester. I appreciate that. When do you--you say you 
have got 60 days to write up the guidance. Could you give me a 
ballpark figure? Will it take the full 60 days for the guidance 
for municipalities? Or do you intend to get it out sooner?
    Secretary Yellen. We are working as hard as we possibly can 
on this. There are a host of issues about how to interpret the 
requirements of this statute. I do not want to promise that it 
will take less than 60 days, but we are going to try to get 
this done as soon as we possibly can.
    Senator Tester. I appreciate that, and I appreciate your 
hard work on this. I get questions all the time about the 
flexibility on how these monies can be used. By the way, the 
municipalities and counties in Montana are very thankful for 
these dollars. They have been running on shoestring budgets 
forever, and this is the first time they are going to be able 
to make some real improvements in their counties and 
municipalities, plus being able to pay for police officers and 
fire departments and make sure the garbage gets picked up.
    So thank you very much. I appreciate both of you, and we 
look forward to visiting on down the line.
    Thank you, Mr. Chairman.
    Chairman Brown. Thanks, Senator Tester.
    Senator Crapo from Idaho is recognized for 5 minutes.
    Senator Crapo. Thank you, Mr. Chairman. And, Secretary 
Yellen, I want to talk with you about another guidance issue 
that we need to focus on in the American Recovery Act. In the 
act there is a restriction on the use of funds under the State 
Fiscal Recovery Fund that was included that would prohibit 
States from using funds to, and this is a direct quote, 
``either directly or indirectly offset a reduction in the next 
tax revenue of such State or territory resulting from a change 
in law, regulation, or administrative interpretation during the 
covered period that reduces any tax by providing a reduction in 
a rate, a rebate, a deduction, a credit, or otherwise, or 
delays the imposition of any tax or tax increase.''
    As you know very well, this has raised many questions and 
concerns. Eleven of my Republican colleagues and I introduced 
the State Fiscal Flexibility Act last week to simply remove 
this troubling restriction from the law. Twenty-one State 
Attorneys General wrote you asking for a clarification on this 
issue, and a lawsuit was filed by the Ohio Attorney General. 
This is an issue that needs immediate clarity, and I am aware 
of the letter that you responded to the Attorneys General with 
in which you said that you will provide guidance before the 
States must submit certification under 602(d)(1). But that does 
not really tell us how soon this guidance is going to come out. 
It seems to me the States are hamstrung right now. They cannot 
do anything until you give them the guidance. Could you give us 
some clarity on how soon this guidance will come out?
    Secretary Yellen. Well, we have a 60-day period to complete 
the work to get the money to distribute to the State and local 
governments, and there are a host of thorny questions that we 
have to work through that connect with the issue that you just 
mentioned. And we simply are going to have to try to craft 
guidance in that period of time. We are working on it 24/7 to 
get it out as rapidly as we possibly can.
    Senator Crapo. Well, thank you, and I appreciate that. I am 
going to encourage you to do everything you can in developing 
this guidance to answer those thorny questions in a way that 
gives maximum flexibility to the States and local communities.
    Again, in the letter you wrote to the Attorneys General, 
you seemed to be moving in that direction. You stated that 
nothing in the act prevents the States from enacting a broad 
variety of tax cuts. It just cannot use the revenue from the 
act as an offset for those tax cuts.
    Secretary Yellen. That is correct.
    Senator Crapo. I really appreciate that perspective. As I 
am sure you are aware, that still leaves the question as to 
what is offsetting. How do you intend to approach the question 
of what is directly or indirectly offsetting a tax cut?
    Secretary Yellen. Well, when I said that we have thorny 
questions to work through, you have just indicated why we do. 
We will have to define what it means to use money from this as 
an offset for tax cuts, and given the fungibility of money, it 
is a hard question to answer. But that is what we are required 
to do, and we will do our best to offer guidance on it.
    Senator Crapo. Well, you just hit the nail on the head when 
you referenced the fungibility of money. So, again, I want to 
encourage you to be very restrictive in terms of the 
application of this prohibition and give the maximum 
flexibility to States and local communities as they administer 
these funds.
    I just want to ask you an example question. I want to keep 
pushing on this issue with you.
    Secretary Yellen. All right.
    Senator Crapo. And I realize you may not be able to answer 
this any more specifically than you have been able to give 
specifics so far. But I am just going to give a hypothetical. 
What if a State decides that as with the Federal act's waiver 
of Federal taxation on a certain amount of unemployment 
compensation, the State would like to also waive a portion of 
its tax on those same unemployment compensation dollars? Would 
that be a penalty that the State would have to pay for if it 
did that?
    Secretary Yellen. So we have been asked this question by a 
number of States, and it is one we are going to have to 
consider and work through whether informing changes that States 
make, for example, with respect to unemployment insurance, 
whether or not that would qualify as a tax cut or be exempt, 
and we are examining that question carefully.
    Senator Crapo. Thank you. Again, I am just going to 
encourage you again to give the States the maximum flexibility 
you can. They are hamstrung, and the last thing we should do is 
put States in a predicament where they could lose the funding 
that was authorized by Congress to help them just because they 
want to manage their fiscal policy in a way that might include 
some reduction of tax revenue.
    Thank you.
    Chairman Brown. Thank you, Senator Crapo.
    Senator Menendez from New Jersey is recognized for 5 
minutes.
    Senator Menendez. Thank you, Mr. Chairman.
    The Paycheck Protection Program has delivered over $718 
billion in critical relief to small businesses. It is set to 
expire exactly 1 week from today. Secretary Yellen and Chairman 
Powell, is the economy at a place where Congress can safely end 
PPP relief to small businesses?
    Secretary Yellen. So, of course, the economy is not at a 
place where small businesses that have been affected are able 
to thrive. I am not sure how much money remains in the program, 
but there is some, and I would be supportive of an extension.
    Senator Menendez. Chairman Powell.
    Mr. Powell. I would defer to the Secretary on that 
question. Thanks.
    Senator Menendez. Well, in February, three out of every ten 
small businesses said they would likely not survive 2021 
without additional Government assistance. Now, fortunately, the 
American Rescue Plan included $7.2 billion for PPP loans and 
second-draw PPP loans, but if Congress does not reauthorize the 
program in the next 7 days, that money will never reach 
struggling small businesses. So I think it would be reckless 
and cruel to let the program expire when there are still about 
$50 billion of desperately needed PPP funding remaining and 
businesses waiting for relief. So I am glad to hear that you 
agree that it should be extended.
    The Center on Budget and Policy priorities estimates that 
as of March 1st there were 13.5 million adults behind on rent 
and an additional 10.3 million adults behind on their mortgage 
payments. As we have seen throughout this crisis, the brunt of 
that pain is being felt in minority communities; 33 percent of 
black renters, 20 percent of Latino renters, and 16 percent of 
Asian renters said that they were behind on their rent compared 
to 13 percent of white renters.
    The American Rescue Plan included $25 billion in rental 
assistance, nearly $10 billion in homeowner assistance, and one 
of my major priorities, $100 million in housing counseling to 
help renters and homeowners avoid foreclosure or eviction.
    Now, Chairman Powell, you recently said that when there is 
a real crisis, ``do not stop until the job is done.'' Would you 
say that current mortgage and rental payment delinquency rates, 
particularly among minority families, indicates that the job is 
done?
    Mr. Powell. Well, I would say actually the level of 
distress was very, very high and has recently been coming down 
a bit, but it is still quite material. And so that crisis is 
certainly not over.
    Senator Menendez. So is providing housing support both 
through rental and mortgage relief what you meant when you 
said, ``Congress, of course, has come with quite a strong 
fiscal policy''? Would this be part of that fiscal policy?
    Mr. Powell. I meant that statement as a general statement, 
that the fiscal response overall has been remarkable, frankly.
    Senator Menendez. But a fiscal response that leaves 
millions of people out of their homes, whether they be as 
renters or homeowners, is not going to be a fiscal response 
that is going to provide us long-lasting benefits. Is that fair 
to say?
    Mr. Powell. I would say it is.
    Senator Menendez. OK. Let me ask you this: With 402 
economists, the Board of Governors employs far more Ph.D. 
economists than the largest university department. However, 
only 24 percent of the Board's economists are minorities. 
Things are slightly better at Treasury. Only 30 percent of the 
148 economists employed at the Department of Treasury are 
minorities.
    Secretary Yellen, you previously stated that if economists 
are mainly of one gender or race, they are likely to miss 
things that matter. Chairman Powell, do you agree with 
Secretary Yellen's statement?
    Mr. Powell. I very strongly agree with it. But----
    Senator Menendez. So are--I am sorry. Please.
    Mr. Powell. I was just going to say we clearly benefit from 
diverse perspectives. We see that every day.
    Senator Menendez. Let me ask you both, then, considering 
the current make-up of Treasury and Federal Reserve economists, 
are either of you concerned they might be missing things that 
matter?
    Secretary Yellen. Yes, and I am very focused on pursuing 
diversity and hiring to make sure that we do have diversity in 
the economics team at Treasury and throughout Treasury. It is a 
very high priority.
    Senator Menendez. And at the Federal Reserve?
    Mr. Powell. So this is something very, very high priority, 
something we have worked hard at for some time, and we are not 
at all satisfied with where we are. We do a lot of outreach to 
historically black colleges and universities as well as 
Hispanic-serving institutions. I met with a class, actually, of 
minority students from a historically black college just last 
week. I spent an hour with them. But more than that, we have a 
systematic program to encourage more minority kids to study 
economics, and if they do study economics, to think about the 
Fed and that sort of thing. But there is a lot of work to be 
done there. It is a challenge we are very focused on.
    Senator Menendez. Well, I would be happy to work with both 
of you in providing individuals, I think, who presently could 
meet the challenge.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Menendez.
    Senator Rounds from South Dakota is recognized for 5 
minutes.
    Senator Rounds. Thank you, Mr. Chairman. And thank you to 
both of our panelists for your service to our country.
    Secretary Yellen, I would like to begin with you. I would 
like to direct this--as I am sure you are aware, the IRS is 
facing a severe backlog when it comes to processing tax 
returns. These problems, like the 2.4 million backlog in 
untouched tax returns and severe staffing issues at the IRS, 
were laid out at a recent oversight hearing conducted by the 
House Ways and Means Committee. The past processing issues at 
the IRS are troublesome enough, but what I thought even more 
disturbing is that there was no plan on the part of the IRS for 
how to fix the problem.
    My question, I guess, is: What can be done to get the IRS 
to work through the backlog and to return a more normal state 
of operations? And I guess the reason why in particular I bring 
it up today is we are thinking about the fact that there are 
2019 tax returns that since they have not been completed yet or 
been processed, it is going to make it a lot more difficult for 
the 2020 tax returns to be filed, and you are going to have 
some taxpayers that may very well end up in that position of 
having death spiral penalties being imposed on them simply 
because they cannot get responses back from the IRS.
    No. 1, have you had a discussion about what the steps 
should be to begin fixing the issue? And then, second of all, 
will the IRS hold taxpayers that find themselves in this 
position harmless?
    Secretary Yellen. I have met with the IRS Commissioner and 
discussed a range of questions, including IRS' ability to 
distribute economic impact payments and the child tax credits 
on a periodic basis. I have not had a detailed discussion with 
the IRS Commissioner about the issue that you raise, but, you 
know, in general, the IRS needs more funding to be able to work 
appropriately to put in place the technology it needs to 
collect taxes. We know that there is a huge tax gap. It is 
estimated at something like $7.5 trillion over the next decade, 
and more generally, I think IRS needs funding to be able to 
appropriately manage the burdens it has, including, you know, 
providing support to taxpayers who call, a shortage of 
personnel makes it a frustrating matter to try to call to get 
advice over the telephone?
    Senator Rounds. And it is not my point to be argumentative 
with you, Madam Secretary. I would just simply point out that 
you have now got $1.9 trillion that have been allocated, 
specifically some of it for pandemic relief, and the IRS 
suffered, too, because during the pandemic, they had a very 
difficult time in getting their folks to be able to work, and 
that is very understandable. But I do think that it is not 
unreasonable for us to ask for a plan to try to take care of 
that backlog. And I would simply ask for your commitment that 
you would go back and expect them to respond to you and then to 
us with a plan that is appropriate to get backlog resolved as 
quickly as possible.
    Secretary Yellen. I am certainly willing to do that and to 
work with you and your office and let you know what the plan 
is.
    Senator Rounds. Thank you, Madam Secretary.
    Also, I will just share with you, as we have just begun to 
highlight, you have a lot of challenges ahead of you, but one 
of the biggest tasks that the Treasury will be obligated to 
complete in the near term outside of pandemic relief is the 
implementation of the ILLICIT CASH Act. I partnered with 
Senator Warner on this, and we were able to get it into the 
National Defense Authorization Act. And so it is there. It has 
been signed into law.
    Given everything on your to-do list--and I think I have 
just added a few more to that--can you lay out a rough game 
plan for how you would envision implementing the ILLICIT CASH 
Act?
    Secretary Yellen. FinCEN and Treasury more broadly have 
been very focused on implementing the provisions of the NDAA. 
It is a very high priority project for us, and we are already 
very hard at work in hiring people in order to be able to 
complete that work in a timely way.
    Senator Rounds. Thank you, Madam Secretary.
    I had a question for the Chairman, but I will put it in as 
a question for the record.
    I see that my time has expired. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Rounds.
    Senator Warren from Massachusetts is recognized for 5 
minutes.
    Senator Warren. Thank you, Mr. Chairman.
    So after the 2008 financial crisis, Congress passed the 
Dodd-Frank Act to put more cops on the beat and prevent Wall 
Street from wrecking our economy again. One of the protections 
that Dodd-Frank put in place was to automatically create a 
special designation for the too-big- to-fail banks, at the time 
those with assets of $50 billion or more. So they received 
stronger oversight from the Federal Reserve.
    Chair Powell, why did Congress think it was a good idea to 
put stronger oversight in place for banks above a certain size?
    Mr. Powell. I think it was a wise decision. Particularly 
for the very large institutions, it was clear at the time that 
we needed to raise expectations across a very broad range of 
measures, including particularly capital liquidity risk 
management.
    Senator Warren. OK, and we needed better supervision to do 
that, I take it.
    Mr. Powell. I would agree.
    Senator Warren. But it is not just banks that pose a risk 
to the economy. In 2008, two investment companies-- Bear 
Stearns and Lehman Brothers--failed, triggering the 2008 crash. 
So when Congress passed Dodd-Frank, they created the Financial 
Stability Oversight Council, or FSOC, and gave it the power to 
designate nonbank firms as too big to fail, or in the terms of 
the statute, to designate them as ``systemically important,'' 
which means they get the same stronger oversight as the too-
big-to-fail banks. Is that right, Chair Powell?
    Mr. Powell. Yes, it is.
    Senator Warren. OK. So let us look at an example of how 
that is working today. BlackRock is the world's largest asset 
management firm overseeing nearly $9 trillion in assets. That 
is more than double where it was 10 years ago. It also holds a 
stake in just about every company listed on the S&P 500.
    To put that in perspective, BlackRock manages more assets 
than the entire GDP of Japan or Germany or Great Britain or any 
other nation in the world except the United States and China. 
And it is not just size. BlackRock also runs a technology 
platform that currently houses at least 10 percent of all the 
stocks and bonds around the world.
    So, Secretary Yellen, just hypothetically, if a $9 trillion 
investment company failed, would that likely have a significant 
impact on our economy?
    Secretary Yellen. Well, Senator Warren, I believe it is 
important to look very carefully at the risks posed by the 
asset management industry, including BlackRock and other firms. 
And the FSOC began to do that I believe in 2016 and 2017. But 
the risks it focused on were ones having to do with open-end 
mutual funds that can experience massive withdrawals and be 
forced to sell off assets that could create fire sales.
    Senator Warren. Right, so----
    Secretary Yellen. That is actually a risk that we saw 
materialize last spring in March, and I think that with respect 
to asset management, rather than focus on designation of 
companies, I think it is important to focus on an activity like 
that and to consider what the appropriate restrictions are. It 
is not obvious to me that designation is the correct tool to 
address----
    Senator Warren. Wait just a minute. Designation is what 
gives the Fed its increased oversight power. Is that correct? 
Is that correct?
    Secretary Yellen. Yes.
    Senator Warren. And is BlackRock currently designated so 
that it receives that increased oversight?
    Secretary Yellen. It is not designated, but I think it is 
important to understand----
    Senator Warren. So that means that it is not receiving the 
increased oversight from the Fed. So my question is: Are you 
currently looking at designation for companies like BlackRock, 
$9 trillion companies like this?
    Secretary Yellen. Well, as I said, FSOC has looked at this 
issue in the past----
    Senator Warren. I understand we have done it in the past. I 
am not asking about what the last Secretary of the Treasury 
did. You are the head of FSOC now, and the question I am asking 
is whether or not FSOC is considering and looking at 
designation for these large financial institutions.
    Secretary Yellen. Well, I think it is appropriate to 
designate institutions whose failure would pose a material risk 
to U.S. financial stability.
    Senator Warren. Good. And that is why I started my question 
with: Does potentially a $9 trillion investment company pose 
some risk to the American economy if it should fail?
    Secretary Yellen. Well, one needs to analyze what the risk 
is. An asset management company is very different than----
    Senator Warren. So how do you analyze what the risk is if 
you are not actually doing the investigation through FSOC?
    Secretary Yellen. Well, FSOC has undertaken such work in 
the past, and as I said, when it looked at asset managers, it 
issued a report outlining what it sought as some of the most 
significant risk from those industries?
    Senator Warren. So I appreciate that they have done this in 
the past. Are you continuing that investigation now?
    Secretary Yellen. Well, I am just beginning a work program 
with FSOC, and certainly risks from asset management will be on 
the list.
    Senator Warren. All right. I understand that when the stock 
market is going up, it is easy to ignore risks that can be 
building up in the system. That was the mind-set of the 
regulators that led up to the 2008 crash, and that is how 
taxpayers ended up on the hook for a $700 billion bailout of 
the giant banks.
    When the party is going strong, it is the job of the 
regulators to take away the punch bowl. My view on this is that 
Congress gave you the tools to monitor these companies for 
risk, and it is important to use them.
    Mr. Chairman, thank you for allowing me to go a few minutes 
over with another brief question. Secretary Yellen, I am 
grateful to you and President Biden for your leadership in 
enacting the American Rescue Plan. A critical part of this bill 
is the $350 billion assistance for State and local governments. 
Some of our hardest-hit communities in Massachusetts are 
smaller cities under 50,000 in population, places like Chelsea 
and Everett and North Adams. So I want to ask you about how 
they get help from this bill.
    Secretary Yellen, in general, communities with populations 
under 50,000 receive some direct Federal funding as a result of 
the American Rescue Plan. But they do not receive as much 
direct help as bigger cities. Is that correct?
    Secretary Yellen. Well, I believe there is a formula that 
determines how much they receive, and it is paid to them 
through States. I believe that that is----
    Senator Warren. Good. That is where I want to go, because 
direct funding is not the only money coming in to State and 
local government. In addition, State governments also receive a 
separate pot of money that was flexibly designed----
    Secretary Yellen. That is right.
    Senator Warren. ----to help our hardest-hit communities.
    Secretary Yellen. Sure.
    Senator Warren. And specifically the statute says that 
State funding can be used to respond to public health emergency 
with respect to the coronavirus disease or its negative 
economic impacts, including assistance to households, small 
businesses, and nonprofits or aids to impacted communities. Is 
that correct, Madam Secretary?
    Secretary Yellen. Yes, it is correct.
    Senator Warren. Good. And in Massachusetts, it looks like 
there will be about $4.5 billion going to the State government, 
so, Secretary Yellen, just to be clear, this statutory language 
provides our Governor with the flexibility to use State funding 
to provide extra help to address negative economic impacts in 
smaller communities that did not qualify for larger pots of 
direct funding. Is that right?
    Secretary Yellen. That is my understanding, but we will put 
out guidance and work through all of the legalities. But I 
believe that what you have said is correct. I want to be very 
careful about the legalities, but I believe that what you have 
said is correct.
    Chairman Brown. The Senator's time has expired.
    Senator Warren. I appreciate that. Thank you very much.
    Thank you, Mr. Chairman.
    Chairman Brown. Senator Tillis from North Carolina is 
recognized.
    Senator Tillis. Thank you, Mr. Chairman. And, Chair Powell, 
Secretary Yellen, thank you for being here today.
    Secretary Yellen, I have a quick question. During your 
confirmation process, you said that a global minimum tax could 
stop the destructive global race to the bottom on corporate 
taxation and help discourage harmful profit shifting. You went 
on to say that it is necessary for U.S. companies to be 
globally competitive, and that is why the OECD negotiations are 
so important.
    But I am trying to understand, having been a State 
legislator and Speaker of the House, I am trying to understand 
how this is different from federalism and the States trying to 
be competitive. When I became Speaker of the House, we had the 
highest corporate tax rate of any State that had a corporate 
tax rate. Now we have one of the lower ones. We were also in 
fourth quartile from economic performance and for corporate job 
creation. Now we are in the top quartile.
    So why would any country like a Vietnam or Thailand or any 
developing nation buy into the idea that they should have a 
minimum corporate tax rate?
    Secretary Yellen. Well, I----
    Senator Tillis. And why wouldn't we expect--just as an 
extension, why wouldn't we expect a flow into those 
jurisdictions that would have a lower corporate tax rate at the 
expense of the United States?
    Secretary Yellen. Well, we believe that the OECD 
negotiations can be productive in creating a regime in which 
there is a minimum corporate tax rate, and that it is a way of 
stopping the destructive race to the bottom in terms of 
countries competing for business based on their corporate tax 
rates. And this is something we are committed to working to try 
to accomplish internationally.
    Senator Tillis. So do you believe that the lowering of the 
corporate tax rate here in the United States did not have a 
material impact on economic expansion in the United States?
    Secretary Yellen. I do not think it had a very substantial 
impact on investment spending in the United States. People are 
still----
    Senator Tillis. So by extension----
    Secretary Yellen. ----studying that, but it does--I think 
it is necessary for U.S. firms to be competitive. President 
Biden has suggested raising the corporate tax rate back to 28 
percent. We at this point collect only a tiny amount of revenue 
through the corporate tax, less than 1 percent of GDP. And I 
believe it is appropriate to raise the tax rates, but we need 
to worry about the competitiveness of American firms, and doing 
that in the context----
    Senator Tillis. So you think----
    Secretary Yellen. ----of a global agreement----
    Senator Tillis. I have got one other question. So in your 
opinion, the increase of the corporate tax rate up to 28 
percent will not cause any significant competitive disadvantage 
for the United States for corporate expansion?
    Secretary Yellen. Well, it----
    Senator Tillis. Just yes or no.
    Secretary Yellen. Well, I think it would be important to 
make sure that it is done in the context of a global agreement.
    Senator Tillis. OK. Last month, you gave public support for 
the IMF's proposal to issue a new allocation of special drawing 
rights. Several proposals have been put forth. I think just 
yesterday the IMF announced that they are seeking $650 billion. 
I believe that there was a House proposal that was looking at 
$3 trillion.
    I know proponents of the SDR say that this has no budgetary 
impact, but I do not think that tells the whole story. Isn't it 
the case that the U.S. Treasury has to borrow the dollars it 
gives out to the IMF when the SDR exchange is made?
    Secretary Yellen. Yes, it does, if we provide the dollars. 
That is true. But----
    Senator Tillis. If that is----
    Secretary Yellen. ----we also earn interest to the extent 
that we hold SDR above our allocation.
    Senator Tillis. But if you do the SDR allocations, you are 
either going to issue T-notes or T-bonds--right?--to finance 
increase in the SDR obligation. Is that correct?
    Secretary Yellen. So I believe that CBO scores this as not 
having a cost, a net cost.
    Senator Tillis. They say it has no budgetary cost. So is 
the U.S. really misrepresenting the situation with respect to 
longer-term taxpayer obligations?
    Secretary Yellen. I do not think so because there will be 
interests that are earned on the SDRs that offset the payment 
of interest to issue, say, T-bills. And it is not only the 
United States that will likely provide hard currency in 
exchange for SDR. There are other countries that also will take 
part in that.
    Senator Tillis. Well, Mr. Chairman, my time has expired. I 
am going to keep to the 5 minutes. Chair Powell, I had a 
question on asset bubbles and your insights into maybe global 
asset bubbles, but that is something I will just submit for the 
record.
    Thank you both for being here.
    Chairman Brown. Thank you, Senator Tillis.
    Senator Van Hollen of Maryland is recognized for 5 minutes. 
You are mute, Chris.
    Senator Van Hollen. Secretary Yellen--can you hear me OK?
    Chairman Brown. Yes.
    Secretary Yellen. Yes.
    Senator Van Hollen. All right. Well, thank you, Chairman 
Brown. I want to thank Secretary Yellen and Chairman Powell for 
your testimony.
    Secretary Yellen, I think that the action you took with 
respect to SDR is in our national interest, and I appreciate 
you moving forward on that.
    Secretary Yellen. Thank you.
    Senator Van Hollen. I did want to ask you a question about 
long-term unemployment. I was heartened by your testimony this 
morning that you hope and anticipate that, because of the 
passage of the American Rescue Plan and other measures that 
have been taken, we may get back to full employment by the 
summer of next year. I remain very concerned about the long-
term unemployment. Even before the pandemic hit, we had more 
than a million Americans who were long-term unemployed, meaning 
they were looking for work for more than 6 months and could not 
find anything. That number is currently 4 million.
    I do expect that with the natural improvement of the 
economy that number will come down, but I also think that if we 
do not take deliberate measures to help bring the long- term 
unemployed back into the economy, we are going to be leaving 
them behind.
    I did have a conversation with Chairman Powell about this 
at our last hearing. He agreed that deliberate, targeted 
measures were necessary beyond just the natural lift in the 
economy that we hope we will see as a result of measures taken. 
Do you agree with that assessment?
    Secretary Yellen. Well, I am worried about the long- term 
unemployed and think we should be focusing importantly on what 
we need to do to make sure that they are not permanently 
scarred, yes.
    Senator Van Hollen. And would you agree, though, that 
beyond measures we take to--you know, fiscal policies and other 
policies that we take to improve the economy, that in order to 
address the needs of the long-term unemployed, we are going to 
have to be more deliberate and have policies targeted to 
accomplish that?
    Secretary Yellen. We may very well, and I am not sure, 
Senator, exactly what you have in mind, but policies that focus 
on training, workforce development, may be appropriate as the 
economy recovers.
    Senator Van Hollen. Right. I appreciate that. Well, Senator 
Wyden and Senator Baldwin and I proposed different forms of 
long-term unemployment elimination bills. They do include a 
workforce training component, but they also include some level 
of subsidized employment for 1 or 2 years, combined with those 
wrap-around services, in order to make sure that we address 
this chronic problem.
    As you said before, the longer somebody is out of work, the 
harder it becomes for them to find work; and when they do get 
it, they may be stuck with lower wages for the rest of their 
working life.
    Secretary Yellen. Yes.
    Senator Van Hollen. We hope to deal with this in the next 
piece of legislation on infrastructure improvement and other 
challenges.
    Let me ask you about the IRS, because we have seen chronic 
underfunding of the IRS since really 2011, and as a result, it 
is hard for Americans to get their phone calls returned. It is 
harder for the IRS to process things like payment. Right now a 
lot of people are still waiting for their refunds from last 
year's tax season.
    In addition to that, the estimate is that as a result of 
the lack of enforcement ability, about $570 billion in taxes 
that were owed last year did not get paid, 70 percent of that 
coming from the top 1 percent of Americans.
    So for all of these reasons, do you agree that we need to 
better resource the IRS, both to improve customer service and 
to make sure that tax cheats do not get away with not paying 
their fair share?
    Secretary Yellen. I absolutely agree. The tax gap is huge, 
and I think we would have a fairer tax system and collect more 
tax revenue without the need to raise rates if we resourced the 
IRS properly to be able to address this issue.
    Senator Van Hollen. Well, I look forward to working with 
you on that. We were able to provide $1 billion as part of the 
American Rescue Plan.
    Secretary Yellen. Yes.
    Senator Van Hollen. But more is needed, and with my other 
hat, I chair the Subcommittee on Financial Services and General 
Government Appropriations, and we are going to be asking for 
your help as we look at this issue.
    Thank you, Mr. Chairman.
    Secretary Yellen. I look forward to working with you on 
that.
    Chairman Brown. Thank you, Senator Van Hollen.
    Senator Kennedy from Louisiana is recognized for 5 minutes.
    Senator Kennedy. Can you hear me OK?
    Chairman Brown. Yes.
    Senator Kennedy. Chairman Powell, I want to start, 
unusually for me, with a statement as opposed to a question. I 
have been very supportive of you and the Federal Reserve and 
its independence. That was my position with the Trump 
administration; it will be my position, for what it is worth, 
with the Biden administration. And, in fact, I have said both 
publicly and privately, Mr. Chairman, that the single most 
important thing that was done to save the world economy, not 
the American economy alone--the world economy-- from melting 
down during the shutdown last March was your decision to 
implement a foreign currency swap line when the whole world was 
not looking for Treasurys, they were looking for dollars.
    There is an effort going on worldwide to blur the line 
between government and politics on the one hand and central 
banks and their independence on the other. I see every day 
central banks getting more and more involved in fiscal policy 
and lobbying legislators with respect to the adoption of fiscal 
policy. I have noticed that the Bank of England has announced 
in its QE program that it is going to stop purchasing corporate 
bonds from companies that it thinks has too big of a carbon 
footprint.
    I noticed recently that the Reserve Bank of New Zealand has 
decided it is going to start in its policymaking, its monetary 
policy, taking account of housing prices.
    Now, this is where I am headed, Mr. Chairman. The Federal 
Reserve needs to maintain its independence in America. Your 
credibility depends on political independence. I give you 
Turkey if you do not believe me. And besides that, the Federal 
Reserve and the good people in it are unelected. They do not 
have democratic accountability. And my concluding point--and I 
am just going to ask you to respond briefly -some people are 
going to beat on you, Mr. Chairman, like you stole Christmas to 
get involved in social policy in the guise of economic policy. 
And for the long-term health of the Federal Reserve, you need 
to resist that.
    Mr. Powell. Thank you, Senator. And thank you for your 
strong support on Fed independence. I do think that Fed 
independence is an institutional arrangement that has served 
the public well over time, and I am strongly committed to 
continuing it. I also would agree that getting off of our home 
base and straying from our mandate is something that will put 
independence at risk over the long term, because we have this 
precious independence because we have a limited mandate and we 
stick to it. If we are going to be playing on every issue, then 
the case for our independence weakens. There should be very few 
examples of independent agencies that are not part of----
    Senator Kennedy. And you are one of them, Mr. Chairman, and 
I apologize for cutting you off, but I want to stay within my 
time, and I need to ask Secretary Yellen a question.
    Mr. Powell. Thank you.
    Senator Kennedy. Secretary Yellen, the Biden 
administration's plan--and it is your plan--to require the IMF 
to issue $1 trillion of these SDRs, new SDRs, is going to cost 
the American taxpayer about $180 billion.
    Now, your reason for doing that is a good reason. You say 
you want to help poor countries. But you and I both know that 
only about 10 percent of that money is going to go to poor 
countries. It is not going to help poor countries. You know who 
it is going to help if they cash in their SDRs? It is going to 
help China; it is going to help Russia; it is going to help 
Venezuela. And besides that, under your plan, you are 
intentionally splitting the plan into two tranches of $500 
billion each to avoid having to come before Congress. And I do 
not understand why it is efficient to charge the American 
taxpayer $180 billion, all of which we have to borrow, when 
only -and you say you are doing it to help poor countries, and 
only 10 percent is going to poor countries, and even more is 
going to Russia and to China.
    Secretary Yellen. I am sorry. It is not going to cost the 
taxpayer $180 billion.
    Senator Kennedy. Sure it is. You are going to have to 
borrow the money. You do not have the money sitting in a 
checking account.
    Secretary Yellen. The IMF----
    Senator Kennedy. They are going to redeem those SDRs, not 
just the poor countries but China.
    Secretary Yellen. There are many countries that can provide 
hard currencies in return for SDRs, including the United 
States. If the United States does agree to provide SDRs, it 
will have to issue Treasury bills or debt to do it, but it will 
also----
    Senator Kennedy. I rest my case. I rest my case.
    Secretary Yellen. I am sorry. I am sorry, but it will also 
earn interest on any amounts that it converts on behalf of 
other countries, and it will be essentially a wash.
    Senator Kennedy. But the money will need to be paid----
    Secretary Yellen. And it will--there is no money to be paid 
back. It does not matter----
    Senator Kennedy. Sure there is.
    Secretary Yellen. The interest that we earn on any excess 
SDR holdings offsets the cost of issuing Treasurys, and it is 
essentially a wash. And it is not costly.
    Senator Kennedy. I disagree with you, Madam Secretary. I 
think you--no disrespect, but I think you are wrong. I think we 
are going to have to borrow all $180 billion of this----
    Secretary Yellen. I do not know where you----
    Senator Kennedy. We are going to have to----
    Secretary Yellen. I do not know where you got a number like 
that from.
    Senator Kennedy. Well, when China comes to redeem its SDRs 
and says, ``We want dollars,'' where do you think we are going 
to get the money? We are going to borrow it.
    I have gone over. I am sorry, Mr. Chairman. But this is an 
important issue. I will call you, Madam Secretary.
    Secretary Yellen. OK. I would be glad to talk about it 
offline.
    Senator Kennedy. Thank you. Thank you for your time.
    Chairman Brown. Thank you, Senator Kennedy.
    Senator Cortez Masto from Nevada is recognized for 5 
minutes.
    Senator Cortez Masto. Thank you. Secretary Yellen, Chairman 
Powell, welcome back to the Committee.
    Let me start by expressing my appreciation to the staffs at 
your agencies who are charged with implementing the laws that 
we have passed. I know that the staff at the Internal Revenue 
Service, Treasury Department, and the Federal Reserve have 
worked long hours to implement these laws, so let me just say 
on behalf of Nevada, on behalf of the American people, I so 
appreciate the work that your staffs have done to deliver 
financial assistance to Americans. So thank you for that.
    Let me start, Chairman Powell, with you in a conversation 
we always have around our hospitality and tourism industries, 
as you know, that has been so hard hit. Can you talk to me 
about what you are seeing with respect to those economies and 
the recovery? I think you have said that about two-thirds of 
the tourism and hospitality jobs lost in March 2020 are back. 
So can you talk a little bit more about what you are seeing as 
a result of the relief that we have passed here in Congress and 
the impact it is now having on hospitality and tourism?
    Mr. Powell. Sure, I would be glad to. So, actually, it is 
just two-thirds of the jobs that were lost during the winter 
COVID spike came back. The travel and hospitality is still down 
several million jobs, and I am sure you are seeing that at 
home.
    We are beginning to see airline travel; we are beginning to 
see people going to restaurants and hotels; and all of those 
things are just beginning to pick up. And all of that, of 
course, is motivated by declining COVID cases and increasing 
vaccinations. And, you know, if we can just stick to social 
distancing and mask wearing, if I can put that commercial in 
again, it will enable us really to get this done and get the 
economy reopen. And all of these small businesses that are 
hurting so much can get the relief that they need. And, you 
know, it is right there to be done if we can follow through on 
this in the coming months.
    Senator Cortez Masto. I am curious. Do you see any regional 
variations in jobs returning in this industry?
    Mr. Powell. Well, unemployment generally is very much 
concentrated in States like yours and others that have high 
tourism and travel and entertainment components. Those are the 
ones that are suffering. As between individual States within 
that group, I could not say much sitting here today about how 
much variation there is.
    Senator Cortez Masto. Thank you. And thank you for your 
work and always speaking up and out about the need to address 
the concerns that we see with the hospitality and travel 
industry that has been so hard hit because of this pandemic.
    Secretary Yellen, as part of the American Rescue Plan, we 
also included $10 billion in assistance for homeowners, and so 
can I ask, what is your timeline for getting frequently asked 
questions and guidelines out to communities wanting to help 
homeowners? We talk a lot about rental assistance, but there is 
still a lot of homeowners in need of help, and that is why we 
included $10 billion in assistance. So, Secretary, can you talk 
a little bit about that as well?
    Secretary Yellen. Well, we are committed to getting this 
money into the hands of homeowners at risk of foreclosure and 
falling behind on their payments as soon as possible. We are 
working hard on it. We are conducting outreach to State housing 
agencies to understand their needs and to make sure these funds 
are quickly and effectively distributed to communities in need. 
We are working hard at it. I cannot give you a definite date 
when we will get the FAQs out.
    Senator Cortez Masto. Thank you. So then the same question 
to you. As you know, we have also talked about this. The 
hospitality and leisure industry has been so hard hit. The 
money that we fought for particularly in this last package was 
really just focused on those in that industry, not only those 
businesses that are directly involved but those that are 
indirectly involved. I am looking to you to help us to make 
sure that the guidelines get out as quickly as possible where 
they are needed to make sure we get this money to the 
communities. And I know this is a focus of yours as well, 
Secretary Yellen.
    Secretary Yellen. Yes, I think, you know, the money that 
was designated by Congress for restaurants and associated 
industries, that is being managed by the SBA rather than 
Treasury, but we stand ready to work with them to be helpful.
    Senator Cortez Masto. Yes, and thank you. I cannot stress 
enough the money that we fought for, the $350 billion to our 
State and local governments----
    Secretary Yellen. Oh, sure, absolutely.
    Senator Cortez Masto. I mean, this is literally lifesaving, 
and that is why I think the entire--Democrats have fought for 
this and will continue to fight for this. That is the only 
reason that this is in the bill. And I just cannot stress that 
enough because everybody is struggling from those States that 
are--whether they are Republican or Democrat States, whatever 
you want to call them, States are struggling, and it is in a 
bipartisan way. So that is why this is so important.
    Secretary Yellen. That help is going to get out very 
rapidly. We have a maximum of 60 days to work through all of 
the thorny questions. We are working very hard on it, and we 
are going to get that money into the hands of State and local 
governments to use to support their communities.
    Senator Cortez Masto. Thank you. Thank you both so much for 
what you are doing.
    Chairman Brown. Thank you, Senator Cortez Masto.
    Senator Cramer is recognized for 5 minutes.
    Senator Cramer. Thank you, Mr. Chairman. And thank you, 
Madam Secretary and Chairman Powell, for being here.
    First of all, I want to associate myself with the comments 
of Senator Kennedy specifically about the importance of the 
independence, Mr. Chairman, and I know you have talked about 
this in the past, and it is just really critical. I applaud you 
for your discipline in that.
    What I wanted to talk about today a little bit is the 
banking agencies, of course, are starting to roll back last 
year's regulatory measures that responded to the pandemic 
stresses. As you know, we made some temporary--provided some 
temporary relief. And we are hearing now that community banks 
are under leverage ratio stress because of the influx of 
deposits, which, of course, they are holding largely in very 
low risk assets and, of course, somewhat because of their 
strong commitment to PPP Lending. So as the banks continue to 
work with their customers and communities, I am just wondering 
what factors will you consider in deciding how to address 
leverage ratio pressures. And how much lead time will the banks 
and their customers get to adapt to these ad hoc decisions? 
Either one of you can start. Maybe start with you, Mr. 
Chairman.
    Mr. Powell. Right. So on the community bank leverage ratio, 
that is something we will be watching carefully and will 
communicate it well ahead of time, and, you know, we are well 
aware of those stresses.
    Senator Cramer. Very good. Thanks.
    Secretary Yellen, I am going to ask you another question, 
and, you know, if you want to address the CBLR as well, that 
would be great. But you have made, of course, addressing 
climate change one of the central points of your time at 
Treasury. It has been reported that President Biden's climate 
czar, John Kerry, has encouraged banks and other investment 
institutions to form a net zero banking alliance. He has also 
urged banks to provide as much support for alternative energy 
projects as possible, which seems to be at the expense of more 
traditional energy projects, possibly even forcing financial 
institutions to put political and social considerations ahead 
of sound business practices. And that would, of course, be a 
violation of their fiduciary responsibilities to their 
shareholders.
    So in light of the weak unemployment numbers, do you think 
it is a good idea for private businesses to be forced by a 
Government official or even encouraged by one to make decisions 
about where they should or should not put their money, 
jeopardizing jobs and their energy and other sectors of the 
economy that represent legal commerce and industries and 
businesses?
    Secretary Yellen. Well, Senator Cramer, I think the world 
faces a profound crisis in connection with climate, and it is 
appropriate for Government, the private sector as well, to 
focus on how we can mitigate the risks to encourage banks and 
financial institutions, lenders more generally, to think about 
the potential adverse impacts of investments that they may 
make, and perhaps more importantly, to understand that 
eventually we are committed to going to net zero emissions by 
2050, and that that can affect the returns that they receive on 
investment. I do not think that is inappropriate. But there are 
no requirements by Government that I am aware of to force 
anyone to lend for any particular project or not to lend to 
businesses that are involved in carbon-emitting activities.
    Senator Cramer. Well, there certainly are some very strong 
suggestions that border on pressure at the very least, and, of 
course, a lot of these bigger banks are responding to that 
pressure and to market forces as well. But that said, I might 
just bring up a scenario in, say, a cold place like North 
Dakota, or anywhere in the Midwest for that matter, you know, 
when we get to times where there is a very--like a ``polar 
vortex,'' as some people like to call it; we just call it 
``winter,'' or for that matter, you get a peak hot summer 
stretch when the base load electricity that people used to rely 
on to keep their companies running, their manufacturing 
facilities going, or the gas that used to be the feedstock for 
a manufacturer becomes, you know, fuel for generating 
electricity, that could have a pretty negative impact on the 
companies and manufacturers, the server farms who suddenly find 
themselves with rolling blackouts. So I just hope that we can 
take a whole approach to these things and not try to pick 
entire categories of industries as we have talked about, 
particularly as we talk about fair access to banking.
    Secretary Yellen. Well, I agree this is a process that will 
unfold over time gradually, and we need to take account of 
those impacts.
    Senator Cramer. Thank you for your consideration. Again, 
thanks to both of you for being here and for your service.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Cramer. We call it 
``winter.'' Thanks for making me laugh. I noted you laughed and 
I laughed. Moran did not get it, so he did not laugh.
    Senator Smith from Minnesota is recognized for 5 minutes.
    Senator Smith. Senator Smith definitely got the joke about 
that is just winter, so thank you, Senator Cramer. I appreciate 
it.
    I think I am going to start with Secretary Yellen. It is 
great to be with both of you, Chair Powell and Secretary 
Yellen. Thank you again, Secretary Yellen, for another display 
of grace under pressure as you were getting talked over a 
minute ago. I appreciated that very much. And speaking of 
which, I want to just hone in on the issue of women in the 
workplace. You and I have spoken about this. The challenges 
that women are facing in the workplace right now, COVID has 
made it so much worse. Women dropping out of the work at 
roughly the same rates as men, but now what is happening are 
returning to the workforce and women are not. In Minnesota, it 
is an 11-percent decline in women participation in the 
workforce.
    One of the two major--there are two basic issues that women 
face. One is lack of access to affordable child care, and the 
other is lack of access to paid family leave. And this is 
happening in the United States in different ways than it is 
happening in Europe, as I understand it.
    So as part of the American Rescue Plan, as you well know, I 
worked with Senator Warren and others to make a significant 
investment in shoring up our child care system.
    Secretary Yellen. Yes.
    Senator Smith. Secretary Yellen, I was wondering if you 
could just talk a bit about this. How does this ability of 
women to participate in the workforce connect to our economic 
competitiveness? And what role does child care play in making 
sure that women can participate in the workforce and support 
their families?
    Secretary Yellen. Well, I think that women have contributed 
enormously in the United States, and in countries round the 
world, their labor force participation has boosted growth and 
has boosted household incomes. And we saw a surge in women's 
labor force participation in the 1970s and 1980s, but it has 
leveled off, and it has even declined somewhat. And there are a 
number of reasons for it, but we look at the fact that in many 
European countries and other developed countries, labor force 
participation of women is now higher than it is in the United 
States. What stands out is paid leave and affordable child care 
as to things that distinguish the United States from those 
countries. They are really critical to enabling women to 
successfully participate. And I think it is exciting that the 
American Rescue Plan really addresses these issues, providing 
additional, very meaningful support on both fronts.
    Senator Smith. Thank you. I think what we do in the 
American Rescue Plan not only with providing--shoring up our 
child care system but also the child tax credit, which is going 
to have the impact of lifting--reducing child poverty by half, 
shows us the policy levers that we have to make our economy 
work for women, and ultimately that contributes to our economic 
competitiveness, as you say.
    Secretary Yellen. Yes, and it also helps children, I think, 
in the long run succeed to have that additional support.
    Senator Smith. Absolutely. It addresses that opportunity 
gap, as I like to talk about it, rather than an achievement 
gap, because it is really a lack of access to opportunity that 
our children have if they are living in poverty.
    This brings me to another thing, Secretary Yellen, I want 
to talk with you about. It is something that you and I have 
also talked about. Data shows us that people experiencing 
homelessness have been disproportionately impacted by COVID, 
and you and I have spoken about what we can do to get the 
recovery checks, the stimulus checks, to people who are 
experiencing homelessness. A particular challenge is getting 
the checks to them.
    Secretary Yellen. Yes.
    Senator Smith. Recently, your staff provided my office with 
a briefing on what Treasury is doing to connect with local 
shelters and providers and continuums of care to get checks to 
people. And I was really heartened by hearing what you are 
doing, and I want to make sure that these community-based 
efforts continue. So we just have a couple seconds, but I was 
wondering if you could just maybe talk about that for a minute, 
and then if you could commit to providing some sort of guidance 
or publishing best practices, because I think there are some 
great examples of what works around the country.
    Secretary Yellen. Great. I mean, I think pushing best 
practices, trying to figure out what they are, is a very 
important role that Treasury can play in this and in other 
programs that we are charged with implementing. One of the most 
difficult issues is getting impact payments, and it will also 
apply to the child tax credit, getting these payments to 
homeless individuals. And as you say, we are working very hard, 
and I am happy to work with you to try to do everything we can 
on that front. We are working with IRS on this as well.
    Senator Smith. Thank you.
    Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Smith.
    Senator Moran from Kansas is recognized for 5 minutes.
    Senator Moran. Mr. Chairman, thank you very much. Chairman 
Powell, thank you for joining us. Secretary Yellen, a pleasure 
to be with you again.
    Secretary Yellen. Thank you.
    Senator Moran. I look forward to being in the circumstance 
in which it can be different than virtual. Thank you both for 
your public service.
    My question will be directed to you, Madam Secretary. The 
American Rescue Plan included $350 billion for a State and 
local Fiscal Recovery Fund to be used for emergency funding to 
distribute to States, counties, local units of Government. I 
know that you are currently, the Department is currently 
developing guidance in this regard. I would be interested in 
knowing the time of that guidance, but I want to highlight for 
you a circumstance that Kansas and many other States, 
particularly in the middle of the country, are experiencing. No 
relief for COVID can be taken without looking at its broader 
consequences, and I will take us back to what the Chairman was 
talking about, winter.
    A few weeks ago, we had this tremendous cold snap that 
invaded the country, north to south, from Canada to Texas. And 
that cold snap created huge increases in utility bills for 
consumers and even for businesses. It is estimated in Kansas, 
some places, nearly $100 million in utility increases because 
of 3 days of temperature below zero and the cost of natural 
gas. In other words, the purchase price that utility companies 
were encountering to purchase enough gas to keep homes warm, to 
keep businesses operating was so high that the utility bills 
now reflect that $100 million increase that was experienced 
over just a few days.
    A few examples for you, Madam Secretary. There is a Kansas 
municipality--some of our communities generate their own 
electricity and then sell it to their citizens. But one of 
those cities in Kansas with a population of less than 300 
people had a February gas bill three-fifths of the total amount 
of their annual city budget.
    Another city, just over 1,000 people, with household 
incomes less than $30,000, had a February energy bill over $9 
million. A school which typically has a $10,000-a-month gas 
bill, in the month of February it was $400,000. A small 
greenhouse in rural Kansas received a gas bill of just under 
$100,000, of course, crippling that business with an unexpected 
expense.
    My question to you is: I would love to have a commitment 
that you would work with me and others--I think there are other 
Senators on the Banking Committee and certainly other Senators 
who have experienced the same circumstance, and I would like to 
see our State and cities, our local units of government, have 
the flexibility under the belief that you cannot take the 
financial condition of COVID in just a vacuum. All the things 
that pile on when a business is already so fragile or when 
utility bills-- individuals and families are already struggling 
to pay their utility bills, we cannot take that just in 
isolation. And, Secretary Yellen, I would just ask two things. 
I want to make sure you are aware of this circumstance, 
tremendous damage to small businesses and consumers in Kansas 
and elsewhere, ask if you also would see that flexibility makes 
sense to you, a commitment that you would work with me to make 
sure that we can convince you that you have an understanding of 
the circumstance, and then an idea of the timeframe in which 
that relief might--the guidance might be in place so that 
relief could be used.
    Secretary Yellen. Well, Senator, first of all, let me say I 
appreciate your describing to me the problems that your State 
and others face because of the cold weather and the impact on 
utilities.
    Second, I promise that we will work with you when our staff 
can be in contact with yours to discuss the needs that your 
State has to deal with this problem. There is a good deal of 
flexibility within the law on how the funds can be used. Over 
the next 60 days--the statute provides 60 days for payments to 
get out, and we need within those 60 days to clarify what the 
funds can be used for and cannot be used for. I am glad to 
confer with you about whether or not this is within the realm 
of what the statute has in mind. So why don't we have our 
staffs talk offline about this?
    Senator Moran. Secretary, thank you for your answer, and 
you and I make a great team. We ended this in just Sherrod 
Brown's 5 minutes exactly. Thank you for that today and your 
response. I appreciate your willingness to cooperate and your 
understanding of the tremendous challenge and burden that 
individuals are having at home. Thank you.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Moran.
    Senator Daines, have you voted already?
    Senator Daines. I have, yes.
    Chairman Brown. OK. Well, I am going to call on you. I am 
going to go vote, and I apologize to the Chair and to the 
Secretary. We are going to take this--there are two or three 
more people that want to ask questions, so I am going to call 
on you. Then we will recess after your questioning until about 
12:30.
    Senator Daines. OK.
    Chairman Brown. So if Secretary Yellen and Chair Powell 
could stay a little bit longer, Senator Daines will go for 5 
minutes now. We will just recess after your 5 minutes, and then 
we will come back about 12:30 for two or three other Senators.
    Thank you all.
    Senator Daines. Thanks, Mr. Chairman. I appreciate that.
    Well, let me start off by saying I want to express my utter 
shock at the provision that was buried within the recent $1.9 
trillion package that prohibits States from directly or 
indirectly cutting taxes. This provision was snuck into the 
bill at the very end of a more than 24-hour period of 
continuous voting. Process aside, this astonishing level of 
meddling by Congress in State fiscal affairs should be 
troubling to anyone--Republican, Democrat, Independent--who 
believes fundamentally in the concept of federalism. This is 
why I was very pleased to see your response last night to the 
letter from 21 Attorneys General who expressed concern about 
this provision, including my own Attorney General of Montana, 
Attorney General Knudsen, confirming that States can, in fact, 
still cut their taxes. And to quote from your response, 
``Nothing in the act prevents States from enacting a broad 
variety of tax cuts. That is, the act does not deny States the 
ability to cut taxes in any manner whatsoever. It simply 
provides that funding received under the act may not be used to 
offset a reduction in net tax revenue resulting from certain 
changes in State law.''
    I know that Senator Crapo mentioned earlier in this hearing 
a specific hypothetical scenario involving unemployment 
insurance trust funds, and he stated that Treasury is still 
working through some of these issues, and you have 60 days to 
issue guidance.
    Secretary Yellen. That is exactly right.
    Senator Daines. Great. Well, to clarify, our legislature in 
Montana, it meets every 2 years. They are meeting right now, 
and they are slated to adjourn on or about May 1st. Sometimes 
it bleeds over a couple of days into May. So they really need 
this guidance as quickly as possible as they are kind of now in 
the final throes of this biennial session.
    Secretary Yellen, would you commit to issuing guidance well 
in advance of the 60-day statutory deadline?
    Secretary Yellen. I cannot commit to that. There are a host 
of complex questions that have to be resolved, and we need to 
confer with State and local governments, with Members of 
Congress, and work out thorny legal issues around this.
    We are working as rapidly as we possibly can to get this 
guidance out, but I do not want to make a commitment that we 
can get it out a lot sooner than that. We will get it out just 
as soon as we possibly can. We want this money to be in the 
hands of State and local governments, but we will just do the 
best we can.
    Senator Daines. Thank you, Secretary Yellen. I appreciate 
it, just with what is at stake right now with legislators that 
are meeting more on a periodic basis.
    Shifting over here to Chairman Powell, some have proposed 
the Federal Reserve change its operating model to include 
holding retail and commercial deposits through Fed accounts 
opened on their behalf by banks with over $10 billion in 
deposits. Where adequate coverage through banks is not 
achieved, post offices would open accounts for retail and 
commercial customers with the deposits held at the Fed. These 
accounts would be offered at no cost to consumer and retail 
customers.
    My question, Chairman Powell: Is the Federal Reserve 
equipped to service individual retail and commercial accounts?
    Mr. Powell. No, and, of course, we are not permitted under 
current law. That has never been our role, and it has really 
not been the role of other major central banks. It would be a 
quite dramatic change in our role in the economy and one that I 
think should require very careful thought.
    Senator Daines. Thank you for that thoughtful answer, 
Chairman Powell.
    In 2019, the Fed, the OCC, and FDIC took steps mandated by 
Congress to tailor banks' prudential regulation. We are a year 
into the COVID-19 crisis, and banks and lending institutions 
have been a critical source of relief, have maintained strong 
capital and liquidity reserves. I think it is crucial we 
continue to recognize that a bank's size and business model are 
very relevant to consider when looking at how much risk it 
poses.
    My question, Chairman Powell, is: Do you agree that the 
tailoring of regulations, including capital and liquidity 
requirements, to the systemic footprint of a particular banking 
institution is still appropriate and that there has not been 
any demonstrated negative impact to the U.S. economy because of 
tailoring?
    Mr. Powell. Yes, I would agree with that.
    Senator Daines. OK. Thank you. I am out of time. I 
appreciate the answers of both Secretary Yellen and Chairman 
Powell. And I guess--do I need to recess the Committee?
    The Clerk. Yes, so we are going to be in recess until about 
12:30. If Secretary Yellen and Chairman Powell can please 
remain on the call, feel free to mute yourself and turn off 
your video until we are ready to come back, however you feel 
comfortable.
    Senator Daines. OK. So we are in recess until 12:30. Thank 
you.
    Mr. Powell. Just to be clear, you need us to keep sitting 
here until 12:30, or can we come back at 12:30 or 12:25?
    The Clerk. You can come back.
    Mr. Powell. All right. Just making sure.
    The Clerk. Yes, thank you. Please remain on the call.
    [Recess.]
    Chairman Brown. OK. I am just going to call out the names 
of people who have checked in. Senator Warnock, are you here? 
Senator Lummis?
    [No response.]
    Chairman Brown. OK. We are going to adjourn. Thank you, 
both of you, for your patience especially.
    Secretary Yellen. Of course.
    Chairman Brown. And thank you to your staffs. I know in 
informal conversations that I am privileged enough to have with 
both of you, I always learn something, and you are always so 
helpful. I know what incredible staff you have because of the 
immense workload you have.
    I think our two witnesses today sent a clear message about 
fiscal support in the American Rescue Plan and what we need to 
do. It is clearly the right move for the economy. Getting money 
into people's pockets is good for workers and their families.
    I am sorry. One more thing. For Senators who submit 
questions for the record, they have to be in Wednesday, the 
31st, and, Secretary Yellen and Chair Powell, based on the 
change we made to our Committee rules, you have 45 days to 
respond to any questions, if there are any. So thank you, and 
the hearing is adjourned.
    Secretary Yellen. Thank you.
    Mr. Powell. Thank you. Always a pleasure.
    Chairman Brown. Thank you both very much.
    Mr. Powell. Good to be with you.
    Secretary Yellen. Good to be with you. Take care.
    Chairman Brown. You, too. Thanks.
    [Whereupon, at 12:36 p.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    One year ago, we were weeks into this pandemic, and already the 
United States had the most confirmed infections in the world.
    By April, a million Americans had gotten the virus and 10 million 
were out of work. By the end of the year, more than 350,000 had died. 
We represent just 4 percent of the world's population, but we were 20 
percent of the world's deaths.
    A year later, things couldn't look more different.
    Under President Biden's leadership, we are once again the envy of 
the world, on track to lead the world in vaccinations.
    Think about that--after spending a year falling behind other 
countries, with more cases and more deaths, now in a matter of months, 
things have reversed.
    We are leading the world again, and reminding everyone what we can 
achieve when we unleash American ingenuity and talent. We're showing 
people what we can do to make all our lives better, when we invest in 
and follow America's scientists and public health experts.
    Because of that leadership, this summer, we'll have hugs and 
barbecues and birthday celebrations. ``Help wanted signs'' are going to 
go up in windows again. Customers will feel safe going back in stores 
and families will be back in local restaurants.
    And as Chair Powell has told us time and again, the best way to get 
the economy back on track is to get the virus under control.
    This isn't happening by accident. This is what leadership looks 
like. This is what a government that's on your side looks like.
    Last March, as we were staring down those staggering job losses, 
the Federal Reserve and Congress both sprang into action.
    We came together to pass the bipartisan CARES Act. It was a 
lifeline for so many, to help them pay their bills and keep them in 
their homes, and to keep businesses from going under.
    And as a side effect of helping everyone else, the bottom didn't 
fall out of the financial system, and the stock market did more than 
fine.
    That led the last Administration and Republicans in Congress to 
think their job was done.
    After all, the stock market rebounded and corporate profits were 
soaring.
    But for so many Americans, the past year has been the hardest of 
their lives.
    More than 540,000 Americans have lost their lives from this virus. 
That's more than half a million families grieving grandparents, 
mothers, fathers, daughters, brothers.
    We've lost 9.5 million jobs since last February.
    Many of those job losses have fallen on women. Too many mothers 
feel like they've lost their livelihood, lost their support system, 
lost the ability to have a moment to themselves to breathe.
    We've missed far too many birthdays and weddings and graduations. 
Many Americans are about to celebrate the second Passover or the second 
Easter in a row without being able to attend services or celebrate in 
person.
    We've missed hugs with grandparents and family dinners--all the 
little moments with our loved ones that make our lives full and 
meaningful.
    As President Biden said, while it's been different for everyone, we 
all lost something.
    But today, finally, help is here.
    After a year of Americans being told by their Government, ``we 
can't help you, we can't afford it, you're on your own,''--after a year 
of inaction and indifference, the American Rescue Plan will deliver on 
the hope that Americans voted for.
    It gets:

    Shots in people's arms

    Money in people's pockets

    Kids back in schools

    This is the investment we need that will defeat the virus, rescue 
the economy, and begin the work of building a better system for the 
future.
    Our witnesses today, Treasury Secretary Yellen and Federal Reserve 
Chair Powell, play a key role in our economic recovery.
    This is Secretary Yellen's first hearing before our committee as 
head of the Treasury. That also makes this the first time in American 
history a woman has come before this committee as the head of our 
nation's economic policy. It's about time.
    Welcome, Secretary Yellen.
    You and your colleagues at Treasury will have a big role to play in 
making the American Rescue Plan a success--making sure that renters and 
homeowners can stay in their homes, and getting funding to our 
communities to make sure they can help keep small businesses doors 
open.
    You're charged with expanding the Earned Income and Child Tax 
Credits, to put money directly in the pockets of workers, and help 
millions of working class and middle class parents keep up with the 
huge costs of raising a family.
    And you're responsible for getting direct stimulus checks to the 
vast majority of Americans--more than 100 million people already have 
their checks, and a little more economic security and peace of mind.
    The Federal Reserve can also make sure that it uses all of its 
tools to support a strong economic recovery that reaches all workers 
and all communities, not just Wall Street.
    That means we can't just go back to the way things were before the 
pandemic. For too many Americans, the economy didn't work for them and 
hasn't worked for a very long time.
    The gap between workers' wages and corporate profits has soared 
over the past few decades. Black and brown workers, and women, have 
never had their hard work pay off like it should.
    And when government is set up to benefit the richest corporations 
instead of the people who make our economy work, we get growing 
inequality, wealth concentrated at the very top, and a shrinking middle 
class.
    The past year--not to mention the past third of a century--makes it 
obvious: When we funnel money to Wall Street and the largest 
corporations and the richest tiny sliver of people, it never trickles 
down to the rest of us.
    We've tried that approach. It failed. The American Rescue Plan is 
the beginning of a new era--where we invest directly in the people who 
make our country work.
    That means growing an economy where one job is enough to build a 
middle class life.
    It means seizing every opportunity to lead the world in clean 
energy manufacturing and new, clean infrastructure.
    It means giving people power over their own money, and the 
financial security to weather an emergency.
    It means building an economy where hard work pays off for everyone.
    I look forward to hearing from Secretary Yellen and Chair Powell 
about how we will do that, together
                                 ______
                                 
                 PREPARED STATEMENT OF JANET L. YELLEN
                 Secretary, Department of the Treasury
                             March 24, 2021
    Chairman Brown, Ranking Member Toomey, Members of the Committee, 
thank you for having me.
    We are meeting at a hopeful moment for the economy--but still a 
daunting one. While we're seeing signs of recovery, we should be clear-
eyed about the hole we're digging out of: The country is still down 
nearly 10 million jobs from its pre-pandemic peak.
    When Congress passed the CARES and Consolidated Appropriations Acts 
last year, it gave the federal government some powerful tools to 
address the crisis. But upon taking office, I worried they weren't 
powerful enough. After all, there were--and still are--some very deep 
pockets of pain in the data.
    One-in-ten homeowners with a mortgage are behind on their payments, 
and almost one-in-five renters are behind on their rent. There are 22 
million people who say they don't have enough food to eat. One-in-ten 
adults are hungry in America.
    I looked at data like these, and I worried that the COVID economy 
was going to keep hurting millions of people now and haunt them long 
after the health emergency was over.
    We know that when the foundations of someone's life fall apart--
when they lose the roof over their head or the ability to eat dinner 
every night--the pain can weigh on them for years. Their earning 
potential is permanently lowered. I worried about this happening on a 
mass scale.
    That's why I advocated very hard for the American Rescue Plan, and 
it's why my first--and most enthusiastic--message today is: Thank you.
    With the passage of the Rescue Plan, I am confident that people 
will reach the other side of this pandemic with the foundations of 
their lives intact. And I believe they will be met there by a growing 
economy. In fact, I think we may see a return to full employment next 
year.
    Of course, the speed and strength of our recovery depends, in part, 
on how we implement the legislation. Treasury is tasked with much of 
that work, and there is nothing that I--or my team--take more 
seriously. We appreciate your oversight on this matter, and I want to 
briefly tell you about how we've been working.
    Since taking office two months ago, we have been expediting relief 
to the areas of greatest need. For example, small businesses--and 
especially the smallest small businesses, which are disproportionally 
owned by women and people of color.
    The pandemic has hit these businesses hard. The Paycheck Protection 
Program was an early lifeline, but because of issues with the program's 
design, the first rounds often didn't reach the smallest sole 
proprietorships. We're addressing that now. We worked with SBA to tweak 
how the program was implemented. It's allowing the PPP to reach 
millions more microbusinesses and entrepreneurs, especially in rural 
and low-income areas.
    We're also building capacity to support these communities over the 
longer term. Because of the December legislation, Treasury now has $12 
billion to inject into community development financial institutions and 
minority depository institutions. In turn, these CDFIs and MDIs can 
lend that capital out, helping people buy homes and start businesses in 
places that the financial services sector traditionally hasn't served 
well.
    Then, there are the families I spoke about, the ones struggling to 
keep a roof over their head and food on the table.
    The American Rescue Plan provides more than $30 billion to help 
renters and homeowners at risk of losing their homes. And we're making 
sure that assistance flows as efficiently as possible.
    For instance, the previous Administration put in place rules that 
required tenants and landlords to provide quite a bit of documentation 
to get rental assistance, including detailed statements about their 
income. But some people don't have access to those documents. We're 
cutting through the red tape for them, while still taking reasonable 
steps to prevent fraud and abuse.
    And of course, we've been sending direct payments to Americans--a 
lot of Americans. As of last week, we had issued over 90 million 
payments.
    And all this is just a fraction of Treasury's work. There are so 
many more relief programs, including one that will provide $350 billion 
in aid to state and local governments. Implementing all of it is more 
complicated than it sounds, and we are working closely with 
stakeholders to make sure that these programs are both efficient and 
effective.
    Behind these many relief programs, these millions of transactions, 
are a staff of very dedicated (and very tired) Treasury and IRS 
employees. My final word is to them: Thank you. You are putting on a 
master class in how government should work in the furnace of a crisis. 
I'm grateful to be your colleague.
    With that, I am happy to answer any questions you have.
Testimony Addendum
Overview
    Collectively, the Coronavirus Aid, Relief, and Economic Security 
Act (CARES Act); Consolidated Appropriations Act, 2021; and American 
Rescue Plan Act of 2021 (ARP) have created more than 15 new programs 
either directly administered by the Department of the Treasury or 
administrated with significant Treasury involvement. These programs 
have provided critical support to sectors that run the gamut of the 
American economy, from state and local governments to small businesses 
to individual taxpayers, homeowners, and renters.
    The funds distributed by Treasury through these programs have 
helped keep our economy afloat during this difficult time. In recent 
weeks, the IRS has distributed more than 90 million economic impact 
payments totaling $242 billion; Treasury has stood up a new program to 
invest $9 billion in community development financial institutions and 
minority depository institutions; Treasury's investments have resulted 
in airlines canceling 27,000 planned furloughs and kept employees on 
the payroll; and the SBA, with assistance from Treasury, has 
facilitated the approval of 2.7 million loans to small businesses 
totaling $181 billion in the most recent round of PPP. And with the ARP 
at the early stages of implementation, this is only the beginning.
    The remainder of this addendum provides a summary of the progress 
to date and the plans to come for key Treasury -led or -backed 
initiatives under these three statutes. In addition to the programs 
described below, the Treasury Secretary also approved certain 
facilities established by the Board of Governors of the Federal Reserve 
System under section 13(3) of the Federal Reserve Act, and Treasury 
made investments in those facilities using funds provided by the CARES 
Act.
CARES Act Programs
Coronavirus Relief Fund
    The CARES Act's Coronavirus Relief Fund provided $150 billion in 
aid for state and local governments, including Tribal governments, to 
help navigate adverse impacts of the COVID-19 public health and 
economic crisis. These funds could be used for necessary expenditures 
incurred due to COVID-19 which were previously unaccounted for in the 
recipient's most recent budget.
    To date, Treasury has made $149.5 billion in payments (99.7 
percent) from the Coronavirus Relief Fund to 785 governments. Remaining 
funds will be disbursed following final court decisions related to 
Tribal allocations. As of December 31, 2020, recipient governments 
reported that of the approximately $150 billion provided by Treasury, 
$96 billion (64 percent) had been expended in under nine months, 
providing rapid relief to many Americans in need. Recipients also 
reported that much of the spending went to priority categories related 
to payroll for public health and safety employees, small business 
assistance, housing services, and COVID-19 testing and contact tracing.
    As a result, Coronavirus Relief Fund spending has supported keeping 
essential frontline employees on state and local government payrolls 
and funding critical investments to help keep Americans safe.
Payroll Support Program (PSP)
    Treasury has awarded $41 billion so far under the two rounds of the 
PSP for over 650 passenger air carriers, cargo air carriers, and 
certain aviation contractors. These funds must be used exclusively for 
the payment of employee wages, salaries, and benefits. The PSP has 
preserved aviation jobs, compensated air carrier industry workers, and 
prevented involuntary furloughs during the pandemic. PSP awards have 
supported payroll for over 600,000 aviation employees. The requirements 
applicable to companies participating in the PSP have prevented tens of 
thousands of industry layoffs, and Treasury continues monitoring 
recipients for compliance with restrictions on share buybacks, dividend 
payments, and executive compensation.
    Treasury continues to review and approve the remaining applications 
from passenger air carriers and certain aviation contractors for the 
second round of the PSP (PSP2), under the Consolidated Appropriations 
Act, 2021. PSP2 is designed to preserve aviation jobs by requiring 
certain participants to recall and rehire workers who were 
involuntarily furloughed or terminated before the establishment of 
PSP2. Thus far, PSP recipients have issued recall notices to an 
estimated 60,000 employees who had been involuntarily furloughed or 
terminated.
    The ARP provides additional funding for the PSP (PSP3), including 
up to $14 billion for passenger air carriers and up to $1 billion for 
certain aviation contractors. Like prior iterations of the program, the 
ARP's PSP funding must be used exclusively for the continuation of 
payment of employee wages, salaries, and benefits. As required by the 
ARP, Treasury published guidelines for PSP3 just five days after the 
ARP's enactment.
    As compensation for the assistance provided in the PSP, the largest 
PSP recipients have issued Treasury promissory notes with a total 
principal amount of $11 billion and equity warrants with a face value 
of approximately $1 billion. Treasury will continue to receive 
additional equity warrants and notes from the largest PSP recipients as 
additional disbursements in PSP2 and PSP3 are made.
Aviation Loan Program
    The CARES Act provided $25 billion for Treasury to make loans 
directly to passenger air carriers; aviation maintenance, repair, and 
overhaul (MRO) companies; and ticket agents. The statute also provided 
$4 billion for Treasury to make loans to cargo air carriers. The 
availability of these loans served as an essential liquidity backstop 
for the aviation industry at a time of record low investor confidence 
in the industry.
    In this program, Treasury entered into loan agreements for 
commitments totaling $20.8 billion with seven of the ten largest 
passenger air carriers. The loans to those large passenger air carriers 
are secured by collateral and, in some cases, rights to future cash 
flows from the airlines' loyalty programs. The loans bear interest 
rates comparable to each company's pre-pandemic cost of funds, and they 
mature in five years. The seven largest passenger air carriers have 
drawn only 10 percent of their loan commitments, which is the minimum 
amount that each carrier was required to draw at the time of the loan's 
closing in September 2020. Under the loan agreements, the carriers have 
until the end of May 2021 to choose to draw the remaining 90 percent of 
the loan commitments.
    Treasury has also made 17 smaller loans under the Airline Loans 
Program totaling $69 million for smaller passenger air carriers, MROs, 
and ticket agents.
National Security Loan Program
    The CARES Act also authorized Treasury to make loans of up to $17 
billion for businesses critical to maintaining national security. 
Treasury consulted with the Department of Defense and the Office of the 
Director of National Intelligence to establish the eligibility criteria 
for the National Security Loan Program. To be eligible, applicants were 
required to (1) perform under a ``DX-priority'' DOD contract or (2) 
operate under a top-secret facility security clearance. Applicants were 
also eligible if the Secretary of Defense or the Director of National 
Intelligence certified that the applicant was otherwise critical to 
maintaining national security.
    Under the National Security Loan Program, Treasury entered into 11 
loans totaling $735.9 million, of which one loan comprised $700 million 
of the total. The loans are either secured by collateral, or, if a 
borrower passed Treasury's credit standards, are senior unsecured 
loans. Generally, secured loans have an interest rate of 3.5 percent 
and unsecured loans have an interest rate of 5.5 percent. All loans 
mature in five years.
Paycheck Protection Program (PPP)
    The CARES Act authorized the first round of the Paycheck Protection 
Program, providing $349 billion for forgivable loans to small 
businesses to help them keep employees on the payroll and weather the 
effects of the COVID-19 economic crisis. In April, Congress added $310 
billion in lending authority to the program under the Paycheck 
Protection Program and Health Care Enhancement Act. The Consolidated 
Appropriations Act, 2021 provided an additional round of $284 billion 
in funding to keep the program running into 2021.
    Treasury works closely with the Small Business Administration on 
the rules and guidance for the program, especially regarding 
eligibility, application processes, and forgiveness. Following the 
change in Administration, we assisted the SBA in their introduction of 
several major changes to the PPP, including (1) instituting a two-week 
exclusive approval period for borrowers with fewer than 20 employees, 
(2) allowing Schedule C filers to calculate their loan amounts based on 
gross income rather than net profit, (3) removing student loan 
delinquency as a bar to receiving a PPP loan, and (4) removing the 
five-year felony lookback as a bar to receiving a PPP loan.
    These policy changes have meaningfully improved the accessibility 
of the PPP program to the smallest businesses and enhanced the 
program's equity. The percentage of loans going to businesses with 
fewer than 20 employees has increased, as have the percentages of loans 
going to rural businesses and those in low- and moderate-income 
communities.
    The ARP updates PPP by making certain non-profit organizations and 
online news organizations eligible for loans and appropriated an 
additional $7.25 billion in subsidy for the program.
Consolidated Appropriations Act, 2021 Programs
Emergency Capital Investment Program (ECIP)
    Established by the Consolidated Appropriations Act, 2021, the ECIP 
was created to 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 
provide nearly $9 billion in capital directly to depository 
institutions that are certified community development financial 
institutions (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. Per the 
statute, Treasury will set aside $2 billion for CDFIs and MDIs with 
less than $500 million in assets and an additional $2 billion for CDFIs 
and MDIs with less than $2 billion in assets.
    Treasury's investments under the ECIP will generally take the form 
of preferred stock issued by participating institutions, or 
subordinated debt if the institution cannot feasibly issue preferred 
stock. The maximum annual dividend rate for the preferred stock issued 
to Treasury is 2 percent, but institutions can qualify for a reduction 
in the dividend rate if the institution increases its qualified lending 
above an established baseline. Treasury recognizes the value of ``deep 
impact'' lending to the most underserved communities and understands 
that this lending may be more difficult or costly to undertake. In 
order to ensure a level playing field for lenders that choose to go the 
extra mile to have the greatest impact in the most underserved 
communities, lending that qualifies as deep impact lending will receive 
double credit in the calculation that determines a dividend or interest 
rate reduction.
    Treasury has opened an application portal and issued guidance and 
term sheets regarding ECIP. The 60-day application window opened on 
March 4, 2021. Eligible CDFIs and MDIs have until May 7, 2021 to submit 
their applications. Treasury anticipates that the program will begin 
making investments in the summer of 2021.
CDFI Rapid Response Program (CDFI RRP)
    The Consolidated Appropriations Act, 2021 provided $1.25 billion 
for grants to CDFIs to support, prepare for, and respond to the 
economic impacts of the COVID-19 pandemic. To deploy these resources in 
an effective and expedient manner, the Community Development
    Financial Institutions Fund (CDFI Fund) at Treasury developed the 
CDFI RRP. The CDFI RRP is designed to quickly and broadly deploy 
capital to certified CDFIs through a streamlined, formula-driven 
application and review process. The CDFI RRP will provide emergency 
funding to CDFIs of all types and sizes that can support financial 
products and services. A portion of funds can be used to support 
operational expenses to increase the capacity of the CDFI.
    Per the statutory deadline, the RRP application window opened 60 
days from the enactment of the statute. Applications are due by March 
25, 2021. To ensure strong participation, the CDFI Fund conducted 
webinars to provide an overview of the program and answer any 
questions. The CDFI Fund expects to make 1,000 awards with an average 
award size of $1.2 million. The funds expire at the end of fiscal year 
(FY) 2021.
    RRP is the first of two tranches of CDFI grant funding authorized 
by the Consolidated Appropriations Act, 2021. The statute also made 
available $1.75 billion for grants to support CDFIs to expand lending, 
grant making, or investment activity in low- or moderate-income 
minority communities and to minorities that have significant unmet 
capital or financial services needs. This includes up to $1.2 billion 
for a new category of CDFIs called ``minority lending institutions.'' 
This program will be established in FY 2021.
Coronavirus Economic Relief for Transportation Services (CERTS)
    CERTS is a $2 billion grant program established under the 
Consolidated Appropriations Act, 2021 to provide relief to certain 
transportation companies with significant loss of revenue due to the 
COVID-19 pandemic. These include motorcoach, school bus, passenger 
vessel, and pilotage vessel companies. Treasury has conducted outreach 
to the targeted industries and is developing policies and procedures to 
implement the program. Treasury will soon issue program guidelines and 
a grant application.
    Thousands of transportation companies are eligible to apply for 
CERTS, many of which are small and family-owned businesses. In 
addition, Treasury will ensure equitable access to CERTS for small, 
minority-owned, and women-owned businesses.
American Rescue Plan
Economic Impact Payments (EIPs)
    The first round of EIPs were enacted as part of the CARES Act, and 
additional EIPs were made under the Consolidated Appropriations Act, 
2021 and the ARP. Since the ARP was signed into law, Treasury has 
issued over 90 million EIPs totaling more than $242 billion. The speed 
with which these payments have been delivered thus far reflects the 
dedication and hard work of the IRS, as well as other career officials 
across Treasury, building on the foundation laid in distributing 
earlier EIPs with assistance from our agency partners at the Social 
Security Administration, Veterans Administration, Railroad Retirement 
Board, and others.
    With regard to the CARES Act EIPs, the IRS and Treasury began 
issuing payments within three weeks of the CARES Act's passage. 
Eligible individuals received payments up to $1,200 ($2,400 for married 
couples filing joint returns), and households received up to $500 for 
each qualifying child. By the end of 2020, more than 160 million EIPs 
had been issued pursuant to the CARES Act. These payments totaled 
nearly $275 billion. Treasury issued this set of EIPs through December 
31, 2020, though individuals who did not receive an EIP or who received 
less than the amount to which they were entitled may still file a tax 
year 2020 income tax return to claim the correct amount as a Recovery 
Rebate tax credit.
    The second round of EIPs was enacted under the Consolidated 
Appropriations Act, 2021, and the IRS and Treasury began issuing 
payments within one week of enactment. Eligible individuals received 
payments of up to $600 ($1200 for married couples filing joint 
returns), and households received up to $600 for each qualifying child. 
By late January 2021, approximately 147 million EIPs had been issued 
pursuant to the December legislation. These payments totaled 
approximately $142 billion. Treasury issued this set of EIPs through 
January 15, 2021, though individuals who did not receive an EIP or who 
received less than they are entitled to may file a tax year 2020 income 
tax return to claim the correct amount as a Recovery Rebate tax credit.
    The most recent round of EIPs was enacted under the ARP, and 
Treasury and the IRS began issuing payments within a few days of 
enactment. Under the ARP, eligible individuals will receive payments of 
up to $1400 ($2800 for married couples filing joint returns), and 
households can receive up to $1400 for each dependent (this is a 
broader category than qualifying child because it covers children age 
17 and over and others who are supported by the taxpayer).
Emergency Rental Assistance Program (ERAP)
    The Emergency Rental Assistance Program provides states, 
territories, local governments, and Tribes funding to assist renter 
households impacted by the pandemic. Section 501(a) of Division N of 
the Consolidated Appropriations Act, 2021 made available $25 billion in 
rental assistance funds for Treasury to disburse to eligible grantees. 
On March 11, 2021, the ARP provided an additional $21.55 billion for 
ERAP, including a portion of funding reserved for high-need grantees.
    The Consolidated Appropriations Act, 2021 included requirements 
regarding the distribution of funds, such as assisting households that 
are unable to pay rent and utilities due to the COVID-19 pandemic. 
Grantees may use the funds to provide assistance to eligible households 
through existing or newly created rental assistance programs. Grantees 
are directed to prioritize households receiving at or below 50 percent 
the area median income or which have at least one household member that 
has been unemployed for at least 90 days. After an extension included 
in ARP, funds generally expire on September 30, 2022.
    Treasury disbursed all payments to state and local grantees by the 
statutory deadline of January 26, 2021. Tribes were permitted to 
request payment through January 26, and the full $25 billion was 
disbursed by February 26, 2021. Treasury has published information 
pertaining to the grant award terms and the application process and 
answers to Frequently Asked Questions (FAQs) to assist grantees in 
launching their programs. Treasury continues to work with grantees to 
provide additional guidance, as appropriate, and to prepare deployment 
of the additional ARP funding.
Coronavirus State and Local Fiscal Recovery Funds
    The ARP authorizes a total of $350 billion in relief for state and 
local governments, including $219.8 billion for states, territories, 
and Tribal governments and $130.2 billion for local governments. These 
funds may be used to cover costs incurred to respond to COVID-19 or its 
negative economic impacts, including assistance to households, small 
businesses, non-profits, and impacted industries (e.g., tourism, 
travel, and hospitality); provide premium pay to essential public 
employees or grants to employers of essential workers; provide 
government services to the extent of revenue loss due to COVID-19; or 
make necessary investments in water, sewer, or broadband 
infrastructure.
    These payments will help ensure frontline workers and essential 
employees remain on state and local payroll at the time they are needed 
most. The Treasury Department is currently working to allocate these 
funds in line with Congress's statutory instructions and setting up 
procedures to ensure this money is efficiently distributed to the state 
and local governments that need it.
Coronavirus Capital Projects Fund (CCPF)
    The CCPF provides $10 billion for state, territories, and Tribal 
governments to invest in projects directly enabling work, education, 
and health monitoring, including remote options, in response to COVID-
19. Treasury is currently working to establish rules around eligible 
uses for these funds so that they can be used for purposes like 
broadband infrastructure.
Local Assistance and Tribal Consistency Fund (LATCF)
    LATCF provides $2 billion to eligible revenue-sharing counties and 
Tribal governments for a wide variety of governmental expenditures, 
excluding lobbying activities. Treasury is currently in the process of 
evaluating options to equitably allocate and distribute these funds, 
taking into account the economic conditions of each eligible revenue 
sharing county, using measurements of poverty rates, household income, 
land values, and unemployment rates as well as other economic 
indicators, and taking into account economic conditions of each 
eligible Tribe.
    Going forward, Treasury plans to consult with Congress, counties, 
Tribal governments, and other stakeholders in order to develop a full 
picture of economic needs at the county level, to implement an 
allocation that is fair and equitable in light of counties' varying 
economic circumstances, and to effectuate Congress's statutory purpose 
in enacting this provision.
State Small Business Credit Initiative (SSBCI)
    The ARP's SSBCI program builds on the foundation laid by the 
original SSBCI, implemented in 2010, to use federal funds to support 
small businesses and catalyze small business investment at the state 
level. The new SSBCI provides up to $10 billion for states, 
territories, and Tribal governments to fund small business capital 
access and investment programs, including loan loss reserves, 
collateral guarantees, venture capital, and other investment structures 
that pair public funding with private capital. Collectively, these 
funds may catalyze up to $100 billion in total investment in small 
businesses across the country.
    In addition to preparing the application process and technical 
assistance needed to ensure states can operate robust, successful SSBCI 
programs, Treasury will work to implement the ARP's requirements that 
$1.5 billion of SSBCI funds go to businesses owned by socially and 
economically disadvantaged individuals, that $1 billion be set aside 
for an incentive program focused on businesses owned by socially and 
economically disadvantaged individuals, that $500 million be set aside 
for Tribal governments, and that at least $500 million go to businesses 
with fewer than 10 employees. These set-asides are critical to the 
equity of this program and will remain a priority for Treasury.
Pensions
    The ARP authorizes the creation of a new fund to be held at the 
Treasury to provide special financial assistance to underfunded 
multiemployer pensions and ensure these pensions' obligations are paid. 
In particular, the ARP's pension provisions authorize the Pension 
Benefit Guaranty Corporation (PBGC) to provide assistance to eligible 
multiemployer pensions sufficient to reinstate suspended benefits and 
to ensure obligations are paid through 2051. Certain of these 
provisions will be implemented in consultation with Treasury. The PBGC 
will set rules or guidance regarding eligibility and review 
applications to determine eligibility. Treasury will consult with PBGC 
and the Department of Labor, as directed by the ARP, on proposed 
reinstatements of benefits, the changing of funding assumptions 
proposed in a plan's application, and the granting of temporary 
priority consideration for certain plans.
Homeowners Assistance Fund
    The ARP provided $9.96 billion for a new Homeowner Assistance Fund 
to assist homeowners who experienced hardship after January 21, 2020. 
The Department will allocate and distribute funds to participating 
states, territories, and Tribes to prevent homeowner mortgage defaults, 
foreclosures, and displacements. These funds may be used to address 
monthly mortgage payments, delinquencies, principal reductions, 
assistance for utilities, tax, and insurance payments, and to reimburse 
state and local governments for relief provided during the pandemic to 
prevent housing losses. Grantees that elect to participate must set 
aside at least 60 percent of their allocation to assist homeowners with 
incomes equal to or less than 100 percent of the local or national 
median income, whichever is greater. Grantees are also required to 
prioritize payments to socially and economically disadvantaged 
individuals.
    Treasury will work to establish this program and release guidance 
regarding precise use of funds to reflect the intended impact 
prescribed by Congress. The Department recognizes that keeping 
Americans in their homes is not just about ensuring financial 
stability, but also preventing potential health impacts brought by the 
COVID-19 pandemic.
                                 ______
                                 
                 PREPARED STATEMENT OF JEROME H. POWELL
       Chairman, Board of Governors of the Federal Reserve System
                             March 24, 2021
    Chairman Brown, Ranking Member Toomey, and other Members of the 
Committee, thank you for the opportunity to discuss the measures we 
have taken to address the hardship wrought by the pandemic.
    I would like to start by noting the upcoming one-year anniversary 
of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act). 
With unanimous approval, Congress provided by far the fastest and 
largest response to any postwar economic downturn, offering fiscal 
support for households, businesses, health-care providers, and state 
and local governments. This historically important legislation provided 
critical support in our nation's hour of need. As the virus arrived in 
force, our immediate challenge was to limit the severity and duration 
of the fallout to avoid longer-run damage. At the Fed, we also acted 
with unprecedented speed and force, using the full range of policy 
tools at our disposal.
    Today the situation is much improved. While the economic fallout 
has been real and widespread, the worst was avoided by swift and 
vigorous action-from Congress and the Federal Reserve, from across 
government and cities and towns, and from individuals, communities, and 
the private sector. More people held on to their jobs, more businesses 
kept their doors open, and more incomes were saved. But the recovery is 
far from complete, so, at the Fed, we will continue to provide the 
economy the support that it needs for as long as it takes.
    As we have emphasized throughout the pandemic, the path of the 
economy continues to depend on the course of the virus. Since January, 
the number of new cases, hospitalizations, and deaths has fallen, and 
ongoing vaccinations offer hope for a return to more normal conditions 
later this year. In the meantime, continued social distancing and mask 
wearing will help us reach that goal.
    Indicators of economic activity and employment have turned up 
recently. Household spending on goods has risen notably so far this 
year, although spending on services remains low, especially in sectors 
that typically require in-person gatherings. The housing sector has 
more than fully recovered from the downturn, while business investment 
and manufacturing production have also picked up.
    As with overall economic activity, conditions in the labor market 
have recently improved. Employment rose by 379,000 in February, as the 
leisure and hospitality sector recouped about two-thirds of the jobs it 
lost in December and January.
    The recovery has progressed more quickly than generally expected 
and looks to be strengthening. This is due in significant part to the 
unprecedented fiscal and monetary policy actions I mentioned, which 
provided essential support to households, businesses, and communities.
    However, the sectors of the economy most adversely affected by the 
resurgence of the virus, and by greater social distancing, remain weak, 
and the unemployment rate-still elevated at 6.2 percent-underestimates 
the shortfall, particularly as labor market participation remains 
notably below pre-pandemic levels.
    We welcome this progress, but will not lose sight of the millions 
of Americans who are still hurting, including lower-wage workers in the 
services sector, African Americans, Hispanics, and other minority 
groups that have been especially hard hit.
    The Federal Reserve's response has been guided by our mandate to 
promote maximum employment and stable prices for the American people, 
along with our responsibilities to promote the stability of the 
financial system.
    When financial markets came under intense pressure last year, we 
took broad and forceful actions, deploying both our conventional and 
emergency lending tools to more directly support the flow of credit. 
Our actions, taken together, helped unlock more than $2 trillion in 
funding to support businesses large and small, nonprofits, and state 
and local governments between April and December. This support, in 
turn, has helped keep organizations from shuttering and put employers 
in both a better position to keep workers on and to hire them back as 
the recovery continues.
    Our programs served as a backstop to key credit markets and helped 
restore the flow of credit from private lenders through normal 
channels. We deployed these lending powers to an unprecedented extent 
last year. Our emergency lending powers require the approval of the 
Treasury and are available only in very unusual circumstances.
    Many of these programs were supported by funding from the CARES 
Act. Those facilities provided essential support through a very 
difficult year. They are now closed, and the Federal Reserve has 
returned the large majority of the Treasury's CARES Act equity, as 
required by law. Our other emergency lending facilities are following 
suit imminently, although we recently extended the PPPLF (Paycheck 
Protection Program Lending Facility) for another quarter to continue to 
support the PPP (Paycheck Protection Program).
    Everything the Fed does is in service to our public mission. We are 
committed to using our full range of tools to support the economy and 
to help assure that the recovery from this difficult period will be as 
robust as possible on behalf of communities, families, and businesses 
across the country.
    Thank you. I look forward to your questions.
    
    
        RESPONSES TO WRITTEN QUESTIONS OF CHAIRMAN BROWN
                      FROM JANET L. YELLEN

Q.1. The American Rescue Plan's $1,400 direct stimulus payments 
have already been deposited directly in the bank accounts of 
many Americans. But millions in this country who don't have a 
bank account have to wait much longer to get their checks, and 
some will be forced to turn to predatory check-cashers that 
charge exorbitant fees. How can a digital dollar or central 
bank digital currency help Americans who right now have to pay 
to use their own money?

A.1. Treasury has made great efforts to reach the unbanked 
during the COVID crisis. For example, the Direct Express 
prepaid debit card program for the unbanked federal 
beneficiaries was used to distribute millions of Economic 
Impact Payments directly onto existing prepaid cards. Treasury 
is supportive of financial innovations that would facilitate 
faster, safer, more efficient payments and broader financial 
inclusion. A U.S. digital dollar that could support these 
objectives merits further study. The Federal Reserve Bank of 
Boston is currently exploring numerous questions associated 
with the design of a digital dollar, including the extent to 
which such a currency could be oriented directly towards 
individual users. Chairman Powell has stated that the Federal 
Reserve would not proceed with a digital dollar without support 
from Congress, and I look forward to working across the 
Administration and with Congress on this topic.

Q.2. How does the changing climate affect financial stability 
and the economy? What risks does climate change pose to 
financial institutions individually and the financial sector as 
a whole? How can FSOC's ongoing assessment of climate risks 
better protect the financial system from climate-related 
shocks?

A.2. Climate change presents economic opportunities to invest 
in new technologies and industries, and to create good jobs 
that promote sustainability, while putting the economy on a 
path to net zero carbon emissions. Climate change also creates 
significant economic risks-for example, physical risks 
associated with the impact of more frequent and severe extreme 
weather events on households, businesses, and communities, or 
transition risks to sectors of the economy impacted by 
technological innovations and climate policy choices. These 
economic risks will impact the financial sector. FSOC will 
evaluate these risks, coordinate across U.S. regulatory 
agencies, and act, as appropriate, to mitigate potential risks 
to financial stability. FSOC will facilitate the sharing of 
climate-related financial risk data and information among 
regulators, and also work with FSOC member agencies to see how 
they can improve financial disclosures and other sources of 
data, so regulators and market participants can better 
understand potential climate-related exposures.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR TOOMEY
                      FROM JANET L. YELLEN

Q.1. As you know, the United States has the right to 
unilaterally veto any allocation of International Monetary Fund 
(IMF) Special Drawing Rights (SDRs). Thus, any allocation will 
be done under the specific consent of the Biden administration.
    How does the administration justify supporting a proposal 
that would benefit IMF member countries that have perpetrated 
human rights abuses, anti-democratic coups, and genocide, 
especially when-as you have noted-there are more efficient ways 
to support individual countries in need?

A.1. An allocation of IMF Special Drawing Rights (SDRs) would 
help build reserve buffers, smooth economic adjustments, and 
mitigate the risks of economic stagnation in global growth. 
Importantly, it could also enhance liquidity for low-income and 
developing countries to facilitate their much-needed health 
recovery efforts. All IMF members receive an SDR allocation 
proportionate to their quota share. As part of our support for 
an SDR allocation, Treasury is working with the IMF and other 
member countries to maximize the benefits and limit the 
possible downsides of an allocation by enhancing transparency, 
accountability, and equitable participation by SDR holders. The 
SDR allocation is part of broader international efforts to 
support the global recovery. This package also includes robust 
support from the IMF and multilateral development banks, and 
debt relief in some cases-all alongside countries taking 
necessary reform steps, as well as financial support to the 
COVID-19 Vaccines Global Access (COVAX) Facility to help 
prevent long-term scarring from the pandemic and worsening 
global wealth divergence.

Q.2. Any SDR allocation will directly benefit the Burmese 
military junta by giving the Burmese government access to over 
$700 million in hard currency, enabling them to blunt the 
effects of U.S. sanctions. Doesn't an SDR allocation make it 
less likely for democracy and the rule of law to be restored in 
Burma?

A.2. Since the military coup, the IMF has paused relations with 
Burma, leaving the military regime without any access to IMF 
resources, including Burma's SDRs. The IMF will lift the pause 
and deal with the military regime only if IMF members 
representing a majority of the IMF's voting shares 
affirmatively acknowledge that they recognize or deal with the 
military regime. This has not yet occurred, and we are 
encouraging our partners not to do so. Moreover, even if the 
military regime were to gain access to Burma's SDRs, the United 
States will not provide hard currency to Burma in exchange for 
SDRs, either now or subsequent to any SDR allocation, and U.S. 
sanctions on Burma will remain in place.

Q.3. Is it not the case that the Chinese government, which 
Secretary of State Blinken has asserted is engaging in genocide 
in Xinjiang, will benefit from an SDR allocation? What steps 
will the Treasury Department take to ensure that they do not 
benefit from this allocation?

A.3. We do not expect China to convert its SDRs to hard 
currency for its own use, as it already has plentiful foreign 
exchange reserves. The SDRs China would receive under the 
proposed allocation would represent around 1 percent of its 
current level of international reserves. China has received $10 
billion worth of SDRs from the IMF through past SDR 
allocations. China currently holds $11.4 billion worth of SDRs, 
which is greater than its allocation. This means that China has 
purchased SDRs on net from other IMF members over the years. 
Furthermore, it is in the United States' interest for China to 
continue its cooperation in SDR exchanges. We are encouraging 
major economies, including China, to purchase SDRs from low-
income countries to help support these countries in their 
recovery from the COVID-19 crisis.

Q.4. Is it not the case that the Russian government, a hostile 
regime that the United States believes has poisoned dissidents 
with banned chemical nerve agents, meddled in foreign elections 
including our own, and conducted sweeping cyber espionage 
campaigns against Western countries including our own, will 
benefit from an SDR allocation?

A.4. The SDRs Russia would receive under the proposed 
allocation would represent 3 percent of its current level of 
international reserves. Moreover, the United States will not 
provide Russia with hard currency as part of the allocation, 
and U.S. sanctions on Russia will remain in place.

Q.5. Why doesn't an allocation of SDRs amount to assistance to 
terrorist states, such as Iran, as prohibited by federal law 
under 22 U.S.C. 262p-4q?

A.5. SDRs are not assistance, but an international reserve 
asset (and liability) that can be allocated to increase 
liquidity at the IMF and thereby address the global shortfall 
in reserves.

Q.6. During the March 24, 2021, hearing, you expressed your 
belief that there is little or no cost to taxpayers associated 
with providing dollars in exchange for SDRs, calling it a 
``wash'' because of interest earned on excess SDRs. Why do you 
believe that to be the case? Please provide concrete economic 
analysis in your explanation.

A.6. mThe United States earns interest on SDRs that we 
purchase, largely offsetting any increase in Treasury's 
borrowing costs. The differential between the SDR interest rate 
and the interest rate on Treasuries varies over time, so at 
times there is a small cost and at other times a small benefit 
to Treasury. For details, please see the Report to Congress on 
the Financial Implications of U.S. Participation in the 
International Monetary Fund here.

Q.7. The housing finance system is in urgent need of reform. 
More than 12 years after the financial crisis, Congress has 
still not addressed the fundamental flaws in the system that 
led to the crisis. The system is still dominated by the 
government-sponsored enterprise (GSE) duopoly of Fannie Mae and 
Freddie Mac, and the GSEs remain still gravely 
undercapitalized. Just as before the financial crisis, these 
flaws in the system continue to encourage excessive risk-
taking, risk future taxpayer bailouts, and threaten financial 
stability. Treasury secretaries over the last several 
Republican and Democratic administrations have maintained a 
consistent and longstanding commitment to reform of the housing 
finance system.
    Do you intend to have Treasury continue taking on a 
leadership role in advocating and developing comprehensive 
housing finance reform proposals?

A.7. The landmark American Rescue Plan I worked with members of 
Congress to pass created the Homeowner Assistance Fund and 
provided additional funding for emergency rental assistance, 
which Treasury is actively working to administer. In addition 
to addressing these urgent priorities, Treasury has a key role 
in shaping, and a key interest in the outcome of, housing 
finance reform. The Administration is committed to housing 
finance policy that expands fair and equitable access to 
homeownership and affordable rental opportunities, protects 
taxpayers, and promotes financial stability. I look forward to 
working across the Administration and with Congress in support 
of these goals.

Q.8. If so, will you designate a senior Treasury official to 
work with Congress on legislation?

A.8. I agree that Treasury has a key role to play in this area, 
and would anticipate designating a senior Treasury official to 
work with Congress on it as our policy formulation efforts 
progress.

Q.9. I recently released the following principles calling on 
Congress to enact housing finance reform legislation to:
    Transition the GSE duopoly toward a competitive secondary 
market;
    End the conservatorships of Fannie Mae and Freddie Mac;
    Establish a level playing field for other sources of 
private capital that bear mortgage credit risk;
    Foster a liquid secondary mortgage market that promotes the 
continued availability of affordable 30-year and other long-
term fixed-rate mortgage loans across the United States and 
throughout the economic cycle;
    Protect taxpayers by ensuring that significant first-loss 
private capital stands in front of any government support and 
that taxpayers are appropriately compensated for that support;
    Promote equitable access to the secondary mortgage market 
by mortgage lenders of all sizes, business models, charter 
types, and locations; and
    Provide for a smooth transition to the reformed housing 
finance system by ensuring that reforms are incremental and 
realistic, leveraging the existing regulatory and market 
structure.
    These principles build off the past bipartisan efforts of 
current members of the Senate Banking Committee. They also 
share considerable overlap with the reform principles of 
Banking Committee Chairman Brown and House Financial Services 
Committee Chairwoman Waters. Are these principles generally 
consistent with Treasury's policy on housing finance reform?

A.9. appreciate your longstanding attention to this important 
issue. The Administration is committed to housing finance 
policy that expands fair and equitable access to homeownership 
and affordable rental opportunities, protects taxpayers, and 
promotes financial stability, and stands ready to work with 
Congress in support of these goals. I look forward to working 
across the Administration and with you and other members of 
Congress in support of these goals.

Q.10. In January 2021, Treasury and the Federal Housing Finance 
Agency (FHFA) amended the Preferred Stock Purchase Agreement 
with each GSE, requiring, among other things, that Treasury 
deliver to Congress a housing finance reform proposal by the 
end of September 2021. Can you confirm that Treasury will 
deliver that proposal by September, if not sooner?

A.10. Treasury continues to assess the GSEs' current status, 
including the recent amendments to the PSPAs, and will issue 
public statements regarding its views on housing finance reform 
at an appropriate time.

Q.11. I am concerned that a major threat to the value of 
energy-related assets is the effort by regulators to ban or 
limit financial institutions from lending to or investing in 
energy companies. I was encouraged to hear your testimony that 
the Biden administration has ``no plan to regulate what lending 
or investments can be done'' by financial institutions. 
However, I remain concerned by regulatory actions that may 
pressure financial institutions to cease providing banking and 
other financial services to energy companies. For example, the 
Financial Stability Oversight Council's (FSOC) first meeting 
under your tenure will focus on ``climate change and its 
potential impacts on financial stability.'' If the objective of 
this effort is not to influence financial institutions' lending 
and investment activities, what do you expect to result from 
the FSOC's analysis?

A.11. FSOC is a forum where regulators share expertise and 
perspectives to identify and assess potential risks across the 
financial system. FSOC is working with its member agencies to 
evaluate potential risks that climate change may pose to U.S. 
financial stability. To measure and monitor climate-related 
financial risks, regulators need to have access to the best 
information and data available. This is a challenge all 
financial regulators face, and FSOC will facilitate the sharing 
of climate-related financial risk data and information among 
regulators. FSOC will also work with Council member agencies to 
see how they can improve financial disclosures and other 
sources of data, so regulators and market participants can 
better understand potential climate-related exposures. FSOC 
will act, as appropriate, to mitigate potential risks to 
financial stability in this and other areas.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNER
                      FROM JANET L. YELLEN

Q.1. Worker Training Tax Credit--Secretary Yellen, in your 
testimony before the Committee you spoke about economic 
scarring, the impact joblessness has on working Americans, and 
how it can permanently lower their earning potential. As you 
know, we have about 18 million unemployed workers and more than 
4 million of them are long-term unemployed. Based on our 
experience in the Great Recession, I'm not convinced that all 
of those jobs are going to come back. I recently released a 
white paper where I discuss a number of potential policy 
options I've been working on, including creating a worker 
training tax credit for investments in worker training that 
mirrors the R&D tax credit.
    Understanding you're not able to comment on a specific 
policy, would you agree that for a full recovery, companies 
need to start thinking of workers as an investment? For our 
economy to remain competitive in the 21st century, do we need 
to use the levers available to make sure companies get back to 
investing in human beings?

A.1. For the United States to remain a competitive economy, its 
workers must have access to job training that allow them to 
enter and retain high-quality jobs. Developing policies that 
ensure workers have the appropriate access to training and 
supportive services to thrive in a growing economy is a top 
tier issue for the Administration. That is why President Biden 
has proposed investing $100 billion over 10 years in workforce 
development policies that lead to high-quality jobs as part of 
the American Jobs Plan (AJP). The AJP will pair job creation 
efforts with next generation training and employment programs, 
including a new sector-based training program; target workforce 
development opportunities in underserved communities; and build 
the capacity of the existing workforce development system, 
which will include major investments in proven strategies such 
as Registered Apprenticeships.

Q.2. Community Development Financial Institutions--Secretary 
Yellen, I know the Administration and you are committed to a 
quick and effective implementation of the Emergency Capital 
Investment Program (ECIP). I've heard some concerns that the 
lack of clear guidelines for ECIP is creating hesitancy and 
might lead to a low take-up of the program.
    Is there a specific timeline update on when CDFIs and MDIs 
who have applied for the ECIP can expect the investments to be 
made?

A.2. Based on feedback from organizations representing nearly 
every potentially eligible applicant, Treasury extended the 
ECIP application deadline by 60 days to early July. After the 
application deadline, we anticipate moving as expeditiously as 
possible to enter into investment agreements with approved 
participants.

Q.3. How is Treasury working with stakeholders to ensure the 
ECIP program is structured in a way that will lead to broad 
take-up of the program?

A.3. Treasury has conducted extensive outreach with potential 
eligible applicants and received feedback that informed 
Treasury's development of the terms and conditions for the ECIP 
program. Treasury will publish additional guidance and is 
coordinating with banking regulators to promote beneficial 
regulatory capital treatment for ECIP investments.

Q.4. More broadly, Congress just passed $10 billion for another 
round of funding for the State Small Business Credit Initiative 
(SSBCI) and the FDIC is just in the opening stages of getting 
its Mission-Driven Fund off the ground to direct private sector 
and philanthropic investments in MDIs and CDFIs.
    How can the Federal Government better coordinate all of 
these community development finance programs to get the most 
out of these institutions?

A.4. Treasury is focused on implementing the programs that 
Congress established under recent legislation, including the 
American Rescue Plan Act of 2021. It is important to use 
multiple channels to accomplish the federal government's 
community development goals, in light of the differing 
jurisdictions across agencies and the varying needs of 
communities and sectors for support. Treasury regularly 
consults with other agencies regarding these programs, in order 
to maximize the effectiveness and efficiency of our programs.

Q.5. With respect to SSBCI, how can Treasury work to ensure 
CDFIs and MDIs are leveraged as part of the program design?

A.5. Congress provided for set-asides in the SSBCI to serve 
businesses owned and controlled by socially and economically 
disadvantaged individuals. Treasury is currently developing 
guidance regarding this program.

Q.6. Broadband--Secretary Yellen, the last 12 months of the 
pandemic have revealed how essential broadband access is for 
tele-work, online education, and tele-health efforts. 
Unfortunately, the harms of our nation's lingering broadband 
gap have only become more visible as our nation's vaccine roll-
out - highly dependent on online public awareness efforts and 
online registration - has been undermined by millions of 
Americans continuing to lack affordable access. As you know, I 
worked to secure funding for the Critical Capital Projects fund 
in the American Rescue Plan to enable funding for states and 
localities for capital projects like broadband that directly 
enable tele-work, online education and tele-health activities.
    As Treasury works to implement this program, would you 
agree that immediate efforts to close the lingering broadband 
gap constitute not only long-term investments in America's 
recovery, but also essential near-term investments to respond 
to the ongoing public health crisis?

A.6. The COVID health emergency has made clear that online 
access is critical for all households in the United States. It 
is necessary for Americans to do their jobs, to participate 
equally in school learning, health care, and to stay connected. 
Under the American Rescue Plan Act of 2021, the Capital 
Projects Fund provides funds ``to carry out critical capital 
projects directly enabling work, education, and health 
monitoring, including remote options,'' in response to the 
pandemic. The Critical Capital Projects Fund will allow for 
investment in high-quality broadband as well as other 
connectivity infrastructure, devices, and equipment. Treasury 
is currently developing program terms regarding eligible uses 
of proceeds. Treasury will begin to accept applications for 
review in the summer of 2021 and will issue guidance before 
that date.

Q.7. Under the Obama Administration, a January 2017 study from 
the FCC's economist Paul De Sa estimated that closing the 
broadband gap estimated that it would take around $80B in 
funding. While that's a significant amount of money, the long-
term impacts on education, productivity, and economic 
inclusivity from this continuing gap are likely several factors 
larger each year.
    Do you agree that closing the gap should be a component of 
any infrastructure package that Congress pursues?

A.7. Yes, providing affordable, reliable, high-speed internet 
to every American is critical to any infrastructure package. 
Just like generations ago in the 1936 Rural Electrification Act 
the federal government made a historic investment in bringing 
electricity to nearly every home and farm in America, we must 
ensure all families have affordable, reliable access to high-
speed internet.
                                ------                                


               RESPONSES TO WRITTEN QUESTIONS OF
           SENATOR CORTEZ MASTO FROM JANET L. YELLEN

Q.1. How do you recommend Congress consider how we deliver 
financial assistance to families during a future crisis?
    Should we establish a basic savings account for every adult 
for efficient delivery of unemployment insurance or direct 
relief?

A.1. Rapid and efficient delivery of unemployment insurance 
benefits and direct relief, such as the benefits provided by 
the American Rescue Plan, is a critical aspect of a successful 
relief package. Treasury worked around the clock to ensure that 
American families received their benefits in a timely fashion, 
and will continue to develop new strategies and approaches to 
improve upon its efforts-including proposals to expand access 
to financial services. Additionally, in his FY 2022 Budget, 
President Biden laid out high-level principles for 
comprehensive UI reform to help ensure that unemployed workers 
have swift and equitable access to benefits that are sufficient 
enough to sustain them during periods of unemployment. I look 
forward to working with Congress to ensure that all Americans 
have access to critical benefits.

Q.2. What policies would increase efficiency delivering 
assistance and avoid fraud?

A.2. Treasury and the Internal Revenue Service (IRS) delivered 
several different benefits under the American Rescue Plan. One 
example is the Economic Impact Payments (EIPs) of up to $1,400 
per adult and dependent child (phased down for higher-income 
households). The IRS was able to harness existing data and 
tools to deliver these payments expeditiously and efficiently. 
The starting point was available taxpayer data from the IRS, 
using recently filed income tax returns. This was supplemented 
by beneficiary data from the Social Security Administration, 
the Veterans Administration, and the Railroad Retirement Board. 
Reliance on existing data for income tax filers enabled 
payments to begin within a few days and to flow directly into 
people's bank accounts. Reliance on income tax return data also 
limited potential fraud, because these data were compiled for 
people's income tax return filing obligations, which they 
submit under penalty of perjury. In addition, reliance on 
existing security protocols and ongoing fraud protection 
activities minimized the ability of persons to request 
inappropriate payments or to divert legitimate payments away 
from eligible households. These existing protections were in 
place to ensure that taxpayer data could not be inappropriately 
accessed, but these protections proved invaluable in the 
context of issuing EIPs. Building on existing data sets, from 
the IRS and other Federal agencies, and existing practices for 
reducing inappropriate claims are two ways to increase 
efficiency of delivering benefits while minimizing the 
potential for fraud. Additionally, Congress allocated $2 
billion in the American Rescue Plan Act (ARPA) to prevent and 
detect fraud, and ensure timely and equitable delivery in UI. 
These resources will help ensure that states and the federal 
government are prepared to combat the sophisticated fraud 
schemes we encountered in UI during the pandemic.

Q.3. The American Rescue Plan includes substantial funds to 
keep renters housed, including more than $20 billion for rental 
assistance, which will be distributed through Treasury.
    Has the Department of Treasury had conversations with the 
Department of Housing and Urban Development to connect people 
who are going to receive short-term assistance to also receive 
longer-term vouchers if they qualify?

A.3. Treasury coordinates regularly with the Department of 
Housing and Urban Development and other interagency partners on 
the implementation of the American Rescue Plan (ARP), including 
with regard to different ARP programs that may serve the same 
or similar populations and how thoughtful implementation can 
amplify the benefits of the individual programs.

Q.4. The American Rescue Plan also includes $10 billion in 
assistance for homeowners.
    How are lessons from the HAMP/HARP and HHF programs 
providing insight into this new Housing Assistance Fund?

A.4. In the development of program guidance for the HAF, 
Treasury has taken into account input from stakeholders about 
their experience with the implementation of the Hardest Hit 
Fund. From the Hardest Hit Fund, we learned that it is 
important to have consistency across programs where possible, 
both for the understanding of the policy and for streamlining 
the operational process with servicers. We are engaging with 
stakeholders, including advocates, state housing agencies, and 
mortgage servicers, many of whom are drawing on their 
experience with HHF in providing feedback.

Q.5. Will the Treasury Department permit a jurisdiction to 
establish their housing assistance to homeowners program as a 
loan or shared equity investment?
    For example, could a jurisdiction decide to provide the 
assistance to homeowners as a silent second loan with interest 
that must be repaid at sale, refinance or earlier if the 
borrower chose to repay?
    Could the jurisdiction establish a shared equity/
appreciation program that must be repaid at sale, refinance or 
earlier at the borrower's choosing?

A.5. Treasury has issued initial guidance regarding the 
Homeowner Assistance Fund, which addresses the scope of 
permissible expenses. Treasury continues to develop additional 
guidance that may address these issues.

Q.6. Would the Department permit a jurisdiction to recycle the 
assistance for future homeowners as was permitted by the 
Hardest Hit Fund? This would permit the jurisdictions choosing 
this approach to have funds available to help future homeowners 
avoid foreclosure or provide downpayment assistance.

A.6. Treasury has issued initial guidance regarding the 
Homeowner Assistance Fund, which addresses the scope of 
permissible expenses. Treasury continues to develop additional 
guidance that may address these issues.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SMITH
                      FROM JANET L. YELLEN

Q.1. The $8 billion in relief for Tribal governments from the 
CARES Act was distributed using population data from the Indian 
Housing Block Grant program. Only a few Tribes around the 
country do not receive funds from the Indian Housing Block 
Grant, and one of them is Prairie Island Indian Community in 
Minnesota. As a result, Prairie Island Indian Community's 
population was undercounted, and Prairie Island Tribal leaders 
do not believe that the CARES Act relief funding allocation 
they received accurately represents their population. 
Additionally, they were not given an opportunity to review or 
challenge the population numbers ascribed to them. As the 
Treasury Department develops a formula to distribute relief to 
Tribal governments as authorized by the American Rescue Plan, I 
am concerned that Tribes like Prairie Island Indian Community 
will once again be overlooked.
    As you develop a formula to distribute relief from the 
American Rescue Plan to Tribal governments, will you commit to 
consulting directly with Tribes that do not participate in the 
Indian Housing Block Grant Program?

A.1. In accordance with Treasury's Tribal consultation policy, 
Treasury hosted five Coronavirus State and Local Fiscal 
Recovery Funds Tribal consultations in late March and early 
April of 2021 to garner input from Tribal leaders on allocation 
methodologies, use of funds, and administrative functions such 
as reporting and compliance. Over 1,200 participants attended 
the consultations and 85 Tribal leaders provided input. 
Treasury received over 150 written comments. Feedback was 
received from Tribes that participate in the Indian Housing 
Block Grant Program and those that do not. Tribal feedback was 
critical in developing the Tribal Government Allocation 
Methodology that was published on May 10, 2021.
    The American Rescue Plan directed that $19 billion shall be 
allocated by the Secretary to the Tribal governments in a 
manner determined by the Secretary. The Secretary determined 
self-certified enrollment and self-certified Tribal employment 
data are the two factors to be used in the allocation 
methodology. In particular, 65 percent of the $19 billion 
($12.35 billion) will be allocated based on enrollment data and 
35 percent of the $19 billion ($6.65 billion) will be allocated 
based on employment data.
    In April 2021, the Bureau of Indian Affairs collected 
enrollment numbers from Tribal governments and communicated to 
Tribes that this information may be shared with other federal 
agencies. The Bureau of Indian Affairs has shared this data 
with Treasury. For the small subset of Tribes that did not 
provide self-certified enrollment data, Treasury used 
enrollment data submitted last year under the CRF.
    Treasury has engaged in robust and meaningful tribal 
consultation on the ARP State and Local Fiscal Recovery Fund. 
Treasury hosted over 15 hours of consultation in four sessions 
over March 31 and April 1.

Q.2. In lieu of using data from the Indian Housing Block Grant 
program, will you allow Tribal governments to self-report 
population data?

A.2. For Tribal enrollment data, Treasury used self-certified 
enrollment numbers provided by Tribes. In April 2021, the 
Bureau of Indian Affairs collected enrollment numbers from 
Tribal governments and communicated to Tribes that this 
information may be shared with other federal agencies. The 
Bureau of Indian Affairs has shared this data with Treasury. 
For the small subset of Tribes that did not provide self-
certified enrollment data, Treasury used enrollment data 
submitted last year under the CRF. Five eligible Tribal 
governments did not submit enrollment data last year or this 
year. For these Tribal governments, Treasury used enrollment 
data from HUD's IHBG program.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR CRAPO
                      FROM JANET L. YELLEN

Q.1. I and many others believe that Section 602(c)(2)(A) of 
Subtitle M of the American Recovery Act imposes restrictions on 
any state or territory against using any Coronavirus State 
Fiscal Recovery Fund resources to ``either directly or 
indirectly offset a reduction in the net tax revenue of such 
State or territory resulting from a change in law, regulation, 
or administrative interpretation during the covered period that 
reduces any tax (by providing for a reduction in a rate, a 
rebate, a deduction, a credit, or otherwise) or delays the 
imposition of any tax or tax increase.'' I believe Section 
602(c)(2)(A) is unnecessary and harmful to states and 
territories, and have introduced S. 743, the State Fiscal 
Flexibility Act, to eliminate the problematic and legally 
questionable provision. I also submitted numerous questions 
about this and other provisions of Subtitle M accompanying a 
letter I sent to you on March 16, with a requested response 
date of March 22. I have not received a response, and request 
that you send a response. I also have the following questions 
regarding Section 602(c)(2)(A).
    Given the deferral of the federal tax filing deadline for 
tax year 2020, and the response of many states to follow suit 
by delaying their tax filing deadlines, how will Treasury 
determine the accompanying reduction in the net tax revenue or 
each such state because of the ``delays [in] the imposition of 
any tax'' in order to follow the law by not allowing the state 
to use Coronavirus State Fiscal Recovery Fund resources to 
replace that reduction (direct or indirect) in net tax revenue?

A.1. The offset provision applies only to changes in law made 
during the statute's covered period, which began on March 3, 
2021. Changes made prior to March 3 are not considered covered 
changes. Further, changes made after March 3 to implement 
existing substantive law-such as implementing regulations for 
prior substantive legislation-are not considered covered 
changes. Changes in law to reduce a tax made after March 3 may 
be considered covered changes. In order to ensure fair 
treatment and minimize discretionary judgments, Treasury's 
rules do not consider whether planning for a change made during 
the covered period began before or after the beginning of the 
covered period.

Q.2. Will Treasury financially punish a state that intended, 
prior to enactment of the American Recovery Act, to provide tax 
relief to its residents, and follows through on that intention 
by enacting tax relief? For example, if a state had previously 
planned an income tax reduction prior to passage of the Act, 
will the state be limited in any way from covering allowable 
expenses, (e.g., broadband infrastructure, public safety 
payroll costs, etc.) with resources from the Coronavirus State 
Fiscal Recovery Fund because Treasury disallows usage in the 
amount associated with the net tax revenue (direct or indirect) 
decline somehow measured by Treasury as being caused by the tax 
relief?

A.2. The offset provision applies only to changes in law made 
during the statute's covered period, which began on March 3, 
2021.

Q.3. Please identify ``stakeholder'' groups with whom you have 
had discussions of implementation of, perhaps among other 
provisions of the American Recovery Act, Section 602(c)(2)(A), 
including offices of Members of Congress.

A.3. Treasury has discussed the state and local provisions of 
the American Rescue Plan Act with numerous stakeholder groups 
representing state and local governments, including but not 
limited to the National Governors' Association, National 
Association of Counties, National League of Cities, U.S. 
Conference of Mayors, the National Association of State Budget 
Officers, and other similar groups. Treasury has also discussed 
these provisions with many Tribal governments. Finally, 
Treasury has met with the offices of Members of Congress on a 
bipartisan basis to discuss implementation.

Q.4. Section 602(c)(2)(B) of Subtitle M of the American 
Recovery Act says that no Coronavirus State Fiscal Recovery 
Fund resources may be used ``for deposit into any pension 
fund.'' A March 29 editorial in the Wall Street Journal 
identified that the State of Vermont will deposit ``$150 
million of this year's state budget surplus into worker pension 
funds.'' I have the following questions regarding Section 
602(c)(2)(B).
    Given that state budgetary resources are fungible, how can 
Treasury determine whether funds flowing from the Coronavirus 
State Fiscal Recovery Fund into general budgetary resources of 
a state government, as may be the case with Vermont, does not 
flow into pension funds in order to be consistent with Section 
602(c)(2)(B) of the law?

A.4. The Interim Final Rule prohibits the use of funds for 
extraordinary contributions to pension funds for the purpose of 
reducing an accrued, unfunded liability ineligible. Currently, 
Treasury is developing a reporting regime to monitor for 
eligible and ineligible funding uses.

Q.5. It had recently been mentioned by a Senator on the floor 
of the Senate that the restriction in Section 602(c)(2)(B) 
means that, in addition to pensions, a state or territory may 
not use Coronavirus State Fiscal Recovery Fund resources to 
fund other postemployment benefits (OPEBs) for government 
workers, yet OPEBs are not explicitly mentioned in Section 
602(c)(2)(B). Will Treasury, in implementing Section 
602(c)(2)(B) restrict fund uses to disallow any funding of 
OPEBs, consistent with what evidently was congressional intent? 
If so, and given that state budgetary resources are fungible, 
how will Treasury enforce that congressionally intended 
restriction?

A.5. Because Other Postemployment Benefits (OPEB) are 
considered benefits ``other than pensions,'' Section 
602(c)(2)(B), which refers only to pensions, does not apply to 
OPEB. [However, just because a particular use is not prohibited 
does not necessarily mean that it is permitted.] Recipients may 
only use funds for eligible uses, and a recipient seeking to 
use ARP funds for OPEB contributions would need to justify 
those contributions under one of the eligible use categories.

Q.6. I am concerned that Treasury and the IRS are about to make 
an already difficult and confusing tax filing season even worse 
for many low and middle income parents, when it comes to the 
implementation of the new, temporary, advance Child Tax Credit 
payment program.
    While the legislation directs the IRS to begin issuing 
periodic advance payments by this July, it also requires 
Treasury to create an online portal to allow parents to provide 
critical updates to their status and eligibility, like births 
or deaths, changes in marital or tax filing status or changes 
in income.
    Also, importantly, the portal is required to allow parents 
the ability to opt out of receiving any advance payments at 
all. As we saw after the 2017 tax reform, with its impacts on 
the standard deduction and withholding, many taxpayers were 
upset to find that they were no longer getting that big refund 
during filing season, because they were having less taxes 
withheld from their paychecks, giving them more money in their 
pockets throughout the year.
    Even though there are certainly economic arguments that 
those families are better off having that money in their 
pockets sooner, rather than giving the government essentially 
an interest-free loan, having that big tax refund during filing 
season is clearly the preference for many taxpayers. As such, 
it is essential that all taxpayers have that option to opt out 
of receiving any advance payments, prior to any advance 
payments being issued.
    According to IRS staff, the National Taxpayer Advocate, and 
independent experts, a reasonable estimate for the time it 
would take for IRS to create this new portal, and have it fully 
secure and operational is about 12 to 18 months.
    Clearly, such a timeline would challenge the ability to 
issue any advance payments at all during the current one year 
that such advance payments are authorized.
    If this was really just about addressing the current Covid-
created needs to provide additional support to low and middle 
income children, all policymakers had to do was adjust this 
latest round of recovery payments and provide an additional 
bump up to those child dependents in those income categories.
    The systems and infrastructure were already in place, and 
those children and their parents would have had that additional 
support in their pockets weeks ago.
    But, if the real intent of this new program is to establish 
an infrastructure to provide more longer-lasting support to low 
and middle income children, then do you not agree, for the sake 
of efficiency and accuracy, and to protect the rights of all 
taxpayers, that no advance payments should be issued until the 
online portal is fully operational and all eligible parents 
have the ability to update their status and to opt out of 
receiving any advance payments?

A.6. The Internal Revenue Service is hard at work to meet the 
main goal of the legislation which is to provide a regular 
series of advance payments of the Child Tax Credit to eligible 
taxpayers and will meet the statutory requirement to stand up a 
portal to allow taxpayers to opt out of receiving advanced 
payments.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR ROUNDS
                      FROM JANET L. YELLEN

Q.1. Secretary Yellen, your predecessor worked with Director 
Calabria at the FHFA to amend the Preferred Stock Purchase 
Agreement that governs the federal backstop behind Fannie Mae 
and Freddie Mac. Those changes allowed the GSEs to retain more 
capital to protect taxpayers and to help move the GSEs closer 
to release from conservatorship--both important goals.
    However, I am concerned about other provisions added to the 
PSPAs that cap certain types of business the GSEs conduct and 
could cause market disruptions, undermine the GSEs' affordable 
housing mission, and disrupt the level playing field for 
smaller and midsized lenders. Could you please share your views 
on changes made to the PSPAs?

A.1. The Administration is committed to housing finance policy 
that expands fair and equitable access to homeownership and 
affordable rental opportunities, protects taxpayers, and 
promotes financial stability. I look forward to working across 
the Administration and with Congress in support of these goals. 
We continue to assess the GSEs' status, including the recent 
amendments to the PSPAs.
                                ------                                


        RESPONSES TO WRITTEN QUESTIONS OF SENATOR DAINES
                      FROM JANET L. YELLEN

Q.1. The CARES Act, ARPA and other relief bills have contained 
billions in broadband infrastructure eligible funding, 
including over $7 billion for E-Rate, $10 billion for 
Coronavirus Capital Projects Fund, and hundreds of billions in 
state and local funds and various other newly appropriated 
dollars.
    Do you agree that these funds should be used to connect 
unserved areas before upgrading existing broadband connections?

A.1. Under the American Rescue Plan Act of 2021, the Capital 
Projects Fund provides funds ``to carry out critical capital 
projects directly enabling work, education, and health 
monitoring, including remote options,'' in response to the 
pandemic. The COVID health emergency has made clear that remote 
access, among other things, is critical for all households in 
the United States. Treasury is currently developing program 
terms regarding eligible uses of proceeds. Treasury will begin 
to accept applications for review in the summer of 2021 and 
will issue guidance before that date.

Q.2. What restrictions are in place to ensure the money is not 
being used to overbuild or duplicate existing projects?

A.2. Treasury is currently developing program terms regarding 
eligible uses of proceeds for the Capital Projects Fund. 
Treasury will begin to accept applications for review in the 
summer of 2021 and will issue guidance before that date.

Q.3. Will the Treasury Department put out guidance or 
prioritize unserved rural areas for new broadband projects 
funded under the Coronavirus Capital Projects Fund or other 
broadband related coronavirus funding?

A.3. Under the Capital Projects Fund, Treasury will allocate a 
portion of the funds to the states based on the proportion that 
the number of individuals living in rural areas in each state 
bears to the number of individuals living in rural areas in all 
states. The fund will help states, territories, and Tribal 
governments carry out critical capital projects, including in 
rural areas.

Q.4. Can you give an update on the Treasury Department's 
efforts to raise awareness of the Employee Retention Credit?

A.4. Treasury worked with IRS to issue a press release 
highlighting the changes to the Employee Retention Credit for 
the first and second quarters of 2021 within days of the start 
of this Administration. Treasury has also developed short, 
plain English flyers describing the different iterations of the 
Employee Retention Credit, which are on the Treasury website 
https://home.treasury.gov/policy-issues/coronavirus/assistance-
for-small-businesses/small-business-tax-credit-programs and are 
being distributed in webinars and at Small Business 
Administration (SBA) regional offices among others. In 
addition, Treasury is working with SBA on a ``train the 
trainers exercise'' to educate their staff on the credit and 
with the IRS to identify additional avenues to raise awareness 
of the credit.

Q.5. During the hearing, Senator Tillis asked you whether, ``in 
your opinion, the increase of the corporate tax rate up to 28 
percent will not cause any significant competitive disadvantage 
for the United States for corporate expansion?'' You replied, 
``Well, I think it would be important to make sure that it is 
done in the context of a global agreement.''
    Would you agree that the U.S. should not implement any 
increase in the corporate tax rate unless and until a global 
deal is reached and implemented?

A.5. A global deal is highly desirable. However, there are many 
good reasons for the United States to act, regardless of the 
timing of any global deal. First, the corporate tax increase 
will raise much needed revenue for urgent fiscal needs. Second, 
increased corporate taxes will help improve the overall 
fairness of our tax system. Third, the corporate tax falls 
disproportionately on excess profits, or above-normal returns 
to profit, so it will be an efficient way to raise revenue. 
Fourth, the international reforms envisioned in the 
Administration's package will put a stop to the profit shifting 
of all companies (both US and foreign headquartered), whereby 
multinational companies shift the US tax base to very low-tax 
foreign jurisdictions. Fifth, these international reforms will 
also eliminate the offshoring incentives that are present in 
two features of US law, GILTI and FDII; at present, these two 
provisions encourage foreign investment in tangible assets over 
US investment.

Q.6. Even if a deal is reached at the OECD, it is widely 
expected that any minimum tax would be far lower than President 
Biden's proposed 21 percent minimum tax. Can you explain how 
tax increases of this magnitude on U.S. companies would not 
reignite inversions?

A.6. Inversions are extremely difficult to undertake under 
current US law, and they nearly came to a halt due to the Obama 
administration's second term regulations (in 2014 and 2016, 
although portions of these regulations have unfortunately been 
repealed by the Trump Administration). Nonetheless, we have 
proposed two further provisions that will discourage 
inversions. First, the SHIELD proposal improves on the BEAT 
regime by stopping any foreign-headquartered multinational 
company from shifting profits out of the US tax base, and 
deters such companies from operating in low-tax jurisdictions, 
if they are headquartered in a jurisdiction that has not 
adopted a robust minimum tax. Second, as a backstop, we also 
propose additional anti-inversion measures that should be 
highly effective.

Q.7. How many inversions have there been from 2018 to the 
present?

A.7. From 2017 onwards, I am not aware of any significant 
corporate inversions. The second Obama inversion regulation 
came into place in 2016; many observers viewed that regulation 
as very effective.

Q.8. Have we recovered from the pandemic such that companies 
can withstand an increased tax burden of the magnitude that 
President Biden is proposing?

A.8. The proposals advanced by the President represent a 
combination of tax cuts and revenue raisers. The tax cuts are 
often directed at those with low- and middle-incomes, while the 
president has pledged to only increase taxes on individuals 
earning more than $400,000 and corporations. With corporations, 
the tax changes can be broadly categorized into two groups: an 
increase in the corporate tax rate to 28 percent (which is far 
below the pre-2017 historical level) and changes in the 
taxation of multinational companies to end the worldwide race-
to-the-bottom on corporate taxes and incent companies to keep 
their profits and workers in the U.S. It's important to 
remember that the corporate tax only hits profits. Increasing 
the corporate tax is an efficient and effective way to ensure 
that profitable corporations pay their fair share. The 
combination of these reforms and the productivity enhancing 
investments, like increased investment in infrastructure, they 
are designed to fund will grow the economy and ensure that 
American businesses stay competitive globally.
                                ------                                


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

Q.1. How does the changing climate affect financial stability 
and the economy? What risks does climate change pose to 
financial institutions individually and the financial sector as 
a whole? How can the Federal Reserve's ongoing assessment of 
climate risks better protect the financial system from climate-
related shocks?

A.1. Congress has assigned the Federal Reserve narrow but 
important mandates around monetary policy, financial stability, 
and supervision of financial firms, and we view climate-related 
risks through the lens of our existing mandates and 
authorities, particularly the regulation and supervision of 
financial institutions and the stability of the broader 
financial system.
    We are in the relatively early stages of a broad work plan 
of analysis and public engagement regarding climate-related 
risks. We do not yet have a clear view about what additional 
actions might be appropriate from the Federal Reserve to 
address the financial and economic risks of climate change. Our 
engagement and analysis will assist in building our 
understanding and developing such a view. Any potential actions 
we would take would be supported in a robust and analytically 
sound way by the best available research and conducted through 
a transparent process.
    Our November 2020 Financial Stability Report and 
Supervision and Regulation Report both discuss at a high level 
how climate change may create or change risks to the financial 
system or to individual supervised institutions. \1\
---------------------------------------------------------------------------
     \1\ See https://www.federalreserve.gov/publications/2020-november-
financial-stability-report-purpose.htm and https://
www.federalreserve.gov/publications/2020-november-supervision-and-
regulation-report.htm.
---------------------------------------------------------------------------
    We are taking a careful, thoughtful, and transparent 
approach to our climate work, and we will engage with Congress 
and the public as we proceed.
                                ------                                


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

Q.1. In March 2021, the Federal Reserve forecasted real GDP 
growth of 6.5 percent in 2021, a median unemployment rate of 
3.5 percent, and core inflation at 2.1 percent by the end of 
2023. Yet, this same forecast projects the Federal Reserve will 
maintain the current near-zero short term interest rates at 
least through 2024.
    What is the justification for continuing near-zero interest 
rates and $1.4 trillion a year in quantitative easing (QE) well 
past the point of economic recovery?

A.1. In pursuit of our mandated objectives of maximum 
employment and price stability, the Federal Open Market 
Committee (FOMC) has judged that it will be appropriate to keep 
the target range for the federal funds rate at its current 
level until labor market conditions have reached levels 
consistent with the FOMC's assessment of maximum employment and 
inflation has risen to 2 percent and is on track to moderately 
exceed 2 percent for some time. The FOMC has also agreed to 
increase its holdings of Treasury securities by at least $80 
billion per month and agency mortgage-backed securities by at 
least $40 billion per month until substantial further progress 
had been made toward the FOMC's maximum employment and price 
stability goals. With payroll employment currently about 8.2 
million jobs short of its pre-pandemic level and inflation not 
yet on track to moderately exceed 2 percent for some time, 
these goals have not yet been met. The FOMC is committed to 
using its full range of tools to pursue its objectives of 
maximum employment and price stability.
    While FOMC participants provide individual projections of 
the most likely outcomes for the economy, based on their 
individual assessments of appropriate monetary policy, these 
projections do not represent a FOMC forecast or a plan for the 
future course of monetary policy.

Q.2. Does this mean we should expect to see Federal Reserve 
asset purchases and near-zero rates whenever growth is above 
trend and unemployment is near record lows?

A.2. The Federal Reserve sets monetary policy to achieve its 
dual mandate of maximum employment and price stability. 
Consistent with that mandate, the FOMC does not make policy 
decisions focusing on the status of employment without 
considering inflation. With respect to the maximum employment 
half of the mandate, when the FOMC adopted its revised 
Statement on Longer-Run Goals and Monetary Policy Strategy, 
policymakers stressed the importance of the FOMC's assessments 
of ``shortfalls of employment from its maximum level'' as a key 
determinant of monetary policy decisions. Economic growth above 
trend can be associated with either the presence or the absence 
of shortfalls of employment, depending on circumstances. For 
these reasons, among others, the FOMC considers a wide range of 
information when formulating its assessments of the appropriate 
conduct of monetary policy.
    Asset purchases are a key monetary policy tool when the 
Federal Reserve's primary tool, the federal funds rate, cannot 
be used to provide sufficient accommodation for achieving the 
FOMC's objectives because of the effective lower bound on 
nominal interest rates. That is the case at present and so the 
FOMC has agreed that it will be appropriate to increase its 
holdings of Treasury securities by at least $80 billion per 
month and of agency mortgage-backed securities by at least $40 
billion per month, until substantial further progress has been 
made toward achieving the FOMC's maximum employment and price 
stability goals.

Q.3. The Federal Reserve has recently announced two new 
committees focusing on climate-related risks: (1) the 
``Supervision Climate Committee,'' which will focus on safety 
and soundness at individual financial institutions, and (2) the 
``Financial Stability Climate Committee,'' which will analyze 
any such risks across the financial system. Although you have 
repeatedly emphasized that the Federal Reserve is in the ``very 
early days'' of identifying and assessing climate-related 
risks, I am concerned that the Federal Reserve has not provided 
sufficient detail regarding these committees.
    Can you describe the objectives and intended outputs of 
both the Supervision Climate Committee and the Financial 
Stability Climate Committee, as well as the expected timeframes 
for any outputs from these committees?
    Do you commit to undertake public notice and comment on any 
contemplated changes to bank supervision or regulation that 
could result from the work of these committees?

A.3. As you note, Congress has assigned the Federal Reserve 
narrow but important mandates around monetary policy, financial 
stability, and supervision of financial firms. We view climate-
related risks through the lens of our existing mandates and 
authorities, particularly the regulation and supervision of 
financial institutions and the stability of the broader 
financial system.
    The Supervision Climate Committee (SCC) and the Financial 
Stability Climate Committee (FSCC) bring together senior staff 
from the Federal Reserve Board and the Reserve Banks to 
facilitate work directed at better understanding potential 
climate-related risks to our supervised institutions and the 
stability of the financial system. Our goal is to incorporate 
climate-related financial risks into our supervision of 
individual firms through the work of the SCC and into our 
financial stability framework through the FSCC. I note that it 
has long been the policy of the Federal Reserve not to dictate 
to banks what lawful industries they can and cannot serve.
    We do not yet have any fixed expected time frame for 
completing these goals, but we are actively working in this 
area. We are engaging with large financial institutions to 
strengthen our understanding of how they are currently 
assessing climate risks and incorporating them in their risk 
management frameworks. As with all supervisory undertakings, we 
will tailor our approach and resources to focus on firms that 
face the most risk.
    We are taking a careful, thoughtful, and transparent 
approach to our climate-related work. Any potential actions we 
would take would be supported in a robust and analytically 
sound way by the best available research and conducted through 
a transparent process, including public notice and comment 
where appropriate. In addition, we will engage with Congress 
and the public as we proceed.
                                ------                                


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

Q.1. Some of the CARES funds had very limited utility. For 
example, the Municipal Liquidity Program and the Main Street 
Lending Program were underused. What do you recommend Congress 
and the Federal Reserve consider next time we deliver 
intervention to help businesses and communities during an 
economic crisis?

A.1. Congress and the Administration acted swiftly to support 
the U.S. economy in response to the COVID-19 pandemic. These 
actions were critical in avoiding worse economic outcomes, 
including greater job losses. Likewise, using funds 
appropriated in the Coronavirus Aid, Relief, and Economic 
Security Act (CARES Act) to absorb any losses, the Federal 
Reserve's emergency lending facilities were able to provide 
critical support to a very wide range of employers, including 
large and small businesses, nonprofits, and state and local 
governments.
    Although the lending volumes of the facilities were low in 
comparison to their maximum capacity, the facilities had 
powerful announcement and backstop effects, catalyzing the 
private sector to provide the credit needed to keep our 
financial system and economy functioning. In part due to the 
backstops created by Federal Reserve facilities, more than $2 
trillion of new corporate and municipal bonds were issued 
following the acute phase of the crisis in 2020, substantially 
more than the comparable period for the previous year. State 
and local governments were able to issue bonds across the 
ratings spectrum and at all maturities at highly attractive 
interest rates. Small businesses benefited from the Paycheck 
Protection Program (PPP) loans, which are designed to be 
forgiven, unlike Main Street loans that must be repaid. In 
2020, the Small Business Administration approved more than 5.5 
million loans totaling more than $550 billion, suggesting that 
the PPP satisfied a substantial amount of small business credit 
demand. If financial markets had remained closed and credit 
conditions had tightened further, job losses would have been 
far worse.
    While our primary focus remains supporting the economy as 
it recovers from the effects of the pandemic, Federal Reserve 
staff are in the process of capturing lessons learned about 
financial stability, financial regulation, and crisis 
management to better help businesses and communities during a 
future economic crisis.

Q.2. The American Rescue Plan includes $10 billion in 
assistance for homeowners. Has the Federal Reserve researched 
assistance to help homeowners avoid foreclosure? For example, 
has the Federal Reserve compared grant programs with loan or 
shared equity programs? If so, can you share that analysis?

A.2. Researchers in the Federal Reserve System and elsewhere 
have conducted studies of other forms of homeowner assistance, 
particularly the effects of loan modification and refinance 
programs during the Great Recession. \1\ The research conducted 
by Federal Reserve staff described in this answer was done 
independently, and does not necessarily reflect the views of 
the Board of Governors (Board) or anyone else in the Federal 
Reserve System. Such studies have generally shown that payment 
relief was quite effective in reducing foreclosures. A recent 
independent paper by economists at the Federal Reserve Bank of 
Chicago provides an overview of this research, and connects the 
lessons learned from the Great Recession to the current crisis. 
\2\
---------------------------------------------------------------------------
     \1\ Department of Housing and Urban Development. 2012. ``Shared 
Equity Models Offer Sustainable Homeownership,'' at https://
www.huduser.gov/portal/periodicals/em/fall12/highlight3.html; Urban 
Institute ``Shared Equity Research'' https://www.urban.org/projects/
shared-equity-research.
     \2\ Amromin, Gene and Dokko, Jane and Dynan, Karen. 2020. 
``Helping Homeowners During the COVID-19 Pandemic: Lessons from the 
Great Recession,'' Chicago Fed Letter, No. 443, at https://
www.chicagofed.org/publications/chicago-fed-letter/2020/443.
---------------------------------------------------------------------------
    Widespread forbearance has been an important tool for 
stabilizing the housing market, as shown in recent work by 
economists at the Board. \3\ Board economists have also shown 
how valuable assistance to families under the CARES Act was in 
terms of allowing them to cover their recurring non-
discretionary expenses, such as housing payments. \4\ And 
recent research by economists at the Federal Reserve Bank of 
Philadelphia shows how forbearance has benefited lower-income 
and minority borrowers, and assesses longer-term solutions 
aimed at helping struggling homeowners exit forbearance. \5\ 
The American Rescue Plan's assistance to homeowners may prove 
valuable in this effort, as homeowners may need to make up some 
portion of missed payments in order to get back on track and 
stay in their home.
---------------------------------------------------------------------------
     \3\ Anenberg, Elliot, and Tess Scharlemann. 2021. ``The Effect of 
Mortgage Forbearance on House Prices During COVID-19,'' FEDS Notes. 
Washington: Board of Governors of the Federal Reserve System, March 19, 
2021, at https://doi.org/10.17016/2380-7172.2872.
     \4\ Bhutta, Neil and Blair, Jacqueline and Dettling, Lisa J. and 
Moore, Kevin B. 2020. ``COVID-19, the CARES Act, and Families' 
Financial Security,'' at http://dx.doi.org/10.2139/ssrn.3631903.
     \5\ An, Xudong and Cordell, Larry and Geng, Liang and Lee, 
Keyoung. 2021. ``Inequality in the Time of COVID-19: Evidence from 
Mortgage Delinquency and Forbearance,'' at http://dx.doi.org/10.2139/
ssrn.3789349.
---------------------------------------------------------------------------
                                ------                                


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

Q.1. The Federal Reserve has been actively studying and perhaps 
building a general-purpose central bank digital currency 
(CBDC). There are a number of important issues surrounding 
CBDC, including questions of objectives, legal and regulatory 
frameworks, stability and possible digital runs, monetary 
sovereignty, further blurring of a distinction between fiscal 
and monetary policy, and privacy. The Federal Reserve, other 
central banks, and groups of central banks have issued 
exploratory discussions of CBDC containing discussions of the 
issues. For example, a report on CBDC by a group of central 
banks in 2020 identified the possibility of using CBDC and its 
underlying technology to implement fiscal transfers. Recent 
work by former Federal Reserve economists Julia Coronado and 
Simon Potter argues for a ``system of digital currency accounts 
for consumers managed by digital payment providers and fully 
backed by reserves at the Fed'' which could ``facilitate new 
automatic stabilizers while allowing the Fed to provide 
quantitative easing directly to consumers'' and a tool that 
``could be used in a timely manner with broad reach to all 
Americans.'' That is, fiscal policy, including the possibility 
of universal basic income and even, allowing for smart-
contracting possibilities along a chain, central bank control 
of what transfers can and cannot be used for. While the papers 
typically pay lip service to a need for congressional approval 
of the setup of the CBDC or other distributed ledger schemes 
involving the central bank, many envision the possibility of a 
vast transfer of authority over fiscal policy, something 
traditionally and predominantly reserved for the legislative 
branch in our representative democracy. Privacy concerns are 
important as well, as CBDC has a potential to eliminate 
anonymous transactions and replace them with dynamic ledgers 
containing microscopic detail of individual transactions and 
history. Some provide assurances, such as Agustin Carstens, 
general manager of the Bank for International Settlements, who 
recently identified that ``a CBDC does not have to entail an 
Orwellian Big Brother, where the central bank sees each and 
every transaction.'' However, the fact that such remarks are 
part of the CBDC discussions among central bankers suggests 
that concern is warranted. Lately, the Federal Reserve has 
become more public in its discussion of CBDC and a possible 
near-term roll out of at least conceptual designs.
    Please provide a summary of Federal Reserve activities over 
the past two years to develop a CBDC or conceptual designs of a 
CBDC, including collaborative efforts between the Federal 
Reserve Bank of Boston and the Massachusetts Institute of 
Technology, and perhaps other technology partners, researchers, 
or advocates for fiscal transfers.

A.1. At the Federal Reserve, our main focus is on how a U.S. 
central bank digital currency (CBDC) could improve an already 
safe and efficient domestic payment system. We have not made 
any decisions about whether or not to issue a CBDC, and are 
still in the research, analysis, and experimentation stage. We 
are looking at general purpose CBDC as a potential complement 
to, not a replacement of, physical currency and private payment 
options such as commercial bank money. We also plan to continue 
our work assessing a wholesale U.S. CBDC.
    The Federal Reserve is taking a multidisciplinary approach 
to studying CBDC, bringing together technologists, policy 
analysts, engineers, data scientists, economists, lawyers, and 
others to help us gain a well-rounded view of emerging 
technologies and to thoroughly consider the policy issues 
raised by CBDC. Our CBDC work, which is still in the very early 
stages, falls into four categories: thought leadership, 
international collaboration, market intelligence, and research 
and experimentation.
    Thought Leadership: Federal Reserve staff have published 
several papers on key topics related to CBDC, including:

    Jess Cheng, Angela N Lawson, and Paul Wong, 
        Preconditions for a general-purpose central bank 
        digital currency (February 2021)

    Alexander Lee, Brendan Malone, and Paul Wong, 
        ``Tokens and accounts in the context of digital 
        currencies'' (December 2020)

    Francesca Carapella and Jean Flemming, ``Central 
        Bank Digital Currency: A Literature Review'' (November 
        2020)

    Paul Wong and Jesse Leigh Maniff, ``Comparing Means 
        of Payment: What Role for a Central Bank Digital 
        Currency?'' (August 2020)

    Jillian Buttecali, Zachary Proom, Paul Wong, 
        ``Observations from the FooWire Project: Experimenting 
        with DLT for Payments Use'' (August 2020)

    International Collaboration: The Federal Reserve works with 
other central banks and international organizations to 
understand key issues related to CBDC. The Federal Reserve 
collaborated with six other central banks and the Bank for 
International Settlements (BIS) to produce a report \1\ in 
October 2020 on foundational principles for CBDC and continues 
this work this year. The Federal Reserve is also an active 
participant in the multiple workstreams executing on the G20 
roadmap for improving cross border payments, one of which is 
focused on CBDC.
---------------------------------------------------------------------------
     \1\ See https://www.bis.org/press/p201009.htm.
---------------------------------------------------------------------------
    Market Intelligence: Federal Reserve staff follow 
developments related to CBDC in the private sector, academia, 
and globally. Staff meet with a variety of stakeholders to 
understand different perspectives related to CBDC. These 
meetings help staff understand market developments and allow 
private and academic stakeholders to better understand the 
types of questions the Federal Reserve is considering related 
to CBDC.
    Research and Experimentation: The Federal Reserve Board 
(Board) and the Reserve Banks are engaged in a number of 
hypothetical experiments related to CBDC and other payments 
modernization lines of inquiry. These experiments provide hands 
on experience with technology, helping to identify 
opportunities and limitations, which is crucial to policy 
dialogue on CBDC. All of this work is being conducted for 
exploratory research, not real-world use. Projects include:

    The Board's TechLab is focused broadly on digital 
        currencies and is looking at various dimensions of 
        interoperability among differing technologies.

    The Federal Reserve Bank of Boston is collaborating 
        with the Massachusetts Institute of Technology to 
        explore issues of scale and security for a theoretical 
        general purpose CBDC.

    The Federal Reserve Bank of New York is 
        collaborating with the BIS to stand up its New York 
        Innovation Center, which will work on a variety of 
        topics within the broader landscape of financial 
        innovation.

Q.2. Please also include a list of ``stakeholders'' with whom 
members of the Federal Reserve Board have met over the past two 
years in consideration of developing a CBDC or similar 
distributed ledger system involving the Federal Reserve.

A.2. Federal Reserve staff meets with a large and diverse set 
of stakeholders to discuss payments modernization, including 
banks, payments providers, technology companies, research 
institutions, and other central banks. As part of their regular 
conversations with banking and payments groups and providers, 
Board Governors have discussed these issues and have also met 
more specifically on CBDC issues with Members of Congress and 
international counterparts.

Q.3. Please provide a timeline of planned Federal Reserve 
activities for the remainder of the year in your work toward 
developing a CBDC or similar distributed ledger system 
involving the Federal Reserve.

A.3. This year we intend to continue to assess the policy 
rationales, costs, benefits, and risks of CBDC. Federal Reserve 
Bank of Boston staff expect to publish a report on the results 
of their hypothetical experimentation to-date. Federal Reserve 
economists and other staff will also continue to publish 
research. We hope to develop additional academic collaborations 
on CBDC and other broader payments modernization efforts. 
Preventing payments fraud and improving inclusion are two areas 
where we may collaborate. We will also continue to collaborate 
with our international counterparts, including through the BIS-
organized group of central banks, and will publish additional 
research on CBDC. We expect to expand our public dialogue this 
year to ensure we are engaging with a diverse set of viewpoints 
and understanding the implications of a CBDC for a variety of 
stakeholders.

Q.4. Statements about markets, risks, and climate change coming 
out of the Fed have been striking. For example, late last year 
Governor Brainard issued a statement the ``financial markets 
face challenges in analyzing and pricing climate risks.'' She 
goes on to say that it is important to recognize climate-change 
risks to financial stability ``to the stage where the 
quantitative issues are appropriately assessed and addressed.'' 
That suggests that the Federal Reserve thinks that market 
participants are challenged in analyzing and pricing risks, and 
that somehow the Fed knows that markets are not 
``appropriately'' assessing and addressing risks.
    What market prices do the Fed view as being wrong?
    How do analysts at the Fed somehow know that market prices 
are wrong and risks are not being ``appropriately assessed and 
addressed?''
    Since individuals at the Fed seem to be able to see 
unpriced risk, why aren't there ordinary people who also see 
that and, without regulatory coercion, trade in ways that 
correct the mispricing and correct what the Fed seems to think 
are inappropriate risk premiums in asset prices?

A.4. Congress has assigned the Federal Reserve narrow but 
important mandates around monetary policy, financial stability, 
and supervision of financial firms, and we view climate-related 
risks through the lens of our existing mandates and 
authorities, particularly the regulation and supervision of 
financial institutions and the stability of the broader 
financial system. We are in the relatively early stages of a 
broad work plan of analysis and public engagement regarding 
climate-related risks.
    To address appropriately the impacts of climate change on 
our economy and financial system, we must first understand the 
risks. The Federal Reserve has made and continues to make 
strides in better understanding climate-related economic and 
financial risks. Researchers throughout the Federal Reserve 
System are examining the implications of climate change for the 
economy, financial institutions, and financial stability. As 
noted in our November 2020 Financial Stability Report, the 
``opacity of exposures and heterogeneous beliefs of market 
participants about exposures to climate risks could lead to 
mispricing of assets and the risk of downward price shocks. 
Similarly, uncertainty about the timing and intensity of 
climate change, severe weather events, and disasters, as well 
as the poorly understood relationships between these events and 
economic outcomes, could lead to abrupt repricing of assets.'' 
\1\ The Federal Reserve is investing in data and empirical work 
to analyze the transmission of climate-related risks to the 
economy and developing methodologies to measure these risks, as 
are other central banks. Our staff is engaging with colleagues 
from other regulatory agencies, central banks, and standard-
setting bodies, as well as with market participants and other 
external parties to understand how those parties are measuring 
climate-related risks.
---------------------------------------------------------------------------
     \2\ See https://www.federalreserve.gov/publications/2020-november-
financial-stability-report-purpose.htm. and https://
www.federalreserve.gov/publications/2020-november-supervision-and-
regulation-report.htm.
---------------------------------------------------------------------------
    We understand the importance of engaging with Congress and 
the public and we will be taking a careful, thoughtful, and 
transparent approach to our climate-related work. Any potential 
actions we would take would be supported in a robust and 
analytically sound way by the best available research and 
conducted through a transparent process, including public 
notice and comment where appropriate.

Q.5. The Federal Reserve has been issuing statements indicating 
that markets for some reason are not appropriately assessing 
and addressing what it views to be potentially catastrophic and 
system risks from climate change. California has long faced 
potentially catastrophic and systemic risks from an epic, 
large-scale earthquake. Does the Fed believe that insurers and 
property owners have not appropriately assessed and addressed 
those catastrophic risks, and that things like insurance, land 
values, and asset prices in California are mispriced?

A.5. As noted in response to Question 4, we are in the early 
stages of a broad work plan of analysis and public engagement 
to better understand climate-related risks. For example, we are 
investing in data and empirical work and engaging with 
regulatory agencies, central banks, and standard-setting 
bodies. We also are engaging with market participants and other 
external parties to understand how those parties are measuring 
climate-related risks.
                                ------                                


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

Q.1. Chair Powell, during your last appearance before the 
committee we had a conversation about the March 31 expiration 
of the SLR exclusion for Treasuries and Fed deposits. The Fed 
released a statement on March 19th saying that the exclusion 
would expire as planned on the 31st but the statement was vague 
about the timing or the details for next steps. Is there 
anything more you can share about next steps for the SLR at 
this point?

A.1. Consistent with the Board of Governors of the Federal 
Reserve statement in the press release dated March 19, 2021, we 
plan to seek public comment on potential measures to adjust the 
supplementary leverage ratio. The timing and the details of the 
potential measures for public comment are yet to be finalized.

                                  [all]