Hearing — Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response (September 22, 2020)

Summary

Hybrid hearing record, Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response, before the Committee on Financial Services, U.S. House of Representatives, September 22, 2020, Serial No. 116–111. The witnesses listed are Hon. Steven T. Mnuchin, Secretary, U.S. Department of the Treasury, and Hon. Jerome H. Powell, Chair, Board of Governors of the Federal Reserve System, each with a prepared statement. The record also lists written responses to questions for the record from Mnuchin and Powell submitted by Chairwoman Waters and several Representatives.

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Issuer: Congressional materials
Document type: Congressional Hearing
Case: Chrg Chrg 116Hhrg43525 Chrg 116Hhrg43525

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“Hearing — Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response (September 22, 2020).” Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/chrg-chrg-116hhrg43525-chrg-116hhrg43525/, SHA-256 9219dea05e0d72edf36006a28d0f8dd63e70c39e53c8b0fd2c8d213eefbeecb2.

Full text

OVERSIGHT OF THE TREASURY DEPARTMENT’S
AND FEDERAL RESERVE’S PANDEMIC RESPONSE

HYBRID HEARING
BEFORE THE

COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION

SEPTEMBER 22, 2020

Printed for the use of the Committee on Financial Services

Serial No. 116–111

(

U.S. GOVERNMENT PUBLISHING OFFICE
43–525 PDF WASHINGTON : 2021

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HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman

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

CHARLA OUERTATANI, Staff Director

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CONTENTS

Page
Hearing held on:
September 22, 2020 .......................................................................................... 1
Appendix:
September 22, 2020 .......................................................................................... 39

WITNESSES

TUESDAY, SEPTEMBER 22, 2020
Mnuchin, Hon. Steven T. Secretary, U.S. Department of the Treasury ............. 6
Powell, Hon. Jerome H., Chair, Board of Governors of the Federal Reserve
System ................................................................................................................... 8

APPENDIX
Prepared statements:
Mnuchin, Hon. Steven T. ................................................................................. 40
Powell, Hon. Jerome H. .................................................................................... 43

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD
Mnuchin, Hon. Steven T:
Written responses to questions for the record submitted by Chairwoman
Waters ............................................................................................................ 55
Written responses to questions for the record submitted by Representa-
tive Stivers .................................................................................................... 60
Written responses to questions for the record submitted by Representa-
tive Kustoff .................................................................................................... 61
Written responses to questions for the record submitted by Representa-
tive Gabbard .................................................................................................. 62
Written responses to questions for the record submitted by Representa-
tive Barr ........................................................................................................ 63
Powell, Hon. Jerome H.:
Written responses to questions for the record submitted by Chairwoman
Waters ............................................................................................................ 65
Written responses to questions for the record submitted by Representa-
tive Anthony Gonzalez .................................................................................. 85
Written responses to questions for the record submitted by Representa-
tive Hill .......................................................................................................... 88
Written responses to questions for the record submitted by Representa-
tive Kustoff .................................................................................................... 90

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OVERSIGHT OF THE TREASURY
DEPARTMENT’S AND FEDERAL
RESERVE’S PANDEMIC RESPONSE

Tuesday, September 22, 2020

U.S. HOUSE OF REPRESENTATIVES,
COMMITTEE ON FINANCIAL SERVICES,
Washington, D.C.
The committee met, pursuant to notice, at 10:34 a.m., in room
2128, Rayburn House Office Building, Hon. Maxine Waters [chair-
woman of the committee] presiding.
Members present: Representatives Waters, Sherman, Green,
Perlmutter, Himes, Foster, Beatty, Heck, Vargas, Gottheimer, Gon-
zalez of Texas, Lawson, Tlaib, Porter, Axne, Casten, McAdams,
Adams, Dean, Garcia of Illinois, Garcia of Texas; McHenry, Wag-
ner, Lucas, Posey, Luetkemeyer, Huizenga, Barr, Williams, Hill,
Emmer, Zeldin, Loudermilk, Mooney, Davidson, Budd, Kustoff,
Hollingsworth, Gonzalez of Ohio, Rose, Steil, Timmons, and Taylor.
Chairwoman WATERS. The Financial Services Committee will
come to order. Without objection, the Chair is authorized to declare
a recess of the committee at any time.
I want to remind Members of a few matters, including some re-
quired by the regulations accompanying House Resolution 965,
which established the framework for remote committee pro-
ceedings.
First, I would ask all Members on the Webex platform to keep
themselves muted when they are not being recognized by the
Chair. This will minimize disturbances while Members are asking
questions of our witnesses. Members on the Webex platform are re-
sponsible for muting and unmuting themselves. The staff has been
instructed not to mute Members except when a Member is not
being recognized by the Chair, and there is inadvertent background
noise.
Members on the Webex platform are reminded that they may
only attend one remote hearing at a time, so if you are partici-
pating today, please remain with us during the hearing. Members
should try to avoid coming in and out of the hearing, particularly
during the question period.
If, during the hearing, Members wish to be recognized, the Chair
recommends that Members identify themselves by name so as to
facilitate the Chair’s recognition. I would also ask that Members be
patient as the Chair proceeds, given the nature of the online plat-
form the committee is using.
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In addition, the Chair informs the Members participating in per-
son that in enforcing order and decorum in the hearing room, the
Chair has a duty to protect the safety of the Members. The Attend-
ing Physician provided the following guidance: ‘‘For U.S. House of
Representatives meetings, in a limited and closed space, such as a
committee hearing room, for greater than 15 minutes, face cov-
erings are required.’’ Accordingly, the Chair will treat wearing
masks as a matter of order and decorum, and all Members should
wear a mask. The Chair has a strong preference for Members to
wear a mask even while being recognized by the Chair. Members
who do not wish to wear a mask may participate virtually through
the Webex platform.
Before going any further, I would ask unanimous consent to
speak out of order, and I suppose this would be a personal privi-
lege. I would like to take a minute to acknowledge the departure
of a staff member, Lisa Peto.
Lisa has been with the committee for 8 years, working her way
up from a fellow to the committee’s chief counsel. She has been a
dedicated, tireless, and committed public servant with a keen un-
derstanding of procedure and a deep knowledge of the legislative
process.
Under Lisa’s guidance, committee Democrats successfully
transitioned from the Minority to the Majority, and then, Lisa was
instrumental in the committee’s transition from in-person hearings
to virtual and hybrid ones.
Lisa has accomplished so much with the committee, but her most
important accomplishment is her family. She is mom to her son,
Adrian, who recently celebrated his first birthday.
Lisa has been a valued member of my team, and I will miss her
dearly. So, I want to thank her for her service, and wish her the
best in her future endeavors.
Mr. MCHENRY. Madam Chairwoman?
Chairwoman WATERS. I now recognize the ranking member to
speak out of order.
Mr. MCHENRY. Thank you, Madam Chairwoman.
As we all know, and as we grow in our service here, we know
how important having staff is to this whole process, how essential
it is that you have good staffers who are going to represent their
Member’s perspective.
And I will tell you that Lisa has been a fierce advocate for her
principal’s perspective. In negotiations, she has not wavered in her
view, her view being the chairwoman’s view, but at the same time,
being cordial enough to have a conversation and maintain relation-
ships. That is a priceless bit of art that is representative of Lisa’s
character.
And we are grateful, Lisa, that we have been able to work with
you. We wish that we had been more successful in our negotiations
with you personally. But it is due to your talent, and it is also due
to your knowledge.
And so, we thank you for your service to your country, to our
country, to this institution, and to this committee. And I know com-
mittee Democrats especially will miss you. Committee Republicans
won’t miss you quite as much. But we are certainly grateful for the
relationship that we have all been able to have with you, Lisa.

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Congratulations to you on your son and your new family, and we
hope that your time away will be but temporary from public serv-
ice. But thank you for your service to your country and this institu-
tion.
And I yield back.
[applause]
Chairwoman WATERS. Thank you very much, Mr. Ranking Mem-
ber.
Today’s hearing is entitled, ‘‘Oversight of the Treasury Depart-
ment’s and Federal Reserve’s Pandemic Response.’’ This hearing is
the committee’s second quarterly hearing required by the
Coronavirus Aid, Relief, and Economic Security (CARES Act), for
oversight of the various Facilities and programs under the Act.
I now recognize myself for 4 minutes to give an opening state-
ment.
Welcome back, Chair Powell and Secretary Mnuchin. Since you
last testified before this committee in June, the coronavirus crisis
has continued to have a catastrophic impact on communities across
the country.
Nearly 200,000 people in the United States have lost their lives
to the coronavirus, and there have been over 6.8 million U.S. cases.
Millions of families are struggling to make ends meet during this
crisis and are on the verge of eviction. Over a million small busi-
nesses, which are the lifeblood of our economy, have shut their
doors as families across the country are looking to Washington for
leadership.
The Trump Administration has utterly failed in its economic re-
sponse to this virus, with 32 percent of renters unable to make
their full September rent payments at the beginning of the month,
according to Apartment List, and back rent piling up. The need for
emergency rental assistance to prevent a crushing wave of evic-
tions is growing every day.
Instead of rental assistance, the Trump Administration has
issued a Centers for Disease Control and Prevention action that
temporarily prevents evictions for some renters, but only after they
sign documents that potentially expose them to litigation and
criminal penalties. Meanwhile, the unpaid back rent continues to
accrue, meaning that the Trump Administration is simply delaying,
not preventing, evictions.
The Health and Economic Recovery Omnibus Emergency Solu-
tions (Heroes) Act, which passed the House in May to prevent
those evictions and provide other critical relief, is gathering dust
in the Senate on Mitch McConnell’s desk.
I said before that I am pleased that after calls from members of
this committee, the Treasury and the Small Business Administra-
tion made adjustments to the Paycheck Protection Program (PPP)
to ensure that community development financial institutions
(CDFIs) and minority depository institutions (MDIs) are able to
provide loans to the communities they serve, and I appreciate that
the Federal Reserve has expanded several programs. But I am
frustrated with the Trump Administration’s implementation of
pandemic relief programs based on the concerns I continue to hear.
Specifically, I am very concerned that much of the $500 billion
Congress allocated in the CARES Act to Treasury, most of which

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was to support Federal Reserve lending, to help reeling businesses,
nonprofits, and State and local governments, has gone unused.
Here we are almost 6 months after the passage of the CARES Act
and a mere 0.2 percent of Main Street Lending Program funds and
0.3 of Municipal Liquidity Facility funds have been put to use. This
is unacceptable.
Secretary Mnuchin, Chair Powell, let me be blunt. This pandemic
response has fallen badly short, and the Trump Administration has
sabotaged efforts to pass a relief package or address the major pub-
lic health and economic crisis we face. Your work to address this
crisis doesn’t stop when the stock market recovers from its losses.
Your mandate is to help hardworking individuals and families who
are suffering.
Before I close, let me say that I just learned today that there are
40,000 students who have been infected with the virus. That
shakes me. And we still have people who are forcing schools to
open and not do distance learning. I don’t get it. And I didn’t know
until today that that many students had been infected. So, I am
very, very concerned.
I now recognize the ranking member of the committee, the gen-
tleman from North Carolina, Mr. McHenry, for 4 minutes.
Mr. MCHENRY. Thank you. We all know that testing, treatment,
and therapeutics need to come online for a full economic recovery.
That is moving at an unprecedented pace, I would say, not just
globally, but here in the United States, with great innovators. The
coordination between the public sector and the private sector has
been the best it has ever been in generations. And this Administra-
tion’s response to this unprecedented pandemic, the Federal Re-
serve’s response to this unprecedented pandemic, is topnotch.
It is fantastic, the delivery that Secretary Mnuchin was able to
provide on PPP, which supported 51 million jobs and issued over
5 million loans to small businesses impacted by COVID. That was
a direct intervention of the Treasury Secretary and his team at
Treasury.
The Federal Reserve stood up more Facilities in a 6-month period
of time than they did in the fullness of the financial crisis. They
stood up more Facilities than they did in decades prior to this pan-
demic. So, I would give the Federal Reserve an A-plus for its initial
response and to where we are.
And just because Congress can’t get its act together and com-
promise to see a way through so that we can provide those people
who are still hurting because of this voluntary shutdown of our
economy because of this health crisis, we need to give those people
relief and we need to come to terms. That means that Democrats
and Republicans need to move to the middle.
And I would commend Secretary Mnuchin for his negotiations
and his willingness to move the ball forward on behalf of the Amer-
ican people, even in the midst of the crazy politics that we are cur-
rently experiencing, with people shouting in the streets and threat-
ening violence because they don’t like political perspectives.
So, I would commend him for being willing to negotiate where
others have walked away, like Speaker Pelosi and Leader Schumer,
and saying, ‘‘$3 trillion is all we are going to accept, and anything
less is completely unacceptable.’’ We need to actually find a com-

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promise to support those people who are still out of work because
of this global health pandemic.
Quite frankly, on that bill, Democrats would rather bail out blue
States and hold out for that rather than help people who are still
out of work because their jobs are shut down.
Let me finish with this. What we saw at the end of last year was
the best economy of our lifetimes. We had household wage growth
at almost 7 percent in 2019. Households were feeling wealthy for
the first time in a very, very long time in my State of North Caro-
lina, and across the country.
We need to do that again. We know that we are in the midst of
this health pandemic. We know that therapeutics are coming on-
line, treatment techniques are much better than they were at any
time since March, and those things are coming along. And maybe
there will be a vaccine, maybe, but we need to have treatment and
we need to have widescale testing so that people can get back to
some semblance of economic life.
But what I would like to hear today is the limits of the Federal
Reserve’s actions and activities and where Congress should act, be-
cause monetary policy simply cannot do the same thing that fiscal
policy can.
And on the fiscal side of the House, Secretary Mnuchin, I would
like to hear the economic plan from this Administration on what,
when we get past this awful, awful scourge of COVID, that eco-
nomic recovery must entail to get people back in the position they
were in in 2019, or even in January or February of this year. I
think there is a good story to tell and a hopeful story to tell if we
can work together and get things done. And so, I look forward to
your testimony.
I yield back.
Chairwoman WATERS. I now recognize the gentleman from
Texas, Mr. Green, who is also the Chair of our Subcommittee on
Oversight and Investigations, for 1 minute.
Chairman GREEN. Thank you, Madam Chairwoman.
And, Madam Chairwoman, I would like to associate myself en-
tirely with your comments, and I would only add that the stimulus,
the economic impact statement, must be made because the rent
must be paid.
Yesterday, the Government Accountability Office (GAO) reported
that the Treasury Department lacks up-to-date information on the
number of eligible recipients who have yet to receive their economic
impact payments (EIPs). This new GAO report follows previous
GAO findings dating back to May 2020, that persons not in the tra-
ditional employment relationships, such as those working in the gig
economy, may be missing from the IRS EIP outreach. Without this
data, it is very difficult to know who is being left behind, and that
number may be in the millions.
I will say it again: The rent must be paid, and the EIP payment
must be made. If we do not do this, we will put persons at risk of
being evicted at a time when we are having a pandemic that is still
taking lives in this country.
I do believe that this can be done, but I know that we must have
more help to make sure the rent is paid. The EIP payments are

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already there; they are funded. We need to make sure that the peo-
ple who need them will get the funds.
I yield back.
Chairwoman WATERS. I now recognize the subcommittee’s rank-
ing member, Mr. Barr, for 1 minute.
Mr. BARR. Thank you, Secretary Mnuchin and Chairman Powell,
for appearing before the committee today, and for your continued
efforts to combat the economic fallout from the COVID-19 pan-
demic.
Treasury and the Fed acted swiftly to stabilize the economy, keep
businesses open, ensure the continued operation of the credit mar-
kets, and promote long-term recovery.
Since you last appeared before this committee to testify on the
CARES Act implementation, the economy has improved. Unem-
ployment has decreased. Nearly half of the jobs lost in the early
days of the pandemic have been added back to the labor market,
and our economy is safely reopening. We are on the road to recov-
ery.
Policies put into place by Treasury and the Fed, and actions you
both have taken during this crisis, have put the economy on a more
stable footing.
However, important sectors of our economy, including hospitality,
conventions, entertainment, retail, and commercial real estate re-
main in distress, and there are elements of your responses to the
pandemic that could still be adjusted as we move forward. I look
forward to discussing those today and hearing your plans to imple-
ment a strategy for long-term economic growth.
Thank you.
Chairwoman WATERS. I want to welcome today’s witnesses to the
committee.
First, I want to welcome Steven T. Mnuchin, the Secretary of the
Treasury. He has served in his current position since 2017. Mr.
Mnuchin has testified before the committee on previous occasions,
so I do not believe he needs any further introduction.
I also want to welcome our other distinguished witness, Jerome
H. Powell, Chair of the Board of Governors of the Federal Reserve
System. He has served on the Board of Governors since 2012, and
as its Chair since 2017. Chair Powell has also testified before the
committee on previous occasions, so I do not believe he needs any
further introduction, either.
Each of you will have 5 minutes to summarize your testimony.
When you have 1 minute remaining, a yellow light will appear. At
that time, I would ask you to wrap up your testimony so that we
can be respectful of the committee members’ time. And without ob-
jection, your written statements will be made a part of the record.
Secretary Mnuchin, you are now recognized for 5 minutes to
present your oral testimony.
STATEMENT OF THE HONORABLE STEVEN T. MNUCHIN,
SECRETARY, U.S. DEPARTMENT OF THE TREASURY
Secretary MNUCHIN. Thank you.
Chairwoman Waters, Ranking Member McHenry, and members
of the committee, I am pleased to join you today to update you on
how the Department of the Treasury and the Federal Reserve have

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been partnering over the last 6 months to provide relief for Amer-
ican workers and liquidity to credit markets, businesses, nonprofit
organizations, State and local governments, and households. We
are fully committed to getting every American back to work as
quickly as possible.
America is in the midst of the fastest economic recovery from any
crisis in the United States. The August jobs report showed the
economy has gained back 10.6 million jobs since April, nearly 50
percent of all jobs lost due to the pandemic. The unemployment
rate decreased to 8.4 percent, a notable achievement considering
many people thought it could get as high as 25 percent. Thanks to
the programs provided by the CARES Act, we never got close to
that figure.
I believe we will see tremendous growth in the third quarter
fueled by strong retail sales, housing starts, home sales, manufac-
turing growth, and increased business activity. The September
Blue Chip survey projects close to 24 percent for third quarter
GDP.
The recovery has been strong because the Administration and
Congress worked together on a bipartisan basis to deliver the larg-
est economic relief package in American history. The Federal Re-
serve has been instrumental to the recovery by implementing
unique Section 13(3) lending Facilities. Economic reopenings, com-
bined with the CARES Act, have enabled us to have an economic
rebound, but some industries particularly hard hit by the pandemic
require additional relief.
The President and I remain committed to providing support for
American workers and businesses. We continue to work with Con-
gress on a bipartisan basis to pass a Phase IV relief program. I be-
lieve a targeted package is still needed, and the Administration is
ready to reach a bipartisan agreement.
Treasury has been working hard to implement the CARES Act
with transparency and accountability. We have released a signifi-
cant amount of information on our website, Treasury.gov, and
USAspending.gov. We have released more information than was re-
quired by the statute. The Federal Reserve has also posted infor-
mation on its website regarding the lending Facilities.
We have provided regular updates to Congress, with today mark-
ing my 6th appearance before Congress for a CARES Act hearing.
We are cooperating with various oversight bodies: the new Special
Inspector General; the Treasury Inspector General; the Treasury
Inspector General for Tax; the new Congressional Oversight Com-
mission; and the GAO.
We appreciate Congress’ interest in these issues and have de-
voted significant resources to responding. We remain committed to
working with you to accommodate Congress’ legislative needs and
further whole-of-government approach.
I would like to thank the members of the committee for working
with us to provide economic support to the American people.
Thank you.
[The prepared statement of Secretary Mnuchin can be found on
page 40 of the appendix.]
Chairwoman WATERS. Thank you, Secretary Mnuchin.

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Chair Powell, you are now recognized for 5 minutes to present
your oral testimony.
STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR,
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. POWELL. Thank you.
Chairwoman Waters, Ranking Member McHenry, and members
of the committee, thank you for the opportunity to update you on
our ongoing measures to address the hardship wrought by the pan-
demic.
The Federal Reserve, along with others across the government,
is working to alleviate the economic fallout. We remain committed
to using our tools to do what we can, for as long as it takes, to en-
sure that the recovery will be as strong as possible and to limit
lasting damage to the economy.
Economic activity has picked up from its depressed second quar-
ter level when much of the economy was shut down to stem the
spread of the virus. Many economic indicators show marked im-
provement. Household spending looks to have recovered about
three quarters of its earlier decline, likely owing in part to Federal
stimulus payments and expanded unemployment benefits. The
housing sector has rebounded, and business fixed investment
shows signs of improvement. In the labor market, roughly half of
the 22 million payroll jobs that were lost in March and April have
been regained as people return to work.
Both employment and overall economic activity, however, remain
well below their pre-pandemic levels, and the path ahead continues
to be highly uncertain.
The downturn has not fallen equally on all Americans. Those
least able to bear the burden have been the most affected. The ris-
ing joblessness has been especially severe for lower wage workers,
for women, and for African-Americans and Hispanics. The reversal
of economic fortune has upended many lives and created great un-
certainty about the future.
A full recovery is likely to come only when people are confident
that it is safe to reengage in a broad range of activities. The path
forward will depend on keeping the virus under control and on pol-
icy actions taken at all levels of government.
Since mid-March, we have taken forceful action, implementing a
policy of near-zero rates, increasing asset holdings, and standing
up 13 emergency lending Facilities. We took these measures to sup-
port broader financial conditions and more directly to support the
flow of credit to households, businesses of all sizes, and State and
local governments.
Our actions taken together have unlocked more than a trillion
dollars of funding, which in turn has helped keep organizations
from shuttering, putting them in a better position to keep workers
on and to hire them back as the economy continues to recover.
The Main Street Lending Program has been of significant inter-
est to this committee and to the public. Many of the businesses af-
fected by the pandemic are smaller firms that rely on banks for
loans rather than public credit markets.
Main Street is designed to facilitate the flow of credit to small
and medium-sized businesses. In establishing the Facility, we con-

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ducted extensive outreach, soliciting public comment and holding
in-depth discussions with lenders and borrowers of all sizes.
In response to feedback, we have continued to make adjustments
to Main Street to provide greater support to small and medium-
sized businesses and to nonprofit organizations, such as edu-
cational institutions, hospitals, and social service organizations.
Nearly 600 banks, representing well more than half of the assets
in the banking system, have either completed registration or are in
the process of doing so. About 230 loans, totaling roughly $2 billion,
are either funded or in the pipeline.
Main Street is intended for businesses that were on a sound foot-
ing pre-pandemic and that have good longer-term prospects, but
have encountered temporary cash flow problems due to the pan-
demic and are not able to get credit on reasonable terms as a re-
sult.
Main Street loans may not be the right solution for some busi-
nesses, in part because the CARES Act states clearly that these
loans cannot be forgiven. Our credit Facilities have improved lend-
ing conditions broadly, including for potential Main Street bor-
rowers. The evidence suggests that most creditworthy small and
medium-sized businesses can currently get loans from private sec-
tor financial institutions.
Many of our programs rely on emergency lending powers that re-
quire the support of the Treasury Department and are available
only in unusual circumstances. By serving as a backstop to key
credit markets, our programs have significantly increased the ex-
tension of credit from private lenders. However, the Facilities are
only that: a backstop. They are designed to support the functioning
of private markets, not to replace them.
Moreover, these are lending, not spending powers. Many bor-
rowers will benefit from these programs, as will the overall econ-
omy, but for others, a loan that could be difficult to repay might
not be the answer, and in these cases, direct fiscal support may be
needed.
Our economy will recover fully from this difficult period. We re-
main committed to using our full range of tools to support the econ-
omy for as long as is needed.
Thank you.
[The prepared statement of Chairman Powell can be found on
page 43 of the appendix.]
Chairwoman WATERS. Thank you very much, Chair Powell.
I now recognize myself for 5 minutes for questions.
I am very appreciative, Chair Powell, of the explanations that
you are giving in anticipation of all of the questions that we have
about Main Street and other Facilities.
Earlier this month, our committee held a hearing on the need for
further Federal assistance to State and Territorial Governments.
Although each of the State Governors at that hearing can borrow
through private markets at more attractive rates than the Munic-
ipal Liquidity Facility currently offers, they affirmed the need to
keep the Facility as an option in the future, and the Guam Gov-
ernor urged the Fed to make the Facility available to Territories.
The Republican witness, Dr. Holtz-Eakin, a former Congressional
Budget Office Director, and Staff Economist for President George

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H. W. Bush’s Council of Advisers said, ‘‘The mystery to me has
been the performance of the Treasury in using essentially half a
trillion dollars to backstop their Facilities, including the Municipal
Liquidity Facility. This seems underutilized in my eyes, and I don’t
fully understand why that hasn’t happened. That is something that
can and should be more aggressively used.’’
So, Secretary Mnuchin, at a time when a wide range of busi-
nesses have been frustrated that they have been unable to access
their Facilities, again, like the Main Street Lending Program, and
we have heard the excuses that were given for that, and we have
Republican and Democratic State Governors pressing for more as-
sistance, do you agree there is more that Treasury can do with the
$500 billion Congress provided you to enhance these Fed Facilities
to support the economy?
Secretary MNUCHIN. I, unfortunately, think there is not more we
can do. And part of the reason we agreed if there is potential legis-
lation is to reallocate that money to better use.
Almost every single one of the Facilities has extra capacity. I
think that in the case of many businesses that haven’t been im-
pacted by the virus, they are able to borrow in the private markets.
As it relates to Main Street, we have worked very hard with the
Federal Reserve to roll out this program. It is based upon under-
writing from pre-pandemic, and I know there has been some ques-
tions. We do expect to take losses on that, and we are working
closely with the Fed on that Facility.
Chairwoman WATERS. Secretary Mnuchin, of the $600 billion
available through the Main Street Lending Program, only about
$1.2 billion has gone out the door to 118 companies. Would Treas-
ury object to the Fed eliminating the Main Street Lending Pro-
gram’s minimum loan threshold of $250,000, so that small busi-
nesses and minority-owned businesses who need smaller loans
could access the program?
Let me just say, I am appreciative, because when we started out,
when they first rolled out the Main Street Program, the minimum
requirement for the loan was $1 million, and you did reduce that
to $250,000. I am asking, can you go further in the reductions so
that the loans can be made to smaller businesses?
Secretary Mnuchin?
Secretary MNUCHIN. I would be fine lowering that to $100,000,
and I will consult with Chair Powell afterwards on lowering it.
Chairwoman WATERS. Chair Powell?
Mr. POWELL. There is very little demand in the Facility below a
million dollars. There isn’t much interest at all below a million dol-
lars. So, this would have to be a different kind of Facility. It
wouldn’t look like Main Street.
I think extending credit in those small quantities would require
a Facility built from the ground up that would be quite different
than Main Street. It wouldn’t have the same requirements. But we
can talk about that. It wouldn’t look like the current Main Street
Facility, though. It is just a very different kind of a thing.
Chairwoman WATERS. I am aware of how the Main Street Facil-
ity was formulated, was created for the mid-sized businesses, and
also I am very much aware that they have to repay those loans.
But we have so many small businesses still eligible for PPP and

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beyond, and certainly they would repay those small loans that they
could get. It is not that they are absolutely looking to have those
loans waived.
So, do you think that something can be done?
Mr. POWELL. It is possible. I really do, though, think that this
is more appropriate for PPP loans, which are in the nature of
grants. I think that is a better way to approach these.
Trying to underwrite the credit of hundreds of thousands of very
small businesses would be very difficult. And I think PPP is a bet-
ter way to approach that space in the market, and I think you were
well-advised to use that.
Chairwoman WATERS. Thank you.
I now recognize the distinguished ranking member, Mr.
McHenry, for 5 minutes for questions.
Mr. MCHENRY. Thank you, Madam Chairwoman.
Secretary Powell, let’s begin here. In the Federal Reserve’s own
data, we see that there is a substantial economic recovery hap-
pening. We see economic numbers improving, and we have many
households that are about the same as they were, or a little better
off in terms of savings than back at the beginning of the year. But
we see many households much, much worse off. And so it is sort
of a tale of two different recoveries, if you will, or two different ex-
periences of this pandemic.
So while we see good economic numbers, what are the areas that
you see as needing further assistance? What areas of our economy
do you see as needing further assistance to get us back to some-
thing more normalized, given where we are with COVID?
Mr. POWELL. I guess I would point to the labor market to sort
of capture the size of the issue. We still have 11 million people out
of the 22 million who were laid off in the payroll numbers in March
and April, still 11 million out there. And that is really good
progress. We have put fully half of them back to work. But there
is a long way to go. That is more people than lost their jobs during
the global financial crisis, as I am sure you know.
So there is a lot of work to do there, and our policies will support
that, but it will go faster for those people if we have—if it is all
of government working together.
Mr. MCHENRY. Okay. Meaning that there is a fiscal response to
help support the economy for those most affected by COVID, eco-
nomically affected by COVID?
Mr. POWELL. Yes. Now, of course, the details of that are between
Congress and the Administration, and not for the Fed to say. But
I do think that the recovery will go faster if we have both tools con-
tinuing to work together, as they have so far, I think, worked very
well together.
Mr. MCHENRY. Okay. Thank you.
Secretary Mnuchin, there is much that has been made up here
on Capitol Hill about your negotiations on another CARES package
like we passed back in March, that you negotiated. You are the
lead Administration negotiator on that package, which I think,
from all sources, was a very solid piece of bipartisan legislating,
and I want to commend you for being the Administration’s voice
and negotiator on that project. And I think we got good results

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from the programs that you were then able to set up in coordina-
tion with the Fed.
Along those lines, what are the components for the next package
that we need to take to support the economy, to get things going
again?
Secretary MNUCHIN. I think the next package should be much
more targeted. It should be focused on kids and jobs and areas of
the economy that are still hard-hit, particularly areas such as the
travel business and restaurants. I think there is broad bipartisan
support for extending the PPP to businesses that have had revenue
drops for a second check. I think small businesses are a large pri-
ority of that.
Mr. MCHENRY. Okay. So focused on small business and family
support, right? And that would be a strong foundation, I assume,
for this.
Let me ask you both this, treatment, therapeutics, massive scale
testing—we are getting up-to-speed with some really first-rate test-
ing across the country and getting kids back in school in a safe
way. Those things are sort of foundations for us getting the econ-
omy going to the next degree, right? It is not all going to be fiscal
policy or monetary policy to get the people back in restaurants
again. It is not government regulation. It is going to be people’s de-
cisions of whether or not to engage in many ways, similar to get-
ting on airplanes.
Along those lines, do you see the capacity for us to get to a full
economic recovery, Secretary Mnuchin?
Secretary MNUCHIN. I do. I think it is just a question of time.
And I would just highlight, we are extremely pleased that we have
committed to 150 million point-of-care tests with Abbott that will
be delivered between now and the end of the year, and we are
working with other parties to deliver comparable amounts of point-
of-care testing with instant results.
Mr. MCHENRY. So, it is instant results. And those are very low-
cost tests, are they not?
Secretary MNUCHIN. That is correct.
Mr. MCHENRY. Okay. I thank you both for your testimony, I
thank you for being here today, and I thank you for your leader-
ship in the midst of this crisis. And I know we are still deeply in
the midst of it, of the economic effects of COVID. And I want to
thank you both for being there, both with the life insurance policy
and with the water to put out the flames. You have worked in good
stead on behalf of the American people. Thank you both.
Chairwoman WATERS. The time of the gentleman has expired.
I now recognize Mr. Himes of Connecticut for 5 minutes.
Mr. HIMES. Thank you, Madam Chairwoman.
And thank you, gentlemen, for being here.
I am going to pick up on what the ranking member just said
about the insurance policy. My time in Washington is bracketed by
bailouts. Right before I got here, we passed the Troubled Asset Re-
lief Program (TARP), which led to a massive bailout of the financial
services industry and, of course, a bailout of the auto industry. And
now, through CARES, we are bailing out the airlines; we are bail-
ing out businesses large and small. The government is very, very
much in the business of bailouts.

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I would point out to my friends on the Republican side that all
of those bailouts were promoted and passed and promulgated by
Republican Presidents. They might just bear that in mind as they
accuse my party of being socialist, but that is a conversation for a
different day.
Secretary Mnuchin, I had the opportunity to talk to Chair Powell
about this, so I want to talk with you about bailouts. I would like
to believe we could do fewer rather than more. I don’t like the idea
of business managers large and small thinking that every 5, 7, or
10 years, the Federal Government will bail them out of liquidity
crises or whatever it might be.
I also like the idea, as long as we are going to do these things,
that the American public be compensated for the use of their funds
for private and commercial purposes. And I admire your efforts to
get warrants and make sure that the American public is com-
pensated.
But there is a funny hostage situation that develops, right?
When I proposed that on a caucus call, I instantly got calls from
labor unions and the airline industry saying, no, if you make the
money cost anything, they won’t take it and they will fire us. That
feels to me like a hostage situation: Give me the money for free or
we will not take it and we will fire people.
So, Secretary Mnuchin, I would love to give you much of the rest
of my time. First, what do we need to do structurally to get out of
the business of bailouts?
And, second, how can we get out of this hostage situation, in
which I think you actually worked very, very hard, where the
American people are being compensated fairly for the use of their
money for private purposes?
Secretary MNUCHIN. First of all, I would just say that this is a
very different situation than the financial crisis, because in this
case, the businesses that are impacted were impacted because of
COVID, which was not their fault, as opposed to issues that they
controlled.
I would say, in the case of the airlines, I think we struck the
right balance. We did get proper compensation for taxpayers. I
think it was very important, given what went on in the travel in-
dustry. In the case of the national security loans that we have
made to the trucking companies, we took a 30 percent equity inter-
est in that for proper compensation.
So, I agree with you that the government should be properly
compensated.
On the other hand, I think for very small businesses, like the
PPP, the money that we spent there, we saved significant money
on unemployment on the other side.
Mr. HIMES. With respect to the warrants, Mr. Secretary, and the
30 percent equity stake in the trucking company, what is your phi-
losophy? Is your philosophy to dispose of that position as soon as
you can do so safely and in a sound manner, or is it to maximize
the return to the American public?
Secretary MNUCHIN. I don’t think it is to absolutely maximize the
return, but I think that the American public should reap the ben-
efit. So my expectation is that is not something we would liquidate

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now; we would liquidate when the markets are more normalized
and the economy is back to normal.
Mr. HIMES. Let me run an offbeat idea by you. As it happens,
I had the opportunity to talk to both former Treasury Secretary
Paulson and another former Treasury Secretary about it. One of
the vehicles for capturing common wealth for the citizens of a coun-
try is a sovereign wealth fund. As you know, Persian Gulf countries
use it, Alaska uses it, Norway uses it, largely oil-driven wealth.
Should Congress investigate, if we are going to be in the regular
business of bailouts and receive a return on those bailouts, should
we look at establishing a sovereign wealth fund in order to take the
proceeds from that common wealth and either use it as an insur-
ance fund or use it to disburse however we may choose to disburse?
Is that an idea that makes any sense to you?
Secretary MNUCHIN. Let me just say that most countries that
have sovereign wealth funds, or in the case of Alaska, it is typically
for future generations where they are focused on, in the case of
many places, energy and things like that, that will not necessarily
be around forever.
I don’t necessarily think the U.S. should have a sovereign wealth
fund. On the other hand, I think taking the profits and putting it
into an account that is reserved for future emergencies is a very
interesting idea, and I would be willing to explore it with you.
Mr. HIMES. Good. I am going to take you up on that offer. Again,
I don’t think any of us want to be in the persistent business of bail-
outs, but if we are going to do it, I think we should make sure that
the American public is amply compensated for the use of their
money.
Thank you. I yield back the balance of my time.
Chairwoman WATERS. Thank you very much.
I now recognize the gentlelady from Missouri, Mrs. Wagner, for
5 minutes.
Mrs. WAGNER. Thank you, Madam Chairwoman.
Secretary Mnuchin and Chairman Powell, thank you for being
here today.
I have been hearing from employers across the Second District
of Missouri who desperately need Congress to do its job and pass
coronavirus relief legislation so they can do their jobs and keep
handing out paychecks to their hardworking employees.
Earlier this month, the Senate acted to pass relief legislation
that could actually be signed into law. That package would have
given relief to families, schools, child care providers, small busi-
nesses, and those who need it most. At a time when so many are
struggling, we really do need to put America’s families first.
And I am sick of the partisan politicking, the partisan wish lists.
It should have no place in this conversation. Congress should be
laser-focused on providing targeted and immediate relief.
The Senate Majority supports a second round of PPP money that
would keep our small businesses afloat, and I call on my colleagues
in the House to bring this to the Floor.
Secretary Mnuchin, I am grateful also, as the ranking member
mentioned, for your due diligence and your work in negotiating this
and what it means for our small businesses, including, as you said,

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restaurants, the travel and events industry, dentist offices, and so
many others that keep Americans employed.
You talked a little bit about how passing the second round of the
Paycheck Protection Program would keep America on track for a
full economic recovery. How much money do you think we could re-
purpose from CARES in order to do this? And tell us again what
this would mean in terms of economic recovery?
Secretary MNUCHIN. I agreed that we had approximately $450
billion that was allocated to work with the Fed on the Section 13(3)
Facilities, and I agreed that I would reallocate $200 billion of that,
that is not being used. That obviously needs congressional support,
but we would reallocate that. And, again, our priorities are kids
and jobs.
Mrs. WAGNER. Right.
Secretary MNUCHIN. I think there is very strong bipartisan sup-
port for the PPP. I know that both committees in the House and
Senate have worked on revisions that are necessary revisions, and
we would look forward to working with both parties on that.
Mrs. WAGNER. And that could be passed today and signed into
law today. Is that correct?
Secretary MNUCHIN. The President would very much support
signing into law additional PPP money immediately.
Mrs. WAGNER. We must act. It is clear that the best economic
stimulus package we can give to the American people is a fully
open economy. It brings people back to work, allows economic
growth to begin, and will restore our economy.
Chairman Powell, do you agree that reopening has increased eco-
nomic activity and jump-started the process of bringing the U.S.
back to pre-pandemic prosperity?
Mr. POWELL. Yes, I do. We need to reopen the economy so people
can go back to work, and we need to do it in a sustainable way.
And that is why I always mention that a part of reopening quickly
and effectively is to keep the virus under control, and that takes
basic measures like wearing masks and things like that, and gets—
the two things go together. A fast reopening and maintaining these
sorts of measures actually go together.
Mrs. WAGNER. Absolutely.
The President’s plan to reopen America has enabled States to tai-
lor their reopening plans to address the specific challenges in their
States and regions.
Chairman Powell, how does this State-by-State approach ensure
success, especially when it comes to States that are responding dif-
ferently to the pandemic? And are there any regulatory burdens
you are aware of that should be removed to improve States’ abili-
ties to quickly and safely reopen?
Mr. POWELL. The question of how to reopen exactly and what
policies to use, that is a question that is one for elected officials at
the State and local level, not for the Federal Reserve, and so I
wouldn’t be a good judge of that.
I would say in terms of regulatory adjustments, we have made
a number that have been designed to allow banks to serve their
customers in this. We have relaxed a number of regulations tempo-
rarily, and we think that has really helped them serve their cus-
tomers in a way that doesn’t at all endanger safety and soundness.

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We are open to doing more of that, but many of those things we
have done. And, frankly, the economy is healing now, so—
Mrs. WAGNER. The economy is healing, and I do believe that
many of the regulatory burdens that we have lifted are things that
could be sustained even beyond this pandemic. So, I hope that this
committee will be able to take a look at that as we go forward.
I thank you for your answer.
And I yield back, Madam Chairwoman.
Chairwoman WATERS. Thank you.
I now recognize the gentleman from Illinois, Mr. Foster, for 5
minutes.
Mr. FOSTER. Thank you, Madam Chairwoman. And I thank our
witnesses, as well.
Chairman Powell, the Fed recently announced hypothetical sce-
narios for the second round of bank stress tests, and unlike the re-
sults of the sensitivity analyses conducted earlier this year, you
will be releasing bank-by-bank results.
I appreciate this transparency and believe it is very important
for markets, policymakers, and the banks themselves to have this
information be public. One of the tragedies of the last financial cri-
sis was that in the months prior to the crisis, as pressure built on
financial institutions, they did not use this time to raise capital
until it was too late. Hopefully, the prospect of publicly disclosed
stress tests will help avoid a repeat of this behavior if the pan-
demic downturn continues.
Now, you are going to be using the results of these stress tests
to determine whether the restrictions on shareholder dividends and
the prohibition on buying back shares will continue through the
fourth quarter. So my first question is, will you be making these
determinations on a bank-by-bank basis or will all of the large
banks be subject to the same restrictions?
Mr. POWELL. Yes, that is going to depend on a lot of things, and
those are decisions we will make down the road, but I think we will
be looking probably to use the bank-by-bank approach.
Mr. FOSTER. Thank you.
And given the continuing high unemployment, the failure of the
Senate to pass any new COVID relief, and the uncertainty and vol-
atility of a large number of economic indicators, will you err on the
side of conservatism and safety in making these determinations?
Mr. POWELL. I think the stress tests themselves always err on
the side of safety. We think of very extreme scenarios, severely ad-
verse scenarios, and so that has generally been our approach over-
all.
Mr. FOSTER. I appreciate that.
Will you be reanalyzing the living wills of the giant banks to en-
sure that they could be executed properly at a time of COVID pan-
demic with, for example, most of the workforce at home?
Mr. POWELL. We don’t have any plans that I know of to change
the schedule of doing that. Banks have to resubmit those on a reg-
ular schedule, and I think we will just stick to that schedule.
Mr. FOSTER. Okay. I urge you to keep an eye on that, because
if we have to execute them and it is not possible in the pandemic
conditions, we will regret that.

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Potential problems may not be confined to a small number of
giant banks. For example, the savings and loan crisis was the re-
sult of losing bets made by over a thousand smaller institutions,
and the taxpayers ended up on the hook for bailouts amounting to
about 2 percent of GDP, which is huge compared to TARP, in
which the taxpayers actually got their money back with at least
some interest.
And given that the fates of small banks are more closely tied to
the fates of small and medium-sized businesses, which are often
most at risk of business failure during the failed response to this
pandemic, what should we be worried about in regards to the po-
tential need to bail out large numbers of smaller banks if the pan-
demic continues?
Mr. POWELL. I guess I would say we spent 10 years, and the
banks spent 10 years strengthening their capital, their liquidity,
and their understanding of the risks and their management of
them, and so far, the banking system has held up well.
Now, we don’t know where we are in this whole process, so we
will be continuing to, as you can see from the stress tests, con-
tinuing to do those things that we need to do to continue to assess
those things in the banking system. But so far, we don’t see the
kinds of problems you are talking about.
I think with smaller banks, the issue is that there has been a
30-year trend of consolidation and banks going out of business, and
that is not a trend we want to do anything to exacerbate. I do
think that smaller banks are going to probably bear too much of
the burden here. They have more exposure to real estate and to
smaller businesses, which are probably more vulnerable and have
less resources to deal with this sort of stress.
I think we will be watching carefully to make regulatory adjust-
ments, supervisory adjustments, to make sure that we give those
banks every chance to serve their customers and to make it
through this difficult time.
Mr. FOSTER. Yes. Thank you. One of the problems that we have
in financial regulation is that we always seem to be fighting the
last war, and we maybe should look two wars back in this.
In my limited amount of time left, you introduced a new strategic
framework for conducting long-term monetary policy, and as part
of that you discarded the idea of a fixed goal for full employment.
Instead, you are going to consider a wide range of indicators in
making an assessment of whether there are any shortfalls in em-
ployment. And I urge you to do that very publicly and trans-
parently, because you can get different answers by choosing dif-
ferent measures, both for inflation and for unemployment.
Thanks. My time is up. I yield back.
Chairwoman WATERS. Thank you very much.
I now recognize the gentleman from Kentucky, Mr. Barr, for 5
minutes.
Mr. BARR. Thank you, Madam Chairwoman.
And I want to first start by responding to my friend Representa-
tive Himes’ comments about bailouts, because I share my friends
antipathy for what he describes as bailouts. But I do think it is im-
portant to point out that a bailout, at least the way I look at it,
implies that the government is saving businesses from mismanage-

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ment or excessive risk-taking or the use of taxpayer funds for pri-
vate use in a way that would promote moral hazard.
We saw some of that, I think, in the aftermath of the financial
crisis, but that is not what we have here. What we have here is
a congressional response to many State and local governments im-
posing restrictions. Now, some of those restrictions may be very
warranted in response to a pandemic. Others may criticize some of
those restrictions as being overzealous or draconian.
But, nevertheless, this congressional response in the CARES Act
or the PPP program or the Main Street Lending Program or some
of these liquidity Facilities seem to me more like a compensation
for a regulatory taking. So, I think it is important to point out that
distinction, a regulatory taking.
I do want to ask Chairman Powell about Main Street, and I do
think there is interest among potential borrowers to participate in
this program. But many businesses and lenders are reporting to us
in Congress that the program is not working for them. To date, the
Fed has committed less than one-half of 1 percent of the total
available funds under the program, and so an argument can be
made that the program isn’t performing to its full potential.
Last week, the Fed issued updated FAQs about the program, and
I have heard from banks in my district that the updates are un-
likely to move the needle.
You mentioned that smaller loans for smaller businesses under
a million dollars—that this program may not be right for them; it
is more suited to a PPP. But, Chairman Powell, I would offer for
your consideration that for some of those businesses that would
need a smaller loan, the PPP program really doesn’t help them be-
cause their payroll is fairly limited and they have larger amounts
of debt.
So my question initially would be, is the Fed considering pub-
lishing more targeted guidance, underwriting standards, docu-
mentation requirements for the smallest Main Street loans?
Mr. POWELL. As you know, Mr. Barr, the limit now is $250,000,
and we actually have very little demand below $1 million, as I told
the Chair a while back. So, we are not seeing demand for very,
very small loans. Because the nature of the Facility and the things
you have to do to qualify, it tends to be sort of larger-sized busi-
nesses.
Lending at the very small end, under $100,000, it tends to in-
volve a lot of personal guarantees—you are lending to a person and
that person is guaranteeing what is a very small business, and that
just is not a Facility that we currently have. We would have to
start from scratch to develop that.
Mr. BARR. Fair point. Just the feedback we are getting is that,
for those smaller loans, the lenders are telling us that they really
would prefer to use their existing structuring, underwriting, and
documentation and account monitoring processes in order for them
to get into that smaller level of loan.
I want to talk about EBITDA restrictions in the program, too.
The restrictions that we have in the program right now do prohibit
many commercial real estate borrowers from accessing the pro-
gram. In the FAQs released last Friday, you indicated the Fed had
studied whether to allow for collateral-based calculations for asset-

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heavy borrowers but, ‘‘determined that conditions do not warrant
such changes at this time.’’
How did you come to this conclusion? And are there ways to re-
tool Main Street to work for commercial real estate borrowers?
Mr. POWELL. We have spent with Treasury a great deal of time
looking, because we hear these things, too, probably from the same
people, and we look for places where the banking system, the lend-
ing system is not working for commercial real estate.
And a big part of that, of course, is the commercial mortgage-
backed securities (CMBS) market, and we don’t have an answer to
that, because there are a couple of problems with CMBS that make
it impossible to make additional loans, for example, and the
servicers have to pay. So, it’s hard to get foreclosures.
So we look at other places in commercial real estate, and really
it is not easy to find places where we could have much of an im-
pact.
Mr. BARR. And I appreciated our conversation earlier where you
said that the Fed’s emergency lending powers may be not particu-
larly suited for CMBS.
But, Secretary Mnuchin, I appreciate the communication with
your team on this issue and particularly CMBS. Could you detail
what Treasury is doing to monitor and respond to these challenges
facing commercial real estate?
Secretary MNUCHIN. First of all, I am sympathetic to the issue,
and we have spent a lot of time internally trying to figure out if
there is a way we could structure a program with the Fed.
And as the Fed Chair said, unfortunately, there is a structural
problem with limitations and additional debt and prepayment pen-
alties. I think the best way to help many of these is with additional
PPP funds so that people can pay rent, so that owners can pay
their mortgage.
Mr. BARR. Thank you. I yield back.
Chairwoman WATERS. The gentleman’s time has expired.
I now recognize the gentlelady from Ohio, Mrs. Beatty, for 5 min-
utes.
Mrs. BEATTY. Thank you, Madam Chairwoman. And I thank the
witnesses, as well.
We have heard a lot today about reopening the economy. We
have also heard a lot about the pandemic, health and safety. And,
Chair Powell, you even used the words, ‘‘they go hand in hand’’ and
actually used the words and pointed to your mask, by wearing a
mask. All of that is a part of it.
So to you, Mr. Secretary, we recently learned that the White
House had scrapped plans at the United States Postal Service to
send approximately $650 million worth of masks through the mail.
Maybe that is because President Trump sees no value and tweets
about not wearing one. You have had a lot of involvement with the
operations and governance of the U.S. Postal Service. Were you in-
volved in that situation about scrapping the plans or are you aware
of it?
Secretary MNUCHIN. Just to be clear, I think I read something
in the press about that alleged situation. Never, in any of my task
force meetings, do I recall that being discussed or any plan being

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scratched whatsoever. It may have occurred in a different part of
the government. But, no, I have not heard anything about that.
Mrs. BEATTY. Would you be willing to look into it since we—most
experts, not me, certainly, as a Congressperson, but certainly sci-
entists and medical personnel have all stated that wearing a mask
is helpful in preventing the spread now that we know over 200,000
people have died. Would you look into that, since you have had in-
volvement with the U.S. Postal Service?
Secretary MNUCHIN. I would be happy to, and we will get back
to your staff.
Mrs. BEATTY. Thank you very much.
My next question is, certainly we know that when we talk about
reopening the government, would you both agree if people are
healthy and if they have healthcare, then that, too, goes hand in
hand with reopening the economy by having people be healthy
enough to go back to work? That is a yes-or-no question.
Chair Powell?
Mr. POWELL. Yes. Sure.
Mrs. BEATTY. Mr. Secretary?
Secretary MNUCHIN. Yes. And I just would add that one of the
reasons we liked the PPP is that it kept employees connected to
their businesses, which in many cases allowed them to keep their
healthcare.
Mrs. BEATTY. Okay. Earlier this year, the Trump Administration
submitted a brief to the Supreme Court urging them to overturn
the Affordable Care Act, which would strip roughly 20 million
Americans of their healthcare in the midst of this historic pan-
demic that has already cost the lives of, we know today more than
200,000 Americans, including stripping protection for preexisting
conditions, and kicking many of our younger adults off their plans.
We are also hearing now about how great their numbers are. I
have been in Congress for 8 years, and I have voted against it doz-
ens of times.
Chairman Powell, what effect would stripping 20 million Ameri-
cans of their healthcare in the midst of this COVID-19 pandemic
have on the economy?
Mr. POWELL. I wouldn’t want to comment on a particular Su-
preme Court case. But as you mentioned, healthcare is an impor-
tant part of the support system that people need.
Mrs. BEATTY. Let me say it this way, Mr. Chairman. Do you
think stripping healthcare or not having healthcare would be bad
for the economy?
Mr. POWELL. As you started with, I think that having healthcare
coverage is an important basis for people to go to work. It is one
of the reasons people do work, and it helps in continuing your
work.
Mrs. BEATTY. Would you say that is a yes? Then, would you say
that is a yes, that having healthcare would certainly be a plus or
a positive to having people—come on, 200 million people have died.
Look at the numbers. If I look at African-Americans making up 13
percent of the population but having almost 30-some percent posi-
tive results, with 24 percent dying, don’t you think healthcare
plays into keeping people healthy, and the economy?
Mr. POWELL. Yes, I do.

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Mrs. BEATTY. Thank you.
Chairman Powell, according to the transaction data of the Sec-
ondary Market Corporate Credit Facility that the Federal Reserve
published on Sunday, the Fed purchased corporate bonds of dozens
of companies that are in good financial condition, like Apple, which
has more than $200 billion cash in hand.
How does buying corporate debt of large companies in good fi-
nancial condition help further the Fed’s mandate? And how does
buying corporate debt of foreign-owned companies, like BP and
Toyota, further the Fed’s mandate?
Mr. POWELL. None of those secondary market corporate debt pur-
chases extend any new credit to anybody, so that is just buying an
outstanding bond. And the reason we are doing that is to have a
footprint in the after market, which, should conditions deteriorate,
would enable us to continue to have good financial conditions,
which would support companies and allow them to keep workers on
staff.
Mrs. BEATTY. Okay.
Chairwoman WATERS. Thank you. The gentlelady’s time has ex-
pired.
I now recognize the gentleman from Texas, Mr. Williams, for 5
minutes.
Mr. WILLIAMS. Thank you, Madam Chairwoman.
As most of you know, I am a small business owner.
I want to thank both of you for coming before our committee
today. Both the Treasury Department and the Federal Reserve
have worked with incredible speed to implement the CARES Act
and get resources in the hands of hardworking American busi-
nesses. I applaud you both for your leadership and your efforts dur-
ing these uncertain times, and Main Street America also thanks
you.
Some local governments in my district in Texas are sitting on the
money they received from the corona relief fund because there is
uncertainty surrounding what counts as an eligible expense. For
example, one local government in my district would like to spend
the money to buy food for a local food pantry since many of their
citizens are seeing food insecurity as a result of the economic shut-
downs, but they are unsure that this will be an eligible expense,
since the cost was not accounted for in their annual budget prior
to the pandemic.
So, Secretary Mnuchin, what advice would you give these local
governments that are unsure if a use for the coronavirus relief
funds will be deemed a qualified expense so we can get this money
spent?
Secretary MNUCHIN. We will look into your specific question and
get back to you, but I will say that we have tried to give as much
flexibility as we can. And as part of additional congressional au-
thorization to move forward, we are inclined to allow for additional
flexibility on the money that has already gone out to State and
local governments.
Mr. WILLIAMS. Thank you, and we will get something for you to
look at.
Chairman Powell, I raised this issue with Vice Chairman
Quarles back in May, but I wanted to get your perspective as well

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to make sure everyone at the Federal Reserve is on the same page
regarding business interruption insurance.
Forcing private companies to cover business interruption claims
for COVID-19 losses would be a terrible precedent of the govern-
ment stepping in and retroactively changing the terms of an agree-
ment between two private parties, and would decimate the insur-
ance industry. I have said before, in Texas we say, ‘‘A deal is a
deal.’’
And the last time you were in front of this committee in June,
you mentioned you were aware of this issue as it relates to fiscal
stability, and I am hoping we could get a little more substance on
this issue since the Federal Reserve is involved in insuring Federal
institutions, including the insurance companies that do not pose a
risk for our financial systems.
So my question would be, can you please give us your thoughts
on forcing insurance companies to retroactively cover business
interruption claims?
Mr. POWELL. I don’t think I have had a conversation about that
since our last visit together in June, but let me check in on the cur-
rent situation and come back to you.
Mr. WILLIAMS. Okay. That would be great. Thank you.
And both of you have discussed the potential need for another
economic stimulus package to come through Congress. We have
done that today. However, at the moment, much of the money that
we allocated in the CARES Act and other aid packages has not yet
been spent. The nonprofit Committee for a Responsible Federal
Budget estimates that the government has allocated or disbursed
$2.2 trillion of the $4 trillion that Congress has passed in COVID
relief.
Mr. Secretary, you have been deeply involved in negotiating, as
we very well know, the next COVID-19 relief package. And as we
discuss spending new money, how would or how should we be view-
ing the economy to ensure that industries in most need of assist-
ance receive it while the other money we have already allocated
makes its way into the system?
Secretary MNUCHIN. I think we are in a very different situation
than we were last time. I think last time, the entire economy was
shut down and we had to act very quickly, and in many cases, that
required us to do things across-the-board. I think this time it
should be much more targeted to the industries that are most im-
pacted by this situation.
Mr. WILLIAMS. Thank you. And I want to thank you again for
your efforts and basically tell you, as somebody who is on Main
Street, the economy is pretty good right now. It is getting better,
and attitudes of people in startups are getting better. I hope one
day we can look at liability toward a lot of small businesses and
big businesses that could keep them from growing.
So, thank you again for your efforts. We appreciate it.
And I yield back. Thank you.
Chairwoman WATERS. Thank you.
I now recognize the gentleman from Washington, Mr. Heck, for
5 minutes.
Mr. HECK. Thank you, Madam Chairwoman.

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Chairman Powell, I want to discuss fiscal support today, but be-
fore I do, I want to quickly address the announcement that the Fed
made to take steps to make the inflation target more symmetric
and emphasize the employment mandate, the new framework that
Dr. Foster referred to.
I am not at all exaggerating when I say this new framework is
the most important thing that has happened in monetary policy,
indeed in economic policy, in 40 years in this country. It will have
a bigger impact on absorbing heretofore marginalized [inaudible]
Especially among communities of color. Your leadership in shep-
herding [inaudible] Needs to be acknowledged [inaudible].
Chairwoman WATERS. Excuse me. Mr. Heck, speak right into the
microphone so that we can hear you clearly.
Mr. HECK. I hope he was able to hear all of my comments. Can
you hear me now, Madam Chairwoman?
Chairwoman WATERS. Yes.
Mr. HECK. Thank you.
Chairman Powell, thank you very much for the new framework.
At the outset of this pandemic you declared that, ‘‘This is the
time to use the great fiscal power of the United States to do what
we can to support the economy and try to get through this.’’ Con-
gress responded by passing the CARES Act, and Congress con-
tinues to deliberate further fiscal support.
At your press conference on Wednesday, you said that the Fed-
eral Reserve’s projections for growth, inflation, and employment
were assuming more fiscal support. What size support were you as-
suming?
Mr. POWELL. Let me say that I think a big part of the good eco-
nomic news that we have had results from the fiscal support that
came with the CARES Act. So it deserves a lot of the credit for
keeping people spending and keeping business confidence and
household confidence high.
We don’t agree on a forecast. Individuals make different assump-
tions. I think something like—most private sector forecasters are
assuming that some kind of a package passes sometime in the next
few months, but there isn’t any particular number that I would
give you that would come out of the Fed.
Mr. HECK. But is it not true, Mr. Chairman, that the Fed did
itself make projections as to growth and inflation and employment?
And if so, acknowledging that it assumed fiscal support, there must
have been some assumption about the level of fiscal support.
Mr. POWELL. Actually—
Mr. HECK. How else would you arrive at your projections?
Mr. POWELL. Yes. I wish it were that simple.
The way we do it is we—what we publish is the individual pro-
jections of the 17 people who vote or who are, sorry, participants
on the Federal Open Market Committee (FOMC), and they are free
to make whatever assumptions they need. And we don’t survey
them on every little thing, but I would say most assumed some fis-
cal action. But we didn’t create a table, and so I can’t tell you ex-
actly what was assumed, but fiscal action underlies many, many
current forecasts.

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Mr. HECK. Then, let me try this a different way. What happens
to growth in employment if there isn’t any fiscal support and it
doesn’t materialize?
Mr. POWELL. What has happened lately is that the economy has
proved resilient, both to the broader spread of the disease over the
summer in some of the southern and western States and also to
the expiration of the CARES Act benefits. So, we don’t really know
what will happen.
I would just tell you what I think the risk is. As some have
pointed out, savings are very high, and that is because of a number
of things. Part of it is the CARES Act. But there are still 11 million
people unemployed.
So the risk is that over time, they go through those savings, and
they haven’t been able to find employment yet because it is going
to take a long time to get—or it is going to take a while to get 11
million people back to work. And so, their spending will decline.
Their ability to stay in their homes will decline. And the economy
will begin to feel those negative effects at some time.
At the same time, the economy is recovering, and that is a good
thing. And it is very hard to have any certainty about the path for-
ward because we don’t know which of those two forces will domi-
nate.
Mr. HECK. With all due respect, Mr. Chairman, unless you are
arguing that fiscal stimulus has no impact, then is it not inescap-
able that if there is no additional fiscal support, growth will be
lower?
Mr. POWELL. Yes. Certainly fiscal, and I have said that I think
it will likely be needed. I do defer to the Administration and Con-
gress, who actually have the responsibility for this. But I think
that it is likely that more fiscal support will be needed.
Chairwoman WATERS. Thank you. The gentleman’s time has ex-
pired.
Mr. HECK. Thank you, Madam Chairwoman.
Chairwoman WATERS. I now recognize the gentleman from Ar-
kansas, Mr. Hill, for 5 minutes.
Mr. HILL. Thank you, Madam Chairwoman.
And of course, thank you, Secretary Mnuchin, for being with us
here today.
And Chair Powell, it is terrific to see you.
I want to associate myself with the remarks of the ranking mem-
ber, who outlined really the outstanding leadership we have ob-
tained from the Treasury and from the Federal Reserve, particu-
larly in the early days of fighting the virus. And we appreciate your
commitment to our country, to restore the health of the American
people, and renew our families’ belief in the American Dream, and
in your own ways, to rebuild the American economy.
I want to talk for a minute about this issue for smaller busi-
nesses, and I plan on signing the discharge petition in the House
today to move Congressman Chabot’s bill to the House Floor, which
extends the PPP program and clarifies the forgiveness aspects of
that.
This is something that should have been done at the end of July,
and I was pleased that last week, Democratic Members of Speaker
Pelosi’s caucus were objecting to her leadership, or lack thereof, in

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trying to negotiate this COVID package. I hope my Democrat col-
leagues will join me in signing that discharge petition, because the
PPP extension, as Secretary Mnuchin outlined, is a key component
to having the tools necessary for the small business recovery.
Second, in my view, the proposal by Mr. Rubio that is in the Sen-
ate bill on the 7(a) loan program is critical because it allows us to
take this embedded loss of the last 6 or 8 months, or that we think
is coming, and put it on a 20-year am at a 1 percent rate as an
SBA product. And it is a much better solution than the emergency
loan program that the SBA has used during this pandemic, which
is really geared towards a hurricane and not to a national pan-
demic.
But the third point is the Main Street Program, and both of you
know my views on this as we have talked about it in an oversight
commission hearing, as well as privately. On Friday at 1 p.m., in
a typical Washington, D.C., fashion, the Fed released its frequently
asked questions and dumped them out to the public on Friday
afternoon, that you would not pursue this asset-based lending type
approach for a different Main Street term sheet. Mr. Barr did a
good job describing that.
I really think that can be done, Chairman Powell, to companies
on sound footing, to companies that are not able to reach credit tra-
ditionally under reasonable terms, and in the concept of a backstop.
And so, I want to press both of you that while it doesn’t fit the
Main Street term sheet you have today, that took 4 months to
stand up, I still believe that asset-based lending to a solvent com-
pany is important.
And you had a key component, another Washington key compo-
nent in the frequently asked questions, where you said, ‘‘at this
time.’’
So I would urge you to reconsider your position on asset-based
lending and offer you each an opportunity to comment.
Mr. Powell?
Mr. POWELL. We have taken a very close look at it, as you know,
and as the Secretary indicated, but we are happy to continue the
conversation, and we will do that with you.
Mr. HILL. I really do believe it can be done in the right way. And
I think the three things I commented on, the first two, the 7(a) pro-
gram and the PPP loan where I addressed this lower loan size that
the Chair mentioned, but I do believe there is a solvent niche out
there of portfolio lending that can be done on a sound basis that
would offer some liquidity for hospitality, particularly not CMBS
per se, but portfolio lending where they have this gap that we saw
after 9/11 and we saw after the financial crisis of very slow in-
creases in business travel.
Secretary Mnuchin, you commented that you would like Congress
to give you authority to incur risk as it relates to the $500 billion
in funding for the Exchange Stabilization Fund, or particularly the
454 that was not related to airlines, and that you proposed to re-
program that money for other uses. But when we had a discussion
of this in the oversight commission, we have issued in our fourth
report that we don’t believe that you need any additional congres-
sional authority to reprogram that and take on additional risk.
Could you comment on that please?

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Secretary MNUCHIN. Let me just be clear. I don’t think we need
authorization to take on additional risk. And let me clarify, I think
on the Main Street loans, in general, we will be taking losses, be-
cause I think this is basically being underwritten on pre-corona
EBITDA.
What I was suggesting is that we would like to spend that money
on other areas of the economy that could be better served—kids,
jobs, more PPP, SBA long-term loans—and that, unfortunately, we
do need congressional authority to use it in other areas.
And again, I think, as you know, we have a lot of money left over
in the PPP that has been appropriated by Congress, that with sim-
ple legislation, could allow many hardworking small businesses to
get a second loan.
Mr. HILL. Thank you both for your leadership.
Madam Chairwoman, I yield back.
Chairwoman WATERS. Thank you.
I now recognize the gentleman from California, Mr. Vargas, for
5 minutes.
Mr. VARGAS. Thank you very much, Madam Chairwoman. I ap-
preciate it.
I want to thank the Secretary, of course, and also the Chairman
for being here today. I appreciate your testimony very much.
I have to say I have heard some pretty tortured language and
tortured logic from some of my colleagues today. One Member said
that we are not bailing out businesses, ‘‘compensation for a regu-
latory taking.’’ That sounds a lot like, ‘‘use my words against me,’’
when you say you won’t vote for a Supreme Court Justice in an
election year for President. The reality is when you talk in abso-
lutes, you get into these situations where logic gets twisted to try
to fit things.
And the other thing I heard today is that Congress should pass
a second CARES Act. We did that. We passed it. It is called the
Health and Economic Recovery Omnibus Emergency Solutions (He-
roes) Act. It is languishing over in the Senate.
Then, I heard another colleague say we should do what the Sen-
ate did and pass what they did. They didn’t pass anything. The
Senate didn’t pass a thing. They tried to pass something, but noth-
ing passed.
The other thing I guess I heard today also was a pretty rosy pic-
ture of the economy. And I don’t want to put words in people’s
mouths, but, Mr. Secretary, I believe you said that the economic re-
covery was strong.
I think that tens of millions of Americans would disagree with
that and, in fact, would say that the stock market is not the only
economy. We have 11 million Americans who are still out of work,
who lost their jobs, more than in the financial crisis. So, I don’t
think that they would agree that we have had this strong recovery.
I do agree with what the Chairman said, that we won’t get a full
recovery until everyone feels that they are safe from this virus, and
so I think it is very important that we do everything we can to de-
feat it. But unfortunately, up to now, I think the virus has been
in charge.
So, I want to ask this. I have been watching what has been hap-
pening in Europe. It seems like they are starting to get a second

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wave. I am very concerned that we may have a second wave in our
own country, and I am not sure that we are prepared for this.
I also went back and did a lot of reading on the Spanish flu and
saw that their second wave was the more devastating one, not the
first one, but the second wave of the Spanish flu.
Could you comment, either one of you, on how prepared we are?
What is our plan in case this thing comes roaring back?
Secretary MNUCHIN. I would just first comment on—I did say
there is a strong recovery, because when you close the economy and
you reopen it, it is strong, but there is still more work to do.
As it relates to being prepared—and again, I am not a health
professional, although I have sat on the task force—I think we
have made major progress on vaccines, on virals, on testing, and,
I think, on PPE. So, I think we have done a very good job at being
prepared for the virus.
Mr. VARGAS. But do we have a plan? Do you have a plan in case
it comes back? In fact, a virus usually has some seasonality to it,
and you would expect in the winter for it to come roaring back. We
have seen that before. If it does come back—assume it does—do we
have a plan? Does the Administration have a plan?
Secretary MNUCHIN. First, from an economic standpoint, we do
have a plan for the economy now, and that is why we want more
congressional approval.
As it relates to health, yes, the Administration and the task force
does have a plan. It is executing that plan. And a major component
of that plan is the vaccine development, which is making great
progress.
Mr. VARGAS. Thank you.
Mr. Chairman, if I may ask you, you said that until people feel
that they are not at risk, the economy won’t come back. Could you
elaborate a little more on that?
Mr. POWELL. Sure. There are parts of the economy that involve
people getting very close together in groups, and that is travel, hos-
pitality, entertainment, things like that. And I think people will—
not everybody, but some part of the population will be reluctant to
continue in those activities until they feel confident that it will be
safe, that they won’t get sick from doing so.
And that is not most of the economy; that is a piece of the econ-
omy. It is a reasonably substantial piece of the economy, where a
number of people, millions of people are still not working, and it
will probably take some time for them to get back to work.
So, getting them back to work will depend on continued progress
on the medical front, including, ultimately, a vaccine.
Mr. VARGAS. I think my time has expired, and I yield back.
Thank you very much.
Chairwoman WATERS. Thank you.
I now recognize the gentleman from Georgia, Mr. Loudermilk, for
5 minutes.
Mr. LOUDERMILK. Thank you, Madam Chairwoman.
Secretary Mnuchin and Chairman Powell, thank you for being
here. And let me also echo the thanks for early on in this pan-
demic, especially with the PPP program, the way our offices
worked together and your offices worked with the banks in our

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communities to tailor this thing to where it would actually do
something for the small businesses.
And as a result of that, one of the small banks in my district that
only has two branches ended up making more PPP loans than one
of the major national banks did nationwide. And that is just one
of the many successes of the PPP, but it is because of the engage-
ment there.
I have two questions, but first, I would like to respond to some-
thing my good colleague from California just brought up about the
recovering economy. I think there are areas of this country where
the economy is recovering strong, and the State of Georgia is one
of those. Our revenue reports came out just a little over a week ago
that tax revenues for 2020 are 7.7 percent higher than 2019. And
it is because instead of using a heavy-handed government putting
long-term restrictions on the people, we decided to trust the people
that they would be safe and secure, and we opened our economy.
So I think if other States would like to see that type of economic
recovery, maybe they should address the way that their States are
being governed.
I know the Federal Reserve is looking at ways of broadening the
Main Street Lending Program, which I think we all realize needs
to be broadened. But there are some areas I would like to see us
take a look at, and one of those industries that is interested in
Main Street lending is specialized consumer finance firms, which
are nonbanks that purchase credit card receivables from card-
issuing banks and they securitize those assets, which enables con-
sumers with subprime credit to access a credit card, which are
some of the most vulnerable in society right now. But the earnings
before interest, taxes, depreciation and amortization (EBITDA) re-
quirements prevent them from obtaining a loan.
Chairman Powell, would you consider modifying Main Street
lending to allow these firms to access this program?
Mr. POWELL. I would have to look at that in particular. EBITDA
is a very standard cash flow measure. If you are going to make a
cash flow loan in our markets, you are going to look at EBITDA.
The alternative is something asset-based. And I don’t know these
companies to know exactly what we are talking about, but we are
happy to take a look.
Mr. LOUDERMILK. I will make sure that our staff engages with
yours to give you some of the folks who are looking to do that, and
I think it would be wise.
Another issue, back to the PPP program, Mr. Secretary, is that
the forgiveness of the PPP loans is very cumbersome, and it is put-
ting some of the banks, such as the one I had brought up earlier,
Vinings Bank, into a situation where they are keeping those loans
on their books longer than they had intended to.
Is there something that we can do to streamline this forgiveness
program so it is less cumbersome, so we can start getting those
loans off the books of the small banks to open them up to make
other, more traditional business loans?
Secretary MNUCHIN. We have tried to streamline the process for
the smaller loans, as you outlined. I know that there are some pro-
posals in Congress, and as part of legislation, we have worked with

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both committees on that, making sure we have the right balance
of protecting for fraud with simplification.
Mr. LOUDERMILK. Okay. And I assume that you would be willing,
if Congress took some action there, to work with us on that.
Thank you both. I know these have been challenging times, but
I think the Administration has responded admirably and well, con-
sidering the severity of this crisis. And I think we just—if we keep
on track and keep pushing forward, we can get through this and
make our economy as strong as it was before, if not stronger.
And, Madam Chairwoman, I yield back.
Chairwoman WATERS. Thank you.
I now recognize the gentleman from Texas, Mr. Gonzalez, for 5
minutes.
Mr. GONZALEZ OF TEXAS. Thank you, Madam Chairwoman.
And thank you, Chairman Powell and Secretary Mnuchin.
Folks, I represent many small business hoteliers in my district,
many of whom are first- and second-generation Americans who
have worked hard to achieve the American Dream. As a result of
COVID-19 and subsequent travel shutdowns, and through no fault
of their own, family-owned and operated hotels in Texas and across
the country are facing an unimaginable economic crisis with no
ability to access a lifeline through the Main Street Lending Pro-
gram.
Despite repeated requests from Congress, including my own, the
MSLP facts released on September 18th state that conditions did
not warrant changes to allowing lending to asset-based borrowers.
There is nothing else for these people to turn to.
I want to make sure I understand your message to them. Right
now, we have money on the table, programs that are not being
used, and programs that are being used that are not quite compli-
ant with the CARES Act, and programs that have been drained of
funding because they worked. Your position is that these busi-
nesses should be allowed to fail, that hardworking Americans
should lose their livelihoods, and that you will do nothing to help
them.
You want to carefully follow the law, right, on the CARES Act?
Well, we passed the CARES Act, and to the extent that you are not
in compliance with the programs included there, it is time to get
that done. Failure to do so would not constitute following the law.
You either are or you are not complying with the law. And you do
not have programs that comply with the CARES Act distribution
of funding.
We may be in a crisis now, but I am sure you can imagine what
will happen after the crisis when we start picking up the pieces
and scrutinizing the actions of your agencies. Right now, we are
using the powers given to you for explicitly this purpose, and you
are using the powers for explicitly this purpose for both you, and
so you can help the country.
Businesses need a lifeline, they are not even asking for bailouts,
businesses like the ones I am talking about. Lending them money
for 10 or 20 or 30 years at a low interest rate creates the liquidity
that the markets need. And recognize that if all commercial prop-
erties start defaulting, we are looking at another wave of a crisis,

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aren’t we? And what are we doing to prepare now and help them
now and do the work now?
Secretary MNUCHIN. I would first say I think we are following
the law, so let me just be clear on that.
The second thing I would say is that we want to help the types
of businesses that you are talking about. In many cases they need
grants and not loans. But as part of additional SBA appropriations,
we very much support long-term loans, particularly for the types
of businesses that you are focused on.
Mr. GONZALEZ OF TEXAS. What specific loans do you have avail-
able for folks like these small hoteliers?
Secretary MNUCHIN. Again, we support additional money to
small hotels because that is what they need. Additional SBA loans
are something that we have looked at as well as PPP loans. In
many of the cases, these small hotels do not fit into Main Street
because they already have additional—they already have other in-
debtedness, and in many cases they are either not allowed to take
additional loans or they are too levered to begin with, to qualify.
Mr. GONZALEZ OF TEXAS. So, the small ones that do fit in, you
are saying that the SBA has a program for them?
Secretary MNUCHIN. No, what I said is as part of additional leg-
islation, the Small Business Committee has proposed additional
money, long-term money for small businesses as part of a new pro-
gram, and that is something that we have looked at and we would
support.
Again, many of the small hotels that you are talking about don’t
have any revenues.
Mr. GONZALEZ OF TEXAS. Right.
Secretary MNUCHIN. So, those hotels would qualify for additional
PPP loans. There is over $130 billion that has been appropriated
by Congress that we just need authorization to use, and that would
be the best solution for them.
Mr. GONZALEZ OF TEXAS. Thank you. I would just ask that we
stay cognizant of these folks. They are good Americans. They are
hardworking Americans. They are an important part of our econo-
mies, both locally and nationally, and they deserve our attention.
Thank you very much.
Chairwoman WATERS. Thank you very much.
I now recognize the gentleman from Tennessee, Mr. Kustoff, for
5 minutes.
Mr. KUSTOFF. Thank you, Madam Chairwoman.
And I would like to thank the witnesses for your leadership dur-
ing this crisis. I think you have both displayed tremendous leader-
ship.
Secretary Mnuchin, if I could, we have talked a lot about the
PPP program today and its success, and the ranking member
talked about the 51 million jobs that it is estimated that it saved,
with the caveat that maybe 12 million rural jobs in rural commu-
nities that it saved.
If I could, following up on what Mr. Loudermilk asked about a
few moments ago as it relates to the forgiveness, what I have heard
from small businesses throughout my district, and frankly,
throughout the State of Tennessee, is that they are very thankful

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about the PPP; it literally saved their businesses. But there is a
concern about the complexity of the forgiveness.
And so my question is, have you considered administratively for-
giving certain loans, say, loans of $150,000 or less, again, through
administrative action?
Secretary MNUCHIN. We have considered that. We don’t think we
have the authorization to do that in the context of the law. And we
have tried to make it very simple for small businesses. But again,
there were some proposals out of Congress that just said we should
automatically forgive all of those loans, and to do that, we would
need congressional action.
Mr. KUSTOFF. So your interpretation is that you don’t have the
authority to administratively forgive those certain loans, again, the
smaller loans? I am using $150,000 or less. Administratively, you
don’t have the authority to do that?
Secretary MNUCHIN. We think we have the obligation to get the
documents, have them fill out what is an easy form, and have the
ability to audit those. I think, as you know, unfortunately, there
has been some fraud, and we’re working with our IG on that.
But, no, we don’t think it would be appropriate, and we don’t
think we have the authorization to do a blanket forgiveness across-
the-board.
Mr. KUSTOFF. If I can, again, we have heard from people, I think
all of us have, about how PPP saved their businesses, kept their
employees on the payroll. And, frankly, you all deserve credit for
crafting that. And I do think, frankly, that Congress deserves cred-
it for acting swiftly and in a bipartisan manner.
The one criticism I have heard from businesses, specifically in
my district, is that they literally could not compete—some—with
the enhanced unemployment benefit, that it was set too high. And
so maybe in an area like Tennessee or Mississippi or Arkansas,
maybe it was generous in other States. Maybe it was not. I don’t
want to get ahead of the negotiations, but if there is an additional
enhanced unemployment benefit in the next package, is there a
way to somehow tie that to locality?
Secretary MNUCHIN. Yes. At the time, we knew that there were
certain places where it would be too high, and certain plaes where
it would be too low. We thought the fair way of doing it was one
number across-the-board.
As part of the President’s executive action, he has now author-
ized that to go forward with up to $400, $300 if the State doesn’t
contribute, and we have proposed as part of additional legislation
having it at something like 75 percent of wage replacement.
Mr. KUSTOFF. And would that be uniform across all 50 States or
would it be based somehow on locality?
Secretary MNUCHIN. Ideally, it would be each State would take
some time for them to implement that technology, but that it would
be capped on 75 percent of previous wages.
Mr. KUSTOFF. Thank you, Mr. Secretary.
One more question for you, if I can, and I am going to touch on
something that I don’t think has been asked today, and that is on
phase one of our agreement with China that was executed earlier
in the year. Obviously, we know we faced a pandemic. Are you

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right now confident that China can meet its commitment to pur-
chase $36.5 billion in agricultural products this year?
Secretary MNUCHIN. I believe they are on track for that, and Am-
bassador Lighthizer and I are monitoring that very carefully.
Mr. KUSTOFF. Thank you, Mr. Secretary.
With that, I yield back my remaining time.
Chairwoman WATERS. Thank you.
I now yield 5 minutes to the gentleman from Florida, Mr.
Lawson.
Mr. LAWSON. Thank you, Madam Chairwoman. I would like to
thank you and Ranking Member McHenry for hosting this hearing
today.
And I would like to welcome the gentlemen to the meeting. It has
been very good hearing you all speak this morning.
One of my colleagues, Representative Taylor from Texas, joined
me in writing a letter to both of you regarding the impact of
COVID-19 on the commercial real estate market, and I heard some
of it talked about earlier.
The commercial real estate market continues to be hit hard due
to the economic shutdown that has resulted in store closings and
halted travel. The COVID-19 pandemic has turned the $4 trillion
commercial real estate financial market upside down.
In June, I was joined by Representative Taylor and over 100 of
our colleagues in requesting that the Department of the Treasury
and the Federal Reserve urgently consider targeting economic sup-
port to bridge the temporary liquidity deficiencies facing commer-
cial real estate borrowers created by the unforeseen crisis. We be-
lieve that this—and still do that the Federal Reserve has the abil-
ity to bridge the gap through various Facilities to help many busi-
nesses survive the economic disruption.
However, on Friday the Federal Reserve released an update on
the Main Street Lending Program, which stated that conditions do
not warrant changing this to allow the lender to assist the basic
buyer.
Would you all care to comment on that for me?
Secretary MNUCHIN. First, let me say, again, Chair Powell and
I both agree with you that the commercial real estate market has
an issue.
I just want to clarify, when people talk about asset-based lend-
ing, they traditionally don’t include real estate in that. The real es-
tate market is its own market, so that wouldn’t necessarily be part
of an asset-based program.
There are structural problems. I know some people in the House
tried to work on a proposal of preferred equity so that it could be
going below the existing.
But Chair Powell and I will continue to work on this. It is an
issue. We don’t have a solution. We wish we did.
Mr. LAWSON. Okay. Does Chairman Powell want to comment,
too? Because I was on a call with him several weeks ago about this
issue, along with Representative Taylor.
Mr. POWELL. Yes. And both of us are very familiar with the let-
ter that you sent and have studied it carefully and really looked
hard at how we can reach the problem we are talking about.

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And a lot of the problem just isn’t with commercial mortgage-
backed securities. Those loans contain a provision that says you
can’t incur additional debt. The Secretary referred to a way to get
around that, but that wouldn’t involve the Fed. It would require
legislation.
And we do understand and appreciate that this is a significant
problem in the economy, and we can keep looking for solutions. We
don’t really have a solution, though, with the tools we have.
Mr. LAWSON. And I understand that we don’t have a solution.
I think one of the things that really bothers me as a lawmaker,
is when we turned back about $130 billion in PPP funds, and then
you find out that all of these people who are suffering tremen-
dously, and they have coming up to maybe releasing something like
a large group of employees who depend on them.
I had the opportunity to talk to Chairwoman Waters about some
of the things that were happening even in her area out in Cali-
fornia. And I am glad that you all are considering it and that we
need legislation. I don’t know how quickly we can get legislation
through. I was certainly hoping that it could be included in nego-
tiations on the HEROES Act and what is coming out of the Senate,
but I know the Senate, which was stated today, still hasn’t passed
anything.
So I don’t have much time left, but I am glad that you all were
continuing to keep that at the forefront, because a lot of these em-
ployees are just everyday people who need help.
And with that, Madam Chairwoman, I yield back.
Chairwoman WATERS. Thank you.
I now recognize the gentleman from Indiana, Mr. Hollingsworth,
for 5 minutes.
Mr. HOLLINGSWORTH. Good afternoon.
First to you, Chair Powell. I was recently excited by the news
about creating a more symmetrical inflation target. I think that
was great news. I know it is something that you and I had dis-
cussed at length privately, as well as publicly at these hearings. I
am sure it had a lot of discussion and a lot of research
underpinnings, and it wasn’t just my annoyance that led to it. But,
nonetheless, I really appreciate you doing that and I think it is
going to be positive for the Fed and for the American economy
going forward.
Specifically, I also wanted to turn to the temporary exclusion of
Treasuries and deposits at Federal Reserve Banks from the SLR
that was done through March of 2021, on some concerns that in-
creased reserves during this period of time didn’t want to count
against them during SLR, but it was not extended to, nor does it
flow through to the G-SIB size indicator. I was wondering why that
was the case, and is there any further discussion or dialogue about
extending that through the G-SIB size indicator?
Mr. POWELL. I have to go check on that for you. I am not aware
of any of those discussions.
Mr. HOLLINGSWORTH. Okay. Great. If you wouldn’t mind check-
ing on this, because I think that is really important to us to make
sure that we see that flow through, given that in the fourth quar-
ter, I think many of our largest institutions are going to begin to
see those impacts.

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On to you, Secretary Mnuchin, what you said a few minutes ago.
There has been a proposal around Congress potentially talking
about preferred equity to some of our real estate borrowers that are
most troubled. That, to me, is troubling, that proposal, and I think
you said it doesn’t feel like there is a good solution. Could you talk
about why that isn’t a good solution?
Secretary MNUCHIN. Ideally, we would rather lend as debt and
not do preferred equity.
Mr. HOLLINGSWORTH. Evaluation issues, government ownership
position issues, how do you get paid back issues, those sorts of
things?
Secretary MNUCHIN. All of the above. Exactly.
Mr. HOLLINGSWORTH. Exactly.
And one of the things that I want to emphasize is that there is
real distress in this community, there are real challenges in this
community, but the longer that we continue to talk about solutions
that aren’t real solutions, I think the longer it will take to get to
a legislative and administrative fix that will provide a real solution
to those who are hurting across my district, across my State, and
across this country. So, I appreciate your clarity on that.
With that, I will yield back.
Chairwoman WATERS. Thank you.
I now recognize the gentlelady from Michigan, Ms. Tlaib, for 5
minutes.
Ms. TLAIB. Thank you so much, Madam Chairwoman.
And thank you both so much for being here.
One of the questions or some of the basic ones I just want to re-
view with both of you, Chairman Powell and Secretary Mnuchin,
what do you think your primary role is during this pandemic?
And I will start with you, Chairman Powell.
Mr. POWELL. We are here to serve the American people.
Ms. TLAIB. It is to stabilize the economy?
Mr. POWELL. That is a big part of it right now, yes.
Ms. TLAIB. How about you, Mr. Secretary?
Secretary MNUCHIN. Yes, that’s correct, and to operationalize
what are obviously all of the responsibilities that the Treasury—
Ms. TLAIB. Like, prevent an economic collapse, right? You both
agree that is kind of a—
Secretary MNUCHIN. Yes, for starters.
Ms. TLAIB. Yes. No, I hope so, too.
I am going to start with you, Chairman Powell. Every time I
have asked you about State and local governments, you have in-
sisted there is nothing that the Fed can do for States and cities in
distress. But you did create a Municipal Liquidity Facility (MLF)
to apparently do just that. However, the program is pretty restric-
tive. Is it true that only the State of Illinois has applied?
Mr. POWELL. No. We have done two loans. And of course, that
Facility has resulted in $250 billion of borrowing in the private sec-
tor, where there was none taking place before the Facility was an-
nounced.
Ms. TLAIB. Do you think State and local government going bank-
rupt would create instability in our economy?
Mr. POWELL. I think that is an issue that is outside my bailiwick.

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Ms. TLAIB. So you don’t think it is an integral part to ensure that
State and local government in the public sector is stabilized and
will not go bankrupt like the City of Detroit did?
Mr. POWELL. States can’t go bankrupt. They don’t have a—there
is no means for them to. Cities, of course, can, under Chapter 9.
Ms. TLAIB. Yes. The City of Detroit, when they went bankrupt,
there was a huge—did you think there was an impact in the econ-
omy there?
Mr. POWELL. Yes.
Ms. TLAIB. I think so, too.
My district really hasn’t benefited from the program, and one of
the things that I want to point out to you, Chairman Powell, is you
don’t have to lend with penalty rates to State and local govern-
ment. This regulation that you have there about penalty rates, that
wasn’t created by statute, correct? That was created by you all in-
ternally?
Mr. POWELL. It is in our regulation and in our practice.
Ms. TLAIB. But why not remove the penalty rate when there is
heightened unemployment or when the State and local govern-
ments are at risk?
Mr. POWELL. What that Facility has accomplished is it has
opened up the private market. So, State and local governments are
borrowing in record amounts at record low yields, and that is
across the yield curve and it is in various—
Ms. TLAIB. Only two States applied, correct?
Mr. POWELL. Excuse me?
Ms. TLAIB. Only two States have been able to qualify under the
MLF program?
Mr. POWELL. Yes, but they are all borrowing in the public mar-
kets—
Ms. TLAIB. How many cities?
Mr. POWELL. They are borrowing in the public markets at much
cheaper rates, which is at very cheap rates.
Ms. TLAIB. Okay. But, Chairman Powell, what I understand is
for corporations, the Fed supports bonds within a 5-year maturity.
Do you think corporations in debt are more important than local
municipalities? Because I understand theirs is 5 years, and you
have it for what, 3 years for local government?
Mr. POWELL. Yes. State and local governments generally are not
allowed to borrow to finance deficits. And so there is—what it is,
is their borrowing is for liquidity. And there is a part of the market
which is zero to 3 years that is about liquidity, and that is where
we have been willing to lend.
But there has been a lot going on, longer-term issues. Twenty-
year bonds and 30-year bonds have been issued. And that is be-
cause of our backstop. Our Facility is performing its backstop func-
tion, and that has enabled the private market to work very well to
serve State and local governments.
Ms. TLAIB. Yes. I don’t think—honestly, just looking at what hap-
pened in the City of Detroit, I am really worried that we are not
being flexible enough, that we are not able to accommodate for the
fact that these State and local governments—you know that for
much of the policies from within, to stabilize the economy, we have
to uplift and make sure that the communities are protected. So, I

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would recommend that you check out the bill that I have, the Up-
lifting Our Local Communities Act. I really would appreciate that.
Secretary Mnuchin, we have to prevent an economic collapse,
right? This is a huge issue. This is probably even deeper than the
recession that we went through.
Yes or no, do you believe another stimulus check could help sta-
bilize the economy?
Secretary MNUCHIN. I do.
Ms. TLAIB. However, you have been on record for not supporting
the economic package that we passed in May, that included an-
other round of stimulus checks for millions of Americans who are
right now unable to afford their rent and so forth.
Can you explain what your position there is? Because I think the
American people are a little confused. Does the Administration
support another $1,200 stimulus payment?
Secretary MNUCHIN. The Administration does support another
stimulus payment.
Ms. TLAIB. But you are willing to go ahead and support within
the Heroes Act that payment and push back on what I call the, ‘‘let
them go bankrupt bill,’’ that the Senate has proposed?
Secretary MNUCHIN. Let me just say I take great pride that the
last two bills we did passed with overwhelming bipartisan support.
We obviously can’t pass a bill in the Senate without bipartisan sup-
port. And our job is to continue to work with Congress to try to get
additional help to the American public.
Ms. TLAIB. I think you need to be very clear with the Senators,
Secretary, really clear that direct payments to individuals is crit-
ical to preventing an economic collapse in our country.
Chairwoman WATERS. Thank you very much.
We are going to move to the last Member who will be able to
raise questions. Both of our guests have a hard stop at 12:30, and
we are going to honor that.
I now recognize the gentleman from North Carolina, Mr. Budd,
for 5 minutes.
Mr. BUDD. Thank you, Madam Chairwoman.
And Secretary Mnuchin, thanks for being here.
To date, less than 1 percent of the PPP loans nationwide have
been processed through the SBA’s forgiveness portal. Many small
businesses, these PPP borrowers, are waiting to see if Treasury or
Congress is going to act on some sort of bipartisan forgiveness pro-
posals that we see in the House and the Senate.
Now, the current one, as I understand it, the current process is
really confusing for a lot of these small business owners, and it is
not what they expected when they first took out these loans.
The current process is also a real burden on community banks
that have a lot less resources than our large banks.
The time for such a streamlined process to be put in place was
a long time ago. It was weeks ago. But due to this delay, the situa-
tion with banks and borrowers is getting more and more urgent.
So under your current authority, would you and SBA Adminis-
trator Carranza be able to implement a streamlined process as out-
lined in the Paycheck Protection Small Business Forgiveness Act?
Secretary MNUCHIN. I’m sorry. I would have to look at the spe-
cifics of the Act and get back to you. But I believe the answer is

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that we don’t have the authority to implement it the way it is in
the Act.
But, again, I would just say the forgiveness portal is open. We
are encouraging small businesses to apply. And we are working
with SBA to make sure that they can process those as quickly as
possible and we could provide small businesses tools to make it
easy for them.
Mr. BUDD. Mr. Secretary, I am glad that the portal is open, and
I am assuming that it is working. Do you consider it currently to
be a streamlined process? And is there anything, any improvement
you could do within your authority?
Secretary MNUCHIN. We developed an easy form, so we tried to
make it significantly easier. And, again, we are happy to work on
a bipartisan basis with Congress if they want to pass legislation
that creates blanket authority for forgiveness.
Mr. BUDD. Thank you, Mr. Secretary.
Chairman Powell, thanks again for being here. At your last ap-
pearance before the committee you stated that our banking system
is robust and it has been a source of strength throughout this pan-
demic. Specifically, you cited the unprecedented influx of deposits,
forbearance measures taken by banks, and the continued ability to
lend as evidence of the strengths of the U.S. banks in the COVID-
19 environment.
Now, while many industries have understandably needed govern-
ment support to continue operating during the forced economic
shutdown, my view is that the financial system has been a crucial
partner for the Fed and Congress in facilitating relief to businesses
and to households.
I bring all this up because I have heard some call the recent ac-
tions taken by Congress and the Fed—they have actually called it,
‘‘a bailout for banks.’’ So my question to you is simple: Has there
been a bailout for banks during COVID-19?
Mr. POWELL. No, I wouldn’t say that there has been.
Mr. BUDD. My office keeps hearing from companies that are un-
able to secure short-term financing, but they are using their work-
ing capital financing to run their operations. They were too large
to take advantage of the PPP, and they don’t have access to the
capital markets.
So, how could the Fed use its Section 13(3) authority to provide
assistance to these companies, many of whom provide services and
supplies all up and down the supply chain that are critical to our
nation’s economy? What can the Fed do to provide assistance to
them?
Mr. POWELL. On working capital, in looking at the idea of an
asset-based Facility, we did a good deal of work in that sector, and
we came away thinking that working capital financing was pretty
broadly available. So I am surprised, and it is not a good thing that
I am hearing that it is difficult for some. So, we will go back and
look at that.
Mr. BUDD. Chairman Powell, is there something that I should
relay to these mid-sized businesses, that maybe they haven’t found
or they are not aware of that they should look to for support?
Mr. POWELL. We have the Main Street Facility, of course, which
has three different portals—or three different loan products—and

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all companies are welcome to borrow there. We have, as I men-
tioned, growing interest there. There is the PPP program—
Mr. BUDD. Mr. Chairman, do you think there might be a gap—
Mr. POWELL. —the Paycheck Protection Program.
Mr. BUDD. I’m sorry. Do you think there might be a gap between
the PPP and the Main Street Lending Facility, where some could
get caught sort of in the lurch?
Mr. POWELL. We have been looking for gaps, honestly, and we
did look at the working capital, at working capital and finance, and
did not see a big problem to solve there. But we will go back and
take another look at that.
Mr. BUDD. Thank you, Chairman Powell.
I yield back.
Chairwoman WATERS. Thank you very much.
I would like to thank our distinguished witnesses for their testi-
mony today.
The Chair notes that some Members may have additional ques-
tions for this panel, which they may wish to submit in writing.
Without objection, the hearing record will remain open for 5 legis-
lative days for Members to submit written questions to these wit-
nesses and to place their responses in the record. Also, without ob-
jection, Members will have 5 legislative days to submit extraneous
materials to the Chair for inclusion in the record.
This hearing is now adjourned.
[Whereupon, at 12:23 p.m., the hearing was adjourned.]

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APPENDIX

September 22, 2020

(39)

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File and source

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SHA-256: 9219dea05e0d72edf36006a28d0f8dd63e70c39e53c8b0fd2c8d213eefbeecb2
Our copy: chrg_chrg-116hhrg43525_chrg-116hhrg43525.pdf
Original: www.govinfo.gov