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OVERSIGHT OF THE TREASURY DEPARTMENT’S AND THE FEDERAL RESERVE’S PANDEMIC RESPONSE HYBRID HEARING BEFORE THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS SECOND SESSION JUNE 30, 2020 Printed for the use of the Committee on Financial Services Serial No. 116–99 ( U.S. GOVERNMENT PUBLISHING OFFICE WASHINGTON 42–943 PDF VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 : 2021 Sfmt 5011 K:\DOCS\HBA182.000 TERRI HOUSE COMMITTEE ON FINANCIAL SERVICES MAXINE WATERS, California, Chairwoman CAROLYN B. MALONEY, New York NYDIA M. VELÁZQUEZ, New York BRAD SHERMAN, California GREGORY W. MEEKS, New York WM. LACY CLAY, Missouri DAVID SCOTT, Georgia AL GREEN, Texas EMANUEL CLEAVER, Missouri ED PERLMUTTER, Colorado JIM A. HIMES, Connecticut BILL FOSTER, Illinois JOYCE BEATTY, Ohio DENNY HECK, Washington JUAN VARGAS, California JOSH GOTTHEIMER, New Jersey VICENTE GONZALEZ, Texas AL LAWSON, Florida MICHAEL SAN NICOLAS, Guam RASHIDA TLAIB, Michigan KATIE PORTER, California CINDY AXNE, Iowa SEAN CASTEN, Illinois AYANNA PRESSLEY, Massachusetts BEN MCADAMS, Utah ALEXANDRIA OCASIO-CORTEZ, New York JENNIFER WEXTON, Virginia STEPHEN F. LYNCH, Massachusetts TULSI GABBARD, Hawaii ALMA ADAMS, North Carolina MADELEINE DEAN, Pennsylvania JESÚS ‘‘CHUY’’ GARCIA, Illinois SYLVIA GARCIA, Texas DEAN PHILLIPS, Minnesota PATRICK MCHENRY, North Carolina, Ranking Member ANN WAGNER, Missouri FRANK D. LUCAS, Oklahoma BILL POSEY, Florida BLAINE LUETKEMEYER, Missouri BILL HUIZENGA, Michigan STEVE STIVERS, Ohio ANDY BARR, Kentucky SCOTT TIPTON, Colorado ROGER WILLIAMS, Texas FRENCH HILL, Arkansas TOM EMMER, Minnesota LEE M. ZELDIN, New York BARRY LOUDERMILK, Georgia ALEXANDER X. MOONEY, West Virginia WARREN DAVIDSON, Ohio TED BUDD, North Carolina DAVID KUSTOFF, Tennessee TREY HOLLINGSWORTH, Indiana ANTHONY GONZALEZ, Ohio JOHN ROSE, Tennessee BRYAN STEIL, Wisconsin LANCE GOODEN, Texas DENVER RIGGLEMAN, Virginia WILLIAM TIMMONS, South Carolina VAN TAYLOR, Texas CHARLA OUERTATANI, Staff Director (II) VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\HBA182.000 TERRI CONTENTS Page Hearing held on: June 30, 2020 .................................................................................................... Appendix: June 30, 2020 .................................................................................................... 1 37 WITNESSES TUESDAY, JUNE 30, 2020 Mnuchin, Hon. Steven T., Secretary, U.S. Department of the Treasury ............ Powell, Hon. Jerome H., Chair, Board of Governors of the Federal Reserve System ................................................................................................................... 6 7 APPENDIX Prepared statements: Mnuchin, Hon. Steven T. ................................................................................. Powell, Hon. Jerome H. .................................................................................... ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Waters, Hon. Maxine: Written statement of the Credit Union National Association ...................... Written statement of the National Association of Federally-Insured Credit Unions ............................................................................................................ McHenry, Hon. Patrick: Written statement of the National Association of Federally-Insured Credit Unions ............................................................................................................ Mnuchin, Hon. Steven T.: Written responses to questions for the record submitted by Chairwoman Waters ............................................................................................................ Written responses to questions for the record submitted by Representative Heck ........................................................................................................ Written responses to questions for the record submitted by Representative Himes ..................................................................................................... Written responses to questions for the record submitted by Representative Gonzalez ................................................................................................. Written responses to questions for the record submitted by Representative Lawson ................................................................................................... Written responses to questions for the record submitted by Representative Steil ......................................................................................................... Written responses to questions for the record submitted by Representative Tlaib ........................................................................................................ Written responses to questions for the record submitted by Representative Vargas .................................................................................................... Powell, Hon. Jerome H.: Written responses to questions for the record submitted by Chairwoman Waters ............................................................................................................ Written responses to questions for the record submitted by Representative Beatty ..................................................................................................... Written responses to questions for the record submitted by Representative Heck ........................................................................................................ Written responses to questions for the record submitted by Representative Kustoff .................................................................................................... (III) VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 38 41 K:\DOCS\HBA182.000 TERRI 52 60 60 63 75 76 76 77 78 78 80 82 109 113 115 IV Page Powell, Hon. Jerome H.—Continued Written responses to questions for the record submitted by Representative Lawson ................................................................................................... Written responses to questions for the record submitted by Representative Mooney ................................................................................................... Written responses to questions for the record submitted by Representative Tlaib ........................................................................................................ Written responses to questions for the record submitted by Representative Vargas .................................................................................................... VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\HBA182.000 TERRI 119 122 124 129 OVERSIGHT OF THE TREASURY DEPARTMENT’S AND THE FEDERAL RESERVE’S PANDEMIC RESPONSE Tuesday, June 30, 2020 U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The committee met, pursuant to notice, at 12:45 p.m., in CVC200, Congressional Auditorium, Hon. Maxine Waters [chairwoman of the committee] presiding. Members present: Representatives Waters, Maloney, Velazquez, Sherman, Meeks, Clay, Scott, Green, Cleaver, Perlmutter, Himes, Foster, Beatty, Heck, Vargas, Gottheimer, Gonzalez of Texas, Lawson, San Nicolas, Tlaib, Porter, Axne, Casten, McAdams, Ocasio-Cortez, Wexton, Gabbard, Adams, Dean, Garcia of Illinois, Garcia of Texas; McHenry, Wagner, Lucas, Posey, Luetkemeyer, Huizenga, Stivers, Barr, Tipton, Williams, Hill, Zeldin, Loudermilk, Mooney, Davidson, Budd, Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Gooden, Riggleman, Timmons, and Taylor. Chairwoman WATERS. The Financial Services Committee will come to order. First, I want to thank Secretary Mnuchin and Chair Powell for your patience while we wrapped up our votes. I appreciate that there may be a vote called during the hearing as well; however, I plan to continue the hearing if votes are called. I am told by my staff that both of you have agreed to be here for 2 hours from the start of the hearing, and I thank you. Without objection, the Chair is authorized to declare a recess of the committee at any time. I want to welcome the Members and our distinguished witnesses to the first Full Committee hybrid hearing being conducted by the Committee on Financial Services. As Congress breaks new ground with these remote hearings, I want to remind Members of a few matters, including some required by the regulations accompanying H. Res. 965, which established the framework for remote and hybrid committee proceedings. First, I would ask all Members on the Webex platform to keep themselves muted when they are not being recognized. This will minimize disturbances while Members are asking questions of our witnesses. Members on the Webex platform are responsible for muting and unmuting themselves. The staff have been instructed not to mute Members except when they are not not being recognized by the Chair, and there is inadvertent background noise. Members on the Webex platform are reminded they may only at(1) VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 2 tend one remote hearing at a time, so if you are participating today, please remain with us during the hearing. Members should try to avoid coming in and out of the hearing, particularly during the question period. If, during the hearing, Members wish to be recognized, the Chair recommends that Members identify themselves by name so as to facilitate the Chair’s recognition. I would also ask that Members be patient as the Chair proceeds, given the nature of the online platform the committee is using. In addition, the Chair informs the Members participating in person that in enforcing order and decorum in the hearing room, the Chair has a duty to protect the safety of the Members. The attending physician provided the following guidance: ‘‘For U.S. House of Representatives meetings in a limited enclosed space, such as a committee hearing room, for greater than 15 minutes, face coverings are required.’’ Accordingly, the Chair will treat wearing masks as a matter of order and decorum, and all Members should wear masks. The Chair has a strong preference for Members to continue to wear a mask, even while being recognized by the Chair. Members who do not wish to wear masks may participate virtually through the Webex platform. Before proceeding to the hearing, I have one committee business matter. Without objection, two resolutions, distributed in advance to all Members’ offices establishing committee task forces for the remainder of 2020, are approved. Today’s hearing is entitled, ‘‘Oversight of the Treasury Department’s and the Federal Reserve’s Pandemic Response.’’ This hearing is the committee’s first 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 would like to inform Members that our witnesses have a hard stop today at 2:00. I now recognize myself for 4 minutes to give an opening statement. Secretary Mnuchin, Chair Powell, welcome back. The pandemic continues to have a terrible impact. More than 126,000 people have lost their lives in the United States, and, this past Sunday, there were 40,000 new cases of COVID-19, the highest number of daily cases. And the unemployment rate in May was 13.3 percent, nearly 4 times higher than it was last May. All of the job gains of the past decade have been wiped out. Communities of color have been affected disproportionately both by the virus and its economic impact. The Centers for Disease Control reports that Jewish, Black, and Latinx Americans are 4 to 5 times more likely than Whites to be hospitalized for COVID-19, and half of all Black adults are not working. During the 2008 foreclosure crisis, we saw a similarly disproportionate impact on communities of color. This was followed by an unequal recovery where White households gained the wealth they lost, and Black and Brown households are still trying to catch up. We cannot endure another unequal crisis or unequal recovery. Your agencies and Congress must do all that we can to ensure that history does not repeat itself. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 3 I want to thank both of you for your efforts thus far, and for the ways that you have worked with me and the members of this committee, including taking my many calls to strengthen the implementation of the CARES Act. Secretary Mnuchin, you have used your authority to provide Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) greater access to the Paycheck Protection Program (PPP), including by setting aside $10 billion for them to lend to ensure that more loans go to small, minority-owned businesses. Chairman Powell, you have worked with us to reduce the minimum loan size at the Main Street Lending Facility from $1 million to $250,000, and to extend the length of the loans. You have also expanded eligibility of the Municipal Liquidity Facility to increase access to a greater number of cities and towns. The CARES Act has provided important relief to struggling families and communities, but as the pandemic has strengthened, so must our efforts. I now recognize the ranking member of the committee, the gentleman from North Carolina, Mr. McHenry, for 4 minutes. Mr. MCHENRY. Thank you. Thank you all for being before the committee and behind the salad guards that we have arranged for you. It’s good to see your smiling faces behind your masks, but I am grateful that we are able to assemble. This is certainly a large undertaking for the second-largest committee in Congress, and I do want to commend the chairwoman for these efforts so that we could actually have this hybrid hearing. I think it shows that Congress and our government are still working, even if we have to do so using technology. Thank you all for your response and your active response since this crisis began. I want to say, first of all, I believe that the Fed’s and Treasury’s decisive actions prevented the worst of the economic catastrophe, but there is still much work to be done. It is important to remember this is not a crisis that was caused by irresponsible choices by any specific industry or corporation. What we have seen is the impact of a voluntary shutdown of our economy in an effort to save lives. The bipartisan CARES Act directed both the Treasury Department and the Federal Reserve to stand up responsible programs that would have been unthinkable even months ago, and to do so quickly, and you have done so rather quickly. Now that many of these programs are up and running, we must be forward-thinking to seek solutions to return us to the roaring economy that we experienced right before the global health crisis. That means we need to understand the nature of what we have done and what we need to do going forward. We know the pandemic has touched nearly every aspect of our economy and every family. Facilities discussed today need to be similarly far-reaching and responsive to economic conditions, not political ones. And I know there are a number of programs that have been desired by policymakers to be company-specific or something like that, but that is not the appropriate response nor commensurate with the law. Moreover, Members are going to have a lot of questions about fiscal policy, which I think Secretary Mnuchin is best fitted to, and VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 4 monetary policy, which Chairman Powell is best suited to. And I think the understanding of that is important for us as policymakers to experience at the beginning of this hearing rather than to hear you defer to one another. Our role in Congress is to assess the effectiveness of existing programs, determine the goals for additional relief programs, and identify the appropriate entity to provide that relief. That is our role. Of course, we need to access the key programmatic data, and so I want to commend Secretary Mnuchin for coming forward with this type of oversight material in a massive, unprecedented way, with the type of low-level data that we requested in Congress, and to provide that in a transparent way. The thousands of pages of documents that you and your team have assembled for just this committee alone is staggering in such a short period of time. I hope my colleagues will use this data appropriately so that we can assess these programs and make sure they are working. I do want to commend you, Secretary Mnuchin, for the delivery of the PPP program so effectively and so quickly. It wasn’t perfect, of course, but it saved millions of jobs. And Chairman Powell, I want to commend you. You have made your words good in terms of action, and that builds confidence in the institution of the Federal Reserve, that your words actually are as good as action by the Federal Reserve. So, thank you for following through on your word and your commitment. I think there is positive news in terms of the assessment for this initial response, and I want to thank you for being here at the first quarterly oversight hearing under the CARES Act. Madam Chairwoman, on a personal note, I would like to welcome back our friend and colleague, the ranking member of the Oversight Subcommittee, Andy Barr, from his family concerns he has been attending to. So, thank you, Andy. We welcome you back. I yield back. Chairwoman WATERS. Thank you very much. I now recognize the gentleman from Texas, Mr. Green, who is also the Chair of our Subcommittee on Oversight and Investigations, for 1 minute. Mr. GREEN. Thank you, Madam Chairwoman. And I thank everyone. It is an honor to serve under your leadership, Madam Chairwoman. The 2019 Home Mortgage Disclosure Act (HMDA) data were released last week and demonstrate that unequal access to credit on the basis of race and ethnicity remains the norm in America today. This is something that we can do something about, but there is a problem. Many of the people who have the authority and who are in positions to make a difference refuse to even acknowledge that the problem exists. I have the evidence. I have pictures from prior hearings. The one to my right asks, ‘‘Do you believe that discrimination in lending exists?’’ One person has his hand up. He is with the NAACP. He is African American. The four Anglo persons on this panel refused to raise their hands. These are the problems that we have to contend with. I yield back the balance of my time. Chairwoman WATERS. Thank you, Mr. Green. I now recognize the subcommittee’s ranking member, Mr. Barr, for 1 minute. Mr. BARR. Madam Chairwoman, before I deliver my opening statement, I rise to ask a question of personal privilege. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 5 Chairwoman WATERS. Without objection, certainly. Mr. BARR. Thank you, Madam Chairwoman. As you know, 2 weeks ago, I lost my wife unexpectedly to a heart condition, and I want to express my sincere appreciation to you, Madam Chairwoman, Ranking Member McHenry, and to all of my colleagues on this committee on both sides of the aisle for the outpouring of prayers and expressions of sympathy for Carol and her greatest legacy, our two daughters. Your friendship and kindness during this difficult time for me and my family means so much, and I thank all of you. Chairwoman WATERS. Thank you very much, Mr. Barr, and now you may take 1 minute if you would like— Mr. BARR. Thank you. Chairwoman WATERS. —on the subject that is before us today. Mr. BARR. Thank you. And thank you, Secretary Mnuchin and Chairman Powell, for appearing before the committee today and for your continued efforts to ameliorate the effects of the governmentimposed shutdown of the economy arising out of the pandemic. Congress acted decisively through the passage of the CARES Act and other legislation to mitigate the damage to the economy, and keep people employed and businesses strong to ensure that the economy can emerge on the other side in a position for long-term growth. Congress directed the Fed and Treasury to play a critical role in the response, and throughout, you both have been decisive and aggressive in using the tools at your disposal and been incredibly responsive to congressional concerns. You have made appropriate adjustments, each of you personally, and there are elements of Treasury’s and the Fed’s responses to the pandemic that could still be improved or adjusted to honor congressional intent. I look forward to talking to you about those today, including and especially in commercial real estate. I look forward to discussing that today. And, again, thank you, both of you, for being here today. I yield back. Chairwoman WATERS. Thank you, Mr. Barr. I want to welcome today’s witnesses. First, we have Steven T. Mnuchin, Secretary of the Treasury. He has served in this current position since 2017. Mr. Mnuchin has testified before the committee on previous occasions, and I do not believe he needs any further introduction. Next, we have Jerome Powell, Chair of the Board of Governors of the Federal Reserve System. Mr. Powell has served on the Board of Governors since 2012, and as its Chair since 2017. Mr. Powell has testified before the committee on previous occasions, and I do not believe he needs any further introduction. 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 we can be respectful of the committee members’ time. And, without objection, 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. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 6 STATEMENT OF THE HONORABLE STEVEN T. MNUCHIN, SECRETARY, U.S. DEPARTMENT OF THE TREASURY Secretary MNUCHIN. Thank you very much, and, Mr. Barr, let me express my condolences for your loss. Chairwoman Waters, Ranking Member McHenry, and members of the committee, I am pleased to join you today to discuss how the Treasury Department and the Federal Reserve are working together to provide liquidity to credit markets, businesses, and households, as well as State and municipal governments. We remain committed to making sure that every American gets back to work as quickly as possible. America’s economy continues to recover from the challenges posed by the COVID-19 pandemic. The jobs report for the month of May vastly exceeded expectations with a record gain of 21⁄2 million jobs after experts had predicted a loss of nearly 8 million jobs. While the unemployment rate is still historically high, we are seeing additional signs that conditions will improve significantly in the 3rd and 4th quarters of this year. The ‘‘Blue Chip Report’’ is forecasting that our GDP will grow by 17 percent annualized in the 3rd quarter and by 9 percent in the 4th quarter. The U.S. Chamber of Commerce reported this month that 79 percent of small businesses are at least partially open, and half of the remaining businesses are opening very soon. Retail sales rose in May by 18 percent, more than double the expectation. Investors and businesses have historically high cash positions, the highest level since 1992, indicating that private capital is ready to return as communities reopen. We are in a strong position to recover because the Administration worked with Congress on a bipartisan basis to pass legislation and provide liquidity to markets in record time. In particular, the PPP is keeping tens of millions of employees connected to their jobs. Economic impact payments are also helping millions of families and workers through these challenging months. We are monitoring economic conditions closely. Certain industries, such as construction, are recovering quickly, while others, such as retail and travel, are facing longer impacts and may require additional relief. We look forward to continued conversations with you to address these critical economic issues. Treasury has been hard at work implementing the CARES Act Program. The PPP: we have approved over 4.8 million small business loans for $519 billion. Economic impact payments: we distributed nearly 160 payments in record time. Programs to support aviation and other eligible businesses: we have approved and dispersed over $27 billion to over 500 airlines and other aviation businesses, preserving hundreds of thousands of jobs. We are in the process of documenting loans to business and critical national security for approximately $25 billion. The Coronavirus Relief Fund: from this fund, we have distributed $150 billion across States and local governments and additional money to tribal governments. The CARES Act granted Treasury the authority to provide $454 billion to support Federal Reserve Lending Facilities under Section 13.3. Since March 17th, using funds available, I have approved a number of Federal Reserve programs: the Commercial Paper Program; the Primary Dealer Program; the Money Market Mutual VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 7 Program; the TALF; the Primary Market Corporate Credit Facility; the Secondary Facility; the Main Street Facility; the Municipal Facility; and the PPP Lending Facility. We have committed approximately $200 billion to support these. The announcements of these programs have helped unlock markets and promote much-needed access to liquidity. We have over $250 billion to create or expand programs as needed. While we are beginning to have conversations about supplemental relief legislation, we look forward to working with Congress on a bipartisan basis in July on any other further legislation that will be necessary. Treasury has already been entrusted with a tremendous amount of funding to inject into the economy. We are closely monitoring these results and seeing conditions improve. We would anticipate that any additional relief would be targeted to certain industries that have been especially hard hit by the pandemic, with a focus on jobs and putting all Americans back to work who have lost their jobs through no fault of their own. The Treasury Department is implementing the CARES Act with transparency and accountability. We are providing information to the government-wide reporting on USAspending and updates to Congress. We are also cooperating with the congressional oversight committee, GAO, and others. We are pleased that the Federal Reserve has announced plans to boost loan information on its website regarding its facilities. Chair Powell and I have had very productive initial meetings with four members of the Oversight Committee, and we look forward to continuing to work with them. Thank you very much. [The prepared statement of Secretary Mnuchin can be found on page 38 of the appendix.] Chairwoman WATERS. Thank you. 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. Chairwoman Waters, Ranking Member McHenry, and members of the committee, thank you for the opportunity to testify today to discuss the extraordinary challenges our nation is facing and the steps we are taking to address them. We meet as the pandemic continues to cause tremendous hardship, taking lives and livelihoods both at home and around the world. This is a global public health crisis, and we remain grateful to our healthcare professionals for delivering the most important response, and to our essential workers who help us meet our daily needs. These dedicated people put themselves at risk day after day in service to others and to our country. Beginning in March, the virus and the forceful measures taken to control its spread induced a sharp decline in economic activity and a surge in job losses. As the economy reopens, incoming data are beginning to reflect a resumption of economic activity. Many businesses are opening their doors, hiring is picking up, and spending is increasing. The economy has entered an important new phase and has done so sooner than expected. While this bounce-back in economic activity is welcome, it also presents new challenges, notably the need to keep the virus in VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 8 check. While recent economic data offers some positive signs, we are keeping in mind that more than 20 million Americans have lost their jobs and that the pain has not been evenly spread. The rise in joblessness has been especially severe for lower-wage workers, for women, and for African Americans and Hispanics. This reversal of economic fortune has caused a level of pain that is hard to capture in words as lives are upended amid great uncertainty about the future. The path forward for the economy remains extraordinarily uncertain and will depend, in large part, on our success in containing the virus. A full recovery is unlikely to occur until people are confident that it is safe to engage in a broad range of activities. The path forward will also depend on policy actions taken at all levels of government to provide relief and support the recovery for as long as needed. The Federal Reserve is strongly committed to using our tools to do whatever we can for as long as it takes to provide some relief and stability to ensure that the recovery will be as strong as possible and to limit lasting damage to the economy. After lowering the Federal funds rate to essentially zero, our actions so far fall into four categories: stabilizing Treasury and agency MBS markets; money market, and liquidity and funding measures; direct efforts to support the flow of credit in the economy; and targeted regulatory measures to support those efforts. So far, we have created 11 Facilities under Section 13.3 of the Federal Reserve Act to support liquidity, funding, and the flow of credit to households and businesses and State and local governments. Without access to credit, families could be forced to cut back on necessities or even lose their homes. Businesses could be forced to downsize or close, resulting in further losses of jobs and incomes and worsening the downturn. Our emergency lending facilities have all been undertaken with the approval of the Treasury Secretary, and many are supported by funding from the CARES Act. Their status and effects are discussed in greater length in my written statement, which I have provided to the committee. The Fed will continue to use these powers forcefully, proactively, and aggressively until we are confident that the nation is solidly on the road to recovery. When the time comes, after the crisis has passed, we will put these emergency tools back in the toolbox. I would stress that these are lending powers, not spending powers. I will also note that we design our facilities to work for broad ranges of businesses and municipalities. We do not target particular firms or industries. Elected officials have the power to tax and spend and to make decisions about where to direct such targeted relief. The CARES Act and other legislation provides direct help to people, businesses, and communities. This direct support is making a critical difference, not just in helping families and businesses in a time of need, but also in limiting long-lasting damage to our economy. Public faith in our operations depends on transparency. At the Fed, we are committed to that transparency, particularly in deploying our emergency powers. Thank you. I look forward to answering questions. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 9 [The prepared statement of Chairman Powell can be found on page 41 of the appendix.] Chairwoman WATERS. Thank you very much, Chairman Powell. I now recognize myself for 5 minutes for questions. As I mentioned in my opening, the pandemic is strengthening, and so, too, must our response. Two weeks ago, Chair Powell, when I asked you about the need for more congressional action to protect our communities, you said, ‘‘There are something like 25 million people who are still dislodged from their job, in full or in part, due to the pandemic. I would think it would be a concern if Congress were to pull back from the support that it’s providing too quickly.’’ Unfortunately, tomorrow, this is exactly what will happen if the Senate does not pass the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act. Tomorrow, the PPP program stops taking new loan applications. The PPP should be extended immediately so that the remaining $135 billion in funding can support small businesses. Also happening tomorrow, millions of families will be unable to pay their rent and mortgages. In June, onethird of renters couldn’t pay rent, 4.2 million homeowners are currently in forbearance because they are unable to pay their mortgages, and evictions have already started in many States where local eviction moratoria have expired. While the moratoria should be extended, it is not conscionable to simply delay an eviction and foreclosure crisis. Congress and the Administration must provide assistance to struggling low-income families to cover their rent and utility payments. So, Chairman Powell, millions of families are at risk of being stripped of their homes. Do you think Congress should provide financial assistance to ensure that people can stay in their homes? Mr. POWELL. Thank you, Madam Chairwoman. I try to keep my fiscal comments at a very high level, and actually that comment you referred to, was referring to the unemployment insurance that expires at the end of July. And I think for the specifics of what you need to be doing, we have the Treasury Secretary here, and I would defer to the Treasury Secretary on fiscal matters here. Chairwoman WATERS. Okay. So, you put it off on Mr. Mnuchin. While you have made some changes to broaden the Municipal Liquidity Facility, many jurisdictions, like the Territories, are still locked out. When we last spoke, you mentioned that it was difficult, but perhaps there was a way that Guam may be eligible. Did you find a way to take a serious look at that and determine whether or not something could happen? Mr. POWELL. Yes, we are taking a serious look at that. The Territories themselves are not investment grade-rated, and they were not before the pandemic set in, and that is the minimum standard for access to the Municipal Liquidity Facility. Of course, businesses in the Territories would be eligible for the Main Street Facility. Some of the revenue-based facilities that Guam has are investment grade-rated, but below the minimum, and we are actually reviewing our credit standards in the Municipal Liquidity Facility at the moment to determine if there is a way to adjust the Facility in a way that would make eligible some creditworthy issuers without violating the spirit or the letter of Section 13.3. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 10 Chairwoman WATERS. Thank you. Secretary Mnuchin, with critical unemployment support expiring next month, and today marking the last day that Treasury and the Small Business Administration’s (SBA’s) claim that new PPP loans can be approved, does the Administration support extending these programs as proposed in the HEROES Act? Secretary MNUCHIN. We do support additional legislation, and we look forward to working with the House and the Senate on that. As it relates to the PPP, I have already had conversations with the Small Business Committee in the Senate about repurposing that $135 billion, and I think that should be done, and I look forward to working with both the House and the Senate so that we can pass legislation by the end of July. Chairwoman WATERS. Thank you very much. The ranking member of the committee, the gentleman from North Carolina, Mr. McHenry, is now recognized for 5 minutes. Mr. MCHENRY. Thank you. Thank you for your testimony. Secretary Mnuchin, I think there is wide agreement that your engagement in the PPP program made things largely better, right? The Treasury expertise in making sure that SBA could deliver on this really seminal program of the CARES Act is proven out because you have 41⁄2 million small businesses that have benefited from it. The average loan size is quite modest in the context for our economy, but the effect is pretty widescale. So, what would you say regarding the additional funds that are purposed for PPP? What should be our focus as policymakers on repurposing that $134 billion? How can we best do that? Is that the 7(a) Program? Is that an expiry loan program? How do you see this fitting in, given the actions of Main Street and other Facilities you stood up through this Act? Secretary MNUCHIN. Thank you, and I appreciate your comments. I think at the time when we passed the last CARES Act, the economy was in very difficult shape, and we needed to get money quickly. And I have said before, programs that took 3 or 4 months were not the focus. I think that there appears to be bipartisan support in the Senate to repurpose the $130 billion for PPP, and extending it to businesses that are most hard hit, that have a requirement that their revenues have dropped significantly, things like restaurants and hotels and others where it is critical to get people back to work. Mr. MCHENRY. Okay. That seems like a reasonable step in the right direction. Chairman Powell, the reputation you have garnered this year, in particular, is that your actions have been predictable, and that you signal what you are going to do and you follow through on it, transparent in that you lay out the metrics for action. You, therefore, follow those metrics. Incredible. One example is that at announcement, you said that you were going to support corporate bonds, and by saying you are going to support corporate bonds, the market acted as if the Fed already had the program up and running, to the point where once you were up and running, people asked why you followed through on that program. Now, I think that is important to note. That transparency, that guidance, that communication has been effective in this opening stage in setting up these responses. So along those lines, the Fed VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 11 took, what I would call, strong medicine in terms of action on the stress test to restrict dividends and buybacks, and in restraints on these large financial institutions. I would call that quite strong medicine. I think what we want to understand are the metrics that the Fed is going to use in order to make these judgments and assessments in this next phase over the next couple of months for these large financials? Mr. POWELL. I think you have to start with two major facts here. One is that the banking system is very strong, and has been a source of strength. The banks have been taking on a wave of deposits. They have been engaging in forbearance. They have been making loans. So, they are a source of strength in this situation, unlike the last crisis, where they were a source of weakness. It is also a fact that things are highly uncertain, and so to preserve that strength, what we have done is we have stopped all share repurchases and we have stopped increases in dividends, so we are preserving the level of capital in the system. To address the uncertainty, looking forward, we did run these three sensitivity analyses, and they were really to assess the overall strength of the system in the face of these downside cases. We found that the majority of firms were still adequately capitalized, sufficiently capitalized, in all of those scenarios. Notwithstanding that, for the first time in the history of these tests, we said that we are going to ask the banks to resubmit their capital plans. We are going to distribute scenarios, and we are going to look at the results again as we learn more about the path of the crisis. And in terms of the precise metrics we are going to be looking at, we will be providing more clarity about that, going forward. Mr. MCHENRY. But based off of that uncertainty, you are asserting as a regulator that you will actively review this to ensure that we don’t have a financial crisis as a result of this health crisis? Mr. POWELL. Yes, we are going to keep monitoring this. We are learning so much every quarter, and the path of the economy is highly uncertain. In our system, dividends are declared every quarter. We have already stopped the overwhelming majority of distribution, so we think that is the right place to be. Mr. MCHENRY. Thank you. Thanks for your leadership and effectiveness, and thank you as well, Secretary Mnuchin, for your effectiveness in leadership. I yield back. Chairwoman WATERS. Thank you. I now recognize the gentlewoman from New York, Mrs. Maloney, for 5 minutes. Mrs. MALONEY. Thank you, and welcome. Secretary Mnuchin, I would like to ask you about a very troubling oversight issue. As you know, I am the Chair now of the House Oversight and Reform Committee, and I take these matters very seriously, and I hope that you do, too. In the CARES Act, we created the Pandemic Response Accountability Committee, or PRAC, which is a committee of independent inspectors general that is charged with overseeing all of the money spent in the CARES Act, and identifying waste, fraud, and abuse. Last month, the General Counsel’s office in Treasury issued a legal opinion that questions PRAC’s authority to oversee trillions of dollars of CARES Act spending. To put it bluntly, this legal analysis is so bad that it borders on bad faith. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 12 The opinion claims, with no evidence, that Congress did not intend for the PRAC to have oversight authority over anything in the first half of the CARES Act, including the PPP program and any of the Fed’s Lending Facilities or the $150 billion in funding for State and local governments. So I would say, Secretary Mnuchin, that this interpretation is wrong, that it is just plain wrong. Senator Gary Peters and I proposed and authored this section of the law, the PRAC Act, and I was heavily involved in negotiating those provisions in the CARES Act, and I am telling you that Congress’ intent was for the PRAC to oversee all of the spending in the CARES Act, not just one-half of the CARES Act, but all of it. That was our intent, and that was what the bill said explicitly. The interpretation from your general counsel’s office is already causing problems because it is hindering the PRAC’s ability to monitor how the States are spending their CARES Act money. So now, Secretary Mnuchin, I would say that we have worked very productively together and in good faith negotiations on the Beneficial Ownership Bill and other bills before Congress, so I hope that you will take my concerns about this erroneous legal opinion seriously, and this is what I would like to ask today: I would like you to commit to interpreting this section of the CARES Act as Congress intended, with the PRAC’s oversight authorities applying to all of the CARES Act spending. I think this is a small step, but a very important one, that you can take to show that you are serious about the oversight of the trillions of dollars in the CARES Act. Secretary MNUCHIN. Thank you. I appreciate your comments, and I assure you we are very much committed to working with the Oversight Committee on transparency. Now, as it relates to this, I can assure you it was not bad faith. I am happy to have our office follow up with you. It has to do with a technical issue of recipients reporting. As it relates to the issue of monitoring State spending, I am more than happy to put the PRAC in touch with our Inspector General, who has primary oversight, and to make sure that whatever information specifically the PRAC wants on the States, that we accommodate. Mrs. MALONEY. That is not what I am asking. What I am asking is, will you commit to interpreting the PRAC’s oversight authorities as applying to all of the CARES Act spending? That was our intent. I wrote that section of the law. That was what Congress wanted. There is no problem with the interpretation. It is very clear and explicit. Will you commit to allowing the oversight that was in the bill? Secretary MNUCHIN. I appreciate that you wrote that portion. I would also say I appreciate I had very direct discussions with people in the Senate about various different oversight. That is why we agreed to a new oversight committee with full transparency. We agreed to provide information that was not required under Section 13.3 so we have full transparency. And, again, I am happy to follow up with you on the specific concerns as to which different entities should receive what information. I think it is important that there is not bureaucratic overlap. But, again, let me emphasize, if the PRAC needs certain information, we will try to do what we can to accommodate it. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 13 Mrs. MALONEY. I am very disappointed with that answer, and I guess we will have to pursue a legislative solution. It was very clear that the intent of Congress was that PRAC would have oversight of all of the CARES spending. I yield back. I am out of time. Chairwoman WATERS. Thank you. The gentlewoman from Missouri, Mrs. Wagner, is now recognized for 5 minutes. Mrs. WAGNER. Thank you, Madam Chairwoman, and thank you for joining us today, Secretary Mnuchin and Chairman Powell. I want to commend you both at the outset here for your leadership during this unprecedented time. Both the United States Department of the Treasury and the Federal Reserve System have shown their ability to both effectively and rapidly respond to the economic crisis caused by COVID-19 by providing trillions of dollars to stabilize our economy. Chairman Powell and Secretary Mnuchin, lender registration for the Main Street Lending Program went live on June 15th, I believe. Do either of you know how many lenders have registered so far, and do you know the average size of the lenders participating? If not, when do you think this information might be made available? I will toss it to either of you? Mr. POWELL. Sure. In the range of 300 banks, and it may be higher than that—that number is a few days old—have entered the registration process. It takes a few days, so I can’t tell you exactly how many, but that is how many will come out of the pipeline. Mrs. WAGNER. Average size of lenders? Mr. POWELL. I don’t know. The size ranges from the large to the very small, and the very small are particularly well-represented, but it does range across the full spectrum. Mrs. WAGNER. And you will be providing this information to us on a regular basis? Mr. POWELL. We are working with the borrowers to figure out the right way to connect lenders and borrowers and borrowers and lenders so they can get in touch with each other. So we are working with the lenders to put something together that will make that happen in the most efficient way. Mrs. WAGNER. Thank you. Chairman Powell, in your efforts to create broad-based programs, do you think that the Main Street Facility will need to expand any further to meet the needs of our businesses? Mr. POWELL. Let me say, as you have seen, the Secretary and I work very closely on this, and we have been very willing to learn from experience and learn from what we are hearing from different parts of the economy, so we— Mrs. WAGNER. You certainly did with the PPP program, so I would hope that you would approach this the same way. Mr. POWELL. We will. As you know, we are in the relatively early stages of opening up a non-profit Main Street Facility, and I think will be watching as the regular Main Street fully comes online, and continuing to look to see whether there are ways we can improve it. Mrs. WAGNER. Thank you. Chairman Powell, last week’s release of the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) outcome and, more importantly, the results of their VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 14 COVID-19 sensitivity analysis, underscores the resilience, I think, of the banking system. While we can all agree that the level of uncertainty in the economy continues to be high given the progression of the COVID-19 pandemic, I believe the Federal Reserve subjected CCAR filers to extraordinary assumptions regarding unemployment and GDP contraction. Despite these assumptions, the 33 largest banks remained above minimum Tier 1 capital requirements. Given that, I am wondering why the Federal Reserve has indicated that firms will need to resubmit capital plans, and, in addition, there will be an off-cycle supervisory stress test in the ‘‘latter part of the year.’’ The Federal Reserve has already- ncluded firms’ capital planning management processes and, I think, approaches and assumptions, passed the toughest test. So, could you explain that, please? Mr. POWELL. Sure. What the 33 institutions all passed was the regular-way, severely-adverse scenario that we wrote before the pandemic arrived. That is what controlled the outcome at this time. Also, though, remember, the pandemic arrived right in the middle of the stress test period, so we quickly devised, without going through our usual very thorough vetting process, three alternative sensitivity analyses, one of which was a V-shaped recovery, one of which was U-shaped, and one of which was a serious double dip, and these are very serious downside side cases. We didn’t use them to evaluate individual institutions, but, rather, to evaluate the broad range of institutions, and we didn’t— Mrs. WAGNER. I am running out of time. Why lock up additional capital now? This has the potential to have, I think, a chilling effect on the economy at exactly the point where banks need to provide credit and liquidity to households and businesses to facilitate economic recovery and support and financial intermediation in the capital markets. So, I will leave you with that. Mr. POWELL. No, we didn’t do that. We are not looking to raise capital standards during a crisis. That is not what is going on here. Mrs. WAGNER. Thank you for that clarification, and I yield back. Chairwoman WATERS. Thank you. The gentlewoman from New York, Ms. Velazquez, is now recognized for 5 minutes. Ms. VELAZQUEZ. Thank you, Madam Chairwoman, and Ranking Member McHenry. Mr. Secretary, at any time, have you been blocked by President Trump or anyone else at the White House from providing access to information requested by Congress or an oversight body? Secretary MNUCHIN. No. Ms. VELAZQUEZ. Have you ever prevented anyone within the Treasury Department, or the Administration, more broadly, from providing access to information requested by Congress or an oversight body? Secretary MNUCHIN. If you are referring to an oversight body, not that I am aware of, no. Ms. VELAZQUEZ. Okay. So, tonight, the PPP program expires, and you are advocating for extending that authorization. You are telling us that you are already discussing this with the Senate, but there is a role for the House. Secretary MNUCHIN. Of course. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 15 Ms. VELAZQUEZ. Yes, and I will remind you that nothing will move unless we have those conversations. As Chair of the House Small Business Committee, I cannot in good sense make a determination as to where the program should go or what tweaks or what reforms the program needs unless we have access to the data. When are you going to provide the data to our committee? Secretary MNUCHIN. I believe we said by the end of this week, and we have reached out to your committee to make sure we establish secure— Ms. VELAZQUEZ. No, we got a letter, but no date has been— Secretary MNUCHIN. It is supposed to be delivered by the end of this week. Let me just say, I am more than happy to speak to you if you would like to set up a time to speak. Ms. VELAZQUEZ. Sir, we have been contacting your office every week asking for you to appear before the Small Business Committee with the administrator. I spoke to her last week. She intends to come before the committee. You are saying here that we need to take care of those most hard-hit businesses in this next repurpose of the $135 billion that is left, but we need to know if the program worked as intended by Congress. We know that 4 million businesses accessed the program, but what about the millions of minority- and women-owned businesses that were not able to access the program? You said that maybe a restaurant might need to get a second loan. I just heard Senator Marco Rubio—well, no one should get a second loan unless we know that most businesses who are struggling get a chance to get a loan. Chairman Powell, as Chair of the House Small Business Committee, I am particularly concerned about the state of our nation’s small businesses as the pandemic poses an acute risk to their survival. How would the failure of small businesses, especially those that are women- or minority-owned, adversely affect the communities they serve, particularly those of color? What impact could these failures have on future labor market conditions? Mr. POWELL. Of course, the effects could be very significant. Small businesses generate most of the jobs and most of the growth in the economy, so that could be very important, particularly in minority communities. Ms. VELAZQUEZ. Chairman Powell, earlier this month, the Organisation for Economic Co-Operation and Development (OECD) said the pandemic has triggered the most severe recession in a century and warned that the global economy could contract by 7.6 percent this year should a second outbreak hit. Do you agree with this assessment? Mr. POWELL. That particular number—there is a range of assessments, but I would say that is in the range. And, yes, I can’t think of a more— Ms. VELAZQUEZ. And what impact do you see a second outbreak having on both the U.S. and the global economy? Mr. POWELL. I certainly wouldn’t forecast that, and, just hypothetically, a second outbreak could force governments and force people to withdraw again from economic activity. And I think the worst part of it would be to undermine public confidence, which is what we need to get back to lots of kinds of economic activity that involves crowds. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 16 Ms. VELAZQUEZ. Thank you. I yield back. Chairwoman WATERS. Thank you. Mr. Lucas, you are now recognized for 5 minutes. Mr. LUCAS. Thank you, Madam Chairwoman. Chairman Powell and Secretary Mnuchin, thank you for attending this hearing today. And I want to begin by commending Chairman Powell on finalizing the Inter-Affiliate Margin Rule. This may be the last time we discuss this, sir. While these rules may seem abstract and difficult to understand, they have a real impact on agriculture and oil and gas producers back home that use financial derivatives, manage risk, and plan for the future, which can be, as we have seen in past months, to put it mildly, unpredictable. That said, as both of you know, commercial paper finances a wide array of economic activity and provides liquidity for companies to meet their operational needs. With the commercial paper market under significant strain due to COVID-19, in mid-March, the Federal Reserve established the Commercial Paper Funding Facility to encourage investors to lend in the commercial paper market, which ultimately supports businesses and jobs across the country. Chairman Powell, could you describe the current indicators of how the commercial paper market responded to the creation of the facility, and has there been a discussion to expand the facility to address liquidity issues faced by Tier 2 issuers? Mr. POWELL. The Commercial Paper Facility has substantially healed. As you point out, it really closed there in the beginning part of March, as so many markets did, and when we announced the facility, the highest-graded borrowers were able to start borrowing. So largely, but not completely, that market has returned to fairly normal function, and we are watching it carefully. I would say we are not currently assessing whether to broaden that facility, but should the situation deteriorate, we would have that as an option. Mr. LUCAS. Thank you. Secretary Mnuchin, there have been reports that China is restricting global agricultural imports due to COVID-19. How are we working to resolve this with China, and do you anticipate this impacting the terms of the Phase 1 trade agreement to purchase $200 billion in U.S. goods and services, particularly the commitment to purchase $40 billion in U.S. farm products? Secretary MNUCHIN. Let me just first emphasize that we have very serious concerns about the lack of transparency from China as it relates to COVID. Having said that, we have every expectation that they will support and live up to the Phase 1 agreement, and they are well on their way for those commitments. Mr. LUCAS. One last question. Native American tribes have been hit particularly hard by COVID-19. Tribal employment is often concentrated in the arts, recreation, and accommodation industries. How has the Federal Reserve and Treasury been looking specifically at the economic challenges faced by tribes? Mr. POWELL. As to Main Street, of course, the tribal businesses are eligible for participating in Main Street, and that is where a lot of the economic activity is there. The tribes themselves are not really general obligation issuers, so they are not particular candidates for the Municipal Facility. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 17 Mr. LUCAS. Thank you. And with that, Madam Chairwoman, I yield back the balance of my time. Chairwoman WATERS. Thank you. Mr. Sherman, you are now recognized for 5 minutes. Mr. SHERMAN. Thank you. Secretary Mnuchin, I am a very nice guy, so I won’t mention the press reports that say that over $1 billion in stimulus payments have gone to people who are deceased. But I will urge you to adhere quickly to the agreement that you have made with the Senate Small Business Committee to very quickly release the names and data of all PPP borrowers that have borrowed over $150,000. Chairman Powell, back on March 12th, I sent you a letter urging that you prohibit stock buybacks by banks. You have done so. Thank you very much. About 2 weeks ago, you went on the record to say, ‘‘I would think that it would be of concern if Congress were to pull back their support,’’ having just said that there are 25 million people who have been dislodged from their jobs. I thank you for that advocacy, and I hope Congress listens. We need to do more to stimulate this economy under these circumstances. Secretary Mnuchin mentioned the support that he’s providing to local and State Governments, but that is all in the form of loans, and, of course, almost all State and local governments can’t run a deficit. So with their revenues down by hundreds of billions of dollars, I hope we pass the HEROES Act and actually provide aid to State and local governments. And one issue, Chairman Powell, for the Main Street Lending Program that is particularly relevant to commercial real estate is that if they get a loan from you, they violate the loan covenants that they have in their existing mortgage, and I look forward to working with you on that. One possible solution is the bill that I submitted, and we have had hearings on in this committee, the Business Borrowers Protection Act. Certainly, getting a loan on a program that we have authorized because of the COVID crisis should not trigger the violation and make a pre-existing mortgage immediately due and payable. I spent this morning at the White House with a few of our colleagues getting briefed on Russian involvement in Afghanistan, and it appears to me, Secretary Mnuchin, that they have been bold. They have killed our soldiers, because when they do something else that we catch them on, we don’t sanction them very much. The debate now is whether they took the obscene step of putting a bounty on the head of individual soldiers, or whether they have limited their involvement in Afghanistan to just aiding the Taliban, but not correlating that aid to how many dead Americans this or that operation created. And, of course, the response from the Administration to this seems to be, well, let them into the G-8 and otherwise help them. That kind of lax response will lead to more deceased American soldiers. Under the Chemical Weapons Act, which Congress passed a couple of years ago, your Department was supposed to sanction Russia for their violation of the Chemical Weapons Act when they used poison to try to assassinate a Russian dissident in Britain, but you opted for the weakest sanctions allowed by the Act. What it does, is it prohibits certain loans from Americans to the Russian government, but it doesn’t apply to ruble transactions. It doesn’t apply to VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 18 loans to state-owned enterprises, and it apparently doesn’t apply to purchases in the secondary market. Given the fact that our under-sanctioning of Russia has led, at least, to their aiding the Taliban in a general sense and, according to press reports, has led to the specific putting of a bounty on our soldiers, could you revisit your decision on this existing law and impose these bans on ruble transactions, state-owned enterprises, and secondary markets? Secretary MNUCHIN. You covered a lot— Mr. SHERMAN. It must be a tough question. You took off your mask. Secretary MNUCHIN. Let me just comment, we believe we followed the law and selected amongst a series of items at the time, but I am happy to go back—I recall the situation—and look at it again. Mr. SHERMAN. There are credible reports that they put bounties on our troops. Please, look at it again. Secretary MNUCHIN. Again, on that, I just want to be clear. For the record, I am not commenting on classified information, nor do I think it is appropriate in this setting to talk about alleged information that is in the press. Chairwoman WATERS. Mr. Posey, you are now recognized for 5 minutes. Mr. POSEY. Thank you, Madam Chairwoman and Mr. Ranking Member, for holding this hearing today to review the Treasury and the Federal Reserve’s pandemic responses. Mr. Secretary, I want to commend your efforts and those of the President’s team, but most especially you, in working with Congress to put relief in place during these extraordinary times. The stimulus checks and the Paycheck Protection Program have been tremendously successful in bringing much-needed relief to hard-hit American families. It has been huge. Nothing like it before. It is great, the very best there is. Secretary MNUCHIN. Thank you. Mr. POSEY. I also want to commend Chairman Powell for his leadership in keeping the financial markets stable and liquid in the face of the downturn in the general economic conditions. We await full implementation of the Main Street Lending Program, and I am looking forward to hearing more about that. My first question is, our nation’s hoteliers have been facing one of the most severe downturns in demand of any sector of our economy. Revenues have plummeted as much as 80 percent during the shutdown, and extreme curtailment of travel, as you know. I am wondering—and I would like a response from both of you— if you have the authority you need under Section 13(3) of the Federal Reserve Act, and more broadly, the CARES Act, to address the liquidity and cash flow crisis that the hotel sector will be going through? Mr. POWELL. I will go first. We are not looking for additional authority under 13(3). Our authority is, of course, to lend to solvent institutions and in programs of broad applicability, and any company in any sector that meets those tests can borrow at one of our facilities. Mr. POSEY. Okay. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 19 Secretary MNUCHIN. The only thing I would just add to that is that we do appreciate, and certain comments have been made by this committee and others as it relates to loans that are in securitizations, and particularly hotels and other real estate that was properly levered beforehand. It does not lend itself as well to the 13(3) facilities, and we continue to look at that. Mr. POSEY. Okay. Mr. Chairman, some of our businesses, including, again, the hoteliers, are warning that their inability to make payments is threatening the servicing of commercial-backed securities, and I just wonder if you can bring us up to date on the status of the commercial mortgage-backed securities (CMBS) market? Secretary MNUCHIN. As I just mentioned, one of the problems of the CMBS market is there are very strict contractual obligations, and that is why one of the things I do think we need to look at in the next CARES Act is additional funding for these industries that are the hardest hit, so they can continue to rehire people, so that as occupancy increases, they have employees that they can maintain. Mr. POSEY. Great. Thank you. I recently wrote to both of you expressing my concern for businesses that are asset-based and I believe they will face hurdles to assessing Main Street Lending facilities because of the nature of their business challenges, their ability to meet lending criteria, based on the earnings before interest, taxes, and amortization, the so-called EBITA. For example, an aircraft developer in my district, especially an R&D organization, falls into this category, and I wonder if you could tell me what the possibilities are of providing access to Main Street Lending facilities for businesses like that? And you can go first, Mr. Secretary. Secretary MNUCHIN. We have discussed looking at asset-based financing, and that is something we continue to discuss with the Federal Reserve. Mr. POSEY. Okay. Mr. Powell? Mr. POWELL. Yes, that is where we are. Mr. POSEY. Thank you, Madam Chairwoman. I yield back. Chairwoman WATERS. Thank you. Mr. Clay, you are now recognized for 5 minutes. Mr. CLAY. Thank you so much, Madam Chairwoman, and I thank both witnesses for your participation today. Mr. Secretary, I am somewhat troubled by recent reports that some banks have taken stimulus payments from individuals and families, where the garnishment orders are negative account balances, to offset unrelated debts owed to them. I find it troubling that banks would serve as debt collectors at a time like this when families need resources most. When will Treasury issue guidelines articulating your expectation that financial institutions refrain from taking stimulus funds away from their customers during a time like this? Secretary MNUCHIN. Let me first say I agree with you, and that I think it would be awfully unfortunate if banks are doing that. We have had inquiries about the issue of garnishment, and we agree, from a policy standpoint, that there should have been no garnishment. Unfortunately, that is something we need to address in the next CARES Act if we do additional direct payments, because there are certain State laws that were not overridden in the existing VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 20 CARES Act. But my understanding is that is a State issue and not a Federal issue. But we agree from a policy— Mr. CLAY. But think about the cruelty of the policy. Wouldn’t you want to— Secretary MNUCHIN. As I said, I agree with you on the policy. Mr. CLAY. Couldn’t you all issue a blanket— Secretary MNUCHIN. We have asked our legal department, and unfortunately we can’t, and that is one of the things we would want to fix in the next CARES Act. So, we agree with you from the policy standpoint. Mr. CLAY. Thank you. Chairman Powell, for many nonprofits and small businesses, earnings before interest, taxes, depreciation and amortization is not a widely used metric. Have you considered applying other metrics of debt, future growth, or financial health to the Main Street Lending Program so that nonprofits and small businesses are fully able to participate? Mr. POWELL. Yes. As a matter of fact we have, particularly for nonprofits, of course, earnings before interest taxes doesn’t make any sense. So, you don’t need to take taxes out. They are nonprofits. They don’t pay tax. We are looking at a range of—and we actually put this out for comment, and we got a lot of very thoughtful comments from the nonprofit community, looking at cash flow and also financial resources, more broadly. In terms of companies, EBITA is just basically pre-tax cash flow. It is a very widely used metric. But there are other metrics, and as the Secretary mentioned, one of them, probably the next one in line, is something along the lines of asset-based, and that is something that we are looking at with the Treasury. Mr. CLAY. Under the Main Street Lending Program, you reduced the minimum loan threshold from $1 million to $250,000, and then by expanding the program to nonprofits with more than 50 employees. However, many small businesses may not need $250,000. Mr. Chairman, has the Fed considered eliminating the minimum loan threshold altogether? Mr. POWELL. We have not considered eliminating it yet, of course, and we are just now getting rolling with loans, as you know. So we can, once we get up and running, look at lowering it again, but you get into a very different kind of lending when you are down lower. These are really personal loans rather than business loans. They are generally guaranteed by the business operator, and we could look at that. But that would be something we would look at once we get up and running. Mr. CLAY. Yes, but it is kind of concerning that you have that threshold at $250,000 when, say, a small business in St. Louis needs $100,000 to survive through this pandemic until they get back on their feet. Any consideration given to accommodate that? Mr. POWELL. Yes. No, we can see ourselves possibly lowering the threshold again, but just logistically, for us to be making very, very small loans would be difficult, and those people may be better dealt with through fiscal policy. But I can see us down the road looking at a lower threshold. Mr. CLAY. I see. Thank you both for your responses, and Madam Chairwoman, I yield back. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 21 Chairwoman WATERS. Thank you. Mr. Scott, you are recognized for 5 minutes. Mr. SCOTT. Thank you, Madam Chairwoman. Chairman Powell, we all know that job losses have disproportionately impacted women, African Americans, and other minorities, but at the same time, our capital markets have improved significantly since the epidemic. Why is that? Is there something you are doing more so to help the capital markets than helping job losses corrected? Mr. POWELL. No. In fact, the objective of everything we are doing, every single thing we are doing is to take the 25 million people whose working lives have been disrupted and create a situation in which they have the best chance to go back to their old job or to get a new job. That includes all the facilities that we are doing. That is the overriding goal of what we are doing, and every one of them helps in that direction. Mr. SCOTT. Yes, I know that is your goal, but what I am trying to get at is, is it correctable? Are there some things you can do to fix this imbalance between staggering lowering unemployment and soaring rise in our financial capital markets? Mr. POWELL. What we have been trying to do is to create accommodative financial conditions and supportive financial conditions so that when the economy reopens—remember, we sort of deliberately closed it down—that expansion can be vigorous and strong, and it is just beginning now. Our support for that is part of what is driving the job growth that you saw in May, which was surprising to the upside. Mr. SCOTT. Yes. Also, while we have both of you all here, I want to pick up on what Chairwoman Waters was saying. We have a great opportunity here to do both of these things, with our housing and homeowner tranche that we are putting forward. This goes right into the belly of our economic wheelhouse jobs, keeping people secure, because it is coming. When 25 or 30 million people lose their jobs, how are they going to pay their house note? How are they going to pay the rent? How are they going to pay utilities? And more than that, how are the banks and the financial institutions going to get their mortgage payments so that they can make payments for the securitization of those mortgages that keeps our financial system healthy? So, I want to ask you to make sure that you all start talking about these things that we are putting forward. You my not agree with us on everything, but this is one that is very important. Let me go to one other area, to you, Secretary Mnuchin. None of the lending facilities established have targeted the needs of our agriculture industry. Now, why do I mention that? Food. It is coming. I don’t know why people can’t see this crisis. Food shortages are coming. It is almost like the farmers have been the forgotten ones. Are they qualifiable as small businesses? Many of them don’t know. They are sort of out there, just dribbling along the misty flats. What are you all doing to help lift up and make sure that we give our farmers, our rural communities the kind of help that they need? Because all of the food chain is going down, and you hear about the closures, the food processors are going down. Farmers are coming. These are small. Most of them, they are very important. Why can’t they be qualified as small businesses? Where are VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 22 they? They are getting lost in the shuffle. And if we get a food shortage, we are in— Chairwoman WATERS. Thank you. Mr. Luetkemeyer, you are now recognized for 5 minutes. I would encourage all of the Members to keep their mask on, please. Mr. LUETKEMEYER. Thank you, Madam Chairwoman, and thank you, Secretary Mnuchin and Chairman Powell, for being here today, and for your great leadership during this time. As we have gone through this, you guys have been very responsive, and you have been very cooperative. I can tell you from discussions that we have had in different settings, you have implemented lots of suggestions that we have come up with as a group, as a Congress, and for that, we are grateful. Leaders make tough decisions in tough times, and you have both exhibited the ability to make those tough decisions, so thank you very much. Both of you, in the past, have expressed your support for housing finance reform and GSE credit risk transfer (CRT). In prior testimony, you have committed to reviewing your prospective policies to determine whether capital relief is appropriate for U.S. banking organizations that engage in CRT with sound counterparties. FHFA recently re-proposed a capital framework for Fannie Mae and Freddie Mac, which adopts much of the U.S. banking framework, but in doing so, seems to have taken a confused and more punitive approach to certain types of CRT. I am encouraged by the questions posed in the proposal that would seem to indicate that there remains room for revision before the rule is final. I ask each of you gentlemen whether you still agree that it is appropriate that the Enterprises should receive meaningful capital credit for sound CRT transactions that they conduct with sound counterparties and avoid the accumulation of credit risks on the balance sheets of two institutions that remain taxpayer-backed. Secretary MNUCHIN. Yes. I agree that they should receive relief, that we should encourage them to do credit risk transfers with creditworthy counterparties, and I can also tell you that the Financial Stability Oversight Council (FSOC) is beginning to review these issues as well. Mr. LUETKEMEYER. Chairman Powell, do you want to comment on that as well? Mr. POWELL. No, I do agree, and we are actually in the middle of doing a careful review of the whole capital proposal as well. Mr. LUETKEMEYER. Okay. Thank you. As you know, it is hard for me to let a hearing go without talking about Current Expected Credit Losses (CECL), so we are going to try it one more time. In March of this year, the Federal Reserve and the FDIC and the OCC issued an interim rule to delay for 2 years estimated impact on regulatory capital at CECL, followed by a 3-year phase-in. In addition, the CARES Act included an optional delay in CECL implementation until the end of 2020 or the end of the pandemic, which 25 percent of applicable entities actually opted for. The Department of the Treasury is also conducting a study about the impact of Current Expected Credit Losses (CECL)—we were directed to do that—and most recently, my colleagues and I sent a bipartisan letter to the Financial Stability Oversight Council VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 23 (FSOC), urging for a delay on CECL implementation for all entities until 2022, set every entity, both banks and non-banks, which were not included in the CARES Act, on the same footing, and Treasury can conduct the study with the input of a real-life scenario that we have ongoing today. Given the actions by Congress and the prudential regulators, should we delay CECL, as I and my colleagues have called for, and should the Treasury examine the real-life scenario we have gone through when conducting their study? Mr. Mnuchin? Secretary MNUCHIN. I think that should be seriously considered, and yes, we are working on the study. Mr. LUETKEMEYER. The President issued an Executive Order with regards to each agency, going through and looking at all of the rules and regulations that were either waived, declined, changed, whatever. If they don’t work now, why should we continue them down the road when we get out of this mess? And so, I assume everybody is doing that. And this particular accounting principle would seem to fall in that area of, we need to be looking at this as something down the road that we need to get rid of in its entirety. Chairman Powell, would you like to comment on this as well? Mr. POWELL. No, I would agree. Mr. LUETKEMEYER. Okay. Thank you. I appreciate that, because I think there is a time and a place for rules and regulations. There is a time and a place that if they are nonfunctioning, we need to get rid of them and start over. With the Nationally Recognized Statistical Rating Organizations (NRSROs) and the Federal Reserve emergency facilities, I know you have heard a lot about this issue from members on both sides of the aisle, Chairman Powell, especially. The Fed took modest steps to include smaller NRSROs in the most recent FAQs, but only if those ratings are accompanied by one of the three incumbent NRSROs. I remain concerned that the Fed’s unilateral and haphazard chairing of these NRSROs is going to have serious implications for small to mid-sized businesses. Have you examined the impact delineating between the large and smalls is having in the marketplace? Mr. POWELL. As you mentioned, we started out getting these facilities set up very quickly, and we just went with the big three. After that, I think more than a month ago, we broadened it out to another group after taking a look. And we are balancing the need to move quickly and to move with institutions that we know well, or that are well-known, and that we included more and more, and that is a process that we are still looking at. Mr. LUETKEMEYER. Okay. Thank you very much. I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you. Mr. Huizenga, you are now recognized for 5 minutes. Mr. HUIZENGA. A point of inquiry, Madam Chairwoman. Should that be on the other side of the aisle? Oh, I am sorry. Okay. Thank you. I appreciate that. Mr. Chairman and Mr. Secretary, the word, ‘‘unprecedented’’ has been banned in my house by my col- VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 24 lege graduate—well, he graduated remotely—because he was looking around and was a little tired of that word being used. He has a history. His grandfather, my dad, was born in 1921, on a kitchen table in the hired hand’s home. My mother was born in 1931 in Flint, Michigan—yes, that Flint, Michigan—and had to move to Oklahoma, to the Dust Bowl, in the middle of the Depression, to try to survive, when they lost their house and my grandfather lost his job. We know that there is history behind this. So, I am not sure if this is, ‘‘unprecedented.’’ It certainly may be unprecedented in a way, in the modern era, where we have seen the government come in and sort of shut this down. But what we do know, from looking at history, is that we need to get the economy moving again. Now the question is how, whether it is getting kids back to school, as some have suggested, because if you can’t get kids into school, that is not going to then free up those parents to be available to work. Anecdotally, in my area, I know that manufacturers and service companies are having a very difficult time getting enough workers to come in to complete a full contingent of line workers, for example, or to get a full shift filled. And there are various reasons. Some have debated about the $600 additional per-week kicker as being a bit of a disincentive. But nonetheless, we know that we have to address those folks who really, truly are not able to get a job, and how do we distinguish them from those who are just deciding not to take that job? One of the things that I have proposed is something called the Patriot Bonus. The Patriot Bonus would be a 50 percent tax credit to any company that would give a per-hour bump to their employees, or a weekly bonus to their employees, or even a one-time bonus to their employees, to incentivize them to come off of that unemployment insurance system and get back engaged in the workforce, and I think it is critical that we do that. I do want to say, also, thank you for your work on the Paycheck Protection Program. I have talked to Cheryl, who owns a very popular bagel and coffee shop in my hometown, who knows that she survived because of it. And Don, who owns a bowling alley in my district, who was able to keep his folks on the payroll. Those types of things are critical and were very, very important. As we are shifting to the Main Street program, I do want to draw attention, and Chairman Powell and I had this conversation a couple of weeks ago. I brought up La Colombe. La Colombe is a Philadelphia-based company that has a manufacturing production facility in my district. It is a 26-year-old, fast-growing company. You may have gotten their coffee in the can. They produce a number of great products. But for the last 6 years, they have been really focused on their growth, and that also means they have had to borrow a tremendous amount of money, and that led to an accumulation of debt. Under some of the rules as they are currently written, La Colombe would not qualify to participate in the Main Street Lending Program, and I believe that the way that the leverage ratio requirements in the program are currently drafted really sort of, frankly, punishes companies like La Colombe and others who would otherwise be viewed as really, frankly, success stories. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 25 So if it is the way the rules are currently written, it is designed to prevent funds from going to companies that have this debt, but sometimes those companies might be some of those that need it the most. I am hoping that you will commit, Mr. Secretary, to working with me on that, to address that issue. Secretary MNUCHIN. Yes. I am not familiar with the company but we are happy to follow up with you and see if it can work. Mr. HUIZENGA. Great. And then in the remaining time, I talked to Jeff this morning. Jeff is 52. I talked to Jim and Eliza. He is 64, she is slightly younger, but she won’t tell me exactly how old. But what I do want them to know is, I want them to hear from you, what do you want to tell them, and the rest of Joe and Jane 401k who have their small investments in the markets, that are there, frankly, to help them as they approach retirement? What assurances can we give them about the economy? Secretary MNUCHIN. I want to tell them and all the other people that we are going to work with Congress to make sure we can do whatever we can do to get everybody back to work who lost their job due to COVID. And I am also extremely optimistic about the research that is being done on vaccines and virals and us combatting this terrible disease. Mr. HUIZENGA. Thank you. Mr. POWELL. I would just say— Chairwoman WATERS. Mr. Meeks, you are recognized for 5 minutes. Mr. MEEKS. Thank you, Madam Chairwoman. Mr. Powell, you and others at the Fed have written and spoken about the importance of maintaining the economy, full employment, as a way to pull a greater share of the minority workforce up, which is often the first to be laid off and the last to be hired. And while this is helpful, this is incredibly frustrating, as it is an admission that everyone else gets a head start in the economy, and communities of color only get out of the starting block after everyone else has been running the race for months, years, or decades. Let me ask you first, Mr. Powell, would you agree that structural discrimination exists in the United States in the economy today and impedes the economic success of communities of color and is a key to understanding why Black wealth is just 10 percent that of White communities? Mr. POWELL. Yes, I do agree. Mr. MEEKS. Mr. Mnuchin, would you agree also? Secretary MNUCHIN. I agree we need to do everything we can to create a level playing field, yes. Mr. MEEKS. I also believe that our approach to addressing the legacy of economic racism and discrimination must include equity investments. Communities that have been financially excluded for decades, or hundreds of years, that were disproportionately impacted by the financial crisis, and now by the COVID pandemic, cannot borrow their way out of poverty and economic—I believe that sizable equity investments over the coming decade into communities of color will be essential to substantially lift them out of poverty and build resilience. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 26 I am working on a proposal for creating a national investment fund, pulling together capital from both the private sector and the government, to invest in these communities over the next decade or more. Secretary Mnuchin, do you agree that massive amounts of equity investments will be required to lift these communities, and that debt alone cannot solve the problem? Secretary MNUCHIN. I definitely think investments in these communities is important, and we look forward to working with you on your specific ideas. Mr. MEEKS. Great. And Mr. Powell, can we count on the funds and you working with us? Mr. POWELL. We would be delighted to. Mr. MEEKS. Given that, Secretary Mnuchin, the Treasury Department has the capacity and the authority to invest Tier 1 capital into Minority Depository Institutions (MDIs), but has never done so. Similarly, the Treasury Department could use existing authority to mobilize deposits from trust funds into MDIs, either directly or through custodial accounts, but it does not do so. And since we agree that we need to have investments, would you agree that MDIs play a critical role, as we found doing PPP, in providing minority communities access to capital, and I will ask you then, will the Treasury use its existing authority and capital to provide direct support to MDIs? Secretary MNUCHIN. I will have to review those authorities and get back to you. If that is something we have, it sounds very interesting. I am not familiar with those specific authorities so let me look into it. Let me just say also, the CDFIs did a terrific job as well. Mr. MEEKS. I agree. I should have added the CDFIs. We concur on that. But I look forward to working with you to make sure that we are investing. We have public money as well as private money to invest in those MDIs so that they have the capital and the wherewithal to move forward. That is the way to govern. Mr. Powell, has the Fed made a requirement of all asset managers and broker-dealers with which they contract to partner with minority firms in fulfilling contracts and transactions? Mr. POWELL. Yes. We do have obligations, for example, with the companies we have contracted with during the pandemic. They have to address diversity and inclusion issues at their company, and they have to also reach out to minority suppliers as well. Mr. MEEKS. And the Treasury? Secretary Mnuchin? Secretary MNUCHIN. Yes. Mr. MEEKS. Okay. So, I am hearing from both of you that you will commit to incorporating this as standard to the Federal Reserve and the Treasury policies across all capital market programs that involve partnership with private sector asset managers, broker-dealers going forward, with minority broker-dealers and asset managers. Is that correct? Mr. POWELL. That is really part of our rulebook now, actually. Mr. MEEKS. Mr. Mnuchin? Secretary MNUCHIN. Yes. That is something we will work on as well. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 27 Mr. MEEKS. Thank you. I am out of time, so I yield back. Chairwoman WATERS. Mr. Stivers, you are now recognized for 5 minutes. Mr. STIVERS. Thank you, Madam Chairwoman. And thanks for being here, Mr. Secretary and Mr. Chairman. I really appreciate it. Secretary Mnuchin, I am hearing from some lenders that are being accused of failing to pay agents who assisted businesses in preparation of their Paycheck Protection Program loan submissions. And before participating in PPP, I heard comments from banks that they were worried they might be exposed to legal liability without sufficient safeguards in what is essentially a government grant program. But they largely participated anyway, because obviously, they felt like they had a duty to their customers and the country during a time of need. Now I am told that many banks are being targeted by litigation. It takes advantage of the lack of clarity about how agent fees are supposed to be processed and how they work. For example, banks don’t have precise answers on where the fees were supposed to come from, is an agreement between a bank and an agent required before any work on the application is completed or processed? Is this an issue you are aware of, and does Treasury have a plan to offer any additional FAQs to clarify the issue of agent fees and when they are due and how that works? Secretary MNUCHIN. I have recently become aware of this issue as well. What our guidance did say is that banks could pay agent fees out of the fees that they received. That was intended to be based upon a contractual relationship between the agent and the bank. And to the extent there is any confusion on that, we will look at clarifying that. Mr. STIVERS. It would be great if you could do a clarifying FAQ, because I think it will prevent some litigation, or at least allow for that litigation to move expeditiously and less costly through the process. Secretary MNUCHIN. We will review that. Thank you. Mr. STIVERS. Thank you, Mr. Secretary. Chairman Powell, Treasury and the International Association of Insurance Supervisors (IAIS)have stated publicly that proposals to retroactively amend business interruption insurance policies to cover COVID-19 claims would endanger financial stability. Specifically, IAIS stated that they cautioned against initiatives seeking to require insurers to retroactively cover COVID-19-related losses such as business insurance, and that those things were excluded in the insurance contracts. Such initiatives could ultimately threaten policyholder protection and financial stability. Do you share the concern requiring payoffs of uncovered policies and that they could result in insurer insolvencies and destabilize our financial system? Mr. POWELL. Actually, that is an issue that is really kind of outside the periphery of our authority, except as you point out, to the extent to which it relates to financial stability. We are monitoring it, but so far, we haven’t taken a position on it. Mr. STIVERS. Please, continue to monitor it. If it results in any kind of destabilization of the financial system, that is your role. I VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 28 get it. And I am not asking you to exceed your role, but please pay attention to it. Chairman Powell, could you kind of give us an overview of the current state of municipal finance markets and the effectiveness of the Fed’s efforts to stabilize those markets? Mr. POWELL. I would be glad to. The municipal markets, like so many other markets, really just about shut down in the middle of March, and we announced the municipal liquidity facility, and really that announcement has had an enormous effect on the functioning of that market. So, you see a lot of healing in that market. You see plenty of issuance of issuers of different credit ratings and also different kinds of issuers, revenue issuers. It hasn’t returned to where it was in February of 2020, but there has been a lot of progress. As an example, the State of Illinois did most of its financing in the private markets without our support and then came to our facility for its last piece of financing. So, I am very pleased that the announcement effect was very strong and effective, and is helping a lot of borrowers now. Mr. STIVERS. Finally, I just want to say thank you, Secretary Mnuchin, and thank you, Chairman Powell, for your incredible leadership and availability through this crisis. This hasn’t been easy. Clearly, mistakes will happen when we are in uncharted waters. But you both have been bold in your leadership. You have made a difference. You have helped businesses survive. You helped the economy survive. Thank you for your incredible leadership, and we wouldn’t be doing as well without it. There is more work to be done. I appreciate everything you have done and hope you will continue to focus on small businesses and medium-sized businesses around Main Street, because they are still struggling. Thank you so much. Chairwoman WATERS. Mr. Green, you are now recognized for 5 minutes. Mr. GREEN. Thank you, Madam Chairwoman. I thank the witnesses for appearing as well, and I would like to lay a proper predicate for my questions. According to the latest Home Mortgage Disclosure Act (HMDA) data, in 2019 the vast majority of home purchase loans went to White borrowers, at approximately 10 times that of loans that went to Black and Asian Americans and Pacific Islanders (AAPI) borrowers. Here are the numbers: the share that went to White borrowers, 60.3 percent; to Hispanic borrowers, 9.2 percent; to AAPI borrowers, 5.7 percent; and to Black borrowers, 7 percent—60.3 percent to White borrowers, 7 percent to Black borrowers. And even when lending discrimination does not result in outright denials of credit, it drives up borrowing costs for minority home buyers. Loans to Black and Hispanic borrowers continue to be higher-priced for both conventional and nonconventional loans in 2019. Home purchase loans were higher-priced for the following share of borrowers: to Black borrowers, 20.3 percent; to Hispanic borrowers, 23 percent; and to White borrowers, 8.3 percent. Consistently we see empirical evidence indicating that there is invidious discrimination in lending, especially as it relates to people of color. So here are my questions, dear friends. Adjusting for VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 29 education, credit score, assets, and other relevant factors, do you believe that invidious discrimination in lending exists against borrowers of color? I have been collecting these pictures. I keep them in my office. These are pictures of people who denied the existence of invidious discrimination as it relates to people of color. So my question to you is, do you believe that this invidious discrimination exists in lending as it relates to people of color? If you do believe so, would you kindly extend a hand into the air? [Hands raised.] Mr. GREEN. Okay. Would you kindly hold them up? I’d just like to get a good picture of you, Mr. Secretary. Thank you very much. Next question. Do you believe that this invidious discrimination against borrowers of color can be addressed with legislation? Can we craft legislation to help end this invidious discrimination? If you think so, would you kindly raise a hand? Legislation. Can we craft legislation? [Mr. Powell raises his hand.] Chair Powell seems to think so. Mr. Mnuchin? Secretary MNUCHIN. Can I respond to the answer? Mr. GREEN. You can respond, but if you will be so kind as to let me know where you are going first. Sometimes, when people finish, I don’t know what they said. This wouldn’t apply to you, of course. Secretary MNUCHIN. I think we have legislation, so I think we need to do a better job. So I will say we can look at legislation, but I think it is more than just legislation. Mr. GREEN. Okay. I agree with you that it is more than legislation, but would you agree that legislation can be a part of the remedy? If you would kindly extend a hand. [Secretary Mnuchin raises his hand.] Mr. GREEN. Thank you. Now, I am in agreement with you. We have a couple of pieces of legislation. H.R. 149, the Housing Fairness Act, helps to deal with discrimination in housing as it relates to people of color and others as well. And then, H.R. 166, the Fair Lending for All Act, would put an end to this race-based lending and discrimination. That is two pieces of legislation, and hopefully, they will move in Congress. But here is my final question. I believe that it is time for us to reconcile in this country. We have survived COVID but didn’t reconcile. We survived the invidious discrimination that exists now, segregation, but we haven’t reconciled. If we had a Department of Reconciliation with a Secretary of Reconciliation, would you work with a Secretary of Reconciliation, your departments, the agencies that you represent, would you work with such a person to help us reconcile in this country? If so, raise your hand. Okay. Secretary MNUCHIN. Not knowing what that is, I guess—if there is a department then— Mr. GREEN. I can tell you, it would be a department designed to eliminate invidious discrimination and racism. That is what it would be all about, at the Cabinet level, hopefully. Thank you both. And thank you, Madam Chairwoman. I yield back. VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 30 Chairwoman WATERS. Thank you. Mr. Barr, you now are recognized for 5 minutes. Mr. BARR. Thank you, Madam Chairwoman, and to Secretary Mnuchin and Chairman Powell, I want to thank you both for the very decisive and aggressive actions that you have both taken from the outset of this pandemic. I think both the Fed and the Treasury, through the emergency lending, and with the tools that we have given you through the Exchange Stabilization Fund, really made a difference in making a bad situation a lot less bad, given the circumstances. So, thank you for your actions. And as an example of the agility that you have shown, Secretary, let me thank you, in particular, for responding favorably to a letter that Representative Hill and I sent to you about streamlining and making less bureaucratic the loan forgiveness application under the PPP program. That was tremendously helpful for both borrowers and lenders, cutting that red tape. The EZ form is very welcome, and I appreciate the fact that you were responsive to that. Let me ask you a follow-up question about commercial real estate. We have had a couple of questions from Mr. Sherman, and Mr. Posey. This is a problem we have not addressed yet. And I am hearing from many commercial property owners and borrowers in my district, and across the country, especially hoteliers, where occupancy rates remain very, very low. Shopping center owners—retail clearly has not recovered. And other businesses have been significantly disrupted by the pandemic. I think we are going to see, without intervention, a wave of foreclosures and defaults. And Secretary, you did identify the problem with the inflexibility of these servicing agreements. But I think you mentioned that we might need additional legislation to allow hoteliers to hire back workers. That is really not the issue. The issue is debt. They can’t service their debt because they don’t have revenue. So my question is, both of you all recently received a letter from me, Congressman Taylor, Congressman Heck, and Congressman Lawson, plus over 100 of our colleagues, urging the Fed and Treasury to establish a facility to assist commercial real estate borrowers, especially those with CMBS loans. Secretary, you testified that you have $250 billion remaining in the Exchange Stabilization Fund (ESF). To both of you, does the Fed currently have the authority to establish such a facility, and do you feel that market conditions in commercial real estate warrant action by the Fed and Treasury? Secretary MNUCHIN. Let me just appreciate and thank you for your letter. This is a large challenge, so working with the Fed, we have not yet figured out a way to set up a facility. It is not out of a lack of interest or a lack of desire. There are structural problems. And let me just add, in many of these cases, these companies don’t need more debt. They need support. So one of the things we will want to look at in the next CARES Act, as I said, is additional support for these hardest-hit industries. As the Chair has said, there is a difference between lending and spending. Mr. BARR. Right. Chairman Powell? VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 31 Mr. POWELL. I just would echo, and I have your letter right here, that I have been very focused on this. And you said it in your comments, and it is in the letter, that more debt may not be the answer here. Debt doesn’t solve every problem you have. People can’t currently service debt. You have hese inflexible arrangements. So, there is a serious problem here that needs to get fixed, and we are racking our brains to see how it could be something we could do by lending. But that is really what we can do, is create more debt. Mr. BARR. I would encourage you to consider, in some cases, that the covenants against additional indebtedness may be too restrictive, that these owners could take on additional debt to get them through this period of time. But I look forward to working with you, whatever the answer is. Quickly, on Main Street, Chairman Powell, I have heard from a number of lenders and business owners who have indicated that the terms of Main Street may discourage borrowers from applying and lenders from participating. Some lenders had welcomed the changes made recently by the Fed, but many are still far from enthusiastic about participating. What has been the response thus far from the lender community, and how is the Fed going to encourage lender participation, given the hesitations? Mr. POWELL. We have had a lot of interest. We do webinars. We do outreach. And as I mentioned earlier, we have had something like 300, a little more than 300 now, I think, turn up. What the banks tell us is, though, is that it is sort of a mixed thing. They are not getting a ton of interest from borrowers, and many of them say that they expect that will change—over the course of the next few months, they do expect the demand from borrowers will increase. And I will just echo that we continue to be open to playing with the formula and making adjustments going forward. Mr. BARR. My time has expired, but the reason why Main Street doesn’t work for commercial real estate is that EBITDA limitation, as you know. But thank you. I yield back. Chairwoman WATERS. Thank you very much. Mr. Powell, the issue of rules that we have talked about is on my radar. We will continue to talk about this issue and pay attention to what you are saying to us about it. With that, Mr. Cleaver, you are recognized for 5 minutes. Mr. CLEAVER. Thank you very much, Madam Chairwoman. Secretary Mnuchin, thank you for being here. Chairman Powell, thank you for being here again. I know that you have been asked by a number of Members before me about the issue with Black and Brown business owners being left out of that pot that was clearly intended to help during these down times. And so I am frustrated, like a lot of people, not only in Congress, but a lot of people around the country. What is your philosophy, Mr. Secretary—well, maybe not your philosophy, but what do you have to say as to why weren’t rural and minority businesses more equally supported in the emergency program? And what do you think happened? Secretary MNUCHIN. Let me just first say that we need to all do a better job at making sure that we have sources of funds for those VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 32 businesses and to support those businesses. In the PPP, we have worked with lots of different people to make sure the CDFIs and the MDIs get there. But across-the-board, we can always be doing a better job. Mr. CLEAVER. Thank you. I guess I am where I am now because I am here dealing with these minority businesses right now, and if I say we all agree we need to do a better job, do you have any ideas on specifically, what we can do better? Secretary MNUCHIN. We would be happy to work with you on that. We have been working with Robert Smith and a bunch of external people to try to figure out how we can use the CDFIs, how we can make sure MDIs have more access to capital. And I think there is a lot of good ideas out there that we need to continue to explore before we have one solution. I think there are multiple solutions. Mr. CLEAVER. Okay. Mr. POWELL. Mr. Cleaver, I will just add that we are doing a great deal of outreach with MDIs and CDFIs to get them access to the programs that we are doing, including the PPP. And in fact, we have a meeting with the National Bankers Association tomorrow, on July 1st. So, we are doing a lot of outreach, and we think it is having an effect. Mr. CLEAVER. Thank you. Actually, after you appeared before our committee, I did have an approximately 40-minute meeting with Esther George here, at the Kansas City Fed office. And I said I appreciated her going into detail about the issues that we were raising as best as she could. So, thank you for doing that. I appreciate that. I just was hoping that the Secretary would understand the pressure that these businesses are under, which means that as representatives of theirs, we are also in a tremendously pressurized situation. I was hoping that I could go back and say, ‘‘This is what we are going to do henceforth.’’ But I appreciate where we are. You can’t respond to any classified intelligence, so I won’t ask those questions. But I am, nevertheless, going to send you a letter, and I don’t even expect a response. I am doing this for my own personal historic concern, and that is, I am sure that the next generation and the generation after that will be asking us, ‘‘Grandpa, what did you do?’’ ‘‘Grandma, what were you doing during those times when things were going off the rails?’’ So, thank you both for appearing, and I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you very much. Mr. Tipton, you are recognized for 5 minutes. Mr. TIPTON. Thank you, Madam Chairwoman. I appreciate, Mr. Secretary, and Chairman Powell, you both taking the time to be here. And I do appreciate all of the efforts that you have made to stimulate the economy and to help our folks at home. I did want to bring up an issue that we have heard back in our district. As you know, under the CARES Act, the government did provide for communities of 500,000 or more people to be able to apply directly to Treasury for assistance. In Colorado, that translated into 59 of the VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 33 64 counties in Colorado were unable to be able to receive direct assistance. In full recognition, obviously, the traditional dollars went in over and above the direct assistance that was able to be applied for. And I guess, Mr. Secretary, I would like to be able to see from you, has there been any oversight to be able to do what I believe was the congressional intent, to be able to get those dollars back into small communities, like those that I represent, and have we had any sort of examination of how those dollars are being spent by the States? Secretary MNUCHIN. Let me just say, we agree with you. We thought the purpose was that we sent money to cities above 500,000. The reason why we didn’t do it to less was purely administrative. We have put out guidance saying that the States should distribute money down. We have also had discussions with the Inspector General to review this. So, we appreciate your comments. Mr. TIPTON. Thank you, and I appreciate the recognition that the small communities happen to—when we look at small businesses— that was my real life—we create 7 out of 10 jobs, and a lot of that does happen to be in rural America. And I appreciate your attention to that as we are looking forward to any other package that may come forward. One of the biggest aspects, I think, that you have both spoken to is the ability to be able to get the economy going and to make sure that we are going to be able to create jobs once again. But providing access to credit is going to be ultimately critical to being able to do that. We have some that are tempted to wipe that credit slate clean during the pandemic. But I believe it is important that we do have an accurate and a full credit profile to be able to have risk mitigation that will help ultimately reignite lending in the country quickly. Secretary Mnuchin, would you speak maybe to the importance of being able to maintain unaltered and complete credit profiles so that lenders can evaluate the creditworthiness of borrowers? Secretary MNUCHIN. Yes. I believe that is very important. Mr. TIPTON. One of the bigger issues that we are hearing on PPP is that lenders across the country, big and small, readily answered the call to be able to make those loans out to our small businesses during the crisis. And since there was essentially no guidance when lenders began providing PPP loans, what can agencies do, Mr. Secretary, to the extent to hold them harmless in terms of provisions to the entirety of the PPP process and adequately protecting the lenders who are trying to do the right thing? Secretary MNUCHIN. The lenders were merely intended to be an intermediary. They were the fastest way that we could get money to the businesses. Most of the certifications were certifications that the borrowers had to make and that they would be liable for. There were a few things that the lenders had to do, which was check the payroll and payroll documents. But yes, it was supposed to be predominantly a pass-through mechanism. Mr. TIPTON. Okay. Thank you. And there is an interim final rule on lender fees out of the SBA, indicating that if they conduct loan review and determined that the borrower was ineligible for a PPP loan, the lender is not eligible for the processing fee. The SBA was VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 34 also able to draw a claw-back feature of the fee, within one year, if they determined that a borrower is ineligible for the PPP loan. Considering that those lenders, as we noted, did act in good faith through the PPP process and have dedicated significant amounts of resources to be able to help the economy, why did the agencies decide to take this approach? Secretary MNUCHIN. Let me just say I hope that is a very small number of loans that that turns out to be. But the thought of the taxpayers paying fees to loans that weren’t made seems to be unfair, and I would just say, in general, I think the fees were very attractive to the lenders. So, if there were a small number of loans that they made where that was the case, I think they were still well-compensated. Mr. TIPTON. Thank you, Mr. Secretary, and I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you. Mr. Perlmutter, you are recognized for 5 minutes. Mr. PERLMUTTER. Thank you, Madam Chairwoman. Gentlemen, thank you for your testimony today. And thank you for your leadership in the first 3 months of this emergency. The pandemic dealt a real blow to the economy, and you helped cushion the blow. But we are not out of this thing, by any stretch of the imagination. Around Colorado, we see California, Utah, Arizona, and Texas with rising case numbers, rising hospital patients, rising death counts. And we also know that at the end of July, the Pandemic Unemployment Insurance payments cease, as it is currently written. We know that a number of the moratoria on evictions and foreclosures begin to cease. And the 8 weeks provided under the PPP, certainly for those initial takers of the loans, start to run out. So, I see a brick wall at the end of July. And Mr. Secretary, you played a key role in helping to fashion the fiscal pieces of this, the CARES Act. We call what we have done as this next iteration the HEROES Act, so that law enforcement, teachers, transportation workers, and medical staff don’t get laid off, in addition to the ones who have already been laid off by local governments, by State Governments, and by school districts. I asked Mr. Powell a question when he was in front of our committee a couple of weeks ago, on State and local government assistance to backfill the tax revenue.I will say, though, from a standpoint, State and local governments employ something like 13 million people. States have to balance their budgets. And revenues go down and expenses go up, and what States do is they cut costs. And we have seen State and local governments lay off 1.5 million people already. State and local governments provide essential services, as we all know, so you know they are a great and a big employer, and I would say it is certainly worth considering. If we don’t do something, it will hold back the economic recovery if they continue to lay people off and if they continue to cut essential services. And, in fact, that is kind of what happened after the global financial crisis. Mr. Secretary, as you again are sort of in the middle, between the House and the Senate and the White House, where are you on VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI 35 assisting State and local and school districts to help backfill the lost revenue that we have seen hit them already? Secretary MNUCHIN. Let me just first say, within the context of the last CARES bill, we tried to issue guidance that was as flexible as possible, particularly for firefighters, first responders, and policemen, so that States could use that money, and have a safe harbor, and didn’t need to let any of those people go, which, as you said, this would be the worst time, when we need to support all of those people. I am committed to working with both the Democrats and the Republicans, in the House and the Senate. In July, as you said, we have a lot of important features that all come to an end, and I commit to continuing to have these conversations, and I take great pride in the fact that we had enormous bipartisan support in the previous bills, and I look forward to working with everyone. Mr. PERLMUTTER. And I would just ask you, because what we have seen—as a Democrat, we passed this. The Senate has been sitting on it, even as time is ticking. And in Colorado, for instance, we are looking at probably a $2.5 to $3 billion drop in tax revenues this year, and will see it again next year, and probably the year after that. And so, I would just ask you to really push on that one, or there are going to be a lot of people laid off at just the worst time, in very essential services. And so, gentlemen, you have done a heck of a job. You get patted on the back now, but we are still in this emergency, and now we have to focus on going forward, which is this next iteration, or there is going to be a lot of trouble come the end of the summer. With that, I yield back. Chairwoman WATERS. Thank you very much. I would like to thank our witnesses for their testimony today. The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. This hearing is now adjourned. [Whereupon, at 2:45 p.m., the hearing was adjourned.] VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\HBA182.000 TERRI APPENDIX June 30, 2020 (37) VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00041 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00042 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 1 here 42943.001 38 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00043 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 2 here 42943.002 39 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00044 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 3 here 42943.003 40 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00045 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert 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Insert offset folio 69 here 42943.069 106 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00111 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 70 here 42943.070 107 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00112 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 71 here 42943.071 108 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00113 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 72 here 42943.072 109 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00114 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 73 here 42943.073 110 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00115 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 74 here 42943.074 111 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00116 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 75 here 42943.075 112 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00117 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 76 here 42943.076 113 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00118 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 77 here 42943.077 114 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00119 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 78 here 42943.078 115 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00120 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 79 here 42943.079 116 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00121 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 80 here 42943.080 117 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00122 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 81 here 42943.081 118 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00123 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 82 here 42943.082 119 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00124 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 83 here 42943.083 120 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00125 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 84 here 42943.084 121 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00126 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 85 here 42943.085 122 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00127 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 86 here 42943.086 123 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00128 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 87 here 42943.087 124 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00129 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 88 here 42943.088 125 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00130 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 89 here 42943.089 126 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00131 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 90 here 42943.090 127 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00132 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 91 here 42943.091 128 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00133 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 92 here 42943.092 129 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00134 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 93 here 42943.093 130 VerDate Nov 24 2008 16:06 Mar 08, 2021 Jkt 095071 PO 00000 Frm 00135 Fmt 6601 Sfmt 6601 K:\DOCS\HBA182.000 TERRI Insert offset folio 94 here 42943.094 131