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OVERSIGHT OF THE TREASURY DEPARTMENT’S AND FEDERAL RESERVE’S PANDEMIC RESPONSE HYBRID HEARING BEFORE THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED SIXTEENTH CONGRESS SECOND SESSION SEPTEMBER 22, 2020 Printed for the use of the Committee on Financial Services Serial No. 116–111 ( U.S. GOVERNMENT PUBLISHING OFFICE WASHINGTON 43–525 PDF VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 : 2021 Sfmt 5011 K:\DOCS\HBA266.000 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 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\HBA266.000 TERRI CONTENTS Page Hearing held on: September 22, 2020 .......................................................................................... Appendix: September 22, 2020 .......................................................................................... 1 39 WITNESSES TUESDAY, SEPTEMBER 22, 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 8 APPENDIX Prepared statements: Mnuchin, Hon. Steven T. ................................................................................. Powell, Hon. Jerome H. .................................................................................... ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD 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 Stivers .................................................................................................... Written responses to questions for the record submitted by Representative Kustoff .................................................................................................... Written responses to questions for the record submitted by Representative Gabbard .................................................................................................. Written responses to questions for the record submitted by Representative Barr ........................................................................................................ 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 Anthony Gonzalez .................................................................................. Written responses to questions for the record submitted by Representative Hill .......................................................................................................... Written responses to questions for the record submitted by Representative Kustoff .................................................................................................... (III) VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 40 43 K:\DOCS\HBA266.000 TERRI 55 60 61 62 63 65 85 88 90 VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\HBA266.000 TERRI OVERSIGHT OF THE TREASURY DEPARTMENT’S AND FEDERAL RESERVE’S PANDEMIC RESPONSE Tuesday, September 22, 2020 U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The committee met, pursuant to notice, at 10:34 a.m., in room 2128, Rayburn House Office Building, Hon. Maxine Waters [chairwoman of the committee] presiding. Members present: Representatives Waters, Sherman, Green, Perlmutter, Himes, Foster, Beatty, Heck, Vargas, Gottheimer, Gonzalez of Texas, Lawson, Tlaib, Porter, Axne, Casten, McAdams, Adams, Dean, Garcia of Illinois, Garcia of Texas; McHenry, Wagner, Lucas, Posey, Luetkemeyer, Huizenga, Barr, Williams, Hill, Emmer, Zeldin, Loudermilk, Mooney, Davidson, Budd, Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, Timmons, and Taylor. Chairwoman WATERS. The Financial Services Committee will come to order. Without objection, the Chair is authorized to declare a recess of the committee at any time. I want to remind Members of a few matters, including some required by the regulations accompanying House Resolution 965, which established the framework for remote committee proceedings. First, I would ask all Members on the Webex platform to keep themselves muted when they are not being recognized by the Chair. This will minimize disturbances while Members are asking questions of our witnesses. Members on the Webex platform are responsible for muting and unmuting themselves. The staff has been instructed not to mute Members except when a Member is not being recognized by the Chair, and there is inadvertent background noise. Members on the Webex platform are reminded that they may only attend one remote hearing at a time, so if you are 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. (1) VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 2 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 and closed 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 a mask. The Chair has a strong preference for Members to wear a mask even while being recognized by the Chair. Members who do not wish to wear a mask may participate virtually through the Webex platform. Before going any further, I would ask unanimous consent to speak out of order, and I suppose this would be a personal privilege. I would like to take a minute to acknowledge the departure of a staff member, Lisa Peto. Lisa has been with the committee for 8 years, working her way up from a fellow to the committee’s chief counsel. She has been a dedicated, tireless, and committed public servant with a keen understanding of procedure and a deep knowledge of the legislative process. Under Lisa’s guidance, committee Democrats successfully transitioned from the Minority to the Majority, and then, Lisa was instrumental in the committee’s transition from in-person hearings to virtual and hybrid ones. Lisa has accomplished so much with the committee, but her most important accomplishment is her family. She is mom to her son, Adrian, who recently celebrated his first birthday. Lisa has been a valued member of my team, and I will miss her dearly. So, I want to thank her for her service, and wish her the best in her future endeavors. Mr. MCHENRY. Madam Chairwoman? Chairwoman WATERS. I now recognize the ranking member to speak out of order. Mr. MCHENRY. Thank you, Madam Chairwoman. As we all know, and as we grow in our service here, we know how important having staff is to this whole process, how essential it is that you have good staffers who are going to represent their Member’s perspective. And I will tell you that Lisa has been a fierce advocate for her principal’s perspective. In negotiations, she has not wavered in her view, her view being the chairwoman’s view, but at the same time, being cordial enough to have a conversation and maintain relationships. That is a priceless bit of art that is representative of Lisa’s character. And we are grateful, Lisa, that we have been able to work with you. We wish that we had been more successful in our negotiations with you personally. But it is due to your talent, and it is also due to your knowledge. And so, we thank you for your service to your country, to our country, to this institution, and to this committee. And I know committee Democrats especially will miss you. Committee Republicans won’t miss you quite as much. But we are certainly grateful for the relationship that we have all been able to have with you, Lisa. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 3 Congratulations to you on your son and your new family, and we hope that your time away will be but temporary from public service. But thank you for your service to your country and this institution. And I yield back. [applause] Chairwoman WATERS. Thank you very much, Mr. Ranking Member. Today’s hearing is entitled, ‘‘Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.’’ This hearing is the committee’s second quarterly hearing required by the Coronavirus Aid, Relief, and Economic Security (CARES Act), for oversight of the various Facilities and programs under the Act. I now recognize myself for 4 minutes to give an opening statement. Welcome back, Chair Powell and Secretary Mnuchin. Since you last testified before this committee in June, the coronavirus crisis has continued to have a catastrophic impact on communities across the country. Nearly 200,000 people in the United States have lost their lives to the coronavirus, and there have been over 6.8 million U.S. cases. Millions of families are struggling to make ends meet during this crisis and are on the verge of eviction. Over a million small businesses, which are the lifeblood of our economy, have shut their doors as families across the country are looking to Washington for leadership. The Trump Administration has utterly failed in its economic response to this virus, with 32 percent of renters unable to make their full September rent payments at the beginning of the month, according to Apartment List, and back rent piling up. The need for emergency rental assistance to prevent a crushing wave of evictions is growing every day. Instead of rental assistance, the Trump Administration has issued a Centers for Disease Control and Prevention action that temporarily prevents evictions for some renters, but only after they sign documents that potentially expose them to litigation and criminal penalties. Meanwhile, the unpaid back rent continues to accrue, meaning that the Trump Administration is simply delaying, not preventing, evictions. The Health and Economic Recovery Omnibus Emergency Solutions (Heroes) Act, which passed the House in May to prevent those evictions and provide other critical relief, is gathering dust in the Senate on Mitch McConnell’s desk. I said before that I am pleased that after calls from members of this committee, the Treasury and the Small Business Administration made adjustments to the Paycheck Protection Program (PPP) to ensure that community development financial institutions (CDFIs) and minority depository institutions (MDIs) are able to provide loans to the communities they serve, and I appreciate that the Federal Reserve has expanded several programs. But I am frustrated with the Trump Administration’s implementation of pandemic relief programs based on the concerns I continue to hear. Specifically, I am very concerned that much of the $500 billion Congress allocated in the CARES Act to Treasury, most of which VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 4 was to support Federal Reserve lending, to help reeling businesses, nonprofits, and State and local governments, has gone unused. Here we are almost 6 months after the passage of the CARES Act and a mere 0.2 percent of Main Street Lending Program funds and 0.3 of Municipal Liquidity Facility funds have been put to use. This is unacceptable. Secretary Mnuchin, Chair Powell, let me be blunt. This pandemic response has fallen badly short, and the Trump Administration has sabotaged efforts to pass a relief package or address the major public health and economic crisis we face. Your work to address this crisis doesn’t stop when the stock market recovers from its losses. Your mandate is to help hardworking individuals and families who are suffering. Before I close, let me say that I just learned today that there are 40,000 students who have been infected with the virus. That shakes me. And we still have people who are forcing schools to open and not do distance learning. I don’t get it. And I didn’t know until today that that many students had been infected. So, I am very, very concerned. I now recognize the ranking member of the committee, the gentleman from North Carolina, Mr. McHenry, for 4 minutes. Mr. MCHENRY. Thank you. We all know that testing, treatment, and therapeutics need to come online for a full economic recovery. That is moving at an unprecedented pace, I would say, not just globally, but here in the United States, with great innovators. The coordination between the public sector and the private sector has been the best it has ever been in generations. And this Administration’s response to this unprecedented pandemic, the Federal Reserve’s response to this unprecedented pandemic, is topnotch. It is fantastic, the delivery that Secretary Mnuchin was able to provide on PPP, which supported 51 million jobs and issued over 5 million loans to small businesses impacted by COVID. That was a direct intervention of the Treasury Secretary and his team at Treasury. The Federal Reserve stood up more Facilities in a 6-month period of time than they did in the fullness of the financial crisis. They stood up more Facilities than they did in decades prior to this pandemic. So, I would give the Federal Reserve an A-plus for its initial response and to where we are. And just because Congress can’t get its act together and compromise to see a way through so that we can provide those people who are still hurting because of this voluntary shutdown of our economy because of this health crisis, we need to give those people relief and we need to come to terms. That means that Democrats and Republicans need to move to the middle. And I would commend Secretary Mnuchin for his negotiations and his willingness to move the ball forward on behalf of the American people, even in the midst of the crazy politics that we are currently experiencing, with people shouting in the streets and threatening violence because they don’t like political perspectives. So, I would commend him for being willing to negotiate where others have walked away, like Speaker Pelosi and Leader Schumer, and saying, ‘‘$3 trillion is all we are going to accept, and anything less is completely unacceptable.’’ We need to actually find a com- VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 5 promise to support those people who are still out of work because of this global health pandemic. Quite frankly, on that bill, Democrats would rather bail out blue States and hold out for that rather than help people who are still out of work because their jobs are shut down. Let me finish with this. What we saw at the end of last year was the best economy of our lifetimes. We had household wage growth at almost 7 percent in 2019. Households were feeling wealthy for the first time in a very, very long time in my State of North Carolina, and across the country. We need to do that again. We know that we are in the midst of this health pandemic. We know that therapeutics are coming online, treatment techniques are much better than they were at any time since March, and those things are coming along. And maybe there will be a vaccine, maybe, but we need to have treatment and we need to have widescale testing so that people can get back to some semblance of economic life. But what I would like to hear today is the limits of the Federal Reserve’s actions and activities and where Congress should act, because monetary policy simply cannot do the same thing that fiscal policy can. And on the fiscal side of the House, Secretary Mnuchin, I would like to hear the economic plan from this Administration on what, when we get past this awful, awful scourge of COVID, that economic recovery must entail to get people back in the position they were in in 2019, or even in January or February of this year. I think there is a good story to tell and a hopeful story to tell if we can work together and get things done. And so, I look forward to your testimony. I yield back. Chairwoman WATERS. I now recognize the gentleman from Texas, Mr. Green, who is also the Chair of our Subcommittee on Oversight and Investigations, for 1 minute. Chairman GREEN. Thank you, Madam Chairwoman. And, Madam Chairwoman, I would like to associate myself entirely with your comments, and I would only add that the stimulus, the economic impact statement, must be made because the rent must be paid. Yesterday, the Government Accountability Office (GAO) reported that the Treasury Department lacks up-to-date information on the number of eligible recipients who have yet to receive their economic impact payments (EIPs). This new GAO report follows previous GAO findings dating back to May 2020, that persons not in the traditional employment relationships, such as those working in the gig economy, may be missing from the IRS EIP outreach. Without this data, it is very difficult to know who is being left behind, and that number may be in the millions. I will say it again: The rent must be paid, and the EIP payment must be made. If we do not do this, we will put persons at risk of being evicted at a time when we are having a pandemic that is still taking lives in this country. I do believe that this can be done, but I know that we must have more help to make sure the rent is paid. The EIP payments are VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 6 already there; they are funded. We need to make sure that the people who need them will get the funds. I yield back. Chairwoman WATERS. I now recognize the subcommittee’s ranking member, Mr. Barr, for 1 minute. Mr. BARR. Thank you, Secretary Mnuchin and Chairman Powell, for appearing before the committee today, and for your continued efforts to combat the economic fallout from the COVID-19 pandemic. Treasury and the Fed acted swiftly to stabilize the economy, keep businesses open, ensure the continued operation of the credit markets, and promote long-term recovery. Since you last appeared before this committee to testify on the CARES Act implementation, the economy has improved. Unemployment has decreased. Nearly half of the jobs lost in the early days of the pandemic have been added back to the labor market, and our economy is safely reopening. We are on the road to recovery. Policies put into place by Treasury and the Fed, and actions you both have taken during this crisis, have put the economy on a more stable footing. However, important sectors of our economy, including hospitality, conventions, entertainment, retail, and commercial real estate remain in distress, and there are elements of your responses to the pandemic that could still be adjusted as we move forward. I look forward to discussing those today and hearing your plans to implement a strategy for long-term economic growth. Thank you. Chairwoman WATERS. I want to welcome today’s witnesses to the committee. First, I want to welcome Steven T. Mnuchin, the Secretary of the Treasury. He has served in his current position since 2017. Mr. Mnuchin has testified before the committee on previous occasions, so I do not believe he needs any further introduction. I also want to welcome our other distinguished witness, Jerome H. Powell, Chair of the Board of Governors of the Federal Reserve System. He has served on the Board of Governors since 2012, and as its Chair since 2017. Chair Powell has also testified before the committee on previous occasions, so I do not believe he needs any further introduction, either. Each of you will have 5 minutes to summarize your testimony. When you have 1 minute remaining, a yellow light will appear. At that time, I would ask you to wrap up your testimony so that we can be respectful of the committee members’ time. And without 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. STATEMENT OF THE HONORABLE STEVEN T. MNUCHIN, SECRETARY, U.S. DEPARTMENT OF THE TREASURY Secretary MNUCHIN. Thank you. Chairwoman Waters, Ranking Member McHenry, and members of the committee, I am pleased to join you today to update you on how the Department of the Treasury and the Federal Reserve have VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 7 been partnering over the last 6 months to provide relief for American workers and liquidity to credit markets, businesses, nonprofit organizations, State and local governments, and households. We are fully committed to getting every American back to work as quickly as possible. America is in the midst of the fastest economic recovery from any crisis in the United States. The August jobs report showed the economy has gained back 10.6 million jobs since April, nearly 50 percent of all jobs lost due to the pandemic. The unemployment rate decreased to 8.4 percent, a notable achievement considering many people thought it could get as high as 25 percent. Thanks to the programs provided by the CARES Act, we never got close to that figure. I believe we will see tremendous growth in the third quarter fueled by strong retail sales, housing starts, home sales, manufacturing growth, and increased business activity. The September Blue Chip survey projects close to 24 percent for third quarter GDP. The recovery has been strong because the Administration and Congress worked together on a bipartisan basis to deliver the largest economic relief package in American history. The Federal Reserve has been instrumental to the recovery by implementing unique Section 13(3) lending Facilities. Economic reopenings, combined with the CARES Act, have enabled us to have an economic rebound, but some industries particularly hard hit by the pandemic require additional relief. The President and I remain committed to providing support for American workers and businesses. We continue to work with Congress on a bipartisan basis to pass a Phase IV relief program. I believe a targeted package is still needed, and the Administration is ready to reach a bipartisan agreement. Treasury has been working hard to implement the CARES Act with transparency and accountability. We have released a significant amount of information on our website, Treasury.gov, and USAspending.gov. We have released more information than was required by the statute. The Federal Reserve has also posted information on its website regarding the lending Facilities. We have provided regular updates to Congress, with today marking my 6th appearance before Congress for a CARES Act hearing. We are cooperating with various oversight bodies: the new Special Inspector General; the Treasury Inspector General; the Treasury Inspector General for Tax; the new Congressional Oversight Commission; and the GAO. We appreciate Congress’ interest in these issues and have devoted significant resources to responding. We remain committed to working with you to accommodate Congress’ legislative needs and further whole-of-government approach. I would like to thank the members of the committee for working with us to provide economic support to the American people. Thank you. [The prepared statement of Secretary Mnuchin can be found on page 40 of the appendix.] Chairwoman WATERS. Thank you, Secretary Mnuchin. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 8 Chair Powell, you are now recognized for 5 minutes to present your oral testimony. STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. POWELL. Thank you. Chairwoman Waters, Ranking Member McHenry, and members of the committee, thank you for the opportunity to update you on our ongoing measures to address the hardship wrought by the pandemic. The Federal Reserve, along with others across the government, is working to alleviate the economic fallout. We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible and to limit lasting damage to the economy. Economic activity has picked up from its depressed second quarter level when much of the economy was shut down to stem the spread of the virus. Many economic indicators show marked improvement. Household spending looks to have recovered about three quarters of its earlier decline, likely owing in part to Federal stimulus payments and expanded unemployment benefits. The housing sector has rebounded, and business fixed investment shows signs of improvement. In the labor market, roughly half of the 22 million payroll jobs that were lost in March and April have been regained as people return to work. Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain. The downturn has not fallen equally on all Americans. Those least able to bear the burden have been the most affected. The rising joblessness has been especially severe for lower wage workers, for women, and for African-Americans and Hispanics. The reversal of economic fortune has upended many lives and created great uncertainty about the future. A full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities. The path forward will depend on keeping the virus under control and on policy actions taken at all levels of government. Since mid-March, we have taken forceful action, implementing a policy of near-zero rates, increasing asset holdings, and standing up 13 emergency lending Facilities. We took these measures to support broader financial conditions and more directly to support the flow of credit to households, businesses of all sizes, and State and local governments. Our actions taken together have unlocked more than a trillion dollars of funding, which in turn has helped keep organizations from shuttering, putting them in a better position to keep workers on and to hire them back as the economy continues to recover. The Main Street Lending Program has been of significant interest to this committee and to the public. Many of the businesses affected by the pandemic are smaller firms that rely on banks for loans rather than public credit markets. Main Street is designed to facilitate the flow of credit to small and medium-sized businesses. In establishing the Facility, we con- VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 9 ducted extensive outreach, soliciting public comment and holding in-depth discussions with lenders and borrowers of all sizes. In response to feedback, we have continued to make adjustments to Main Street to provide greater support to small and mediumsized businesses and to nonprofit organizations, such as educational institutions, hospitals, and social service organizations. Nearly 600 banks, representing well more than half of the assets in the banking system, have either completed registration or are in the process of doing so. About 230 loans, totaling roughly $2 billion, are either funded or in the pipeline. Main Street is intended for businesses that were on a sound footing pre-pandemic and that have good longer-term prospects, but have encountered temporary cash flow problems due to the pandemic and are not able to get credit on reasonable terms as a result. Main Street loans may not be the right solution for some businesses, in part because the CARES Act states clearly that these loans cannot be forgiven. Our credit Facilities have improved lending conditions broadly, including for potential Main Street borrowers. The evidence suggests that most creditworthy small and medium-sized businesses can currently get loans from private sector financial institutions. Many of our programs rely on emergency lending powers that require the support of the Treasury Department and are available only in unusual circumstances. By serving as a backstop to key credit markets, our programs have significantly increased the extension of credit from private lenders. However, the Facilities are only that: a backstop. They are designed to support the functioning of private markets, not to replace them. Moreover, these are lending, not spending powers. Many borrowers will benefit from these programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer, and in these cases, direct fiscal support may be needed. Our economy will recover fully from this difficult period. We remain committed to using our full range of tools to support the economy for as long as is needed. Thank you. [The prepared statement of Chairman Powell can be found on page 43 of the appendix.] Chairwoman WATERS. Thank you very much, Chair Powell. I now recognize myself for 5 minutes for questions. I am very appreciative, Chair Powell, of the explanations that you are giving in anticipation of all of the questions that we have about Main Street and other Facilities. Earlier this month, our committee held a hearing on the need for further Federal assistance to State and Territorial Governments. Although each of the State Governors at that hearing can borrow through private markets at more attractive rates than the Municipal Liquidity Facility currently offers, they affirmed the need to keep the Facility as an option in the future, and the Guam Governor urged the Fed to make the Facility available to Territories. The Republican witness, Dr. Holtz-Eakin, a former Congressional Budget Office Director, and Staff Economist for President George VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 10 H. W. Bush’s Council of Advisers said, ‘‘The mystery to me has been the performance of the Treasury in using essentially half a trillion dollars to backstop their Facilities, including the Municipal Liquidity Facility. This seems underutilized in my eyes, and I don’t fully understand why that hasn’t happened. That is something that can and should be more aggressively used.’’ So, Secretary Mnuchin, at a time when a wide range of businesses have been frustrated that they have been unable to access their Facilities, again, like the Main Street Lending Program, and we have heard the excuses that were given for that, and we have Republican and Democratic State Governors pressing for more assistance, do you agree there is more that Treasury can do with the $500 billion Congress provided you to enhance these Fed Facilities to support the economy? Secretary MNUCHIN. I, unfortunately, think there is not more we can do. And part of the reason we agreed if there is potential legislation is to reallocate that money to better use. Almost every single one of the Facilities has extra capacity. I think that in the case of many businesses that haven’t been impacted by the virus, they are able to borrow in the private markets. As it relates to Main Street, we have worked very hard with the Federal Reserve to roll out this program. It is based upon underwriting from pre-pandemic, and I know there has been some questions. We do expect to take losses on that, and we are working closely with the Fed on that Facility. Chairwoman WATERS. Secretary Mnuchin, of the $600 billion available through the Main Street Lending Program, only about $1.2 billion has gone out the door to 118 companies. Would Treasury object to the Fed eliminating the Main Street Lending Program’s minimum loan threshold of $250,000, so that small businesses and minority-owned businesses who need smaller loans could access the program? Let me just say, I am appreciative, because when we started out, when they first rolled out the Main Street Program, the minimum requirement for the loan was $1 million, and you did reduce that to $250,000. I am asking, can you go further in the reductions so that the loans can be made to smaller businesses? Secretary Mnuchin? Secretary MNUCHIN. I would be fine lowering that to $100,000, and I will consult with Chair Powell afterwards on lowering it. Chairwoman WATERS. Chair Powell? Mr. POWELL. There is very little demand in the Facility below a million dollars. There isn’t much interest at all below a million dollars. So, this would have to be a different kind of Facility. It wouldn’t look like Main Street. I think extending credit in those small quantities would require a Facility built from the ground up that would be quite different than Main Street. It wouldn’t have the same requirements. But we can talk about that. It wouldn’t look like the current Main Street Facility, though. It is just a very different kind of a thing. Chairwoman WATERS. I am aware of how the Main Street Facility was formulated, was created for the mid-sized businesses, and also I am very much aware that they have to repay those loans. But we have so many small businesses still eligible for PPP and VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 11 beyond, and certainly they would repay those small loans that they could get. It is not that they are absolutely looking to have those loans waived. So, do you think that something can be done? Mr. POWELL. It is possible. I really do, though, think that this is more appropriate for PPP loans, which are in the nature of grants. I think that is a better way to approach these. Trying to underwrite the credit of hundreds of thousands of very small businesses would be very difficult. And I think PPP is a better way to approach that space in the market, and I think you were well-advised to use that. Chairwoman WATERS. Thank you. I now recognize the distinguished ranking member, Mr. McHenry, for 5 minutes for questions. Mr. MCHENRY. Thank you, Madam Chairwoman. Secretary Powell, let’s begin here. In the Federal Reserve’s own data, we see that there is a substantial economic recovery happening. We see economic numbers improving, and we have many households that are about the same as they were, or a little better off in terms of savings than back at the beginning of the year. But we see many households much, much worse off. And so it is sort of a tale of two different recoveries, if you will, or two different experiences of this pandemic. So while we see good economic numbers, what are the areas that you see as needing further assistance? What areas of our economy do you see as needing further assistance to get us back to something more normalized, given where we are with COVID? Mr. POWELL. I guess I would point to the labor market to sort of capture the size of the issue. We still have 11 million people out of the 22 million who were laid off in the payroll numbers in March and April, still 11 million out there. And that is really good progress. We have put fully half of them back to work. But there is a long way to go. That is more people than lost their jobs during the global financial crisis, as I am sure you know. So there is a lot of work to do there, and our policies will support that, but it will go faster for those people if we have—if it is all of government working together. Mr. MCHENRY. Okay. Meaning that there is a fiscal response to help support the economy for those most affected by COVID, economically affected by COVID? Mr. POWELL. Yes. Now, of course, the details of that are between Congress and the Administration, and not for the Fed to say. But I do think that the recovery will go faster if we have both tools continuing to work together, as they have so far, I think, worked very well together. Mr. MCHENRY. Okay. Thank you. Secretary Mnuchin, there is much that has been made up here on Capitol Hill about your negotiations on another CARES package like we passed back in March, that you negotiated. You are the lead Administration negotiator on that package, which I think, from all sources, was a very solid piece of bipartisan legislating, and I want to commend you for being the Administration’s voice and negotiator on that project. And I think we got good results VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 12 from the programs that you were then able to set up in coordination with the Fed. Along those lines, what are the components for the next package that we need to take to support the economy, to get things going again? Secretary MNUCHIN. I think the next package should be much more targeted. It should be focused on kids and jobs and areas of the economy that are still hard-hit, particularly areas such as the travel business and restaurants. I think there is broad bipartisan support for extending the PPP to businesses that have had revenue drops for a second check. I think small businesses are a large priority of that. Mr. MCHENRY. Okay. So focused on small business and family support, right? And that would be a strong foundation, I assume, for this. Let me ask you both this, treatment, therapeutics, massive scale testing—we are getting up-to-speed with some really first-rate testing across the country and getting kids back in school in a safe way. Those things are sort of foundations for us getting the economy going to the next degree, right? It is not all going to be fiscal policy or monetary policy to get the people back in restaurants again. It is not government regulation. It is going to be people’s decisions of whether or not to engage in many ways, similar to getting on airplanes. Along those lines, do you see the capacity for us to get to a full economic recovery, Secretary Mnuchin? Secretary MNUCHIN. I do. I think it is just a question of time. And I would just highlight, we are extremely pleased that we have committed to 150 million point-of-care tests with Abbott that will be delivered between now and the end of the year, and we are working with other parties to deliver comparable amounts of pointof-care testing with instant results. Mr. MCHENRY. So, it is instant results. And those are very lowcost tests, are they not? Secretary MNUCHIN. That is correct. Mr. MCHENRY. Okay. I thank you both for your testimony, I thank you for being here today, and I thank you for your leadership in the midst of this crisis. And I know we are still deeply in the midst of it, of the economic effects of COVID. And I want to thank you both for being there, both with the life insurance policy and with the water to put out the flames. You have worked in good stead on behalf of the American people. Thank you both. Chairwoman WATERS. The time of the gentleman has expired. I now recognize Mr. Himes of Connecticut for 5 minutes. Mr. HIMES. Thank you, Madam Chairwoman. And thank you, gentlemen, for being here. I am going to pick up on what the ranking member just said about the insurance policy. My time in Washington is bracketed by bailouts. Right before I got here, we passed the Troubled Asset Relief Program (TARP), which led to a massive bailout of the financial services industry and, of course, a bailout of the auto industry. And now, through CARES, we are bailing out the airlines; we are bailing out businesses large and small. The government is very, very much in the business of bailouts. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 13 I would point out to my friends on the Republican side that all of those bailouts were promoted and passed and promulgated by Republican Presidents. They might just bear that in mind as they accuse my party of being socialist, but that is a conversation for a different day. Secretary Mnuchin, I had the opportunity to talk to Chair Powell about this, so I want to talk with you about bailouts. I would like to believe we could do fewer rather than more. I don’t like the idea of business managers large and small thinking that every 5, 7, or 10 years, the Federal Government will bail them out of liquidity crises or whatever it might be. I also like the idea, as long as we are going to do these things, that the American public be compensated for the use of their funds for private and commercial purposes. And I admire your efforts to get warrants and make sure that the American public is compensated. But there is a funny hostage situation that develops, right? When I proposed that on a caucus call, I instantly got calls from labor unions and the airline industry saying, no, if you make the money cost anything, they won’t take it and they will fire us. That feels to me like a hostage situation: Give me the money for free or we will not take it and we will fire people. So, Secretary Mnuchin, I would love to give you much of the rest of my time. First, what do we need to do structurally to get out of the business of bailouts? And, second, how can we get out of this hostage situation, in which I think you actually worked very, very hard, where the American people are being compensated fairly for the use of their money for private purposes? Secretary MNUCHIN. First of all, I would just say that this is a very different situation than the financial crisis, because in this case, the businesses that are impacted were impacted because of COVID, which was not their fault, as opposed to issues that they controlled. I would say, in the case of the airlines, I think we struck the right balance. We did get proper compensation for taxpayers. I think it was very important, given what went on in the travel industry. In the case of the national security loans that we have made to the trucking companies, we took a 30 percent equity interest in that for proper compensation. So, I agree with you that the government should be properly compensated. On the other hand, I think for very small businesses, like the PPP, the money that we spent there, we saved significant money on unemployment on the other side. Mr. HIMES. With respect to the warrants, Mr. Secretary, and the 30 percent equity stake in the trucking company, what is your philosophy? Is your philosophy to dispose of that position as soon as you can do so safely and in a sound manner, or is it to maximize the return to the American public? Secretary MNUCHIN. I don’t think it is to absolutely maximize the return, but I think that the American public should reap the benefit. So my expectation is that is not something we would liquidate VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 14 now; we would liquidate when the markets are more normalized and the economy is back to normal. Mr. HIMES. Let me run an offbeat idea by you. As it happens, I had the opportunity to talk to both former Treasury Secretary Paulson and another former Treasury Secretary about it. One of the vehicles for capturing common wealth for the citizens of a country is a sovereign wealth fund. As you know, Persian Gulf countries use it, Alaska uses it, Norway uses it, largely oil-driven wealth. Should Congress investigate, if we are going to be in the regular business of bailouts and receive a return on those bailouts, should we look at establishing a sovereign wealth fund in order to take the proceeds from that common wealth and either use it as an insurance fund or use it to disburse however we may choose to disburse? Is that an idea that makes any sense to you? Secretary MNUCHIN. Let me just say that most countries that have sovereign wealth funds, or in the case of Alaska, it is typically for future generations where they are focused on, in the case of many places, energy and things like that, that will not necessarily be around forever. I don’t necessarily think the U.S. should have a sovereign wealth fund. On the other hand, I think taking the profits and putting it into an account that is reserved for future emergencies is a very interesting idea, and I would be willing to explore it with you. Mr. HIMES. Good. I am going to take you up on that offer. Again, I don’t think any of us want to be in the persistent business of bailouts, but if we are going to do it, I think we should make sure that the American public is amply compensated for the use of their money. Thank you. I yield back the balance of my time. Chairwoman WATERS. Thank you very much. I now recognize the gentlelady from Missouri, Mrs. Wagner, for 5 minutes. Mrs. WAGNER. Thank you, Madam Chairwoman. Secretary Mnuchin and Chairman Powell, thank you for being here today. I have been hearing from employers across the Second District of Missouri who desperately need Congress to do its job and pass coronavirus relief legislation so they can do their jobs and keep handing out paychecks to their hardworking employees. Earlier this month, the Senate acted to pass relief legislation that could actually be signed into law. That package would have given relief to families, schools, child care providers, small businesses, and those who need it most. At a time when so many are struggling, we really do need to put America’s families first. And I am sick of the partisan politicking, the partisan wish lists. It should have no place in this conversation. Congress should be laser-focused on providing targeted and immediate relief. The Senate Majority supports a second round of PPP money that would keep our small businesses afloat, and I call on my colleagues in the House to bring this to the Floor. Secretary Mnuchin, I am grateful also, as the ranking member mentioned, for your due diligence and your work in negotiating this and what it means for our small businesses, including, as you said, VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 15 restaurants, the travel and events industry, dentist offices, and so many others that keep Americans employed. You talked a little bit about how passing the second round of the Paycheck Protection Program would keep America on track for a full economic recovery. How much money do you think we could repurpose from CARES in order to do this? And tell us again what this would mean in terms of economic recovery? Secretary MNUCHIN. I agreed that we had approximately $450 billion that was allocated to work with the Fed on the Section 13(3) Facilities, and I agreed that I would reallocate $200 billion of that, that is not being used. That obviously needs congressional support, but we would reallocate that. And, again, our priorities are kids and jobs. Mrs. WAGNER. Right. Secretary MNUCHIN. I think there is very strong bipartisan support for the PPP. I know that both committees in the House and Senate have worked on revisions that are necessary revisions, and we would look forward to working with both parties on that. Mrs. WAGNER. And that could be passed today and signed into law today. Is that correct? Secretary MNUCHIN. The President would very much support signing into law additional PPP money immediately. Mrs. WAGNER. We must act. It is clear that the best economic stimulus package we can give to the American people is a fully open economy. It brings people back to work, allows economic growth to begin, and will restore our economy. Chairman Powell, do you agree that reopening has increased economic activity and jump-started the process of bringing the U.S. back to pre-pandemic prosperity? Mr. POWELL. Yes, I do. We need to reopen the economy so people can go back to work, and we need to do it in a sustainable way. And that is why I always mention that a part of reopening quickly and effectively is to keep the virus under control, and that takes basic measures like wearing masks and things like that, and gets— the two things go together. A fast reopening and maintaining these sorts of measures actually go together. Mrs. WAGNER. Absolutely. The President’s plan to reopen America has enabled States to tailor their reopening plans to address the specific challenges in their States and regions. Chairman Powell, how does this State-by-State approach ensure success, especially when it comes to States that are responding differently to the pandemic? And are there any regulatory burdens you are aware of that should be removed to improve States’ abilities to quickly and safely reopen? Mr. POWELL. The question of how to reopen exactly and what policies to use, that is a question that is one for elected officials at the State and local level, not for the Federal Reserve, and so I wouldn’t be a good judge of that. I would say in terms of regulatory adjustments, we have made a number that have been designed to allow banks to serve their customers in this. We have relaxed a number of regulations temporarily, and we think that has really helped them serve their customers in a way that doesn’t at all endanger safety and soundness. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 16 We are open to doing more of that, but many of those things we have done. And, frankly, the economy is healing now, so— Mrs. WAGNER. The economy is healing, and I do believe that many of the regulatory burdens that we have lifted are things that could be sustained even beyond this pandemic. So, I hope that this committee will be able to take a look at that as we go forward. I thank you for your answer. And I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you. I now recognize the gentleman from Illinois, Mr. Foster, for 5 minutes. Mr. FOSTER. Thank you, Madam Chairwoman. And I thank our witnesses, as well. Chairman Powell, the Fed recently announced hypothetical scenarios for the second round of bank stress tests, and unlike the results of the sensitivity analyses conducted earlier this year, you will be releasing bank-by-bank results. I appreciate this transparency and believe it is very important for markets, policymakers, and the banks themselves to have this information be public. One of the tragedies of the last financial crisis was that in the months prior to the crisis, as pressure built on financial institutions, they did not use this time to raise capital until it was too late. Hopefully, the prospect of publicly disclosed stress tests will help avoid a repeat of this behavior if the pandemic downturn continues. Now, you are going to be using the results of these stress tests to determine whether the restrictions on shareholder dividends and the prohibition on buying back shares will continue through the fourth quarter. So my first question is, will you be making these determinations on a bank-by-bank basis or will all of the large banks be subject to the same restrictions? Mr. POWELL. Yes, that is going to depend on a lot of things, and those are decisions we will make down the road, but I think we will be looking probably to use the bank-by-bank approach. Mr. FOSTER. Thank you. And given the continuing high unemployment, the failure of the Senate to pass any new COVID relief, and the uncertainty and volatility of a large number of economic indicators, will you err on the side of conservatism and safety in making these determinations? Mr. POWELL. I think the stress tests themselves always err on the side of safety. We think of very extreme scenarios, severely adverse scenarios, and so that has generally been our approach overall. Mr. FOSTER. I appreciate that. Will you be reanalyzing the living wills of the giant banks to ensure that they could be executed properly at a time of COVID pandemic with, for example, most of the workforce at home? Mr. POWELL. We don’t have any plans that I know of to change the schedule of doing that. Banks have to resubmit those on a regular schedule, and I think we will just stick to that schedule. Mr. FOSTER. Okay. I urge you to keep an eye on that, because if we have to execute them and it is not possible in the pandemic conditions, we will regret that. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 17 Potential problems may not be confined to a small number of giant banks. For example, the savings and loan crisis was the result of losing bets made by over a thousand smaller institutions, and the taxpayers ended up on the hook for bailouts amounting to about 2 percent of GDP, which is huge compared to TARP, in which the taxpayers actually got their money back with at least some interest. And given that the fates of small banks are more closely tied to the fates of small and medium-sized businesses, which are often most at risk of business failure during the failed response to this pandemic, what should we be worried about in regards to the potential need to bail out large numbers of smaller banks if the pandemic continues? Mr. POWELL. I guess I would say we spent 10 years, and the banks spent 10 years strengthening their capital, their liquidity, and their understanding of the risks and their management of them, and so far, the banking system has held up well. Now, we don’t know where we are in this whole process, so we will be continuing to, as you can see from the stress tests, continuing to do those things that we need to do to continue to assess those things in the banking system. But so far, we don’t see the kinds of problems you are talking about. I think with smaller banks, the issue is that there has been a 30-year trend of consolidation and banks going out of business, and that is not a trend we want to do anything to exacerbate. I do think that smaller banks are going to probably bear too much of the burden here. They have more exposure to real estate and to smaller businesses, which are probably more vulnerable and have less resources to deal with this sort of stress. I think we will be watching carefully to make regulatory adjustments, supervisory adjustments, to make sure that we give those banks every chance to serve their customers and to make it through this difficult time. Mr. FOSTER. Yes. Thank you. One of the problems that we have in financial regulation is that we always seem to be fighting the last war, and we maybe should look two wars back in this. In my limited amount of time left, you introduced a new strategic framework for conducting long-term monetary policy, and as part of that you discarded the idea of a fixed goal for full employment. Instead, you are going to consider a wide range of indicators in making an assessment of whether there are any shortfalls in employment. And I urge you to do that very publicly and transparently, because you can get different answers by choosing different measures, both for inflation and for unemployment. Thanks. My time is up. I yield back. Chairwoman WATERS. Thank you very much. I now recognize the gentleman from Kentucky, Mr. Barr, for 5 minutes. Mr. BARR. Thank you, Madam Chairwoman. And I want to first start by responding to my friend Representative Himes’ comments about bailouts, because I share my friends antipathy for what he describes as bailouts. But I do think it is important to point out that a bailout, at least the way I look at it, implies that the government is saving businesses from mismanage- VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 18 ment or excessive risk-taking or the use of taxpayer funds for private use in a way that would promote moral hazard. We saw some of that, I think, in the aftermath of the financial crisis, but that is not what we have here. What we have here is a congressional response to many State and local governments imposing restrictions. Now, some of those restrictions may be very warranted in response to a pandemic. Others may criticize some of those restrictions as being overzealous or draconian. But, nevertheless, this congressional response in the CARES Act or the PPP program or the Main Street Lending Program or some of these liquidity Facilities seem to me more like a compensation for a regulatory taking. So, I think it is important to point out that distinction, a regulatory taking. I do want to ask Chairman Powell about Main Street, and I do think there is interest among potential borrowers to participate in this program. But many businesses and lenders are reporting to us in Congress that the program is not working for them. To date, the Fed has committed less than one-half of 1 percent of the total available funds under the program, and so an argument can be made that the program isn’t performing to its full potential. Last week, the Fed issued updated FAQs about the program, and I have heard from banks in my district that the updates are unlikely to move the needle. You mentioned that smaller loans for smaller businesses under a million dollars—that this program may not be right for them; it is more suited to a PPP. But, Chairman Powell, I would offer for your consideration that for some of those businesses that would need a smaller loan, the PPP program really doesn’t help them because their payroll is fairly limited and they have larger amounts of debt. So my question initially would be, is the Fed considering publishing more targeted guidance, underwriting standards, documentation requirements for the smallest Main Street loans? Mr. POWELL. As you know, Mr. Barr, the limit now is $250,000, and we actually have very little demand below $1 million, as I told the Chair a while back. So, we are not seeing demand for very, very small loans. Because the nature of the Facility and the things you have to do to qualify, it tends to be sort of larger-sized businesses. Lending at the very small end, under $100,000, it tends to involve a lot of personal guarantees—you are lending to a person and that person is guaranteeing what is a very small business, and that just is not a Facility that we currently have. We would have to start from scratch to develop that. Mr. BARR. Fair point. Just the feedback we are getting is that, for those smaller loans, the lenders are telling us that they really would prefer to use their existing structuring, underwriting, and documentation and account monitoring processes in order for them to get into that smaller level of loan. I want to talk about EBITDA restrictions in the program, too. The restrictions that we have in the program right now do prohibit many commercial real estate borrowers from accessing the program. In the FAQs released last Friday, you indicated the Fed had studied whether to allow for collateral-based calculations for asset- VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 19 heavy borrowers but, ‘‘determined that conditions do not warrant such changes at this time.’’ How did you come to this conclusion? And are there ways to retool Main Street to work for commercial real estate borrowers? Mr. POWELL. We have spent with Treasury a great deal of time looking, because we hear these things, too, probably from the same people, and we look for places where the banking system, the lending system is not working for commercial real estate. And a big part of that, of course, is the commercial mortgagebacked securities (CMBS) market, and we don’t have an answer to that, because there are a couple of problems with CMBS that make it impossible to make additional loans, for example, and the servicers have to pay. So, it’s hard to get foreclosures. So we look at other places in commercial real estate, and really it is not easy to find places where we could have much of an impact. Mr. BARR. And I appreciated our conversation earlier where you said that the Fed’s emergency lending powers may be not particularly suited for CMBS. But, Secretary Mnuchin, I appreciate the communication with your team on this issue and particularly CMBS. Could you detail what Treasury is doing to monitor and respond to these challenges facing commercial real estate? Secretary MNUCHIN. First of all, I am sympathetic to the issue, and we have spent a lot of time internally trying to figure out if there is a way we could structure a program with the Fed. And as the Fed Chair said, unfortunately, there is a structural problem with limitations and additional debt and prepayment penalties. I think the best way to help many of these is with additional PPP funds so that people can pay rent, so that owners can pay their mortgage. Mr. BARR. Thank you. I yield back. Chairwoman WATERS. The gentleman’s time has expired. I now recognize the gentlelady from Ohio, Mrs. Beatty, for 5 minutes. Mrs. BEATTY. Thank you, Madam Chairwoman. And I thank the witnesses, as well. We have heard a lot today about reopening the economy. We have also heard a lot about the pandemic, health and safety. And, Chair Powell, you even used the words, ‘‘they go hand in hand’’ and actually used the words and pointed to your mask, by wearing a mask. All of that is a part of it. So to you, Mr. Secretary, we recently learned that the White House had scrapped plans at the United States Postal Service to send approximately $650 million worth of masks through the mail. Maybe that is because President Trump sees no value and tweets about not wearing one. You have had a lot of involvement with the operations and governance of the U.S. Postal Service. Were you involved in that situation about scrapping the plans or are you aware of it? Secretary MNUCHIN. Just to be clear, I think I read something in the press about that alleged situation. Never, in any of my task force meetings, do I recall that being discussed or any plan being VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 20 scratched whatsoever. It may have occurred in a different part of the government. But, no, I have not heard anything about that. Mrs. BEATTY. Would you be willing to look into it since we—most experts, not me, certainly, as a Congressperson, but certainly scientists and medical personnel have all stated that wearing a mask is helpful in preventing the spread now that we know over 200,000 people have died. Would you look into that, since you have had involvement with the U.S. Postal Service? Secretary MNUCHIN. I would be happy to, and we will get back to your staff. Mrs. BEATTY. Thank you very much. My next question is, certainly we know that when we talk about reopening the government, would you both agree if people are healthy and if they have healthcare, then that, too, goes hand in hand with reopening the economy by having people be healthy enough to go back to work? That is a yes-or-no question. Chair Powell? Mr. POWELL. Yes. Sure. Mrs. BEATTY. Mr. Secretary? Secretary MNUCHIN. Yes. And I just would add that one of the reasons we liked the PPP is that it kept employees connected to their businesses, which in many cases allowed them to keep their healthcare. Mrs. BEATTY. Okay. Earlier this year, the Trump Administration submitted a brief to the Supreme Court urging them to overturn the Affordable Care Act, which would strip roughly 20 million Americans of their healthcare in the midst of this historic pandemic that has already cost the lives of, we know today more than 200,000 Americans, including stripping protection for preexisting conditions, and kicking many of our younger adults off their plans. We are also hearing now about how great their numbers are. I have been in Congress for 8 years, and I have voted against it dozens of times. Chairman Powell, what effect would stripping 20 million Americans of their healthcare in the midst of this COVID-19 pandemic have on the economy? Mr. POWELL. I wouldn’t want to comment on a particular Supreme Court case. But as you mentioned, healthcare is an important part of the support system that people need. Mrs. BEATTY. Let me say it this way, Mr. Chairman. Do you think stripping healthcare or not having healthcare would be bad for the economy? Mr. POWELL. As you started with, I think that having healthcare coverage is an important basis for people to go to work. It is one of the reasons people do work, and it helps in continuing your work. Mrs. BEATTY. Would you say that is a yes? Then, would you say that is a yes, that having healthcare would certainly be a plus or a positive to having people—come on, 200 million people have died. Look at the numbers. If I look at African-Americans making up 13 percent of the population but having almost 30-some percent positive results, with 24 percent dying, don’t you think healthcare plays into keeping people healthy, and the economy? Mr. POWELL. Yes, I do. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 21 Mrs. BEATTY. Thank you. Chairman Powell, according to the transaction data of the Secondary Market Corporate Credit Facility that the Federal Reserve published on Sunday, the Fed purchased corporate bonds of dozens of companies that are in good financial condition, like Apple, which has more than $200 billion cash in hand. How does buying corporate debt of large companies in good financial condition help further the Fed’s mandate? And how does buying corporate debt of foreign-owned companies, like BP and Toyota, further the Fed’s mandate? Mr. POWELL. None of those secondary market corporate debt purchases extend any new credit to anybody, so that is just buying an outstanding bond. And the reason we are doing that is to have a footprint in the after market, which, should conditions deteriorate, would enable us to continue to have good financial conditions, which would support companies and allow them to keep workers on staff. Mrs. BEATTY. Okay. Chairwoman WATERS. Thank you. The gentlelady’s time has expired. I now recognize the gentleman from Texas, Mr. Williams, for 5 minutes. Mr. WILLIAMS. Thank you, Madam Chairwoman. As most of you know, I am a small business owner. I want to thank both of you for coming before our committee today. Both the Treasury Department and the Federal Reserve have worked with incredible speed to implement the CARES Act and get resources in the hands of hardworking American businesses. I applaud you both for your leadership and your efforts during these uncertain times, and Main Street America also thanks you. Some local governments in my district in Texas are sitting on the money they received from the corona relief fund because there is uncertainty surrounding what counts as an eligible expense. For example, one local government in my district would like to spend the money to buy food for a local food pantry since many of their citizens are seeing food insecurity as a result of the economic shutdowns, but they are unsure that this will be an eligible expense, since the cost was not accounted for in their annual budget prior to the pandemic. So, Secretary Mnuchin, what advice would you give these local governments that are unsure if a use for the coronavirus relief funds will be deemed a qualified expense so we can get this money spent? Secretary MNUCHIN. We will look into your specific question and get back to you, but I will say that we have tried to give as much flexibility as we can. And as part of additional congressional authorization to move forward, we are inclined to allow for additional flexibility on the money that has already gone out to State and local governments. Mr. WILLIAMS. Thank you, and we will get something for you to look at. Chairman Powell, I raised this issue with Vice Chairman Quarles back in May, but I wanted to get your perspective as well VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 22 to make sure everyone at the Federal Reserve is on the same page regarding business interruption insurance. Forcing private companies to cover business interruption claims for COVID-19 losses would be a terrible precedent of the government stepping in and retroactively changing the terms of an agreement between two private parties, and would decimate the insurance industry. I have said before, in Texas we say, ‘‘A deal is a deal.’’ And the last time you were in front of this committee in June, you mentioned you were aware of this issue as it relates to fiscal stability, and I am hoping we could get a little more substance on this issue since the Federal Reserve is involved in insuring Federal institutions, including the insurance companies that do not pose a risk for our financial systems. So my question would be, can you please give us your thoughts on forcing insurance companies to retroactively cover business interruption claims? Mr. POWELL. I don’t think I have had a conversation about that since our last visit together in June, but let me check in on the current situation and come back to you. Mr. WILLIAMS. Okay. That would be great. Thank you. And both of you have discussed the potential need for another economic stimulus package to come through Congress. We have done that today. However, at the moment, much of the money that we allocated in the CARES Act and other aid packages has not yet been spent. The nonprofit Committee for a Responsible Federal Budget estimates that the government has allocated or disbursed $2.2 trillion of the $4 trillion that Congress has passed in COVID relief. Mr. Secretary, you have been deeply involved in negotiating, as we very well know, the next COVID-19 relief package. And as we discuss spending new money, how would or how should we be viewing the economy to ensure that industries in most need of assistance receive it while the other money we have already allocated makes its way into the system? Secretary MNUCHIN. I think we are in a very different situation than we were last time. I think last time, the entire economy was shut down and we had to act very quickly, and in many cases, that required us to do things across-the-board. I think this time it should be much more targeted to the industries that are most impacted by this situation. Mr. WILLIAMS. Thank you. And I want to thank you again for your efforts and basically tell you, as somebody who is on Main Street, the economy is pretty good right now. It is getting better, and attitudes of people in startups are getting better. I hope one day we can look at liability toward a lot of small businesses and big businesses that could keep them from growing. So, thank you again for your efforts. We appreciate it. And I yield back. Thank you. Chairwoman WATERS. Thank you. I now recognize the gentleman from Washington, Mr. Heck, for 5 minutes. Mr. HECK. Thank you, Madam Chairwoman. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 23 Chairman Powell, I want to discuss fiscal support today, but before I do, I want to quickly address the announcement that the Fed made to take steps to make the inflation target more symmetric and emphasize the employment mandate, the new framework that Dr. Foster referred to. I am not at all exaggerating when I say this new framework is the most important thing that has happened in monetary policy, indeed in economic policy, in 40 years in this country. It will have a bigger impact on absorbing heretofore marginalized [inaudible] Especially among communities of color. Your leadership in shepherding [inaudible] Needs to be acknowledged [inaudible]. Chairwoman WATERS. Excuse me. Mr. Heck, speak right into the microphone so that we can hear you clearly. Mr. HECK. I hope he was able to hear all of my comments. Can you hear me now, Madam Chairwoman? Chairwoman WATERS. Yes. Mr. HECK. Thank you. Chairman Powell, thank you very much for the new framework. At the outset of this pandemic you declared that, ‘‘This is the time to use the great fiscal power of the United States to do what we can to support the economy and try to get through this.’’ Congress responded by passing the CARES Act, and Congress continues to deliberate further fiscal support. At your press conference on Wednesday, you said that the Federal Reserve’s projections for growth, inflation, and employment were assuming more fiscal support. What size support were you assuming? Mr. POWELL. Let me say that I think a big part of the good economic news that we have had results from the fiscal support that came with the CARES Act. So it deserves a lot of the credit for keeping people spending and keeping business confidence and household confidence high. We don’t agree on a forecast. Individuals make different assumptions. I think something like—most private sector forecasters are assuming that some kind of a package passes sometime in the next few months, but there isn’t any particular number that I would give you that would come out of the Fed. Mr. HECK. But is it not true, Mr. Chairman, that the Fed did itself make projections as to growth and inflation and employment? And if so, acknowledging that it assumed fiscal support, there must have been some assumption about the level of fiscal support. Mr. POWELL. Actually— Mr. HECK. How else would you arrive at your projections? Mr. POWELL. Yes. I wish it were that simple. The way we do it is we—what we publish is the individual projections of the 17 people who vote or who are, sorry, participants on the Federal Open Market Committee (FOMC), and they are free to make whatever assumptions they need. And we don’t survey them on every little thing, but I would say most assumed some fiscal action. But we didn’t create a table, and so I can’t tell you exactly what was assumed, but fiscal action underlies many, many current forecasts. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 24 Mr. HECK. Then, let me try this a different way. What happens to growth in employment if there isn’t any fiscal support and it doesn’t materialize? Mr. POWELL. What has happened lately is that the economy has proved resilient, both to the broader spread of the disease over the summer in some of the southern and western States and also to the expiration of the CARES Act benefits. So, we don’t really know what will happen. I would just tell you what I think the risk is. As some have pointed out, savings are very high, and that is because of a number of things. Part of it is the CARES Act. But there are still 11 million people unemployed. So the risk is that over time, they go through those savings, and they haven’t been able to find employment yet because it is going to take a long time to get—or it is going to take a while to get 11 million people back to work. And so, their spending will decline. Their ability to stay in their homes will decline. And the economy will begin to feel those negative effects at some time. At the same time, the economy is recovering, and that is a good thing. And it is very hard to have any certainty about the path forward because we don’t know which of those two forces will dominate. Mr. HECK. With all due respect, Mr. Chairman, unless you are arguing that fiscal stimulus has no impact, then is it not inescapable that if there is no additional fiscal support, growth will be lower? Mr. POWELL. Yes. Certainly fiscal, and I have said that I think it will likely be needed. I do defer to the Administration and Congress, who actually have the responsibility for this. But I think that it is likely that more fiscal support will be needed. Chairwoman WATERS. Thank you. The gentleman’s time has expired. Mr. HECK. Thank you, Madam Chairwoman. Chairwoman WATERS. I now recognize the gentleman from Arkansas, Mr. Hill, for 5 minutes. Mr. HILL. Thank you, Madam Chairwoman. And of course, thank you, Secretary Mnuchin, for being with us here today. And Chair Powell, it is terrific to see you. I want to associate myself with the remarks of the ranking member, who outlined really the outstanding leadership we have obtained from the Treasury and from the Federal Reserve, particularly in the early days of fighting the virus. And we appreciate your commitment to our country, to restore the health of the American people, and renew our families’ belief in the American Dream, and in your own ways, to rebuild the American economy. I want to talk for a minute about this issue for smaller businesses, and I plan on signing the discharge petition in the House today to move Congressman Chabot’s bill to the House Floor, which extends the PPP program and clarifies the forgiveness aspects of that. This is something that should have been done at the end of July, and I was pleased that last week, Democratic Members of Speaker Pelosi’s caucus were objecting to her leadership, or lack thereof, in VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 25 trying to negotiate this COVID package. I hope my Democrat colleagues will join me in signing that discharge petition, because the PPP extension, as Secretary Mnuchin outlined, is a key component to having the tools necessary for the small business recovery. Second, in my view, the proposal by Mr. Rubio that is in the Senate bill on the 7(a) loan program is critical because it allows us to take this embedded loss of the last 6 or 8 months, or that we think is coming, and put it on a 20-year am at a 1 percent rate as an SBA product. And it is a much better solution than the emergency loan program that the SBA has used during this pandemic, which is really geared towards a hurricane and not to a national pandemic. But the third point is the Main Street Program, and both of you know my views on this as we have talked about it in an oversight commission hearing, as well as privately. On Friday at 1 p.m., in a typical Washington, D.C., fashion, the Fed released its frequently asked questions and dumped them out to the public on Friday afternoon, that you would not pursue this asset-based lending type approach for a different Main Street term sheet. Mr. Barr did a good job describing that. I really think that can be done, Chairman Powell, to companies on sound footing, to companies that are not able to reach credit traditionally under reasonable terms, and in the concept of a backstop. And so, I want to press both of you that while it doesn’t fit the Main Street term sheet you have today, that took 4 months to stand up, I still believe that asset-based lending to a solvent company is important. And you had a key component, another Washington key component in the frequently asked questions, where you said, ‘‘at this time.’’ So I would urge you to reconsider your position on asset-based lending and offer you each an opportunity to comment. Mr. Powell? Mr. POWELL. We have taken a very close look at it, as you know, and as the Secretary indicated, but we are happy to continue the conversation, and we will do that with you. Mr. HILL. I really do believe it can be done in the right way. And I think the three things I commented on, the first two, the 7(a) program and the PPP loan where I addressed this lower loan size that the Chair mentioned, but I do believe there is a solvent niche out there of portfolio lending that can be done on a sound basis that would offer some liquidity for hospitality, particularly not CMBS per se, but portfolio lending where they have this gap that we saw after 9/11 and we saw after the financial crisis of very slow increases in business travel. Secretary Mnuchin, you commented that you would like Congress to give you authority to incur risk as it relates to the $500 billion in funding for the Exchange Stabilization Fund, or particularly the 454 that was not related to airlines, and that you proposed to reprogram that money for other uses. But when we had a discussion of this in the oversight commission, we have issued in our fourth report that we don’t believe that you need any additional congressional authority to reprogram that and take on additional risk. Could you comment on that please? VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 26 Secretary MNUCHIN. Let me just be clear. I don’t think we need authorization to take on additional risk. And let me clarify, I think on the Main Street loans, in general, we will be taking losses, because I think this is basically being underwritten on pre-corona EBITDA. What I was suggesting is that we would like to spend that money on other areas of the economy that could be better served—kids, jobs, more PPP, SBA long-term loans—and that, unfortunately, we do need congressional authority to use it in other areas. And again, I think, as you know, we have a lot of money left over in the PPP that has been appropriated by Congress, that with simple legislation, could allow many hardworking small businesses to get a second loan. Mr. HILL. Thank you both for your leadership. Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you. I now recognize the gentleman from California, Mr. Vargas, for 5 minutes. Mr. VARGAS. Thank you very much, Madam Chairwoman. I appreciate it. I want to thank the Secretary, of course, and also the Chairman for being here today. I appreciate your testimony very much. I have to say I have heard some pretty tortured language and tortured logic from some of my colleagues today. One Member said that we are not bailing out businesses, ‘‘compensation for a regulatory taking.’’ That sounds a lot like, ‘‘use my words against me,’’ when you say you won’t vote for a Supreme Court Justice in an election year for President. The reality is when you talk in absolutes, you get into these situations where logic gets twisted to try to fit things. And the other thing I heard today is that Congress should pass a second CARES Act. We did that. We passed it. It is called the Health and Economic Recovery Omnibus Emergency Solutions (Heroes) Act. It is languishing over in the Senate. Then, I heard another colleague say we should do what the Senate did and pass what they did. They didn’t pass anything. The Senate didn’t pass a thing. They tried to pass something, but nothing passed. The other thing I guess I heard today also was a pretty rosy picture of the economy. And I don’t want to put words in people’s mouths, but, Mr. Secretary, I believe you said that the economic recovery was strong. I think that tens of millions of Americans would disagree with that and, in fact, would say that the stock market is not the only economy. We have 11 million Americans who are still out of work, who lost their jobs, more than in the financial crisis. So, I don’t think that they would agree that we have had this strong recovery. I do agree with what the Chairman said, that we won’t get a full recovery until everyone feels that they are safe from this virus, and so I think it is very important that we do everything we can to defeat it. But unfortunately, up to now, I think the virus has been in charge. So, I want to ask this. I have been watching what has been happening in Europe. It seems like they are starting to get a second VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 27 wave. I am very concerned that we may have a second wave in our own country, and I am not sure that we are prepared for this. I also went back and did a lot of reading on the Spanish flu and saw that their second wave was the more devastating one, not the first one, but the second wave of the Spanish flu. Could you comment, either one of you, on how prepared we are? What is our plan in case this thing comes roaring back? Secretary MNUCHIN. I would just first comment on—I did say there is a strong recovery, because when you close the economy and you reopen it, it is strong, but there is still more work to do. As it relates to being prepared—and again, I am not a health professional, although I have sat on the task force—I think we have made major progress on vaccines, on virals, on testing, and, I think, on PPE. So, I think we have done a very good job at being prepared for the virus. Mr. VARGAS. But do we have a plan? Do you have a plan in case it comes back? In fact, a virus usually has some seasonality to it, and you would expect in the winter for it to come roaring back. We have seen that before. If it does come back—assume it does—do we have a plan? Does the Administration have a plan? Secretary MNUCHIN. First, from an economic standpoint, we do have a plan for the economy now, and that is why we want more congressional approval. As it relates to health, yes, the Administration and the task force does have a plan. It is executing that plan. And a major component of that plan is the vaccine development, which is making great progress. Mr. VARGAS. Thank you. Mr. Chairman, if I may ask you, you said that until people feel that they are not at risk, the economy won’t come back. Could you elaborate a little more on that? Mr. POWELL. Sure. There are parts of the economy that involve people getting very close together in groups, and that is travel, hospitality, entertainment, things like that. And I think people will— not everybody, but some part of the population will be reluctant to continue in those activities until they feel confident that it will be safe, that they won’t get sick from doing so. And that is not most of the economy; that is a piece of the economy. It is a reasonably substantial piece of the economy, where a number of people, millions of people are still not working, and it will probably take some time for them to get back to work. So, getting them back to work will depend on continued progress on the medical front, including, ultimately, a vaccine. Mr. VARGAS. I think my time has expired, and I yield back. Thank you very much. Chairwoman WATERS. Thank you. I now recognize the gentleman from Georgia, Mr. Loudermilk, for 5 minutes. Mr. LOUDERMILK. Thank you, Madam Chairwoman. Secretary Mnuchin and Chairman Powell, thank you for being here. And let me also echo the thanks for early on in this pandemic, especially with the PPP program, the way our offices worked together and your offices worked with the banks in our VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 28 communities to tailor this thing to where it would actually do something for the small businesses. And as a result of that, one of the small banks in my district that only has two branches ended up making more PPP loans than one of the major national banks did nationwide. And that is just one of the many successes of the PPP, but it is because of the engagement there. I have two questions, but first, I would like to respond to something my good colleague from California just brought up about the recovering economy. I think there are areas of this country where the economy is recovering strong, and the State of Georgia is one of those. Our revenue reports came out just a little over a week ago that tax revenues for 2020 are 7.7 percent higher than 2019. And it is because instead of using a heavy-handed government putting long-term restrictions on the people, we decided to trust the people that they would be safe and secure, and we opened our economy. So I think if other States would like to see that type of economic recovery, maybe they should address the way that their States are being governed. I know the Federal Reserve is looking at ways of broadening the Main Street Lending Program, which I think we all realize needs to be broadened. But there are some areas I would like to see us take a look at, and one of those industries that is interested in Main Street lending is specialized consumer finance firms, which are nonbanks that purchase credit card receivables from cardissuing banks and they securitize those assets, which enables consumers with subprime credit to access a credit card, which are some of the most vulnerable in society right now. But the earnings before interest, taxes, depreciation and amortization (EBITDA) requirements prevent them from obtaining a loan. Chairman Powell, would you consider modifying Main Street lending to allow these firms to access this program? Mr. POWELL. I would have to look at that in particular. EBITDA is a very standard cash flow measure. If you are going to make a cash flow loan in our markets, you are going to look at EBITDA. The alternative is something asset-based. And I don’t know these companies to know exactly what we are talking about, but we are happy to take a look. Mr. LOUDERMILK. I will make sure that our staff engages with yours to give you some of the folks who are looking to do that, and I think it would be wise. Another issue, back to the PPP program, Mr. Secretary, is that the forgiveness of the PPP loans is very cumbersome, and it is putting some of the banks, such as the one I had brought up earlier, Vinings Bank, into a situation where they are keeping those loans on their books longer than they had intended to. Is there something that we can do to streamline this forgiveness program so it is less cumbersome, so we can start getting those loans off the books of the small banks to open them up to make other, more traditional business loans? Secretary MNUCHIN. We have tried to streamline the process for the smaller loans, as you outlined. I know that there are some proposals in Congress, and as part of legislation, we have worked with VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 29 both committees on that, making sure we have the right balance of protecting for fraud with simplification. Mr. LOUDERMILK. Okay. And I assume that you would be willing, if Congress took some action there, to work with us on that. Thank you both. I know these have been challenging times, but I think the Administration has responded admirably and well, considering the severity of this crisis. And I think we just—if we keep on track and keep pushing forward, we can get through this and make our economy as strong as it was before, if not stronger. And, Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you. I now recognize the gentleman from Texas, Mr. Gonzalez, for 5 minutes. Mr. GONZALEZ OF TEXAS. Thank you, Madam Chairwoman. And thank you, Chairman Powell and Secretary Mnuchin. Folks, I represent many small business hoteliers in my district, many of whom are first- and second-generation Americans who have worked hard to achieve the American Dream. As a result of COVID-19 and subsequent travel shutdowns, and through no fault of their own, family-owned and operated hotels in Texas and across the country are facing an unimaginable economic crisis with no ability to access a lifeline through the Main Street Lending Program. Despite repeated requests from Congress, including my own, the MSLP facts released on September 18th state that conditions did not warrant changes to allowing lending to asset-based borrowers. There is nothing else for these people to turn to. I want to make sure I understand your message to them. Right now, we have money on the table, programs that are not being used, and programs that are being used that are not quite compliant with the CARES Act, and programs that have been drained of funding because they worked. Your position is that these businesses should be allowed to fail, that hardworking Americans should lose their livelihoods, and that you will do nothing to help them. You want to carefully follow the law, right, on the CARES Act? Well, we passed the CARES Act, and to the extent that you are not in compliance with the programs included there, it is time to get that done. Failure to do so would not constitute following the law. You either are or you are not complying with the law. And you do not have programs that comply with the CARES Act distribution of funding. We may be in a crisis now, but I am sure you can imagine what will happen after the crisis when we start picking up the pieces and scrutinizing the actions of your agencies. Right now, we are using the powers given to you for explicitly this purpose, and you are using the powers for explicitly this purpose for both you, and so you can help the country. Businesses need a lifeline, they are not even asking for bailouts, businesses like the ones I am talking about. Lending them money for 10 or 20 or 30 years at a low interest rate creates the liquidity that the markets need. And recognize that if all commercial properties start defaulting, we are looking at another wave of a crisis, VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 30 aren’t we? And what are we doing to prepare now and help them now and do the work now? Secretary MNUCHIN. I would first say I think we are following the law, so let me just be clear on that. The second thing I would say is that we want to help the types of businesses that you are talking about. In many cases they need grants and not loans. But as part of additional SBA appropriations, we very much support long-term loans, particularly for the types of businesses that you are focused on. Mr. GONZALEZ OF TEXAS. What specific loans do you have available for folks like these small hoteliers? Secretary MNUCHIN. Again, we support additional money to small hotels because that is what they need. Additional SBA loans are something that we have looked at as well as PPP loans. In many of the cases, these small hotels do not fit into Main Street because they already have additional—they already have other indebtedness, and in many cases they are either not allowed to take additional loans or they are too levered to begin with, to qualify. Mr. GONZALEZ OF TEXAS. So, the small ones that do fit in, you are saying that the SBA has a program for them? Secretary MNUCHIN. No, what I said is as part of additional legislation, the Small Business Committee has proposed additional money, long-term money for small businesses as part of a new program, and that is something that we have looked at and we would support. Again, many of the small hotels that you are talking about don’t have any revenues. Mr. GONZALEZ OF TEXAS. Right. Secretary MNUCHIN. So, those hotels would qualify for additional PPP loans. There is over $130 billion that has been appropriated by Congress that we just need authorization to use, and that would be the best solution for them. Mr. GONZALEZ OF TEXAS. Thank you. I would just ask that we stay cognizant of these folks. They are good Americans. They are hardworking Americans. They are an important part of our economies, both locally and nationally, and they deserve our attention. Thank you very much. Chairwoman WATERS. Thank you very much. I now recognize the gentleman from Tennessee, Mr. Kustoff, for 5 minutes. Mr. KUSTOFF. Thank you, Madam Chairwoman. And I would like to thank the witnesses for your leadership during this crisis. I think you have both displayed tremendous leadership. Secretary Mnuchin, if I could, we have talked a lot about the PPP program today and its success, and the ranking member talked about the 51 million jobs that it is estimated that it saved, with the caveat that maybe 12 million rural jobs in rural communities that it saved. If I could, following up on what Mr. Loudermilk asked about a few moments ago as it relates to the forgiveness, what I have heard from small businesses throughout my district, and frankly, throughout the State of Tennessee, is that they are very thankful VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 31 about the PPP; it literally saved their businesses. But there is a concern about the complexity of the forgiveness. And so my question is, have you considered administratively forgiving certain loans, say, loans of $150,000 or less, again, through administrative action? Secretary MNUCHIN. We have considered that. We don’t think we have the authorization to do that in the context of the law. And we have tried to make it very simple for small businesses. But again, there were some proposals out of Congress that just said we should automatically forgive all of those loans, and to do that, we would need congressional action. Mr. KUSTOFF. So your interpretation is that you don’t have the authority to administratively forgive those certain loans, again, the smaller loans? I am using $150,000 or less. Administratively, you don’t have the authority to do that? Secretary MNUCHIN. We think we have the obligation to get the documents, have them fill out what is an easy form, and have the ability to audit those. I think, as you know, unfortunately, there has been some fraud, and we’re working with our IG on that. But, no, we don’t think it would be appropriate, and we don’t think we have the authorization to do a blanket forgiveness acrossthe-board. Mr. KUSTOFF. If I can, again, we have heard from people, I think all of us have, about how PPP saved their businesses, kept their employees on the payroll. And, frankly, you all deserve credit for crafting that. And I do think, frankly, that Congress deserves credit for acting swiftly and in a bipartisan manner. The one criticism I have heard from businesses, specifically in my district, is that they literally could not compete—some—with the enhanced unemployment benefit, that it was set too high. And so maybe in an area like Tennessee or Mississippi or Arkansas, maybe it was generous in other States. Maybe it was not. I don’t want to get ahead of the negotiations, but if there is an additional enhanced unemployment benefit in the next package, is there a way to somehow tie that to locality? Secretary MNUCHIN. Yes. At the time, we knew that there were certain places where it would be too high, and certain plaes where it would be too low. We thought the fair way of doing it was one number across-the-board. As part of the President’s executive action, he has now authorized that to go forward with up to $400, $300 if the State doesn’t contribute, and we have proposed as part of additional legislation having it at something like 75 percent of wage replacement. Mr. KUSTOFF. And would that be uniform across all 50 States or would it be based somehow on locality? Secretary MNUCHIN. Ideally, it would be each State would take some time for them to implement that technology, but that it would be capped on 75 percent of previous wages. Mr. KUSTOFF. Thank you, Mr. Secretary. One more question for you, if I can, and I am going to touch on something that I don’t think has been asked today, and that is on phase one of our agreement with China that was executed earlier in the year. Obviously, we know we faced a pandemic. Are you VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 32 right now confident that China can meet its commitment to purchase $36.5 billion in agricultural products this year? Secretary MNUCHIN. I believe they are on track for that, and Ambassador Lighthizer and I are monitoring that very carefully. Mr. KUSTOFF. Thank you, Mr. Secretary. With that, I yield back my remaining time. Chairwoman WATERS. Thank you. I now yield 5 minutes to the gentleman from Florida, Mr. Lawson. Mr. LAWSON. Thank you, Madam Chairwoman. I would like to thank you and Ranking Member McHenry for hosting this hearing today. And I would like to welcome the gentlemen to the meeting. It has been very good hearing you all speak this morning. One of my colleagues, Representative Taylor from Texas, joined me in writing a letter to both of you regarding the impact of COVID-19 on the commercial real estate market, and I heard some of it talked about earlier. The commercial real estate market continues to be hit hard due to the economic shutdown that has resulted in store closings and halted travel. The COVID-19 pandemic has turned the $4 trillion commercial real estate financial market upside down. In June, I was joined by Representative Taylor and over 100 of our colleagues in requesting that the Department of the Treasury and the Federal Reserve urgently consider targeting economic support to bridge the temporary liquidity deficiencies facing commercial real estate borrowers created by the unforeseen crisis. We believe that this—and still do that the Federal Reserve has the ability to bridge the gap through various Facilities to help many businesses survive the economic disruption. However, on Friday the Federal Reserve released an update on the Main Street Lending Program, which stated that conditions do not warrant changing this to allow the lender to assist the basic buyer. Would you all care to comment on that for me? Secretary MNUCHIN. First, let me say, again, Chair Powell and I both agree with you that the commercial real estate market has an issue. I just want to clarify, when people talk about asset-based lending, they traditionally don’t include real estate in that. The real estate market is its own market, so that wouldn’t necessarily be part of an asset-based program. There are structural problems. I know some people in the House tried to work on a proposal of preferred equity so that it could be going below the existing. But Chair Powell and I will continue to work on this. It is an issue. We don’t have a solution. We wish we did. Mr. LAWSON. Okay. Does Chairman Powell want to comment, too? Because I was on a call with him several weeks ago about this issue, along with Representative Taylor. Mr. POWELL. Yes. And both of us are very familiar with the letter that you sent and have studied it carefully and really looked hard at how we can reach the problem we are talking about. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 33 And a lot of the problem just isn’t with commercial mortgagebacked securities. Those loans contain a provision that says you can’t incur additional debt. The Secretary referred to a way to get around that, but that wouldn’t involve the Fed. It would require legislation. And we do understand and appreciate that this is a significant problem in the economy, and we can keep looking for solutions. We don’t really have a solution, though, with the tools we have. Mr. LAWSON. And I understand that we don’t have a solution. I think one of the things that really bothers me as a lawmaker, is when we turned back about $130 billion in PPP funds, and then you find out that all of these people who are suffering tremendously, and they have coming up to maybe releasing something like a large group of employees who depend on them. I had the opportunity to talk to Chairwoman Waters about some of the things that were happening even in her area out in California. And I am glad that you all are considering it and that we need legislation. I don’t know how quickly we can get legislation through. I was certainly hoping that it could be included in negotiations on the HEROES Act and what is coming out of the Senate, but I know the Senate, which was stated today, still hasn’t passed anything. So I don’t have much time left, but I am glad that you all were continuing to keep that at the forefront, because a lot of these employees are just everyday people who need help. And with that, Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you. I now recognize the gentleman from Indiana, Mr. Hollingsworth, for 5 minutes. Mr. HOLLINGSWORTH. Good afternoon. First to you, Chair Powell. I was recently excited by the news about creating a more symmetrical inflation target. I think that was great news. I know it is something that you and I had discussed at length privately, as well as publicly at these hearings. I am sure it had a lot of discussion and a lot of research underpinnings, and it wasn’t just my annoyance that led to it. But, nonetheless, I really appreciate you doing that and I think it is going to be positive for the Fed and for the American economy going forward. Specifically, I also wanted to turn to the temporary exclusion of Treasuries and deposits at Federal Reserve Banks from the SLR that was done through March of 2021, on some concerns that increased reserves during this period of time didn’t want to count against them during SLR, but it was not extended to, nor does it flow through to the G-SIB size indicator. I was wondering why that was the case, and is there any further discussion or dialogue about extending that through the G-SIB size indicator? Mr. POWELL. I have to go check on that for you. I am not aware of any of those discussions. Mr. HOLLINGSWORTH. Okay. Great. If you wouldn’t mind checking on this, because I think that is really important to us to make sure that we see that flow through, given that in the fourth quarter, I think many of our largest institutions are going to begin to see those impacts. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 34 On to you, Secretary Mnuchin, what you said a few minutes ago. There has been a proposal around Congress potentially talking about preferred equity to some of our real estate borrowers that are most troubled. That, to me, is troubling, that proposal, and I think you said it doesn’t feel like there is a good solution. Could you talk about why that isn’t a good solution? Secretary MNUCHIN. Ideally, we would rather lend as debt and not do preferred equity. Mr. HOLLINGSWORTH. Evaluation issues, government ownership position issues, how do you get paid back issues, those sorts of things? Secretary MNUCHIN. All of the above. Exactly. Mr. HOLLINGSWORTH. Exactly. And one of the things that I want to emphasize is that there is real distress in this community, there are real challenges in this community, but the longer that we continue to talk about solutions that aren’t real solutions, I think the longer it will take to get to a legislative and administrative fix that will provide a real solution to those who are hurting across my district, across my State, and across this country. So, I appreciate your clarity on that. With that, I will yield back. Chairwoman WATERS. Thank you. I now recognize the gentlelady from Michigan, Ms. Tlaib, for 5 minutes. Ms. TLAIB. Thank you so much, Madam Chairwoman. And thank you both so much for being here. One of the questions or some of the basic ones I just want to review with both of you, Chairman Powell and Secretary Mnuchin, what do you think your primary role is during this pandemic? And I will start with you, Chairman Powell. Mr. POWELL. We are here to serve the American people. Ms. TLAIB. It is to stabilize the economy? Mr. POWELL. That is a big part of it right now, yes. Ms. TLAIB. How about you, Mr. Secretary? Secretary MNUCHIN. Yes, that’s correct, and to operationalize what are obviously all of the responsibilities that the Treasury— Ms. TLAIB. Like, prevent an economic collapse, right? You both agree that is kind of a— Secretary MNUCHIN. Yes, for starters. Ms. TLAIB. Yes. No, I hope so, too. I am going to start with you, Chairman Powell. Every time I have asked you about State and local governments, you have insisted there is nothing that the Fed can do for States and cities in distress. But you did create a Municipal Liquidity Facility (MLF) to apparently do just that. However, the program is pretty restrictive. Is it true that only the State of Illinois has applied? Mr. POWELL. No. We have done two loans. And of course, that Facility has resulted in $250 billion of borrowing in the private sector, where there was none taking place before the Facility was announced. Ms. TLAIB. Do you think State and local government going bankrupt would create instability in our economy? Mr. POWELL. I think that is an issue that is outside my bailiwick. VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 35 Ms. TLAIB. So you don’t think it is an integral part to ensure that State and local government in the public sector is stabilized and will not go bankrupt like the City of Detroit did? Mr. POWELL. States can’t go bankrupt. They don’t have a—there is no means for them to. Cities, of course, can, under Chapter 9. Ms. TLAIB. Yes. The City of Detroit, when they went bankrupt, there was a huge—did you think there was an impact in the economy there? Mr. POWELL. Yes. Ms. TLAIB. I think so, too. My district really hasn’t benefited from the program, and one of the things that I want to point out to you, Chairman Powell, is you don’t have to lend with penalty rates to State and local government. This regulation that you have there about penalty rates, that wasn’t created by statute, correct? That was created by you all internally? Mr. POWELL. It is in our regulation and in our practice. Ms. TLAIB. But why not remove the penalty rate when there is heightened unemployment or when the State and local governments are at risk? Mr. POWELL. What that Facility has accomplished is it has opened up the private market. So, State and local governments are borrowing in record amounts at record low yields, and that is across the yield curve and it is in various— Ms. TLAIB. Only two States applied, correct? Mr. POWELL. Excuse me? Ms. TLAIB. Only two States have been able to qualify under the MLF program? Mr. POWELL. Yes, but they are all borrowing in the public markets— Ms. TLAIB. How many cities? Mr. POWELL. They are borrowing in the public markets at much cheaper rates, which is at very cheap rates. Ms. TLAIB. Okay. But, Chairman Powell, what I understand is for corporations, the Fed supports bonds within a 5-year maturity. Do you think corporations in debt are more important than local municipalities? Because I understand theirs is 5 years, and you have it for what, 3 years for local government? Mr. POWELL. Yes. State and local governments generally are not allowed to borrow to finance deficits. And so there is—what it is, is their borrowing is for liquidity. And there is a part of the market which is zero to 3 years that is about liquidity, and that is where we have been willing to lend. But there has been a lot going on, longer-term issues. Twentyyear bonds and 30-year bonds have been issued. And that is because of our backstop. Our Facility is performing its backstop function, and that has enabled the private market to work very well to serve State and local governments. Ms. TLAIB. Yes. I don’t think—honestly, just looking at what happened in the City of Detroit, I am really worried that we are not being flexible enough, that we are not able to accommodate for the fact that these State and local governments—you know that for much of the policies from within, to stabilize the economy, we have to uplift and make sure that the communities are protected. So, I VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 36 would recommend that you check out the bill that I have, the Uplifting Our Local Communities Act. I really would appreciate that. Secretary Mnuchin, we have to prevent an economic collapse, right? This is a huge issue. This is probably even deeper than the recession that we went through. Yes or no, do you believe another stimulus check could help stabilize the economy? Secretary MNUCHIN. I do. Ms. TLAIB. However, you have been on record for not supporting the economic package that we passed in May, that included another round of stimulus checks for millions of Americans who are right now unable to afford their rent and so forth. Can you explain what your position there is? Because I think the American people are a little confused. Does the Administration support another $1,200 stimulus payment? Secretary MNUCHIN. The Administration does support another stimulus payment. Ms. TLAIB. But you are willing to go ahead and support within the Heroes Act that payment and push back on what I call the, ‘‘let them go bankrupt bill,’’ that the Senate has proposed? Secretary MNUCHIN. Let me just say I take great pride that the last two bills we did passed with overwhelming bipartisan support. We obviously can’t pass a bill in the Senate without bipartisan support. And our job is to continue to work with Congress to try to get additional help to the American public. Ms. TLAIB. I think you need to be very clear with the Senators, Secretary, really clear that direct payments to individuals is critical to preventing an economic collapse in our country. Chairwoman WATERS. Thank you very much. We are going to move to the last Member who will be able to raise questions. Both of our guests have a hard stop at 12:30, and we are going to honor that. I now recognize the gentleman from North Carolina, Mr. Budd, for 5 minutes. Mr. BUDD. Thank you, Madam Chairwoman. And Secretary Mnuchin, thanks for being here. To date, less than 1 percent of the PPP loans nationwide have been processed through the SBA’s forgiveness portal. Many small businesses, these PPP borrowers, are waiting to see if Treasury or Congress is going to act on some sort of bipartisan forgiveness proposals that we see in the House and the Senate. Now, the current one, as I understand it, the current process is really confusing for a lot of these small business owners, and it is not what they expected when they first took out these loans. The current process is also a real burden on community banks that have a lot less resources than our large banks. The time for such a streamlined process to be put in place was a long time ago. It was weeks ago. But due to this delay, the situation with banks and borrowers is getting more and more urgent. So under your current authority, would you and SBA Administrator Carranza be able to implement a streamlined process as outlined in the Paycheck Protection Small Business Forgiveness Act? Secretary MNUCHIN. I’m sorry. I would have to look at the specifics of the Act and get back to you. But I believe the answer is VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 37 that we don’t have the authority to implement it the way it is in the Act. But, again, I would just say the forgiveness portal is open. We are encouraging small businesses to apply. And we are working with SBA to make sure that they can process those as quickly as possible and we could provide small businesses tools to make it easy for them. Mr. BUDD. Mr. Secretary, I am glad that the portal is open, and I am assuming that it is working. Do you consider it currently to be a streamlined process? And is there anything, any improvement you could do within your authority? Secretary MNUCHIN. We developed an easy form, so we tried to make it significantly easier. And, again, we are happy to work on a bipartisan basis with Congress if they want to pass legislation that creates blanket authority for forgiveness. Mr. BUDD. Thank you, Mr. Secretary. Chairman Powell, thanks again for being here. At your last appearance before the committee you stated that our banking system is robust and it has been a source of strength throughout this pandemic. Specifically, you cited the unprecedented influx of deposits, forbearance measures taken by banks, and the continued ability to lend as evidence of the strengths of the U.S. banks in the COVID19 environment. Now, while many industries have understandably needed government support to continue operating during the forced economic shutdown, my view is that the financial system has been a crucial partner for the Fed and Congress in facilitating relief to businesses and to households. I bring all this up because I have heard some call the recent actions taken by Congress and the Fed—they have actually called it, ‘‘a bailout for banks.’’ So my question to you is simple: Has there been a bailout for banks during COVID-19? Mr. POWELL. No, I wouldn’t say that there has been. Mr. BUDD. My office keeps hearing from companies that are unable to secure short-term financing, but they are using their working capital financing to run their operations. They were too large to take advantage of the PPP, and they don’t have access to the capital markets. So, how could the Fed use its Section 13(3) authority to provide assistance to these companies, many of whom provide services and supplies all up and down the supply chain that are critical to our nation’s economy? What can the Fed do to provide assistance to them? Mr. POWELL. On working capital, in looking at the idea of an asset-based Facility, we did a good deal of work in that sector, and we came away thinking that working capital financing was pretty broadly available. So I am surprised, and it is not a good thing that I am hearing that it is difficult for some. So, we will go back and look at that. Mr. BUDD. Chairman Powell, is there something that I should relay to these mid-sized businesses, that maybe they haven’t found or they are not aware of that they should look to for support? Mr. POWELL. We have the Main Street Facility, of course, which has three different portals—or three different loan products—and VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI 38 all companies are welcome to borrow there. We have, as I mentioned, growing interest there. There is the PPP program— Mr. BUDD. Mr. Chairman, do you think there might be a gap— Mr. POWELL. —the Paycheck Protection Program. Mr. BUDD. I’m sorry. Do you think there might be a gap between the PPP and the Main Street Lending Facility, where some could get caught sort of in the lurch? Mr. POWELL. We have been looking for gaps, honestly, and we did look at the working capital, at working capital and finance, and did not see a big problem to solve there. But we will go back and take another look at that. Mr. BUDD. Thank you, Chairman Powell. I yield back. Chairwoman WATERS. Thank you very much. I would like to thank our distinguished witnesses for their 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 12:23 p.m., the hearing was adjourned.] VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 K:\DOCS\HBA266.000 TERRI APPENDIX September 22, 2020 (39) VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00043 Fmt 6601 Sfmt 6601 K:\DOCS\HBA266.000 TERRI VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00044 Fmt 6601 Sfmt 6601 K:\DOCS\HBA266.000 TERRI Insert offset folio 1 here 43525.001 40 VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00045 Fmt 6601 Sfmt 6601 K:\DOCS\HBA266.000 TERRI Insert offset folio 2 here 43525.002 41 VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00046 Fmt 6601 Sfmt 6601 K:\DOCS\HBA266.000 TERRI Insert offset folio 3 here 43525.003 42 VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00047 Fmt 6601 Sfmt 6601 K:\DOCS\HBA266.000 TERRI Insert offset folio 4 here 43525.004 43 VerDate Nov 24 2008 16:07 Apr 12, 2021 Jkt 095071 PO 00000 Frm 00048 Fmt 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@FedFRASER