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OVERSIGHT OF THE TREASURY DEPARTMENT’S AND FEDERAL RESERVE’S PANDEMIC RESPONSE VIRTUAL HEARING BEFORE THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTEENTH CONGRESS FIRST SESSION MARCH 23, 2021 Printed for the use of the Committee on Financial Services Serial No. 117–12 ( U.S. GOVERNMENT PUBLISHING OFFICE WASHINGTON 44–345 PDF VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 : 2021 Sfmt 5011 K:\DOCS\HBA082.000 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 DAVID SCOTT, Georgia AL GREEN, Texas EMANUEL CLEAVER, Missouri ED PERLMUTTER, Colorado JIM A. HIMES, Connecticut BILL FOSTER, Illinois JOYCE BEATTY, Ohio JUAN VARGAS, California JOSH GOTTHEIMER, New Jersey VICENTE GONZALEZ, Texas AL LAWSON, Florida MICHAEL SAN NICOLAS, Guam CINDY AXNE, Iowa SEAN CASTEN, Illinois AYANNA PRESSLEY, Massachusetts RITCHIE TORRES, New York STEPHEN F. LYNCH, Massachusetts ALMA ADAMS, North Carolina RASHIDA TLAIB, Michigan MADELEINE DEAN, Pennsylvania ALEXANDRIA OCASIO-CORTEZ, New York JESÚS ‘‘CHUY’’ GARCIA, Illinois SYLVIA GARCIA, Texas NIKEMA WILLIAMS, Georgia JAKE AUCHINCLOSS, Massachusetts PATRICK MCHENRY, North Carolina, Ranking Member FRANK D. LUCAS, Oklahoma BILL POSEY, Florida BLAINE LUETKEMEYER, Missouri BILL HUIZENGA, Michigan STEVE STIVERS, Ohio ANN WAGNER, Missouri ANDY BARR, Kentucky 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 WILLIAM TIMMONS, South Carolina VAN TAYLOR, Texas CHARLA OUERTATANI, Staff Director (II) VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\HBA082.000 TERRI CONTENTS Page Hearing held on: March 23, 2021 ................................................................................................. Appendix: March 23, 2021 ................................................................................................. 1 39 WITNESSES TUESDAY, MARCH 23, 2021 Powell, Hon. Jerome H., Chair, Board of Governors of the Federal Reserve System ................................................................................................................... Yellen, Hon. Janet L., Secretary, U.S. Department of the Treasury .................. 7 6 APPENDIX Prepared statements: Powell, Hon. Jerome H. .................................................................................... Yellen, Hon. Janet L. ....................................................................................... ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Powell, Hon. Jerome H.: Written responses to questions for the record from Chairwoman Waters ... Written responses to questions for the record from Representative Beatty Written responses to questions for the record from Representative Davidson .................................................................................................................. Written responses to questions for the record from Representative Hill .... Written responses to questions for the record from Representative Meeks Written responses to questions for the record from Representative Timmons ........................................................................................................ Yellen, Hon. Janet L.: Written responses to questions for the record from Representative Meeks Written responses to questions for the record from Representative Green . Written responses to questions for the record from Representative Pressley .......................................................................................................... Written responses to questions for the record from Representative Nikema Williams .......................................................................................... Written responses to questions for the record from Representative Huizenga ........................................................................................................ Written responses to questions for the record from Representative Hill .... Written responses to questions for the record from Representative Timmons ........................................................................................................ (III) VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 40 45 K:\DOCS\HBA082.000 TERRI 58 69 71 74 79 82 83 85 86 87 90 92 94 VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\HBA082.000 TERRI OVERSIGHT OF THE TREASURY DEPARTMENT’S AND FEDERAL RESERVE’S PANDEMIC RESPONSE Tuesday, March 23, 2021 U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. The committee met, pursuant to notice, at 11:59 a.m., via Webex, Hon. Maxine Waters [chairwoman of the committee] presiding. Members present: Representatives Waters, Maloney, Sherman, Meeks, Scott, Green, Cleaver, Perlmutter, Himes, Foster, Vargas, Gottheimer, Lawson, Axne, Casten, Lynch, Adams, Dean, Garcia of Illinois, Garcia of Texas; McHenry, Lucas, Posey, Luetkemeyer, Huizenga, Stivers, Wagner, Barr, Williams of Texas, Hill, Emmer, Zeldin, Loudermilk, Mooney, Davidson, Budd, Kustoff, Hollingsworth, 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. As a reminder, I ask all Members to keep themselves muted when they are not being recognized by the Chair. 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 are also reminded that they may only participate in one remote proceeding at a time. If you are participating here today, please keep your camera on, and if you choose to attend a different remote preceding, please turn your camera off. Before we begin today’s hearing, I would like to inform all Members that our witnesses today have a hard stop at 2:15 p.m., Eastern Standard Time. Today’s hearing is entitled, ‘‘Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.’’ I now recognize myself for 4 minutes to give an opening statement. I would like to welcome Secretary Yellen and Chair Powell. I am very pleased that with Democrats’ passage of President Biden’s American Rescue Plan, help is now arriving for millions of struggling individuals, families, and small businesses all across this country. The Biden plan delivers much-needed relief in the form of additional direct payments, expanded child tax credits, emergency rental, homeowner, and employment assistance, support for small (1) VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 2 and minority-owned businesses, as well as funding for other key programs. The American Rescue Plan (ARP) is exactly what the nation needs in the midst of this ongoing crisis, and it will help to put us on the path to a faster and more equitable recovery. I am also very relieved that we have President Biden’s capable leadership in the White House, and that he is putting in place a team to ensure that the pandemic response and the implementation of relief programs is efficient, effective, and a top priority so that we can beat this deadly virus. I would like to take a moment, as we prepare to receive testimony from Secretary Yellen for the first time in her role as Treasury Secretary, to acknowledge the historic nature of her appointment. Starting with Alexander Hamilton in September of 1789, the Department of the Treasury has exclusively been led by men until now. Over 231 years later, Secretary Yellen became the first woman to serve as Treasury Secretary. She is also the first person to serve as Treasury Secretary after serving as head of both the Federal Reserve and the White House Council of Economic Advisers. Secretary Yellen, we applaud you, and our committee looks forward to continuing to work closely with you. Secretary Yellen, I would also like to thank you for your work on negotiating an increase in the special drawing rights of $650 billion at the G-7, as I have previously called for. This increase will help vulnerable countries to fight the pandemic and will boost the United States’ and global economies. Chair Powell, I would like to thank you for following my recommendation on bank capital requirements and ending the temporary exemptions to the Supplemental Leverage Ratio (SLR) for big banks. We need to ensure the stability of our financial system during this continuing crisis, and strong capital requirements are the cornerstone of appropriate prudential bank regulation. While we are on the right path with the passage of the American Rescue Plan and the Biden Administration’s strong leadership, we still have a long road ahead of us. Millions of people are still out of work, and threats to the economy remain. We must ensure that there is indeed a sustained and equitable recovery from this historic crisis, so I look forward to your testimony. I now recognize the ranking member of the committee, the gentleman from North Carolina, Mr. McHenry, for 4 minutes. Mr. MCHENRY. Thank you, Madam Chairwoman, and I want to thank Secretary Yellen and Chair Powell for being here today. It is clear we are in a very different place today than we were last March. Our economy is ready to safely reopen, and economic projections are increasingly positive. Despite those facts, Democrats still chose to muscle through their partisan spending package, only 9 percent of which goes toward defeating the virus. This package was not targeted to help those most in need, and does not get Americans safely back to work or kids back in the classroom. The data tells us that targeted support is the key to really reaching those groups who need it most, and with the addition of $1.9 trillion, there has been a great deal of debate about what will happen with this amount of liquidity in our financial markets. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 3 Here is what we do know. Increased taxes, will impede growth, and, as we saw in 2008 and 2009, it is harder to address long-term unemployment. We see our Central Bank’s balance sheet growing to levels unseen in human history. Pre-COVID, we experienced a roaring economy spurred by appropriate regulation, lower taxes, and innovative solutions. Instead of building on these gains, my Democrat colleagues are approaching this crisis like they did in 2009, doing it all over again, rehashing old, failed policies that will not build lasting growth and lasting prosperity. Things are much different. It is a much different country now and a much different economy now, and we should remain forwardthinking and seek bipartisan solutions to really address the needs of our economy. I am grateful for the opportunity to be with you here today under the guise of a Coronavirus Aid, Relief, and Economic Security (CARES) Act oversight hearing, although it is interesting that the CARES funding was rescinded in December. I think it would be more productive to discuss this larger COVID package that was just passed, and I believe there is a lot to discuss there. To put that mammoth $1.9 trillion bill into perspective, let’s put it this way: The Biden Administration is going to spend $3.7 billion on average, per day, for every day remaining in 2021. That equals $43,000 per second. A lot of that money will flow directly from the Treasury to States and cities, which introduces a whole new set of challenges with respect to preventing waste and fraud. And unlike the bipartisan CARES Act, this bill does not contain any new layers of oversight to address these challenges. Secretary Yellen, at our first CARES quarterly hearing in June of 2020, we had a chance to run through our expectations with respect to transparency with your predecessor. At that hearing, Secretary Mnuchin committed to providing key programmatic data to congressional committees to assist oversight responsibilities, and he followed through on that commitment. Secretary Mnuchin also committed to working with the various oversight bodies with jurisdiction under the CARES Act, including the Pandemic Response Accountability Committee, the Congressional Oversight Commission, three Department’s Inspectors General, and the Government Accountability Office (GAO). Now that we have an additional $1.9 trillion to track, I would ask for your commitment along those same lines as Secretary Mnuchin committed. That would be encouraging, if you continue the practice of your predecessor to cooperate with our committee, both Democrats and Republicans, to ensure appropriate oversight. I want to thank you both for your testimony today, and I look forward to the discussion. I yield back. Chairwoman WATERS. Thank you very much. I now recognize the gentleman from Texas, Mr. Green, who is also the Chair of our Subcommittee on Oversight and Investigations, for 1 minute. Mr. GREEN. Thank you, Madam Chairwoman. I thank you so much for your leadership during these turbulent times. Madam Chairwoman, as the CARES Act funding continues to flow, I am greatly concerned about the mechanics of how these funds will reach their intended beneficiaries. There are two recently-author- VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 4 ized pandemic response programs the Treasury Department is now rolling out, in which I have a special interest. The first is the December COVID package that included $9 billion in emergency capital investment as a program. It is called the Emergency Capital Investment Program (ECIP), and will provide capital investments and grants to strengthen Community Development Financial Institutions (CDFIs), and Minority Depository Institutions (MDIs). I am looking forward to hearing about the plans for engaging eligible MDIs and CDFIs regarding this new resource. The second assistance to small businesses, authorized in the American Rescue Plan, is through the State Small Business Credit Initiative, also known as the SSBCI. This $10 billion program provides funding, $2.5 billion of which will go to minority-owned businesses, and that can make a real impact in the hardest-hit businesses. I look forward to hearing from the witnesses in terms of how these programs will benefit the end users. I yield back. Chairwoman WATERS. Thank you. I now recognize the subcommittee’s ranking member, Mr. Barr, for 1 minute. Mr. BARR. Thank you, Madam Chairwoman. Secretary Yellen, congratulations on your confirmation. I look forward to working with you. And Chairman Powell, thank you for being here. Last year, in response to the pandemic, Republicans and Democrats worked together on multiple bills that were temporary, targeted, and tied to COVID. In partnership with the Federal Reserve and Treasury, we were able to direct aid where it was needed. Unfortunately, despite last year’s bipartisan cooperation, the Majority rammed through a partisan $2 trillion deficit spending bill that is a Keynesian wish list for their pre-COVID priorities. While stimulative policies may look good in the short term, I worry about the unintended consequences for mid- and long-term growth. I fear the toxic cocktail of massive deficit spending, when we had $1 trillion of funding still unspent from last year, increasing risk of inflation, higher long-term interest rates, and unprecedented accommodative monetary policy that I fear is addicting our economy on easy money, the promise of growth-destroying tax increases, and an avalanche of regulation, which includes unrelated climate and ESG earnings, will stifle long-term prosperity. I hope we can work together to mitigate future damage by enacting pro-growth, market-oriented solutions to position our economy for the long term. Thank you, and I yield back. Mr. MCHENRY. Madam Chairwoman? Chairwoman WATERS. Yes, Mr. McHenry? Mr. MCHENRY. Madam Chairwoman, I ask a point of personal privilege to recognize my staff director, the Republican staff director on the Financial Services Committee, Stephen Cote. Chairwoman WATERS. The gentleman is recognized. Mr. MCHENRY. Thank you, Madam Chairwoman. Chairwoman Waters and I know from our service here on the Hill that without competent, good staff, this institution couldn’t work. And I think on a bipartisan basis, we know that our staff carries out a lot of the things that we try to achieve legislatively and in terms of oversight and working with the Administration to help the American people. So, Steven Cote has served our institution quite well. He will be leaving us in mid-April to go with an establishment downtown to VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 5 go into the private sector, and I want to wish him well. I want to thank him for his service to the American people, and to our government. He has served in Congress, most notably as the staff director of the House Rules Committee before coming to this fine committee, the House Financial Services Committee, to lead committee Republican staff. He has served in the Majority and the Minority in the House of Representatives. He also served in the Administration in the Office of Management and Budget and various other functions. He is a patriot who served his country and served his country well. I want to thank him for his work, his tenacious spirit, his love for the staff and the people that he gets to work with, a love for the institution and our government, and a love for his country. And I want to thank Stephen for his great work for me over the last 21⁄2 years, for the good work that we have been able to get done. So with that, I want to say thank you to Mr. Cote for his service, and, Madam Chairwoman, I yield back. Chairwoman WATERS. Thank you very much, Mr. Ranking Member. I would like to associate myself with you, and I join with you in recognizing Stephen’s contributions to the committee and to the Congress. Stephen, also called, ‘‘Cote’’ by friends and enemies alike, has had a long and distinguished career in the United States Congress and in the Executive Branch. During his 20-year career, he has served in a variety of positions and institutions. To say he is a tough negotiator is an understatement. He is tenacious, he is fierce, and he is stubborn. He also has a talent for frustrating several members of my staff with his demands. He is a fierce advocate for his ranking member and his party, and I do respect that. So, Stephen, neither I nor my staff are sorry to see you go. [laughter] Chairwoman WATERS. But in all seriousness, on behalf of the Democratic Majority, I thank Stephen for his service to the American people and wish him the best of luck in his future endeavors. Thank you very much. Mr. MCHENRY. Madam Chairwoman? Chairwoman WATERS. Yes? Mr. MCHENRY. Thank you for that kindness. Thank you for that kindness and the spirit with which you offer it. We both have talented staff, and sometimes they go toe-to-toe on our behalf, but it is always for love of our country, but sometimes for the love of the game, too. So anyway, thank you, Madam Chairwoman. [laughter] Chairwoman WATERS. Thank you very much, Mr. Ranking Member. That is so true. I now want to welcome today’s distinguished witnesses to the committee. First, I want to welcome the Honorable Janet Yellen, Secretary of the United States Department of the Treasury, for her first appearance before the committee in her new role. Secretary Yellen has testified a number of times before the committee in her prior capacity as the Chair of the Federal Reserve, where she served from 2010 to 2014 as Vice Chair, and from 2014 through 2018 as Chair, so I do not believe she needs any further introduction. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 6 I also want to welcome our other distinguished witness, the Honorable Jerome Powell, Chairman 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 2018. Chair Powell has previously testified before the committee, and I believe he also does not need any further introduction. Each of you will have 5 minutes to summarize your testimony. You should be able to see a timer on your screen that will indicate how much time you have left, and a chime will go off at the end of your time. I would ask you to be mindful of the timer, and quickly wrap up your testimony if you hear the chime. And without objection, your prepared statements will be made a part of the record. Secretary Yellen, you are now recognized for 5 minutes to present your oral testimony. STATEMENT OF THE HONORABLE JANET L. YELLEN, SECRETARY, U.S. DEPARTMENT OF THE TREASURY Secretary YELLEN. Chairwoman Waters, Ranking Member McHenry, and members of the committee, thank you for having me. We are meeting at a hopeful moment for the economy, but still a daunting one. While we are seeing signs of recovery, we should be clear-eyed about the hole we are digging out of. The country is still down nearly 10 million jobs from its pre-pandemic peak. When Congress passed the CARES and Consolidated Appropriations Acts last year, it gave the government some powerful tools to address the crisis, but upon taking office, I worried that they weren’t powerful enough. After all, there were and still are some very deep pockets of pain in the data: 1 in 10 homeowners with a mortgage are behind on their payments; and almost 1 in 5 renters are behind on their rent. There are 22 million people who say they don’t have enough food to eat: 1 in 10 adults are hungry in America. I looked at data like these and I worried that the COVID economy was going to keep hurting millions of people now and haunt them long after the health emergency was over. We know that when the foundations of someone’s life falls apart, when they lose the roof over their head or don’t have the ability to eat dinner every night, the pain can weigh on them for years. Their earnings potential is permanently lowered, and am I worried about this happening on a mass scale. That is why I advocated very hard for the American Rescue Plan, and why it is my first and my most enthusiastic message today. Thank you. With the passage of the Rescue Plan, I am confident that people will reach the other side of this pandemic with the foundations of their lives intact, and I believe they will be met there by a growing economy. In fact, I think we may see a return to full employment next year. Of course, the speed and strength of our recovery depends, in part, on how we implement the legislation. Treasury is tasked with much of that work, and there is nothing that I or my team take more seriously. We appreciate your oversight on this matter, and I want to briefly tell you about how we have been working. Since taking office 2 months ago, we have been expediting relief to the areas of greatest need, for example, small businesses, and especially the smallest small businesses, which are disproportion- VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 7 ately owned by women and people of color. The pandemic has hit these businesses hard. The Paycheck Protection Program (PPP) was an early lifeline, but because of issues with the program’s design, the first rounds often did not reach the small sole proprietorships. We are addressing that now. We worked with the Small Business Administration (SBA) to tweak how the program was implemented. It is allowing the PPP to reach millions more microbusinesses and entrepreneurs, especially in rural and low-income areas. We are also building capacity to support these communities over the longer term. Because of the December legislation, Treasury now has $12 billion to inject into Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs). In turn, these CDFIs and MDIs can lend that capital out, helping people buy homes and start businesses in places that the financial services sector traditionally hasn’t served well. Then, there are the families I spoke about, the ones struggling to keep a roof over their head and food on the table. The American Rescue Plan provides more than $30 billion to help renters and homeowners at risk of losing their homes, and we are making sure that assistance flows as efficiently as possible. For instance, the previous Administration put in place rules that required tenants and landlords to provide quite a bit of documentation to get rental assistance, including detailed statements about their income, but some people don’t have access to those documents. We are cutting through the red tape for them while still taking responsible steps to prevent fraud and abuse. And, of course, we have been sending direct payments to Americans, a lot of Americans. As of last week, we had issued over 90 million payments. And all of this is just a fraction of Treasury’s work. There are so many more relief programs, including one that will provide $350 billion in aid to State and local governments. Implementing all of it is more complicated than it sounds, and we are working closely with stakeholders to make sure these programs are both efficient and effective. Behind these many relief programs, these millions of transactions, is a staff of very dedicated and very tired Treasury and IRS employees. My final word is to them: Thank you. You are putting on a master class in how government should work in the furnace of a crisis, and I am grateful to be your colleague. With that, I am happy to answer any questions you have. [The prepared statement of Secretary Yellen can be found on page 45 of the appendix.] Chairwoman WATERS. Thank you very much, Secretary Yellen. Chair Powell, you are now recognized for 5 minutes to present your oral testimony. STATEMENT OF THE HONORABLE JEROME H. POWELL, CHAIR, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. POWELL. Chairwoman Waters, Ranking Member McHenry, and members of the committee, thank you for the opportunity to discuss the measures that we have taken to address the hardship wrought by the pandemic. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 8 I would like to start by noting the upcoming 1-year anniversary of the CARES Act. With unanimous approval, Congress provided by far the fastest and largest response to any post-war economic downturn, offering fiscal support for households, businesses, healthcare providers, and State and local governments. This historically-important legislation provided critical support in our nation’s hour of need. As the virus arrived in force, our immediate challenge was to limit the severity and duration of the fallout to avoid longer-run damage. At the Fed, we also acted with unprecedented speed and force, using the full range of policy tools at our disposal. Today, the situation is much improved. While the economic fallout has been real and widespread, the worst was avoided by swift and vigorous action from Congress and the Federal Reserve, from across government and cities and towns, and from individual communities and the private sector. More people held onto their jobs, more businesses kept their doors open, and more incomes were saved, but the recovery is far from complete. So, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes. As we have emphasized throughout the pandemic, the path of the economy continues to depend on the course of the virus. Since January, the number of new cases, hospitalizations, and deaths has fallen, and ongoing vaccinations offer hope for a return to more normal conditions later this year. In the meantime, continued social distancing and mask-wearing will help us reach that goal as soon as possible. Indicators of economic activity and employment have turned up recently. Household spending on goods has risen notably so far this year, although spending on services remains low, especially in sectors that typically require in-person gatherings. The housing sector has more than fully recovered from the downturn, while business investment and manufacturing production have also picked up. As with overall economic activity, conditions in the labor market have recently improved. Employment rose by 379,000 in February as the leisure and hospitality sector recouped about two-thirds of the jobs it lost in December and January. Recovery has progressed more quickly than generally expected and looks to be strengthening. This is due in significant part to the unprecedented fiscal and monetary policy actions I mentioned, which provided essential support to households, businesses, and communities. However, the sectors of the economy most adversely affected by the resurgence of the virus and by greater social distancing remain weak, and the unemployment rate, still elevated at 6.2 percent, underestimates the shortfall, particularly as labor market participation remains notably below pre-pandemic levels. We welcome this progress, but will not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the services sector, African Americans, Hispanics, and other minority groups that have been especially hard hit. The Fed’s response has been guided by our mandate to promote maximum employment and stable prices for the American people, along with our responsibility to promote stability of the financial system. When financial markets came under intense pressure last VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 9 year, we took broad and forceful actions, deploying both our conventional and emergency lending tools to more directly support the flow of credit. Our actions, taken together, helped unlock more than $2 trillion in funding to support businesses—large and small—nonprofits, and State and local governments between April and December. This support, in turn, has helped organizations to not have to shutter their businesses and put employers in a better position to both keep workers on and to hire them back as the recovery continues. Our programs serve as a backstop to key credit markets and help restore the flow of credit from private lenders through normal channels. We deployed these lending powers to an unprecedented extent last year. Our emergency lending powers require the approval of the Treasury and are available only in very unusual circumstances. Many of these programs were supported by funding from the CARES Act. Those facilities provided essential support through a very difficult year. They are now closed, and the Federal Reserve has returned the large majority of the Treasury’s CARES Act equity, as required by law. Our other emergency lending facilities are following suit imminently, although we recently extended the Paycheck Protection Program Liquidity Facility (PPPLF) for another quarter to continue to support the Paycheck Protection Program. Everything the Fed does is in service to our public mission. We are committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible on behalf of communities, families, and businesses across the country. Thank you. I look forward to your questions. [The prepared statement of Chairman Powell can be found on page 40 of the appendix.] Chairwoman WATERS. Thank you very, very much, Chairman Powell. I now recognize myself for 5 minutes for questions. On March 11th, President Biden signed the American Rescue Plan Act into law, providing an additional $1.9 trillion package that is already helping individuals, families, and small businesses. The American Rescue Plan also includes $77 billion in our committee’s jurisdiction, including $21.5 billion to pay back rent and future rent payments, which will not only help renters remain stably housed, but support small landlords who have also been struggling. Congress has now provided the Treasury Department with more than $46 billion in emergency rental assistance to distribute to States, local communities, Tribes, and Territories to help struggling families pay their rent and utilities. My State of California is expected to receive somewhere in the amount of $4.67 billion. However, I am growing increasingly concerned with how the program is being implemented by grantees. In particular, California just launched a program that greatly limits the amount of assistance renters can receive, even if they owe more. Secretary Yellen, what has been the progress so far in implementing the program? What guidance is Treasury providing to ensure that grantees are setting up programs that actually stabilize renters and make landlords whole? VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 10 Secretary YELLEN. Thank you for that question, Chairwoman Waters. We have distributed the money to State, local, and Tribal grantees. The Consolidated Appropriations Act that started this program does specify that grantees can only provide assistance to households where one or more individuals are experiencing unemployment or hardship, that they demonstrate a risk of experiencing homelessness or housing stability, and that the household has income at 80 percent of the area median or below, and that the assistance can be for up to 15 months. We are trying to provide grantees with the flexibility to establish their programs and operate them within those parameters, but with a great deal of flexibility to address local needs as they see fit. The role of the Treasury here is to provide policy guidance so that grantees can establish and follow their own program policies to meet local needs, and we are developing outreach and technical assistance so that our grantees can understand best practices. Of course, we have a role in monitoring to make sure that the payments are reaching the intended populations. Chairwoman WATERS. Secretary Yellen, I hate to interrupt you— my time is going to be up shortly—but I am very concerned about the flexibility that the States have. I don’t really know what all of that means, but I do know that there is a lot of confusion because some States had moratorium programs, some cities had moratorium programs, the Federal Government has a moratorium program, and so I think that is confusing to our renters. In addition to that, for the State of California to say that they are going to pay 80 percent of the rental assistance rather than 100 percent bothers me somewhat, and I don’t know what other States are doing. I know that the government does provide guidance, so I would like to know if you can think about any role that we can play to help straighten out the confusion and to help stabilize this rental assistance? Secretary YELLEN. Congresswoman, we did distribute frequently asked questions, revised from the previous Administration, to try to provide additional guidance, but if you have concerns, my staff will be glad to work with you and your office to see if it is possible to address them. Chairwoman WATERS. Thank you very much. I appreciate that, because there is confusion out there, and I am worried about what is happening with this confusion, and whether or not our landlords are going to abandon us and not go for another moratorium, and so it is a lot of questions. I will get back to you, and thank you so very much. With that, I now recognize the ranking member, Mr. McHenry for 5 minutes. Mr. MCHENRY. Thank you, Madam Chairwoman. And, look, Chairman Powell and Secretary Yellen, I previously asked questions about the independence of the Fed, trying to get the Secretary of the Treasury to opine about that. Dr. Yellen, I would suggest that maybe I need to skip that question with you. I think you have very practical understanding and knowledge here at play, and you will treat your successor as you wish to have been treated since he is now sitting in your chair. [laughter] VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 11 Mr. MCHENRY. Well, it is nice to have two folks who understand this in these respective seats, but Chairman Powell, I want to begin with you and talk about inflation. There continues to be a great deal of speculation that we should be worried about inflationary pressures, particularly after the passage of the most recent $1.9 trillion spending bill, the so-called stimulus or COVID stimulus bill, and then we see recent press reports of an additional $3 trillion of spending contemplated by this Administration. Does the Fed share that there are inflationary pressures and concerns with this rate of spending? What is the view now? Mr. POWELL. Thanks. Let me start by saying that we are strongly committed to our price stability mandate, which, along with our maximum employment mandate—those are the two mandates that you have given us. We consider that inflation that is 2 percent over time, in fact, inflation that averages 2 percent over time. We do expect that inflation will move up over the course of this year, first, because of what we call base effects. The very low readings of March and April of last year dropped out of the 12-month calculation, and, mechanically, it rises, but that goes away quite quickly. Possibly after that, we will see a situation in which, as the economy reopens and vaccinations continues, there could be a surge in spending and there could be some bottlenecks in the economy. We see some of that now. We might see some upward pressure on prices. Our best view is that the effect on inflation will be neither particularly large nor persistent, and part of that just is that we have been living in a world of strong disinflationary pressures around the world really for a quarter of a century, and we don’t think that a one-time surge in spending leading to temporary price increases would disrupt that. However, we have the tools to deal with that. We remain strongly committed to inflation expectations anchored at 2 percent, and we will use our tools as appropriate to achieve that. As far as further fiscal policy is concerned, it is not up to us to comment. As we have discussed on some occasions, we don’t comment on fiscal policy. We try not to, particularly on specific bills and things like that, so I will leave that to others. Mr. MCHENRY. Secretary Yellen, about fiscal policy, we have, as Chairwoman Waters highlighted, rental assistance, the $25 billion of rental assistance to individuals and families who were in arrears because of the lockdown, and we have tried to support them with some rental assistance. What guardrails has the Department of the Treasury put in place to ensure that the funds are actually prioritized for individuals and families who are in rental arrears? Secretary YELLEN. It is Treasury’s job to establish guardrails, and we have done that by issuing a set of frequently-answered questions that are essentially guidance about how the money needs to be used. It clarifies that grantees have flexibility, but also that there are the requirements of the statute, and that we will follow up to make sure that the payments are going to eligible households and that the guidelines of the program are being followed. Mr. MCHENRY. Thank you. Thank you, Secretary Yellen. The final question I have is about oversight. Secretary Yellen, your predecessor agreed to very onerous, and rigid, and strong oversight VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 12 for the CARES Act, this current $1.9 trillion has rescinded all of those things, sadly, except this quarterly hearing. And so, what I would like to hear is your voluntary commitment to work with Congress, the GAO, the special inspectors general, and the Congressional Oversight Commission, as well as this committee. Secretary YELLEN. I think oversight is very important, and I pledge to work with this committee and the oversight groups. Chairwoman WATERS. Thank you very much. Mr. MCHENRY. Thank you, Secretary Yellen, and congratulations on your new role. Thank you. Secretary YELLEN. Thank you. Chairwoman WATERS. I now recognize Mrs. Maloney for 5 minutes. Mrs. MALONEY. Thank you. Thank you so much, Chairwoman Waters, for having this hearing, and welcome, Chairman Powell and Secretary Yellen. And as the first female Secretary of the Treasury in history, and the first to head the Fed, we are so proud of you— Secretary YELLEN. Thank you. Mrs. MALONEY. —and of your many accomplishments, Secretary Yellen. And as this is Women’s History Month, you are certainly inspiring many young women with more confidence and aspirations with your leadership, so thank you. As you know, at the end of last year, we were able to reach a bipartisan compromise on my Corporate Transparency Act, which will crack down on anonymous shell companies, the vehicle of choice for criminal activity, money laundering, and terrorism financing. I want to thank Ranking Member McHenry for his willingness to compromise and Chairwoman Waters for her steadfast support of this bill over many, many years. The bill requires companies to disclose their true beneficial owners to FinCEN, which is an arm of Treasury, and FinCEN will collect this information in a database which is intended to be stateof-the-art with privacy and security protection. Law enforcement calls it the most important tool that has been given to them to track illegal money activity in 30 years, and implementation of this is going to be a massive undertaking and will require an enormous amount of resources and manpower at Treasury. I worked on this bill as a top priority for 12 years, and implementing it and getting it up and running is a top priority of mine. It is incredibly important, I believe, to our national security. We have to get it right. And so my question to you is, will you commit to making beneficial ownership one of your top priorities as Treasury Secretary? We have 2 years to implement it, and I think it will make all of us safer. I think it is extremely important. Secretary YELLEN. I completely agree with you. It is a very important piece of legislation, and it is one of our highest priorities to implement this promptly and to get it right. We have a hiring plan. We recognize that significant resources will be required, and we are trying to obtain them. We have plans for how to collect the required database, and we are actively working to implement this very important piece of legislation. Mrs. MALONEY. Thank you. I want to build on Chairwoman Waters’ question. I am not going to repeat all of the things that VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 13 were in the important Recovery Act. But my question to you, Secretary Yellen and Chairman Powell, is what steps can we take to ensure we don’t lose a generation of workers who never return to the workforce, or that they face these depressed wages moving forward? We know that over 111⁄2 women lost their jobs, compared to 9 million men. Black and Latino women suffered the highest rate of all, and that the women’s labor force participation is down 2 percent, and the families are suffering. We have many aspects of it. A lot she mentioned, from rent to food, to help in so many ways, but I am concerned about this labor force that has been hurt. What can we do to help them get back into the labor force? And my question is to you, Secretary Yellen, first, then to Chairman Powell. Secretary YELLEN. First of all, in the short term, the American Rescue Plan contains substantial support for minorities, and particularly for women who have been forced to drop out of the labor market. There is an important increase in the child tax credit that is going to result in, along with other provisions, a 50-percent reduction in the child poverty rate. There is money to open and support school openings promptly. There is an enhanced child and dependent care credit with a successful vaccination program to get women back into the labor force. And longer term, when we have gotten to the other side of this pandemic, we hope to address in the jobs package over the longer term some of the factors that have resulted in low wages and low labor force participation for women. Mrs. MALONEY. Thank you. My time has expired. Chairwoman WATERS. Mrs. Wagner, the gentlelady from Missouri, is recognized for 5 minutes. Mrs. WAGNER. Thank you, Madam Chairwoman, and thank you, Chairman Powell and Secretary Yellen, for joining us today. Secretary Yellen, and I would ask you please, respectfully, if you would keep your answers brief, as the country begins to safely reopen and our economy recovers, is examining changes to tax policy the correct direction? Secretary YELLEN. We expect to examine changes to tax policy along with programs that will address some of the longstanding problems that have held down our productivity and labor supply in the United States. We will address infrastructure, risks from climate change, education, and training. Mrs. WAGNER. Let me ask you, Madam Secretary, what impact would this action have on jobs and workers’ wages? Secretary YELLEN. I think a package that consists of investments in people, investments in infrastructure, will help to create good jobs in the American economy, and changes to this tax structure will help to pay for those programs. Mrs. WAGNER. Secretary Yellen, what tends to be the impact, I guess I would ask, on American consumers, my constituents, when corporate taxes are raised? Do the costs usually tend to be passed down to them? Secretary YELLEN. The impact of changes in corporate taxes has been studied by economists for a long time, and the impact of them on prices and on consumers is very unclear from existing studies. We do need to raise revenues in a fair way to support the spending that this economy needs to be competitive and productive, and— VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 14 Mrs. WAGNER. Secretary Yellen, if I could, I think we know that raising the corporate tax rate results in higher costs for small businesses, schools, and American households. Then why, as this country begins to reopen and recover economically, would the Biden Administration be proposing tax policies which would, in the end, hurt American families and millions of struggling small businesses? Secretary YELLEN. The Biden Administration is not going to propose policies that hurt small businesses or Americans. The Biden Administration is going to propose investments this economy has long needed to be competitive and productive and supports our— Mrs. WAGNER. With all due respect, ma’am, I would say this. Certainly, raising taxes on business and industry is going to affect consumers and households and American families in a very adverse way. Is this being proposed, these tax increases, to offset the costs of the recently-enacted partisan stimulus package, ma’am? Secretary YELLEN. No, the stimulus package, the American Rescue Plan, was not funded with any increases in taxes, but a longerterm plan that addresses critical relief— Mrs. WAGNER. I really have— Secretary YELLEN. —for this economy probably would be accompanied by some revenue raises. Mrs. WAGNER. Yes, I would say so, and I would say that the plan as it exists right now hasn’t been paid for. For example, let me just say this. Last month’s lumber prices hit an all-time high, doubling in price from just 3 months ago. Gasoline prices jumped 6.4 percent over the previous month, while electricity and natural gas prices rose 3.9 percent, not to mention housing prices and other manufacturing supply chain goods. Are these steady increases a sign that once the economy fully reopens, we are likely to see parts of the economy where demand is intense, at least for a period of time, leading to some additional price pressures? Let me ask you this, Chairman Powell, in my limited time. Could you describe in detail the wide range of policy tools the Fed has at its disposal to address what is obvious inflationary pressures that we are seeing already? Mr. POWELL. Our most basic tools here are to try to achieve price stability, and those principally are interest rates and moving interest rates up and down. As I mentioned a few minutes ago, though, our best expectation is that there will be modest upward pressure on prices this year, but that they won’t be particularly large or persistent into the future. But we do have those tools, and we will use them. Mrs. WAGNER. Thank you. My time has expired. I yield back. Chairwoman WATERS. Thank you. The gentleman from California, Mr. Sherman, is recognized for 5 minutes. Mr. SHERMAN. Thank you. Addressing the comments of Mrs. Wagner, most of the studies I have seen, and obviously the Secretary of the Treasury has seen far more, indicate that increases in corporate income taxes are not passed through to consumers, but that the incidence of that tax is borne by those who invest capital, and which is disproportionately the top 1 percent. In contrast, sales taxes are passed through to consumers. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 15 I want to use most of my 5 minutes just to bring to the attention of our two august witnesses some matters that I hope will merit their personal attention in the days to come. Madam Secretary, your predecessor committed to me, from a foreign policy standpoint, that the Treasury Department would put a reasonable amount of lawyer hours into doing a tax treaty with Armenia, and I hope that policy will continue now that the Iran government is ready to proceed, having had some discord in the past. Madam Secretary, you have delayed till May 17th, the April 15th deadline for Form 1040. It is very important that you do the same for the Form 1040ES, the estimated tax payments, a voucher that is usually prepared at the same time and is so important to gig workers. Madam Secretary, 2 days ago, the IRS issued a report indicating that one-fifth of the earnings of the top 1 percent are going untaxed. I hope very much that you will work with Congress to replace and restore the 15,000 enforcement officers that the IRS has lost in the past decade. I used to head the second-largest tax agency in our country, and it is clear that putting more effort into tax collection, particularly from the top 1 percent, will collect many more times the cost in additional revenue, and will, I think, add to our social cohesion because wage earners are paying their taxes. Madam Secretary, I hope you will focus on a letter from the State of California of May 19th desperately needing guidance on the Recovery Act, especially showing a decision by California to conform to Federal law. So, Federal law recently is very generous to the PPP small businesses. If California conforms to that law, that isn’t regarded as a tax decrease violative of the provisions of the Recovery Act that says that States should not be using those funds to cut taxes. Chairman Powell, we have talked a lot about wire fraud. Your staff has told me they don’t plan to solve the problem. I hope you get personally involved in making sure our new wire transfer system does solve the problem. And, Chairman Powell, I want to commend you for your statement yesterday that the Fed will not proceed with creating a new Central Bank Digital Currency (CBDC) without the support of Congress. And I don’t think you will have that support, unless the Know Your Customer (KYC) provisions are applicable to this new system and it doesn’t become useful to tax evaders, terrorists, drug dealers, et cetera. Madam Secretary, believe it or not, I do have a question. Chairman Powell, when he was before us last month, testified before this committee that Federal legislation is necessary to fix the legacy London Interbank Offered Rate (LIBOR) contracts so that they can continue to function after the LIBOR Index is no longer published by our friends in London. Secretary Yellen, would you agree with Chairman Powell that Congress will need to act to provide for a smooth transition for this $2 trillion in contracts? Secretary YELLEN. Yes, I would agree. There are certain legacy contracts where the transition could be difficult without legislation. These are contracts that don’t provide for a workable fair back rate, and so I think Congress does need to provide legislation for the LIBOR transition. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 16 Mr. SHERMAN. Thank you, and in my remaining time, can you address the issue of States that are conforming their income tax laws to Federal income law? Is that going to be regarded as a violation of the Recovery Act? Secretary YELLEN. We are working to provide guidelines on what will and won’t count, and it is premature for me, until we have completed that, to offer you an answer on the specifics. Mr. SHERMAN. Please, it is critical for the people of California. Secretary YELLEN. We will do it quickly. Chairwoman WATERS. The gentleman’s time has expired. Mr. Lucas, you are recognized for 5 minutes. Mr. LUCAS. Thank you, Madam Chairwoman, for holding this hearing, and thank you, Chairman Powell and Secretary Yellen, for appearing before the committee. And, of course, Secretary Yellen, congratulations. I join my colleagues in congratulating you on your confirmation as the first woman to serve as Secretary of the Treasury. I look forward to the day, hopefully not very far off, when all positions of responsibility, all opportunities in society will have advanced to the point where we won’t have to use the phrase, ‘‘first woman.’’ Again, that day will come, hopefully soon. This past Friday, the Fed announced that the temporary exclusion of Treasuries and reserves in the supplemental leverage ratio will expire at the end of the month. The announcement also stated that the Fed will seek public comment on potential SLR modifications. Chairman Powell, could you comment on if the exclusion of Treasuries and reserves over the past year helped improve U.S. Treasury market conditions and banks’ ability to provide credit? Mr. POWELL. As you know, the Treasury market was experiencing significant dysfunction during the height of the crisis, and we did a number of things, and, particularly, we bought a lot of U.S. Treasuries to restore function. We also did this exclusion and so did many other large countries like us did something like that. If you look back, we threw the kitchen sink at it, and it is hard to say exactly what effect it had. We did the exclusion relatively late, and by then, there had been quite a lot of market function recovered. So it is hard, it is difficult. I would love to give you a straight answer, but it is difficult to say just how helpful it was. In any case, that danger has long passed. Mr. LUCAS. Secondly, could you elaborate on the timeline of potential SLR modifications that may come in the near future, Mr. Chairman? Mr. POWELL. Yes. We expect to put something out for comment, and I can’t tell you exactly when that will be, but relatively soon. And we are going to run a very transparent public process, invite comment, and consider it. Really, the point is that because of the substantial increase in reserves and Treasuries, the leverage ratio is rapidly becoming the binding constraint from a capital standpoint, and that wasn’t our intention at the Fed from the beginning. We like risk-based capital to be binding because it forces banks to manage their risks more carefully. Mr. LUCAS. As everyone on this hearing knows, I have always made it a very strong point that the Third Congressional District VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 17 of Oklahoma is a commodity-driven economy. It is agriculture, and it is energy. There is concern in my district that financial regulators may be moving towards regulation and supervision with environmental policy objectives, potentially discouraging banks from doing business with entire sectors of the economy. Chairman Powell, could you respond to that concern of my constituents? Mr. POWELL. Sure. It has been a long-held policy of the Fed that we don’t tell banks what legal businesses they can lend to or order them to lend to. That is not what we do. With the climate change—you are getting at the climate change work that we are doing. We are at a very early stage of understanding the risks to regulated financial institutions from climate change. It is a risk that we think the public has every right to expect that we will ensure that the banks do manage over time. And so, again, we’re in the early stages of that. I would be happy to talk to you offline about that, too. Mr. LUCAS. Absolutely. And Secretary Yellen, could you provide your thoughts on that concern? Secretary YELLLEN. You want me to weigh in on the issue of lending and climate change? Mr. LUCAS. Yes, that there will potentially be efforts by the financial regulators to move towards regulation and supervision with environmental policy objectives. My folks are concerned that will lead to discouraging banks from doing business in certain areas and certain sectors and consequently potentially have a dramatic effect on their business model or their ability to function. Secretary YELLEN. Climate change is a top priority for the Biden Administration, but we agree that financial regulators should be assessing the risks to financial institutions through stress testing and other techniques. And investors need disclosure of risk, but we have no plan to regulate what lending or investments can be done. Mr. LUCAS. Thank you very much. And I can assure you that I and my colleagues will watch all that very closely. With that, I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you. The Chair now recognizes the gentleman from New York, Mr. Meeks, who is also the Chair of the House Foreign Affairs Committee, for 5 minutes. Mr. Meeks? [no response] Chairwoman WATERS. If Mr. Meeks is not available, we will move on to Mr. Scott for 5 minutes. Mr. SCOTT. Thank you very much, Madam Chairwoman. Chairman Powell, Secretary Yellen, welcome. Chairman Powell, first to you, thanks to the Rescue Plan, we now have an opportunity to expand the child tax credit. The IRS has put forth a Get My Payment website, and I believe it could be used in conjunction with the efforts through the FDIC and the private sector to bring more Americans into our banking system using what is known as Bank On certified safe accounts, but only if it is able to be moved at the moment when we capture it. Because currently, the IRS Get My Payment tool is only open for the status checks. But consumers are unable to add or change delivery information as they were able to do so with the delivery of the first stimulus checks. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 18 So, Chairman Powell, explain that. Don’t you agree that this is an opportunity to increase financial inclusion through the use of certified Bank On safe accounts, Get My Payment? Mr. POWELL. I would agree with you that greater inclusiveness in the financial system is a goal of the highest priority for us and really for all financial regulators and for the country. I am not familiar with the particular practice you are referring to, but I will be happy to look into that and get back to you. Mr. SCOTT. Okay, please do. And then there is another one with the Treasury Department called, Get My Payment. All of these things are good, but I appreciate your looking into them as quickly as you can so that if they are there, we need to use them now because so many of our people cannot get the money quickly because they don’t have the kind of high standing within our financial system. When you put these things in like Bank On and Get My Payment, we need to use them right now. So, I appreciate your looking into that. Secretary Yellen, let me move to you. The American Rescue Plan also included $350 billion in assistance to State and local governments to make up for the lost revenue and to ease the economic impact of the COVID-19 pandemic. Could you tell me when local governments can expect Treasury to release guidance on the American Rescue Plan? Secretary YELLEN. I think we have to issue guidance quite quickly, I think within 60 days, and to distribute the funds. And we are working very hard to sort through the issues that we need to in order to provide clarity about the purpose of the funds and how they can be used. Mr. SCOTT. Okay. Madam Chairwoman, I am concerned. We have the Treasury Secretary here, and we have the Chairman of the Federal Reserve here. And we passed this bill, and we put certain things in it to increase the delivery. And everybody cannot get this payment through electronic accounts. Most of the people that you and I have been very concerned about getting inclusion are not getting these funds as quickly. I just want to encourage—and I know you agree—but I want to take a moment here. We passed it. It is there. Please, please, Treasury Secretary, please Federal Reserve Chair, all of us need to hurry up. We put these things in place so we could reach those who have been excluded very quickly. They need the money as quickly as everyone else. Thank you, Madam Chairwoman. Chairwoman WATERS. Thank you very much, Mr. Scott. I now recognize the gentleman from Florida, Mr. Posey, for 5 minutes. Mr. POSEY. Thank you, Chairwoman Waters, for calling this hearing today. We continue to live in a period of uncertainty, but there is some good news on the horizon for our economy as it appears poised to recover rapidly as the vaccine is given to more and more people. Chair Powell told us in his semi-annual appearance a few weeks ago that the economy could grow by as much as 6 percent during this year alone. At the same time, other factors could cloud the horizon, such as our unprecedented level of deficit spending, increases in nominal VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 19 Treasury and corporate bond yields, the mysterious enthusiasm for raising taxes, and the headlong pursuit of climate change mitigation measures that threaten affordable energy and our recently-acquired energy independence. Secretary Yellen, you recently said that the Treasury Department could facilitate bank stress tests for climate change, but you wouldn’t expect results would be used for capital requirements or other regulation. If these climate stress tests have no regulatory purpose, what would the purpose of such stress tests be? Secretary YELLEN. The purpose of the, maybe we should call it ‘‘scenario analysis’’ rather than ‘‘stress test,’’ is for financial institutions and for the regulators to better understand the risks that climate change poses to the health and resilience of core financial institutions, and it will help those institutions better manage and understand the risks. Mr. POSEY. Are we doing any studies of the risk from solar interaction with our planet? A couple of years ago, we missed a solar eruption that would have knocked out a lot of satellites and kind of put us in the Dark Age. Are we checking on natural phenomena like that as well? Mr. POWELL. Let me say— Secretary YELLEN. Go ahead. Mr. POWELL. Yes, I can say, since we directly supervise financial institutions, we do supervise for institutions that are in areas of the country that are susceptible to significant weather problems, such as hurricanes and things like that. So, we do that. But just in response to your question, I would say that. Mr. POSEY. How would this be used? Some people think it will be a Federal informercial, like the old Al Gore movie or something like that. How do you plan to utilize this information? Mr. POWELL. Let me say that, first of all, many, many of the large financial institutions are already doing this, and the reason they are doing it is just what the Secretary said. It is to try to understand at an early stage of this science really, understand what are the risks that are involved in climate change. And that one way to do that is to run simulations and ask, ‘‘What would happen if? What would happen that?’’ There are no regulatory consequences contemplated. It is an exploration in understanding better what the risks are to the core of our financial system, and we feel like that is our obligation is to understand that. And again, the financial institutions are very much actively doing this on their own. It is not something we are forcing them to do at this point. Mr. POSEY. Who is doing it? Give me some examples of who might be doing that right now? Mr. POWELL. I am not going to name individual financial institutions. Many of the large banks are very active in trying to understand how climate change would affect their business over the long sweep of time. Many or even all financial—and by the way, that is also true of large industrial companies in the United States. Mr. POSEY. And are they sharing that information with you? Mr. POWELL. They are sharing with the public. Mr. POSEY. Does it seem consistent? VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 20 Mr. POWELL. I think it is early days. Honestly, it is really very early days in trying to understand what all of this means. It clearly can have longer-term implications for our economy, for our financial system, and for the people that we all serve. And I think our obligation is to try to understand that. And again, I would say it is early days, but we feel like we have a responsibility to start the process of understanding. Mr. POSEY. Do you think you will discover revelations that they have missed or— Mr. POWELL. I think we have a job, which is to ensure that the institutions we regulate are resilient to the risks that they are running. The public will expect that, and they have every right to expect that over time. So, we don’t have a new mandate. This is consistent with our existing mandate of supervision of financial institutions. It is just the same mandate and a different risk. Chairwoman WATERS. The gentleman’s time has expired. The gentleman from Texas, Mr. Green, is recognized for 5 minutes. Mr. GREEN. Thank you very much, Madam Chairwoman. Madam Chairwoman, I don’t want the historic aspect of this hearing to escape us. I am a senior member of this committee. I have witnessed many persons appearing before this committee, many Secretaries of the Treasury and Chairs of the Fed, and I must tell, you a paradigm shift is taking place, and I don’t want it to be overlooked under your leadership. I have here the statement of the Chairperson of the Fed, and in his statement, he says—while addressing progress that is being made, he states, ‘‘We welcome this progress, but we will not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the service sector—African Americans, Hispanics, and other minority groups that have been especially hard hit.’’ And then, the Secretary of the Treasury, in her statement, she indicates that, ‘‘Since taking office 2 months ago, we have been expediting relief to areas of greatest need, for example, small businesses and especially the smallest small businesses, which are disproportionately owned by women and people of color.’’ I understand that there is still great work to be done, but I just don’t want to overlook the fact that people are talking more now about the needs of minorities and women. Secretary Yellen, you indicated in a message that you presented not so very long ago, when comparing the 1.8 million fewer men in the labor force to the 2.5 million fewer women, you called this, ‘‘extremely unfair.’’ This is the Secretary of the Treasury. I am grateful to both of you for understanding that it is now time for us to move forward on the issues associated with the wealth gap as it relates to minorities in this country, and especially issues related to women, who happen to be more than 50 percent of the population of the country. But it is historic to see this movement under your leadership, Chairwoman Waters. I commend you, and I am honored to serve under your leadership. Now to Secretary Yellen, I have a concern, and I am concerned about the $10 billion that will go to the State Small Business Credit Initiative (SSBCI). I am concerned because when this program VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 21 was instituted on a previous occasion—we have reauthorized it in the Rescue Plan, but when it was authorized initially, it went to the States through the Agriculture Department. Then, the Agriculture Department had the duty and responsibility and obligation of making sure that it moved down to other units of the State. Well, in Texas, that probably is not the best way to do business. I have this consternation about it, and my hope is that we will be able to get this to the end users in a much more expeditious way, such as what you have indicated you have been trying to accomplish. My question is this, Madam Secretary: Will you send us an outline of the timeline for implementation from money in the Treasury to capital in the coffers of the end users in the $9 billion Emergency Capital Investment Program that has come into being under the Honorable Maxine Waters’ leadership—I had the privilege of working on this program—and the $10 billion State Small Business Credit Initiative similarly came into existence? And I would add also this last one had the help of the chairwoman of our Diversity and Inclusion Subcommittee, Mrs. Beatty, who helped us to hone this and refine it to the extent that we are helping the smallest of small businesses. I am just hopeful that we can get such an outline because, I have people who question me daily about, when will the money be available for us as end users to benefit from it? And I believe your heart is in the right place. I believe you are working expeditiously. I just want to be able to answer those questions when they are posed to me. So, again, I thank you. I am grateful for this historic moment. And my hope is that this is only an indication of the better things to come. And Madam Chairwoman, I will yield back 12 seconds to you. Chairwoman WATERS. Thank you. Thank you very much. I now recognize the gentleman from Missouri, Mr. Luetkemeyer, for 5 minutes. Mr. LUETKEMEYER. Thank you, Madam Chairwoman. And congratulations to you, Secretary Yellen, on your new position. It’s good to see you again. Secretary YELLEN. It’s good to see you. Mr. LUETKEMEYER. My opening comment is just for you. I also have another duty here in Congress, which is to be the ranking member on the House Small Business Committee. And during your opening statement, which I am sure was written by your staff, they made or you made some comments with regards to this Administration being responsible for all of the loans that are out there that are being taken by those entities, those small businesses under 20 or 10 employees. I can quote you from my own press release as the ranking member of Small Business that the loans have been at roughly 75 to 80 percent, 10 employees or less already, and are generally about a little over 90 percent of 20 employees or less. And for the Administration to actually pause that ability of small businesses with over 20 employees to have access to the program is actually harmful from the standpoint that, if we don’t pass the extension of the PPP bill that we passed in the House, which the Senate now has— VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 22 if we don’t pass that, those small businesses are actually at a disadvantage because the over-20 were delayed. And if they don’t get their loan in the pipeline soon, the pipeline is not going to get processed, and they won’t even get their loan processed. My comment would be, please tell your staff to quit politicizing your statement, and please stop taking liberties with the facts. Chairman Powell, we are halfway through the 2-year cycle now on Current Expected Credit Losses (CECL) and a capital delay, which will end in 2022, and begin the phase-in of deferred impacts on the capital. We have now had nearly 4 quarters of CECL data available and have banking agencies reviewing the data. Can you tell us what the Fed’s review of that data is, and if you would consider a more permanent calibration or revision to the current approach? Mr. POWELL. We are continuing to look at CECL, and I honestly don’t have anything for you on that data. I will take a look at it quickly, and get back to you. Mr. LUETKEMEYER. Okay. That would be great, because I think having deferred it is something that you agreed to up-front last year in the process. It was something that I think you probably agreed to again this time, and I think it is something we certainly need to review, for sure, if not get rid of altogether, if a delay is something that we all believe is in the best interest of everybody affected by it. Also, Chairman Powell, at this point, Fed data from third quarter 2020 indicates that 51 percent of the commercial real estate debt is now held by banks, and the FDIC data indicates that community banks have a higher concentration of these loans as the lenders. At this point, again, Congress has provided relief from the financial institutions with these assets through the suspension of TDRs and the extension of the foreclosure moratorium. I think it is important that we have discussions around this on what will happen when this relief ends. Can you give us a little heads-up as to what you think will happen, the impact on balance sheets, the economic recovery, if we take that extension, we take that foreclosure moratorium off? Mr. POWELL. I will look into that for you. Mr. LUETKEMEYER. I apologize for my voice. I have really bad allergies today. Mr. POWELL. It is that time of year. No, you are right. We are monitoring commercial real estate (CRE) very carefully, and you are absolutely right that its concentrations arise principally in smaller banks, and we will have to monitor it carefully as we allow those moratoriums to elapse. And I don’t have anything for you on that today, but we are well aware of the issue, and we will be sure to move very, very carefully when we do address that. Mr. LUETKEMEYER. As you know, I am very concerned about this situation, because, as we saw in 2008 and 2009, when we went in and very punitively shut down entire industries, especially in the commercial real estate and real estate development areas, it had a really, really devastating effect on not only local economies, but the economy as a whole. So, I hope we are very, very cautious about this. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 23 You and I have talked about this before with regards to forbearance and being able to allow these businesses to get back on their feet and see once what the real loss is before we go in and sort of, ‘‘scorched earth’’ get rid of all these folks. But I appreciate your interest on that and your support on that. I know that you all are doing a good job of working with the banks at this point. I would ask that you continue to do that. I realize some loans are bad. You have to write them off, that is fine. But I think if time is given with the nature of the economy the way it is, I believe we can get out of a lot of the mess that we are in without having to go through the process of foreclosure. I thank you for your thoughtfulness. And I yield back, Madam Chairwoman. Chairwoman WATERS. Thank you very much. The gentleman from Missouri, Mr. Cleaver, is recognized for 5 minutes. Mr. CLEAVER. Madam Chairwoman, let me again, hopefully for the last time, apologize to you and the members of the committee, and certainly our witnesses, for not being properly attired due to my current medical situation. But I thought it might be better for me to do this than to miss the hearing. If I can, Madam Secretary, I was here, and probably everybody at least on the Democratic side who has spoken so far was here, and many of the—and I think probably, yes, all of the Republicans as well were on the committee when the tax cuts were approved. The Tax Cuts and Jobs Act, I think it was called. And it temporarily authorized what was called the Opportunity Zones, and I became somewhat excited about it. It didn’t matter whether it was designed by Republicans, Democrats, or the Tampa Bay Buccaneers, I thought it was—well, maybe that is going too far. But Opportunity Zones, the incentives were designed to encourage private investment in the economically-distressed areas around the country. And I have become concerned, even though I had great enthusiasm for the program, that the larger promise of this organization has not been realized. I thought, I believed, I hoped that we would have affordable housing, community-oriented amenities like grocery stores, drug stores like CVS, that would improve the quality of life in these low-income areas. But my dream remains unrealized. Now today, Chairman Green and I sent a letter. Let me say although, parenthetically, that Opportunity Zones are under the jurisdiction of the House Ways and Means Committee, and I accept that, there are some parts of this, especially as it relates to affordable housing, where Opportunity Zones could be extremely important. So, here we are. We have seen some things that happened, that I think are extremely unfortunate, and they bode poorly for what we could do in the future. And one of those things, Madam Secretary, is that we have seen, for example, the Brookings Institution talked about in one of their reports that some of the States had picked the Opportunity Zones covering college campuses located in Census tracts where over 90 percent of the residents are students. And I am all for students, but I don’t believe the program was designed, as I recall and read the initial proposal, for colleges. It was designed for distressed communities. At any rate, I am talking VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 24 too long, but I want to make sure that you understand the concerns we have. And in the remaining time, could you talk about what economics says about the benefits if we have this program maybe tweaked or redesigned in some way so that the incentives actually help people in what we thought were going to be zones? Secretary YELLEN. I think it is critically important to increase opportunities to provide affordable housing, especially for low-income and historically-marginalized families, and Opportunity Zones, appropriately structured, could contribute to that. There are a number of other tools that we have that can contribute to affordable housing goals. The Low-Income Housing Tax Credit, I think is important in serving that purpose. The Capital Magnet Fund can also serve to facilitate investment in affordable housing construction. This is a top priority for the Biden Administration. We are certainly open to exploring opportunities at Treasury and across the government to address the affordable housing shortage. We are operating at Treasury, the CDFI Fund and other programs that will invest in CDFIs and Minority Depository Institutions (MDIs), and I think they can make a contribution. But we have a variety of programs, and I would look forward to working with you to see how we can use them to address this problem. Mr. CLEAVER. Thank you. And thank you, Madam Chairwoman. Chairwoman WATERS. The gentleman’s time has expired. Thank you. The gentleman from Michigan, Mr. Huizenga, is recognized for 5 minutes. Mr. HUIZENGA. Thank you, Madam Chairwoman. And I am going to be trying to move through a couple of quick things. But Secretary Yellen, one, congratulations on your new position, and I look forward to continuing to work with you. But I have to read you part of an email I received from a CPA, a constituent of mine, and this echoes what Mr. Sherman had to say. My constituent says, ‘‘Extending the filing date of the 2020 tax returns was not an option. It was a necessity because of all of the stuff being thrown at us this year. Making changes to the 2020 income tax rules in March? Really? ‘‘It is going to take software developers 2 weeks at least to get this into the software correctly. Can you even imagine the amount of incorrect correspondence the IRS system is going to create as a result of this, and how much we are going to have to deal with straightening this out for them because they also can’t get their systems changed correctly that quickly? It is going to be a mess this summer for sure. ‘‘Extending the 2020 deadline by 30 days is minimal. It should have been until June 15th, as the American Institute of Certified Public Accountants (AICPA) and the Ways and Means Committee recommended, but we can deal with that. Having the first quarter 2021 estimated payment due on April 15th, after extending the tax filing date to May 15th, is the most ridiculous thing I have ever heard. How do you think we determine what those estimates should be? Through the completion of the prior year return. ‘‘To have the first-quarter estimate due on April 15th without knowing where the prior return ended up is ridiculous. They should have just kept the filing date at April 15th.’’ VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 25 So, one, I want to know if you are aware of this problem, and, two, whether you are committed to actually trying to straighten that out and move that date to make it workable? Secretary YELLEN. I believe the logic of moving the one date, but not the date for estimated taxes, is based on the idea that it is mainly high-income taxpayers who file estimated taxes and that they are able to file by April 15th when— Mr. HUIZENGA. Let me just stop you right there. As a former REALTOR and independent contractor, coming out of college, I was not a high-income earner, but I paid quarterly taxes. I paid quarterly estimates. And there are all kinds of people like that who are small business owners. They are in the middle of trying to keep their restaurant open, much, I might add, like Marlena, who is a restaurant owner, an immigrant restaurant owner who is in jail right now because she violated the Michigan Health Department’s order to shut her restaurant down because she was trying to save her business. But we have a lot of those folks who need to understand what their tax liability is before they are going out and sometimes having to borrow cash to make that first estimated payment, especially those who are in seasonal work such as construction, landscaping, those kinds of things. I don’t want to take any more time on that. I do want to have that conversation with you and your staff offline. Mr. Powell, materiality, I want to touch on that and the Fed’s involvement in the Network for Greening the Financial System (NGFS). You have a rather interesting quote saying, ‘‘Regardless of the nature of any future engagement with them, we will continue to set supervisory and regulatory expectations basically as normal.’’ So, one, that begs the question, why the involvement in that? And two, materiality, doesn’t it need to be definable as well as quantitative? Very quickly. Mr. POWELL. What the NGFS really is, is regulators, supervisors from countries around the world who are trying to understand together what are best practices— Mr. HUIZENGA. I know what it is. What I need to know in this short amount of time is about the materiality. When nobody can define it or come to an agreement on it, how can it be measured and be quantitative? Mr. POWELL. We are not trying to measure or quantify something right now. We are trying to understand at a high level what is the nature of the risks that will affect banks over time from climate change? Mr. HUIZENGA. That might be your goal and objective. I know that is not the goal and objective of a number of my colleagues who have actually been talking about this needing to be into the review currently. And what I am afraid is that we are going to get dragged into that. In my remaining last little bit, I do want to talk about, Secretary Yellen, you are a professor, a lifelong educator. Do you agree that we should safely send our kids back to school to ensure their educational development? I am very concerned about that impact on the future of our economy. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 26 Secretary YELLEN. I have concerns about the impact of children not being in school, and it is an important objective to reopen the schools safely as soon as we can. Mr. HUIZENGA. Okay. My time has expired. I appreciate the time, and I look forward to that other conversation about the IRS. Chairwoman WATERS. Thank you. The gentleman from Connecticut, Mr. Himes, is recognized for 5 minutes. Mr. HIMES. Thank you, Madam Chairwoman, and thank you to both of you for appearing. A couple of quick things, then I do have one question for both of you. Chairman Powell, I saw with great interest your comments on cryptocurrency out of the Fed. You said we would not proceed without support from Congress and urged great transparency. I appreciate that. I think my subcommittee would probably have jurisdiction over that in some combination with Mr. Sherman’s subcommittee. I just wanted to tip my hat to that sentiment, and I think we should work together. There is quite a bit of education, I think, to be done with the United States Congress on that very important topic. Secretary Yellen, thank you for all of the work that you and your people have done. I would be remiss if I didn’t urge you to be particularly quick on the rollout of the rules for the Restaurant Revitalization Fund. That obviously is a sector that has been brutally hit in the last year or so. We are hoping that those funds become available quickly. In my remaining 4 minutes, I have one question for both of you that I would like to offer. It is undeniable that everywhere we look today, we see the effects of the very substantial liquidity in the system. And by the way, it is gratifying to see monetary and fiscal policy working in tandem. This was not true when I was a freshman in 2009, when the fiscal policy was working against the monetary policy for recovery. It is very gratifying to see that. But again, everywhere we look, we see the effects of a flood of liquidity in the system. That, of course, is in equity market prices, which have a remarkable run. The high-yield market, which is now yielding something like 4 percent. Everybody and their brother has a Special Purpose Acquisition Company (SPAC). Real estate prices are growing around the country. So, my question is for both of you. We learned in 2008 that trees do not grow to the sky. I wonder if you each would just take 90 seconds to tell us what you see as the near- to medium-term risks associated with the inevitable contraction, although we may not know when it comes, of liquidity in the system? Let me start with the Treasury Secretary for a response, and then go to the Chairman. Secretary YELLEN. I would say that while asset valuations are elevated by historical metrics, there is also belief that with vaccinations proceeding at a rapid pace, the economy will be able to get back on track. I think in an environment where asset prices are high, what is important is for regulators to make sure that the financial sector is resilient and to make sure that markets work well and that financial institutions are appropriately managing their risks. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 27 Mr. HIMES. Chairman Powell, that is a pretty good segue over to you. Mr. POWELL. Monetary policy is highly accommodative right now. That is appropriate, given how far we are from our employment goal and our inflation goal, for that matter. And I think the first thing I would point to is just our overall monitoring of financial stability. We have looked carefully at financial stability on an ongoing basis. We have a framework with four pillars. If you look at those, the evidence is kind of mixed. You can say that some asset prices are a bit high, but the banking system is highly-capitalized, and funding risk is relatively modest. The remaining category is really leverage among households and businesses, which is somewhat elevated, but nothing like it was before the financial crisis. So, it is a mixed picture on that. The main thing is to have a resilient financial sector that can withstand the sorts of disruptions that will come. In terms of moving forward, we have said that we would start to taper our asset purchases when we have seen substantial further progress toward our goals. When that comes, we will communicate well in advance of the time of actually tapering. That is what we do. We have learned over the course of some years now that we need to communicate carefully and move slowly. Well ahead of time, we will let people know what is coming, and that is the best we can do to make sure that the transition away from very highly accommodative monetary policy, as the economy reaches full employment and price stability goals that will transition to a different policy. Mr. HIMES. Thank you. I yield back. Chairwoman WATERS. The gentleman’s time has expired. The gentleman from Kentucky, Mr. Barr, is recognized for 5 minutes. Mr. BARR. Thank you, Madam Chairwoman. Secretary Yellen, you have created a team within Treasury to focus on climate change. You are also the Chair of the Financial Stability Oversight Council (FSOC), which is charged with identifying systemic risk to the financial system. I certainly understand that changes to weather patterns could pose risk to individual credits or insurance policy holders. But linking hypothetical climate scenarios to risk to the entire financial system seems to me highly speculative, and on the flip side, I worry that injecting ill-defined climate scenarios into financial regulation and supervision creates the immediate and very real risk of driving investment and credit allocation away from job-producing industries like fossil energy, an industry that still provides 80 percent of total energy consumed in the United States, and remains the most affordable and reliable source of energy to the American economy. Are you incorporating this real risk into your assessments around climate, and how do you plan to account for the disruptions in the labor market, the very significant disruptions to the labor market from lost energy jobs? And what about increasing energy prices and decreasing reliability for consumers, is that something FSOC will look at in addition to—in the context of your time as czar? VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 28 Secretary YELLEN. I believe that FSOC can play a role in arranging discussions among financial regulators, all of whom have responsibilities for assessing risks from climate change to the financial institutions that they supervise and regulate, to coordinate a systemwide response using the best-available tools. I think FSOC can facilitate identification of data and information, including highquality financial disclosures that are needed to understand climate risks and make sure that climate risks are addressed fully in light of these assessments. I don’t see FSOC playing a role in telling financial institutions what kind of lending they can do, but information is important. Mr. BARR. Thank you. And reclaiming my time, I would just encourage Treasury to consider the role that shifting consumption away from fossil energy toward renewables, despite the market’s continued demand for fossil, the impact that could have on the economy as well and systemic risk, as opposed to just looking at hypothetical climate scenarios. Broadband, Madam Secretary. The pandemic has been especially hard for rural families who don’t have a broadband connection in my home State of Kentucky. And I am glad that the American Rescue Plan allows for necessary investments in broadband, but one of the ongoing problems we have had is that funding our broadband infrastructure often goes to areas that already have broadband, and the dollars never get into underserved areas like in my district. I was disappointed that this committee, in the markup of the American Rescue Plan (ARP), rejected my amendment to dedicate funds to rural areas for broadband. Will you commit Treasury to using its authority to see that in the American Rescue Plan, broadband funding is spent first and foremost in underserved rural areas? Secretary YELLEN. We need to distribute the funds to States, localities, Territories, and the like based on the requirements that are in the ARP, and using the funds for broadband or water or sewer for the State and local funding is certainly a permitted use. But we are going to give flexibility to the recipients of these funds as to precisely how they deploy them, consistent with the requirements of the Act— Mr. BARR. Thank you, and I look forward to working with you and Treasury on that. I appreciate that. I think we can work together on that. Final question: With the multi-trillion dollar deficit spending bill just passed, the promise of an additional $3 trillion in spending by this Administration on top of the $4 trillion in borrowing because of COVID last year, does the Treasury or the Fed or both of you intend to lengthen the maturity of government debt before interest rates rise? Secretary YELLEN. Treasury has been looking at this question and has no current plans to do that. Chairwoman WATERS. The gentleman’s time has expired. The gentleman from Illinois, Mr. Foster, is recognized for 5 minutes. Mr. FOSTER. Thank you, Madam Chairwoman. Secretary Yellen, Chair Powell, I would like to probe a little bit deeper on Central Bank Digital Currencies, and in particular the VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 29 need for a secure digital ID for participants. I believe that both of you are on the record as acknowledging that an anonymous, untraceable digital dollar is not a viable option for our country or the free world because of its ability to be abused for money laundering, terrorism financing, ransomware, and so on. Is that principally correct? Mr. POWELL. I don’t think I am on the record for that, but I will go on the record now for it. Mr. FOSTER. Secretary Yellen? Secretary YELLEN. Nor am I on the record, but I would agree that we need to be very careful about the use of the digital currency for illicit finance, and anonymous currency makes that much harder to control. Mr. FOSTER. Yes. Well, I concur. I think it is sort of logically impossible. On the other hand, I believe that the Chinese approach to digital currencies that gives the government immediate and unconditional access to all transaction information will be equally unacceptable to Americans and to most citizens of the free world. Therefore, a digital dollar will be crucially dependent on having an effective authentication component. That is a secure and legally traceable and maximally privacy-preserving way for participants to authenticate themselves as a unique legally traceable individual, a secure digital ID. And it must be backed by a trusted court system and a clear legal regime to determine the conditions under which the participants might be unmasked. And as a digital dollar, if it is to be used internationally, we are then going to need a digital ID system that operates internationally, at least among the free countries of the world. I would like to thank you both for beginning engagement with authorities in other countries on Central Bank Digital Currencies, and I was wondering where you see this discussion going as far as a secure digital ID and a means of authentication across boundaries, across countries? Secretary YELLEN. I will let Chair Powell start with this, because he has been more involved than I have. Mr. POWELL. Thank you. So, yes, where we are is we are engaged in a process of looking at all of the technical issues and design issues, which interact with each other. That is one of the most basic ones. Reflecting your earlier question, I don’t think a system that relies entirely on, for example, completely private governance or completely secret information about who actually owns the digital dollar would be viable. And the lack of privacy in the Chinese system is just not something we could do here. At the same time, I would say there has to be a balance, and it does call for using a two-tiered system in some way so that there is a wallet outside of the central bank, and transfers can take place there and that there are appropriate protections. We are only beginning to think carefully about these things, and it is going to be a careful, detailed, and probably lengthy process of consideration, one that we are investing quite a bit in now, and that I expect will last some time. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 30 Mr. FOSTER. Secretary Yellen, did you have any thoughts on this? The issue of the secure digital ID is very much in your court, having to do with—one of the things that the coronavirus laid bare is the lack of simply a list of citizens in the U.S., and then our ability to rapidly distribute funds, particularly to the underbanked. A high-quality and universal digital ID in the U.S. would have made that immeasurably easier, as well as everything from vaccine certificates or you name it. And so, it is an ongoing discussion on many fronts. And there are also specific proposals. I believe you had letters urging both of you to look into this in more detail. And I was just wondering, just simply as a means for citizens to receive payments, Fed accounts, each one of us already has an account with the Federal Government, the IRS at least, and I was wondering how you saw this part of the conversation going? Secretary YELLEN. I think it is something that is worth exploring. I have not done so, but we would be glad to have further conversations with you about how something like this could work. It is certainly a problem, as you have mentioned. Mr. FOSTER. Thank you. Chairwoman WATERS. The gentleman’s time has expired. The gentleman from Texas, Mr. Williams, is recognized for 5 minutes. Mr. WILLIAMS OF TEXAS. Thank you, Madam Chairwoman. And thank you, Madam Secretary and Chairman Powell, for being with us. The Biden Administration’s tax plans are becoming clearer each day, and from what we have learned so far, the President was not really telling the truth when he told voters that anyone earning less than $400,000 would not have a penny raised in taxes. Now, this number has been reduced to anyone making $200,000 a year, and a significantly greater number of families can expect the government to take more of their hard-earned paychecks so that Democrats can fund their progressive priorities. In addition to individual tax rates going up, the corporate tax rates are also expected to be raised, and we will no longer have one of the most competitive tax rates in the world. This will stifle business investments, prevent employers from hiring more people, and reduce capital-struggling businesses that will need to make the necessary changes to accommodate the new normal after COVID19. So, Chairman Powell, can you talk about the correlation between business investment and productivity gains, and how increasing productivity benefits workers and the overall economy? Mr. POWELL. Sure. The way living standards rise over time is through increasing productivity, more output per hour. Without that, incomes can’t sustainably rise, and that is significantly connected to investment, investment in human capital and also in advancing technology. Mr. WILLIAMS OF TEXAS. Okay. Thank you, Mr. Chairman. At the beginning of 2020, Congress updated the Bank Secrecy Act and made some of the largest changes to our anti-money laundering laws in decades. When this legislation was signed into law, there were some concerns coming from the business community VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 31 about the impact this will have on small businesses in the form of additional regulatory costs. As a small business person, I can tell you that is a burden that we do not look forward to. And as you start putting out guidance and implementing the law, I hope you will be mindful of this and do all you can to ensure that businesses will not be stuck with significant new expense. So, Secretary Yellen, can you give us a status update on Treasury and FinCEN’s work in implementing the Anti-Money Laundering Act of 2020? Secretary YELLEN. Yes. Timely and effective implementation of the Anti-Money Laundering Act of 2020 is the top priority at FinCEN. Our efforts are well underway, and several of the provisions of the Act that involve FinCEN looking at innovation, regulatory reform, and the like, we are actively engaged in. This is something that is a high priority, and we are making progress on it. Mr. WILLIAMS OF TEXAS. Okay, thank you. Chairman Powell, in the past, we have talked about the workforce participation rate and how we need to get people off the sidelines and contributing to our economy. In other words, just put them to work. In your testimony, you note that this figure is still notably lower than it was before the pandemic, and yet the COVID-19 bill recently extended the enhanced unemployment benefits until September. Now, I have consistently expressed my concerns about how this policy will be detrimental to our economic recovery and make it more lucrative to, frankly, live off of these overly-generous government programs than to go out and find a job. So, Chairman Powell, given the enhanced unemployment benefits are now law, how should we be incentivizing people to get off the sidelines and back in the workforce and make a good living for their families? Mr. POWELL. I think the most important thing is for people to get vaccinated, so that we can get the economy fully reopened and those jobs can come back, and people can feel safe doing them. Mr. WILLIAMS OF TEXAS. Do you have an answer to that, Secretary Yellen? Secretary YELLEN. I agree with that. Many people who are not working are not doing so because of safety considerations or because they have children out of school. And the studies that have been done about whether or not the additional payments discourage work show pretty clearly that they don’t serve to do that. In addition, they will be expiring in the fall. Mr. WILLIAMS OF TEXAS. In my remaining time, I just want—we talked about increasing taxes earlier. I would just say, as a small business owner who employs hundreds of people in Texas, it is pretty simple. If you cut taxes, you increase jobs. If you raise taxes, you cost jobs any way you look at it. I hope that everybody will understand that raising taxes to any business is not good for our economy. With that, I will yield back my time, Madam Chairwoman. Chairwoman WATERS. Thank you very much. I now call on Mr. Vargas from California for 5 minutes. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 32 Mr. VARGAS. Thank you very much, Madam Chairwoman. I appreciate very much this hearing. I also congratulate, in the strongest way, Secretary Yellen. It is quite an honor to have a woman now running Treasury. That is very, very exciting. [Inaudible] about deficit spending when we Democrats are in power. They don’t seem to remember that when they are, especially their $1.9 trillion giveaway to the wealthiest Americans, tax giveaway. It is probably even more now because the wealthiest have made so much money during this pandemic. But one of the things that I have found so interesting about this particular hearing is that we have two incredibly intelligent people presenting today, and one is a Democrat and one is a Republican. One was appointed by a Democrat, and one was appointed by a Republican. And yet, they seem to be principled and scientific, speaking about the facts and not crazy things. This is the way it used to be. And so, I appreciate it very, very much and, again, I can’t tell you how much I have enjoyed listening to this intelligent conversation. I am sure that the Secretary and the Chairman have differences of opinion, as they should. But it would be done on a factual basis, and it would be done, I think, intelligently and scientifically. In that spirit, I do want to ask about climate change. It seems that both of you have the notion that climate change could be a big deal and is in your study. So, what are the long-term investments that we need to be looking at with respect to climate change in our economy? And either one of you can go first. Secretary YELLEN. I would start off by saying that climate change poses very severe risks to the well-being of humanity, and it is a global problem that demands a global solution. While we need to address climate change at home, we also need to work globally to help other countries, particularly poorer countries, have the resources to address it as well. It is a top priority of the Biden Administration. President Biden has released a detailed plan to combat climate change. We have rejoined the Paris agreement. We intend to put forward a proposal to invest in sustainable infrastructure and to create new green jobs in the process. We have talked earlier in this hearing about evaluating the risks to businesses and to financial institutions from climate change, which the financial regulators are doing, and I hope to facilitate through FSOC the sharing of information on best practices. We need to focus on information and disclosure of information about the risks to companies that investors need to channel their capital in the right directions. Mr. VARGAS. Mr. Chairman, what about the risks to businesses and financial institutions? Mr. POWELL. We see this through a different lens, appropriately, from the Treasury Department, and that really is the lens of our existing mandate. We supervise banks and some other institutions to ensure that they understand and are managing the risks that they are running in their business. And we don’t have a new mandate. That is what we do. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 33 And climate change is an emerging risk. We are looking at it carefully. We actually are just in the very early stages of considering stress scenarios, and that is what others are doing, too. It is an emerging idea. It is not actually something that people are conducting now, but we are doing that and many other things to— again, to get a basic understanding of how the financial system can be resilient against what may be very significant emerging risks over time. Mr. VARGAS. Thank you. Yesterday, in the Foreign Affairs Committee, we talked to David Beasley, from the World Food Program. Climate change was such a big deal there to famine and to other problems internationally. So, again, I am very thankful that you are working together and that you are scientific. Thank you. Chairwoman WATERS. Thank you very much. Mr. Hill, the gentleman from Arkansas, is recognized for 5 minutes. Mr. HILL. Thank you, Madam Chairwoman. And let me welcome my good friend, Jay Powell, back to the committee for this oversight hearing. And what a pleasure it is to say, ‘‘Madam Secretary,’’ and to welcome Janet Yellen back to the committee in your new role as our Treasury Secretary. It is a pleasure to have you both here. Secretary YELLEN. Thank you. Mr. HILL. Secretary Yellen, China, Russia, Iran, Syria, Venezuela, and Myanmar are all subject to Treasury’s Office of Foreign Assets Control (OFAC) sanctions program. Secretary of State Blinken said last week that China is committing genocide, and President Biden recently called Vladimir Putin a killer. And with Chairwoman Waters’ strong support, Treasury is considering sending billions of dollars to these dictatorships through the International Monetary Fund’s (IMF’s) special drawing rights allocation. Wouldn’t you agree that no-strings-attached liquidity for a genocidal regime like China runs counter to our national interests? Secretary YELLEN. I believe our national interest involves augmenting the reserves of countries that need it, so that at this very difficult time, we don’t pressure countries to take contractionary, deflationary actions that would make recovery more difficult. And it is especially important to channel resources to the world’s poorest countries that are having a great deal of— Mr. HILL. Madam Secretary, I agree completely. And of course, David Malpass has made available $160 billion of concessional loans through the World Bank, and the IMF, billions of dollars to those neediest countries through its facilities for some 80 countries. So, I think we share that goal. But could you at least certify for us today that China won’t receive billions of dollars in this no-strings-attached liquidity through the SDR allocation? Secretary YELLEN. The funds are allocated in accordance with the quotas that each country has at the IMF in an unconditional way. So, China, if this allocation goes through, will receive resources. China is expected to use some of these resources, I believe, to, along with other countries, recycle their Special Drawing Rights (SDRs) to some of the poorest countries through the Poverty Reduc- VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 34 tion and Growth Trust and to provide relief to countries that have outstanding borrowing from China. I think that China is likely to use SDR resources in ways that will be beneficial to countries around the world. Mr. HILL. Madam Secretary, thank you for that. I hope that is the case. I will believe it perhaps when I see it. I hope that is an important part of this discussion of limiting their access. Would you, in turn, also ensure that Third World countries that have been penalized by nontransparent predatory lending from the Belt and Road Initiative from China’s largest creditor will not be paid with SDR allocations from those poor countries? Can you certify that for us today? Secretary YELLEN. We do want to make sure that SDR allocations are used to relieve poverty and address real needs, and we will work with them and with China to ensure that they don’t go to repaying loans from the Belt and Road Initiative. Mr. HILL. And turning to Russia, of course, as I noted, President Biden acknowledged last week that Vladimir Putin is a killer. Killers don’t deserve a blank check from the IMF, do they? Secretary YELLEN. As I said, an SDR allocation goes to members in accordance with their quotas in the IMF. Mr. HILL. Well, I have argued, and I hope you will work with us—you are skirting Congress by limiting the SDR allocation to $650 billion that you discussed with your G-7 colleagues. But you are not making the efforts I think are important for America’s national security to limit this hard currency access going to some of the worst regimes in the world. Will you commit to work with Congress to limit this SDR allocation access to Iran, Syria, Venezuela, Russia, and China? Secretary YELLEN. We are working with the IMF to craft rules that will promote transparency and make it difficult for countries. They need to find willing partners to exchange SDRs, and that requirement will limit uses for some of the countries that you mentioned. Mr. HILL. Thank you, Madam Chairwoman, and I yield back. Chairwoman WATERS. The gentleman’s time has expired. Mr. Gottheimer, the gentleman from New Jersey, is recognized for 5 minutes. Mr. GOTTHEIMER. Thank you, Madam Chairwoman. And thank you, Chairman Powell and Secretary Yellen, for being here today. Secretary Yellen, if I can start with you, the State and Local Tax (SALT) deduction cap jammed through Congress in the 2017 tax hike bill raised taxes for a majority of the families in my district. For all four counties and the scores of middle-class families I represent, on average, SALT puts them above the $10,000 cap. For example, in Bergen County, the average taxpayer claimed $24,783 before the cap went into place, and the average property tax alone was $12,398 last year. These are my communities’ teachers and first responders and small business owners, young people trying to start a family, all groups who were struggling, obviously, during the pandemic. It is high time we fought back against these moocher States that put this into place. My district has been taken advantage of by VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 35 these folks enough. Our taxes need to be cut, not raised, as we recover from COVID-19, and removing the SALT cap has broad bipartisan support. Will the Administration support eliminating the SALT cap and fully reinstating the deduction, ending this misguided policy of double taxation on my constituents? Secretary YELLEN. I do think that the SALT cap is a feature of the Tax Cuts and Jobs Act (TCJA) that resulted in very disparate treatment. There are a lot of options that have been presented, and I would work with you to try to ensure that the inequities that this caused are remedied in a fair and responsible way. As you mentioned, there is a bipartisan proposal to repeal the cap. President Biden discussed a proposal that would cap itemized deductions at 28 percent. The caps could be increased. I think we need to study just what impact it has had, and I look forward to working with you to find a fair way to address it. Mr. GOTTHEIMER. Thank you, Madam Secretary, and I really look forward to working with you, too, on that. Just one other item. Given the number of rural locations throughout the country, including in my district, that still don’t have true broadband connectivity, I believe that Treasury should make sure any American Rescue Plan (ARP) Act broadband infrastructure dollars are targeted to truly underserved areas, to avoid overbuilding. For example, according to a recent survey by the Census, only 69 percent of residents in White Township, in my district, have broadband connectivity. Even in northern New Jersey, there are lots of places that don’t have connectivity or have very limited connectivity. I was wondering, based on the legislation that was just signed into law, will you commit Treasury to using the authority Congress gave it to see that broadband funding is spent first and foremost on underserved areas and to avoid overbuilding? Secretary YELLEN. I am not sure that we have the ability under the law to impose those kinds of restrictions, but I will look at it. And I would also mention that the ARP contains a Coronavirus Capital Projects Fund. It is $10 billion that can also be used to fund broadband and infrastructure. So, there is quite a bit of money in the ARP for infrastructure, and I will look at what can be done. Mr. GOTTHEIMER. I was thrilled about that, obviously. It was something I fought hard for, the $10 billion fund for broadband. And I think the way it is written, the Treasury has latitude here, and I would love to talk to you about that further to make sure that it goes to places that don’t have broadband connectivity now so we don’t overbuild, which has been a mistake in the past, as you know, and try to avoid that. Madam Secretary, The New York Times this week published an article stating that more than $600 billion of income goes unreported yearly to the IRS. This gap in reporting will reduce Federal revenue by $1.4 trillion over the next decade. It is a great opportunity to make sure we go after tax cheats or people who don’t pay what they should, to avoid raising taxes otherwise. VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 36 Are you prioritizing that? Are you looking into the revenue raisers that don’t require tax rates to increase, such as increasing the audit capabilities of the IRS, to help close the tax gap? Secretary YELLEN. Absolutely. I think this is something that would be both fair and not involve any increase in tax rates or burdens. It would make sure that those who are supposed to pay, do. It does require more resources for the IRS. I would like to work with Congress to see if we can provide that funding because I think this would be a very important initiative. I am fully supportive of it. Mr. GOTTHEIMER. Excellent, and I think we get a 5- or 6-to-1 return on that. Secretary YELLEN. Absolutely. Mr. GOTTHEIMER. Thank you so much for your time. And I yield back. Thank you. Secretary YELLEN. Thanks. Chairwoman WATERS. Thank you very much. The gentleman from Georgia, Mr. Loudermilk, is recognized for 5 minutes. Mr. LOUDERMILK. Thank you, Madam Chairwoman, and I appreciate the panelists being with us today. The Majority and the Administration recently enacted a massive $2 trillion stimulus bill, which they said was necessary because we are in an economic crisis. But now, all of a sudden, the Administration thinks the economy is strong enough to withstand a major tax increase, the first in 30 years, in the middle of a pandemic. The notion that the economy is in crisis, and the notion that the economy is strong, cannot both be true at the same time. So, Secretary Yellen, could you tell us, which is it? Is it strong, or is it in crisis? Secretary YELLEN. Right now, it is in crisis due to the pandemic, and the Rescue Package should provide the funding that is needed to address the pandemic and to relieve the suffering that it has caused, getting people to the other side of it. It has been deficit funded. There haven’t been tax increases to finance it. But once the economy is strong again, and we are beyond the pandemic, President Biden is likely to propose that we engage in long-term plans to address longstanding investment shortfalls in our economy, in infrastructure and investments to address climate risk, investments in people, investments in R&D, in manufacturing, and these will make our economy more productive, raise wages, and create good jobs. It is necessary to pay for them. This would be spending over a 10-year horizon and would require some additional funding. He has been clear about the tax proposals that he would consider. One of those would be an increase in the corporate income tax rate back to 28 percent, coupled with reform of the Global Intangible LowTax Income (GILTI) to reduce the incentives of American companies to move their activities abroad to offshore activities. And we are actively engaged in Organisation for Economic Co-operation and Development (OECD) negotiations that would make it possible to do that without negatively impacting the competitive positions of American businesses. We have had a global race to the bottom in corporate taxation, and we hope to put an end to that and, in that context, to collect VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI 37 more than the 1 percent of GDP corporate tax revenue that we now collect, which is very low, and among the lowest of developed countries. Mr. LOUDERMILK. Madam Secretary, a lot of explanation there, but it sounds like all of that is premised on the idea that the economy has been in crisis. And I and several others beg to differ on that, even during the pandemic. But economists and even Chairman Powell were projecting up to 6 percent growth in 2021 before the bill was even signed into law. The economists also believe the package is 6.5 times larger than it needs to be. And I agree with the former Democratic Treasury Secretary Larry Summers, who said the reconciliation package is the most irresponsible economic policy in 40 years. So, I don’t think you can say it is in crisis, and that our economy is strong. It is kind of speaking out of both sides of our mouths here. Secretary Yellen? Secretary YELLEN. We have lost 9.5 million jobs. We have an unemployment rate that, if you add in people who have dropped out of the labor force because of the pandemic, is running at probably over 9 percent. So, we have a huge problem of joblessness in our economy. Mr. LOUDERMILK. Well, I understand that, but reclaiming my time here, there are many States that are actually seeing more revenue, tax revenue this year than they did— Chairwoman WATERS. Hello, Mr. Loudermilk, are you still on? [no response] Chairwoman WATERS. I don’t know if there is a technical glitch, or if he is muted. [pause] Chairwoman WATERS. Mr. Loudermilk, can you hear me? I suppose not. To our technician, can you get Mr. Loudermilk back on? [pause] Chairwoman WATERS. I see that his mouth is moving, but we can’t hear him. Is he unmuted? [pause] Chairwoman WATERS. Unfortunately, there appears to be a problem with the Internet, and we have an agreement for a hard stop at this time. And so, Mr. Loudermilk will probably be one of our first Members recognized at the next meeting of our distinguished guests, when they come. With that, I would like to thank our distinguished witnesses for their testimony today. The Chair notes that some Members may have additional questions for these witnesses, 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. And with that, this hearing is adjourned. [Whereupon, at 2:16 p.m., the hearing was adjourned.] VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 K:\DOCS\HBA082.000 TERRI APPENDIX March 23, 2021 (39) VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00043 Fmt 6601 Sfmt 6601 K:\DOCS\HBA082.000 TERRI VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00044 Fmt 6601 Sfmt 6601 K:\DOCS\HBA082.000 TERRI Insert offset folio 1 here 44345.001 40 VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00045 Fmt 6601 Sfmt 6601 K:\DOCS\HBA082.000 TERRI Insert offset folio 2 here 44345.002 41 VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00046 Fmt 6601 Sfmt 6601 K:\DOCS\HBA082.000 TERRI Insert offset folio 3 here 44345.003 42 VerDate Nov 24 2008 17:16 Sep 01, 2021 Jkt 095071 PO 00000 Frm 00047 Fmt 6601 Sfmt 6601 K:\DOCS\HBA082.000 TERRI Insert 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