[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


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

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

                             HYBRID HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            DECEMBER 2, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-115
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
43-529 PDF                 WASHINGTON : 2022                     
          
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

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

                   Charla Ouertatani, Staff Director
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    December 2, 2020.............................................     1
Appendix:
    December 2, 2020.............................................    43

                               WITNESSES
                      Wednesday, December 2, 2020

Mnuchin, Hon. Steven T., Secretary, U.S. Department of the 
  Treasury.......................................................     5
Powell, Hon. Jerome H., Chair, Board of Governors of the Federal 
  Rreserve System................................................     6

                                APPENDIX

Prepared statements:
    Mnuchin, Hon. Steven T.......................................    44
    Powell, Hon. Jerome H........................................    46

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written responses to questions submitted to Secretary Mnuchin    58
    Written responses to questions submitted to Chairman Powell..    73
    Letter to Hon. Mark Calabria, Director, FHFA.................    85
    Letter from the Credit Union National Association (CUNA).....    87
    Letter from the National Association of Federally-Insured 
      Credit Unions (NAFCU)......................................    90
    Letter from the National Association of REALTORS to Treasury 
      Secretary Mnuchin and FHFA Director Calabria...............    94
    Letter of support from PATH (People Supporting the Homeless).    96
    Letter from various midsized nonprofits......................    97

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

                              ----------                              


                      Wednesday, December 2, 2020

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:04 a.m., via 
Webex, Hon. Maxine Waters [chairwoman of the committee] 
presiding.
    Members present: Representatives Waters, Sherman, Clay, 
Green, Perlmutter, Foster, Heck, Gottheimer, Lawson, San 
Nicolas, Porter, Axne, Casten, Pressley, Ocasio-Cortez, Wexton, 
Lynch, Gabbard, Adams, Dean, Garcia of Illinois, Garcia of 
Texas, Phillips; McHenry, Wagner, Lucas, Posey, Huizenga, 
Stivers, Barr, Hill, Zeldin, Mooney, Davidson, Budd, Kustoff, 
Gonzalez of Ohio, Rose, Steil, Gooden, Riggleman, Timmons, and 
Taylor.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time. I want to remind Members 
of a few matters, including some required by the regulations 
accompanying House Resolution 965, which established the 
framework for remote committee proceedings.
    I would ask all Members on the Webex platform to keep 
themselves muted when they are not being recognized by the 
Chair. This will minimize disturbances while Members are asking 
questions of our witnesses.
    Members on the Webex platform are responsible for muting 
and unmuting themselves. The staff has been instructed not to 
mute Members, except when a Member is not being recognized by 
the Chair, and there is inadvertent background noise.
    Members on the Webex platform are also reminded that they 
may only attend one remote hearing at a time. So, if you are 
participating today, please remain with us during the hearing. 
Members should try to avoid coming in and out of the hearing, 
particularly during the question period.
    If, during the hearing, Members wish to be recognized, the 
Chair recommends that Members identify themselves by name so as 
to facilitate the Chair's recognition. I would also ask that 
Members be patient as the Chair proceeds, given the nature of 
the online platform the committee is using.
    In addition, for Members participating in person, the 
Attending Physician provided guidance.
    I now recognize myself for 4 minutes to give an opening 
statement.
    Today, the committee convenes to conduct oversight over the 
Treasury Department's and Federal Reserve's pandemic response. 
This pandemic continues to have a terrible impact across the 
nation. There have been over 13.4 million coronavirus cases in 
the U.S., which is almost double the amount of cases when 
Secretary Mnuchin and Chair Powell last testified in September, 
and over 267,000 people have lost their lives to the virus. 
Hospitalizations and deaths are surging as this crisis spirals 
out of control. Small businesses are shutting their doors 
permanently, and millions are at risk of eviction, foreclosure, 
and being laid off.
    An historic number of Americans resoundingly voted for a 
new direction last month by overwhelmingly voting for 
President-elect Biden and Vice President-elect Harris. The 
American people have made it clear that they want a government 
that will fight this virus and will protect their families and 
small businesses from the impacts of COVID-19.
    Secretary Mnuchin, on a call last month, many committee 
Democrats and I committed to not going home until we have a 
deal for a stimulus package that is desperately needed across 
the country, but as negotiations continue, I am appalled that 
you would knowingly make matters worse by permanently ending 
essential emergency lending programs, leaving States, cities, 
and small businesses out to dry as the nation faces a dire and 
worsening phase of the pandemic crisis. There is simply no 
justification or justifiable reason to take these tools away, 
with the pandemic crisis worse than it has been, and the Biden 
Administration arriving in January.
    And, Chairman Powell, I am also concerned that the Federal 
Reserve acceded to Treasury's request after publicly indicating 
the importance of extending these Facilities.
    Secretary Mnuchin, I am also very concerned that the 
Treasury Department may be taking actions that will undermine 
housing markets during the pandemic by reportedly working with 
the Federal Housing Finance Agency (FHFA) to rush the 
Government-Sponsored Enterprises (GSEs) out of conservatorship 
before the end of the Trump Administration.
    These actions follow the Trump Administration's obstruction 
of the transition process, delaying important information-
sharing about the pandemic response and national security 
between the Biden transition team and the current 
Administration. So today, you will be held to account for your 
misguided actions.
    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, look, I know there has been a lot of partisan talk by 
my colleagues on the Democratic side of the aisle attacking the 
actions of the Treasury Secretary and even the Federal Reserve. 
And I know committee Democrats and a lot of Democrats in 
Congress said that they wouldn't go home until they had a deal, 
and then they went home for 10 days. So, there is not a whole 
lot of believability coming from our fellow politicians here on 
Capitol Hill right now. It is quite frustrating.
    But, Chairman Powell, Secretary Mnuchin, I want to thank 
you for being with us today and for being so available. I also 
want to commend you for the quick and decisive work that you 
both have done, and I think that is something for which we 
should commend you.
    But, today, I think there is also a reason for optimism. 
The coronavirus vaccines are moving at an unprecedented pace. 
Last month, Pfizer announced its vaccine is 95-percent 
effective, and they are currently seeking regulatory clearance. 
Moderna announced on Monday that its vaccine is 94.1-percent 
effective, and they will also seek regulatory clearance. And 
the British announced today that they are moving forward as 
well with their vaccine distribution.
    This is proof that the public-private partnerships, like 
those in Operation Warp Speed, can lead to phenomenal successes 
in record time. But we know a full economic recovery will occur 
only when Americans can go back to work safely, send their kids 
back to school confidently, and have easy access to testing and 
treatments. And there is still more work to be done.
    And so, I do want to go back to our committee jurisdiction, 
and the Treasury and the Fed's decisive actions back in March 
and April to prevent the worst of this economic crisis and save 
millions of jobs.
    Chairman Powell, the Federal Reserve's emergency lending 
facilities continue to serve as a strong backstop to our 
financial markets and to prevent disorder in the financial 
markets from impacting our real economy. Those programs 
stipulated billions of dollars in private-sector lending and 
successfully operated as lender of last resort.
    And they acted as that necessary source of liquidity in 
those urgent times earlier this year. They ensured the orderly 
flow of credit and the functioning of markets of all sizes, 
including supporting workers in communities across the country. 
So, I want to commend you for that.
    But they are emergency facilities only, and they are 
backstops designed to support the functioning of private 
markets, and they are intended to be a lender of last resort, 
not to replace private markets. And from the start, I have said 
that we need to be forward-thinking and have a plan to wind 
down these firefighting measures, when appropriate.
    And so, I want to thank both the Fed and the Treasury for 
having a plan to wind those measures down appropriately, in 
accordance with the Coronavirus Aid, Relief, and Economic 
Security (CARES) Act law. And I will ask you specifically about 
the additional capacities that you will have with the CARES Act 
expiring on December 31st.
    Additionally, Secretary Mnuchin, thank you for your quick 
work on the Paycheck Protection Program (PPP) that supported 
millions of small businesses. I know we still need additional 
relief for more small businesses in different segments, and 
thank you for continuing to work for a bipartisan agreement 
here on Capitol Hill, and to not play the gamesmanship and 
partisan games that have bedeviled these talks in the last 
couple of months. Thank you for rising above that.
    But there is still work to be done, and I look forward to 
us coming together and having a package that can support small 
businesses and do the responsible things necessary to help 
rebuild our economy and to protect American citizens. Thanks so 
much for being here today, and I look forward to your 
testimony.
    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 the witnesses for appearing as well. Mr. Mnuchin 
[inaudible] indicating that the market has recovered 
significantly. This begs the question for my constituents, what 
market? We know it isn't the Federal market [inaudible] The 
free food market, the foods, obviously, have one thing in 
common, and when all the food is gone, the front lines 
[inaudible].
    The supermarkets, the market prices there have gone up 3.9 
percent for the 12 months ending in October. The stock market 
does not measure certain things of influence to my 
constituents. It does not measure the hunger pains that my 
constituents suffer, the depression, and the addiction. It 
doesn't measure the working-class uncertainty and coronavirus 
injury and death.
    My concern today is, what is your agency doing to help the 
grim reality of this pandemic for consumers? I look forward to 
hearing your testimony.
    I yield back.
    Chairwoman Waters. Thank you very much.
    I now recognize the subcommittee's ranking member, Mr. 
Barr, for 1 minute.
    Mr. Barr. Thank you, Madam Chairwoman.
    And thank you to our witnesses for being here today.
    Congress, the Fed, and Treasury acted boldly in the face of 
the economic turmoil brought on by the COVID pandemic, and 
showcased the true reach of the Federal Government's response. 
Through Congress' fiscal policy authority and the Fed's 
emergency lending facilities, we were able to stabilize 
markets, keep workers on the job, and ensure the continued 
functioning of corporate credit markets.
    As we continue on the path of economic recovery, it is 
important that we take stock of the tools used. We must 
evaluate which were effective and which were not, which should 
be redeployed and which can be wound down, and which programs 
are legally set to expire and which programs should be 
reauthorized. That is the role of this committee with oversight 
of the U.S. financial system. I look forward to hearing from 
our witnesses on this and other topics to help inform Congress' 
continued response to the pandemic.
    Secretary Mnuchin and Chairman Powell, I commend you on 
your work to promote economic stability in turbulent times, and 
I thank you for your service.
    I yield back.
    Chairwoman Waters. Thank you.
    I want to welcome today's witnesses to the committee.
    First, I want to welcome the Honorable Steven T. Mnuchin, 
Secretary of the United States Department of the Treasury. He 
has served in his current position since 2017. Mr. Mnuchin has 
testified before the committee on previous occasions, so I do 
not believe he needs any further introduction.
    I also want to welcome our other distinguished witness, 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, so I believe he 
also does not need any further introduction.
    Each of you will have 5 minutes to summarize your 
testimony. When you have 1 minute remaining, a yellow light 
will appear. At that time, I would ask you to wrap up your 
testimony so we can be respectful of the committee members' 
time. And without objection, your written statements will be 
made a part of the record.
    Secretary Mnuchin, you are now recognized for 5 minutes to 
present your oral testimony.

 STATEMENT OF THE HONORABLE STEVEN T. MNUCHIN, SECRETARY, U.S. 
                   DEPARTMENT OF THE TREASURY

    Secretary Mnuchin. Thank you.
    Chairwoman Waters, Ranking Member McHenry, and members of 
the committee, I am pleased to join you today to discuss the 
Department of the Treasury's unprecedented response to support 
the American people throughout the pandemic. We continue to 
work to implement the historic CARES Act with speed, 
efficiency, and transparency, but our job will not be complete 
until we get every American back to work.
    When I last testified before you in September, I stated 
that America was in the midst of the fastest economic recovery 
from any crisis. I am proud to say that while there is still a 
lot more work to be done, that statement is true. In the third 
quarter, GDP grew by 33 percent annually, beating all 
expectations and a previous record of 1950.
    Americans are getting back to work. The October Jobs Report 
showed the economy gained back 12 million jobs since April, 
more than 50 percent of all jobs lost due to the pandemic.
    The unemployment rate has decreased to 6.9 percent, a rate 
not expected by the blue chip to be achieved until the fourth 
quarter of 2021. The historic bipartisan CARES Act provided the 
economic relief that is critical to supporting the economy 
recovering. Additional economic slowdowns, however, continue to 
impair and cause great harm to American business and workers.
    Based upon the recent economic data, I continue to believe 
that a targeted fiscal package is the most appropriate Federal 
response. I strongly encourage Congress to use the $455 billion 
in unused funds from the CARES Act to pass an additional bill 
with bipartisan support. The PPP has unused money of $140 
billion that could be sent out the door immediately to support 
many small businesses. The Administration is standing ready to 
support Congress in this effort to help American workers and 
small businesses that continue to struggle with the impact of 
COVID-19.
    Treasury has been working hard to implement the CARES Act 
in a transparent and efficient manner. We have released a 
significant amount of information on Treasury.gov and 
USAspending.gov. We continue to cooperate with various 
oversight bodies, including the new Special Inspector General 
(IG), the Treasury IG, the Treasury IG for Tax Administration, 
the new Congressional Oversight Commission, and the GAO.
    We have provided regular updates to Congress, and this is 
my ninth appearance before Congress for the CARES Act hearings. 
We have also devoted significant resources to responding to 
inquiries from numerous congressional committees and individual 
Members on both sides.
    We appreciate your interest on these issues, and we remain 
committed to working with you to accommodate Congress' 
legislative purpose to advance the whole-of-government approach 
to defeating COVID-19.
    Chairwoman Waters, I do want to just respond to your 
comment where you said I had no justification and made matters 
worse on my termination of the facilities. I just want to 
emphasize that this was not a political decision; I was merely 
implementing the CARES Act. I am happy to walk you, your staff, 
or other members of the committee through Section 4029, which 
makes it very clear.
    I find it implausible that any member of the committee 
believed, in voting for the CARES Act, that you were 
authorizing me to invest $500 billion in Federal Reserve 
facilities to make loans and purchase corporate bonds in 
perpetuity with no expiration date. That is exactly what you 
would have to believe if you disagree with my interpretation of 
congressional intent on the issue. And since I was personally 
there and negotiated most of these documents, I am very 
familiar with them. But if Congress wants to extend this money 
for Federal purposes for these facilities, Congress can add 
that to new legislation.
    I would like to thank the members of the committee for 
working with us, and I am pleased to answer any additional 
questions. Thank you very much.
    [The prepared statement of Secretary Mnuchin can be found 
on page 44 of the appendix.]
    Chairwoman Waters. Thank you very much, Secretary Mnuchin.
    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 
update you on our ongoing measures to address the hardship 
wrought by the pandemic.
    Our public health professionals continue to deliver our 
most important response, and we remain grateful for their 
service. The Federal Reserve, along with others across the 
government, is using its policies to help alleviate the 
economic burden.
    Since the pandemic's onset, we have taken forceful actions 
to provide relief and stability, to ensure that the recovery 
will be as strong as possible, and to limit lasting damage to 
the economy. Economic activity has continued to recover from 
its depressed second quarter level.
    The reopening of the economy led to a rapid rebound in 
activity, and GDP rose at an annual rate of 33 percent in the 
third quarter. In recent months, however, the pace of 
improvement has moderated. Household spending on goods, 
especially durable goods, has been strong and has moved above 
its pre-pandemic level. In contrast, spending on services 
remains low, largely because of ongoing weakness in sectors 
that typically require people to gather closely, including 
travel and hospitality.
    The overall rebound in household spending is due, in part, 
to Federal stimulus payments and expanded unemployment 
benefits, which provided essential support to many families and 
individuals.
    In the labor market, more than half of the 22 million jobs 
that were lost in March and April have been regained, as many 
people were able to return to work. As with overall economic 
activity, the pace of improvement in the labor market has 
moderated.
    Although we welcome this progress, we will not lose sight 
of the millions of Americans who remain out of work. The 
economic downturn has not fallen equally on all Americans, and 
those least able to shoulder the burden have been the hardest 
hit. In particular, the high level of joblessness has been 
especially severe for lower-wage workers in the service sector, 
for women, and for African Americans and Hispanics. Economic 
dislocation has upended many lives and created great 
uncertainty about the future.
    As we have emphasized throughout the pandemic, the outlook 
for the economy is extraordinarily uncertain and will depend, 
in large part, on the success of efforts to keep the virus in 
check. The rise in new COVID-19 cases, both here and abroad, is 
concerning and could prove challenging for the next few months. 
A full economic recovery is unlikely until people are confident 
that it is safe to reengage in a broad range of activities.
    Recent news on the vaccine front is very positive for the 
medium-term. For now, significant challenges and uncertainties 
remain, including timing, production, and distribution and 
efficacy across different groups. It remains difficult to 
assess the timing and scope of the economic implications of 
these developments with any degree of confidence.
    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 the stability 
of the financial system. We have been taking broad and forceful 
actions to more directly support the flow of credit in the 
economy.
    Our actions, taken together, have unlocked almost $2 
trillion of funding to support businesses, large and small, 
nonprofits, and State and local governments since April. This, 
in turn, has helped keep organizations from shuttering and has 
put employers in a better position to both keep workers on, and 
to hire them back as the economy continues to recover.
    These programs serve as a backstop to key credit markets 
and have helped restore the flow of credit from private lenders 
through normal channels. We have deployed these lending powers 
to an unprecedented extent. Our emergency lending powers 
require the approval of the Treasury, and are available only in 
very unusual circumstances, such as those we find ourselves in 
today. Many of these programs have been supported by funding 
from the CARES Act, and I have included detailed information 
about those facilities in my written testimony.
    The CARES Act assigns sole authority over its funds to the 
Treasury Secretary, subject to the statute's specified limits. 
The Secretary has indicated that these limits do not permit the 
CARES Act-funded facilities to make new loans or purchases or 
to purchase new assets after December 31st of this year.
    Accordingly, the Fed will return the unused portion of the 
funds allocated to lending programs that are backstopped by the 
CARES Act in connection with their termination at the end of 
the year. As the Secretary noted in his letter, non-CARES Act 
funds and the Exchange Stabilization Fund are available to 
support emergency lending facilities if they are needed.
    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.
    [The prepared statement of Chairman Powell can be found on 
page 46 of the appendix.]
    Chairwoman Waters. Thank you very much, Chair Powell.
    I now recognize myself for 5 minutes for questions.
    Secretary Mnuchin and Chair Powell, just last month the 
Federal Open Market Committee (FOMC) met and, according to the 
minutes, ``a few participants noted that it was important to 
extend the emergency lending facilities beyond year end.''
    A few days later you, Secretary Mnuchin, requested that the 
Fed eliminate its CARES Act emergency lending facilities at the 
end of the year and return $419 billion so that it could not be 
used in the future. Initially, the Fed resisted publicly, but 
the next day, Chair Powell, you acquiesced.
    Secretary Mnuchin, your own Office of Financial Research 
(OFR) warned that we should expect, ``potentially severe losses 
from borrower defaults and bankruptcies.'' Moreover, the 
outlook for States, cities, airports, and hospitals is not 
good.
    And despite what President Trump suggests, it is not 
limited to blue States. For example, the day after New York 
State's credit was downgraded, Mississippi's credit was 
downgraded. With the pandemic worse than at any point since it 
began, it is foolish and reckless to take away emergency 
lending options at this time.
    Secretary Mnuchin, you argue that it was congressional 
intent for these Fed facilities to be shut down at the end of 
the year, but the law does not say that, and even the actions 
of my Republican colleagues belie that novel interpretation.
    Senator McConnell filed a COVID-19 bill that would change 
the law to require the Fed to close all of its facilities after 
January 19, 2021. So, if the law already required this, this 
bill wouldn't be necessary. The CARES Act was passed to 
stabilize the economy during the entirety of the pandemic, not 
until the end of your tenure as Treasury Secretary.
    Secretary Mnuchin, it was reported last week that you 
intend to transfer the unused portion of the CARES Act, that 
$500 billion appropriation, to Treasury's General Fund so that 
the next Secretary can't have access to the fund. However, 
Section 4027 of the CARES Act explicitly states that funds may 
only be transferred on January 1, 2026, not before January 1, 
2026.
    What you are doing is contrary to what is lawful, and it 
puts our entire economy in jeopardy. And, what's more, it has 
also been reported that you are working with Director Calabria 
of the Federal Housing Finance Agency to sell off the 
government stakes in the housing giants, Fannie Mae and Freddie 
Mac, likely destabilizing the entire housing market in the next 
few months.
    As I understand it, Secretary Mnuchin, the Obama 
Administration showed you every courtesy when your team was 
taking the reins. Similarly, the Bush Administration worked 
closely with President Obama's incoming team during the 
financial crisis, even before he was sworn in. They did so 
because they were honoring the decision of the American 
electorate.
    Tell me, Secretary Mnuchin, and Chair Powell, does the 
Secretary's expected successor, Janet Yellen, support what you 
are doing? Does she agree that the emergency lending facilities 
are not needed even though thousands of people are dying each 
day, millions more are being infected each week, tens of 
thousands of small businesses are closing permanently, and our 
cities and States are struggling? Does Ms. Yellen support 
Director Calabria's plans to fundamentally remake the housing 
markets, where millions of people are struggling to pay their 
mortgage and rent each month? Secretary Mnuchin?
    Secretary Mnuchin. Again, let me first comment on--and in 
all due respect, I believe I am following the law. Section 4029 
makes very clear that on December 31, 2020, the authority 
provided under new loans, guarantees, or other investments 
shall terminate.
    Chairwoman Waters. Thank you very much. I am going to 
reclaim my time.
    Do you agree? Do you agree, Mr. Powell?
    Secretary Mnuchin. Let me just continue. The transfer of 
the funds is not up to me. When funds come back, they go into--
    Chairwoman Waters. Reclaiming my time, I need to have an 
answer from Mr. Powell. Do you agree with Secretary Mnuchin?
    Mr. Powell. The Secretary has sole authority over the CARES 
Act funding under the CARES Act. The Fed is not involved in 
that. His reading of the law, thus, is the authoritative one, 
and we accept it.
    Secretary Mnuchin. I would also just say, if I was 
politically-motivated, I wouldn't have extended the four 
facilities in deference to the Fed's view that were non-CARES 
Act facilities. So, had I been trying to be political, I would 
have terminated those.
    Chairwoman Waters. My time has expired.
    I now recognize the distinguished ranking member, Mr. 
McHenry, for 5 minutes for questions.
    Mr. McHenry. Secretary Mnuchin, let me just give you a 
moment to answer. It sounds like you have additional things you 
want to explain in your reading of the CARES Act. The CARES Act 
expires on December 31st of this year. That is in the law. So, 
let me give you the opportunity to give a full answer on your 
decision with the Exchange Stabilization Funds.
    Secretary Mnuchin. Thank you very much. There are three 
sections I direct people to. First, Section 4029, which is the 
termination date of December 31st of 2020 to make new loans, 
loan guarantees, or other investments shall terminate. That is 
perfectly clear.
    Second, Section 4003, which references deposit of proceeds. 
So, when proceeds come in, we allocate proceeds. Whether it is 
the return of an airline loan or money from the Fed, we 
allocate it very clearly in Section 4003.
    Third, as the Chair referenced, Section 4027, which 
references if there was money left over, okay. And there are 
limited uses of what that money can be, either expenses or 
follow-on investments on existing loans. So, if we had to make 
an advance on an existing loan to an airline, that is under 
Section 4027, and any money on 2026 will come back vis-a-vis 
that.
    So, again, Section 4003, Section 4027, Section 4029, and, 
again, I personally negotiated this language. And, again, 
Congress has the ability to change this if they think the money 
should be spent otherwise.
    Mr. McHenry. Secretary Mnuchin, you and I talked regularly 
during those negotiations. I was a strong advocate for as large 
an Exchange Stabilization Fund dollar amount as possible so 
that both the Treasury and the Federal Reserve would have 
maximum firepower to put out what we did not fully understand 
would happen in the coming weeks or coming months with the 
nature of the virus.
    So, we, in the midst of this negotiation, had a very, very 
large Exchange Stabilization Fund (ESF). Absent the CARES Act's 
$454 billion in the Exchange Stabilization Fund, how many 
dollars are allocated to the Exchange Stabilization Fund?
    Secretary Mnuchin. Again, we allocated something like $20 
billion from the ESF for the pre-CARES facilities prior to the 
CARES Act. As I said, in deference to the Fed, those facilities 
don't have this restriction and still exist. And there is still 
something like an additional $50 billion that could be used in 
the future for emergencies, which would support another $500 
billion.
    And, again, I want to thank Congress for giving 
extraordinary authority to the Secretary of the Treasury for 
$500 billion. As people have noted, many people criticized that 
authority. And I am merely following the law and returning that 
authority back, as Congress intended.
    Mr. McHenry. Chairman Powell, these facilities of the Fed 
served a very important purpose in the early days. Their 
utilization in recent months has not significantly changed in 
dollar value of Fed lending facilities, and so the four 
remaining facilities are still important as a lender of last 
resort facility, of course.
    I want to thank you for your work to stand up those 
facilities and your work in the last 8 months of this year to 
stand up more facilities than were stood up in the fullness of 
the financial crisis of 2007, 2008, 2009, 2010. You stood up 
more facilities in 8 months--well, actually, in 3 months, than 
they did in 4 years. So, I thank you and the staff of the 
Federal Reserve for your solid great work to support our 
economy and to ensure that this health crisis, that has become 
an economic crisis, did not become a financial crisis. I want 
to commend you for that.
    Finally, I want to note that I have consistently been an 
advocate of the independence of the Federal Reserve for making 
monetary policy and supporting our economy. I do think it is 
important, an important hallmark, whether it was Chair Yellen 
in your seat, Chairman Powell, or your service as Chairman of 
the Federal Reserve, that we honor the independent policymaking 
and monetary policy decisions of the Federal Reserve. And I 
want to thank you for your leadership.
    I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Guam, Mr. San Nicholas, who is also the 
Vice Chair of the committee, is recognized for 5 minutes.
    Mr. San Nicolas. Thank you, Madam Chairwoman.
    Chairman Powell and Secretary Mnuchin, thank you so much 
for making time to be with us here today. I wanted to open with 
some questions regarding the Main Street Lending Program 
(MSLP), Mr. Chairman. Are you familiar with how much has been 
authorized for the MSLP at this time?
    Mr. Powell. Yes, I am. We made about $5 billion in loans, a 
little better than $5 billion in loans.
    Mr. San Nicolas. Okay. So, we have about $5 billion out 
there in the MSLP. Now, those programs are administered by 
participating banks, correct?
    Mr. Powell. Yes.
    Mr. San Nicolas. Are the banks--
    Mr. Powell. Put it this way: We work through the banking 
system. We access borrowers through the banking system. We 
administer the overall program, but the banks are facing off 
against the actual borrowers.
    Mr. San Nicolas. Right. So, these borrowers who are 
receiving MSLP funds, are they required to be investment-grade 
borrowers?
    Mr. Powell. No.
    Mr. San Nicolas. And that just brings me full circle, Mr. 
Chairman, because the last time we spoke, I was discussing the 
Municipal Liquidity Facility and the Fed's inability to allow 
municipalities that are below investment grade to be able to 
access that liquidity.
    And it was mentioned in our hearings that the Federal 
Reserve does not provide funding to noninvestment grade 
entities. And yet, through the MSLP, indirectly, the Federal 
Reserve, as you have mentioned, is willing to do so for private 
sector entities.
    Mr. Powell. As you will recall, with the Territories, there 
are no investment grade, overall sovereign investment grade. 
But we worked with you and your office to work with one of the 
below sovereign level facilities. The name of it doesn't come 
to mind. And we also worked with you to be in touch with the 
Treasury Department under various loan programs that might be 
useful.
    But, no, the overwhelming majority of municipal borrowers 
are investment grade, and we did limit the facility to that.
    Mr. San Nicolas. The reason why I am raising this point, 
Mr. Chairman, is because I just wanted to highlight the 
inconsistency in the policy, because if investment grade is a 
requirement for the Federal Reserve to be providing financial 
support, particularly as the lender of last resort, and it is 
not imposing that same requirement on private sector entities 
that are accessing the MSLP, I again beg the question, why are 
we doing so for municipal entities trying to access the 
Municipal Liquidity Facility?
    I appreciate your staff trying to work with us in looking 
for workarounds in this environment, but, it is just so 
glaring, Mr. Chairman, that these private companies are not 
investment grade, and they are able to access the support. I am 
glad they are; I want them to. But we are not allowing 
municipal entities who are not investment grade to be able to 
access the specific facilities that we set up for our municipal 
circumstances.
    I just wanted to put that in the record, Mr. Chairman. I am 
hoping that you can go back to the table and reconsider this, 
given these issues that we are bringing to light. And at the 
end of the day, we need a solution for our municipal entities 
that are below investment grade, but are in the same boat as 
all of these private sector entities that are able to access 
capital through the MSLP.
    Thank you, Madam Chairwoman, and I yield back.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from Missouri, Mrs. Wagner, is recognized 
for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman.
    And welcome, Secretary Mnuchin and Chairman Powell. First, 
I would like to thank you both, both you and your staff for 
your service to our nation and your tireless efforts during 
this pandemic to implement the CARES Act and for propping up 
the Federal Reserve's emergency lending facility.
    While economic data continue to trend in a positive 
direction and we do know that credible and safe vaccines are 
just weeks away, the surge in cases and lockdowns occurring 
across the country could result in our economy backsliding 
again if we do nothing. I want to reiterate the urgency, the 
overdue urgency for Congress to provide immediate targeted 
relief now, not next year. It should have been months and 
months ago. Our nation's hospitals, small businesses, schools, 
many of our hardest-hit industries, and certainly those who 
continue to be unemployed, cannot continue to wait any longer 
for relief.
    Just this week, St. Louis County, which I have the 
privilege of representing, reported an average of 660 new cases 
being added every day, with a total of 51,324 confirmed 
coronavirus cases as of Sunday. Many of my constituents in 
Missouri's Second District are under a mask mandate, and 
restaurants and bars have been completely shuttered and are 
closed down. Capacity limits of gatherings are down to 10 
people.
    Our families and our businesses are asking Congress for 
additional relief to combat this health crisis. Hospitals are 
filling up, and many businesses are worried that they will not 
survive. They are reaching the desperation point. We must stop 
playing partisan politics and come to a bipartisan agreement to 
provide a direct COVID-related stimulus and support now.
    Chairman Powell, according to the data you are seeing, what 
parts of our economy are most in need of fiscal stimulus 
measures provided by Congress?
    Mr. Powell. Thank you. There are many sectors that could 
use some help, and, of course, those decisions are really up to 
you and the Administration. But I will just mention quickly, I 
would start with the labor market. I think we ought to remember 
that, despite the rapid progress in getting people back to 
work, which is so welcome, there are still 10 million people 
who are out of work because of the pandemic. And, that is more 
than lost their jobs in all of the global financial crisis 10 
years ago, which at the time was the biggest recession that we 
had had in a long, long time.
    So, there is a lot of work left to do there. The 
unemployment insurance programs are expiring at year's end. I 
think that is an area where I would certainly look.
    Another thing that comes up all the time in our discussions 
is smaller businesses. We met with a group of community bankers 
a week or so ago, and they were telling us there are just a lot 
of smaller businesses in their communities that will struggle 
to make it through this winter because, as you say, in 
Missouri's Second District--and it is true all over the 
country--COVID is moving up, and with the cold weather, people 
are staying in, and it is going to be tough on a lot of small 
businesses. That is another place where I would look.
    Finally, I do think for State and local governments, and 
this differs State to State, revenue is down, and maybe not so 
much in some States, but in some States by a lot, and costs are 
going up. And I think they deliver critical services. They are 
living under balanced budget requirements, and so they lay 
people off, and they have laid off more than a million people 
already. So, that is another area where I think it would be 
profitable to look.
    Mrs. Wagner. Thank you, I appreciate that.
    Secretary Mnuchin, I will ask you a similar question. You 
have mentioned the need for a targeted fiscal package with $455 
billion in unused funds from the CARES Act that did need to be 
returned to Treasury, given the law.
    How do you suggest we appropriate this money to support the 
most-vulnerable segments of our population?
    Secretary Mnuchin. My single-highest priority would be to 
activate the $140 billion in PPP funds that are not spent, that 
we could immediately send out to the hardest-hit small 
businesses whose revenue is down dramatically.
    I also think Congress should consider extending some of the 
unemployment insurance programs that expire at the end of the 
year.
    Mrs. Wagner. I appreciate that. And the Paycheck Protection 
Program is estimated to have saved more than 50 million jobs, 
including many jobs across Missouri's Second Congressional 
District.
    Chairwoman Waters. The gentlelady's time has expired.
    Mrs. Wagner. Thank you. I yield back.
    Chairwoman Waters. The gentleman from Illinois, Mr. Casten, 
is recognized for 5 minutes.
    Mr. Casten. Thank you very much. We really appreciate you 
all being here today.
    I was really pleased that the Federal Reserve's financial 
stability report identified climate change as a risk to 
financial stability. The report stated that, ``different 
sectors of the economy and geographic regions face different 
risks that will diverge from historical patterns.'' It also 
said that levered financial institutions may be exposed to 
losses from disasters made more likely by climate change.
    Chairman Powell, while there is more to explore about how 
to incorporate these risks into modeling, do you think it is 
appropriate for financial institutions to incorporate climate 
risk into credit risk assessment?
    Mr. Powell. Let me say this for starters: Climate change is 
an important issue. I want to say that society's broad response 
to climate change really has to come from elected 
Representatives. I think there is a role for the Fed here, and 
we are working our way through understanding what that will be.
    But one thing is the public will expect that, in our 
supervision and regulation of financial institutions and 
financial market infrastructure, that they will be resilient, 
we will make sure that they are resilient to climate change 
risks. And I do think that it does fall on banking institutions 
and CCPs and other financial market infrastructures to evaluate 
that and incorporate it in their own operations and also, I 
would think ultimately, in the credit that they extend.
    Mr. Casten. I think I will take that as a yes, because I 
was really just asking if it was appropriate for financial 
institutions to incorporate. What role the Fed has is, of 
course, a separate question.
    I certainly agree with you, and I asked the question 
because I am really concerned with the OCC's latest rule that 
would prevent banks from integrating climate-related risks into 
their credit assessments, despite the fairly significant 
financial risk that climate poses.
    The OCC rule specifically says that the risks of lending, 
``would not change based on the sector in which the firm 
operates,'' which is categorically false. I don't know how you 
would tell banks that somehow they need to ignore the dynamics 
in the sector without imposing significant systemic risk on the 
banking sector, not allowing banks to account for the sector of 
the economy where it sits just defies logic and market 
fundamentals.
    The report also stated that, within the financial system, 
increased transparency, through improved measurement and 
disclosure, would improve the pricing of climate risks. What 
additional transparency would be helpful to appropriately 
assess the overall risk to the financial system due to climate 
change?
    Mr. Powell. I am glad you read that box in our Financial 
Stability Report. We are really at the beginning of the process 
of thinking our way through these things, and so are other 
market regulators and central banks and financial institutions 
around the world.
    The point there was that we are going to need transparency 
about how financial institutions are thinking about these 
risks, how they are incorporating it in their business model. 
We don't actually regulate transparency. That is really more of 
a market regulator job, what is a required disclosure.
    I think we are all moving in that direction, but in terms 
of the interaction between financial regulators and financial 
institutions, we are at the beginning of the work.
    Mr. Casten. Would a standardization of climate-related risk 
disclosures from publicly traded companies be useful for you in 
order to continue that work?
    Mr. Powell. I think that is certainly where we are headed 
over time. Again, it is not our responsibility. That would be 
the market regulator's responsibility. But I do think that is 
where we will be going.
    Mr. Casten. Thank you. And I yield back the balance of my 
time.
    Chairwoman Waters. Thank you.
    The gentleman from Kentucky, Mr. Barr, is recognized for 5 
minutes.
    Mr. Barr. Thank you, Madam Chairwoman.
    Chairman Powell, some in the press this morning and some of 
my colleagues have seemed to try to make the argument that you 
and the Treasury Secretary are in disagreement about the 
Exchange Stabilization Fund, but I don't detect much of a 
disagreement.
    What I heard the Secretary say is that his decision to not 
extend the $430 billion left in the Exchange Stabilization Fund 
is rooted in his interpretation of the statute of the CARES 
Act. And what I heard you say is that you believe that the 
Secretary, under the law, has the authoritative interpretation 
of that and you accept that.
    Now, obviously, you stated yesterday that you think it is 
perhaps premature to be pulling back from emergency lending 
programs, but I heard the Treasury Secretary say that it is 
within Congress' ability to authorize that, so I don't see a 
disagreement here.
    But given the modest takeup in some of the emergency 
lending programs, particularly Main Street, wouldn't it be wise 
for Congress to repurpose at least some of that $430 billion 
towards what, admittedly, has been an effective program, the 
Paycheck Protection Program?
    Mr. Powell. I hope you won't mind if I use just a couple of 
seconds to clarify what is going on.
    Mr. Barr. Sure.
    Mr. Powell. As I said earlier, the Secretary has sole 
authority over CARES Act funds. He reads the statute and reads 
it to say that there is no support for lending after December 
31st. We accept that. We don't have a role in reading it. That 
is one thing. Our thinking is not about the CARES Act money; it 
is more about support for the economy.
    Mr. Barr. Sure.
    Mr. Powell. We were concerned that the public might 
misinterpret this as the Fed stepping back and thinking that 
our work is done, and that is very much not the case. So, we 
needed to send a signal to the public to that effect.
    And, as the Secretary pointed out in his letter and as we 
pointed out in our letter, there is Exchange Stabilization Fund 
money that is available to support the reestablishment of these 
facilities or other facilities, if they are needed and they 
meet the legal requirements and that kind of thing.
    Mr. Barr. Let me just ask this, though: Wouldn't it be wise 
for Congress at this point, before the end of the year, to 
repurpose some of those CARES Act funds towards the Paycheck 
Protection Program, given the concerns of the small businesses 
that you referenced?
    Mr. Powell. I would just say that what I am hearing from 
across the aisle and on both sides of the Hill is the desire to 
do something to fund these causes, as the Secretary just talked 
about, and others. And I think that would certainly be a help 
for the economy. As to where that money comes from, that is 
really up to you.
    Mr. Barr. One area where there is, I think, significant 
bipartisan support is for streamlining the forgiveness process. 
A recent survey in Kentucky found that 27 percent of community 
banks in Kentucky would not participate in a new round of PPP 
without streamlined forgiveness and clear rules of the road.
    Many of the businesses in my district who have applied for 
forgiveness tell me that the process from the Small Business 
Administration (SBA) is slow and cumbersome. It is a big 
problem if lenders will not participate in a second round 
because of inadequate streamlining of the forgiveness rules.
    Secretary Mnuchin, you previously indicated your support 
for legislation to streamline PPP forgiveness. Is this still 
the case, and what more can we do to ensure participation by 
community lenders in a new round of PPP?
    Secretary Mnuchin. I do support that. And we have created 
three different forms for forgiveness, using what authorities 
we have, and making it as simple as possible for loans that are 
less than $50,000.
    But I know there is bipartisan support to pass a bill. I 
believe it is all loans $150,000 or less. And we fully support 
that, subject to audit.
    Mr. Barr. Thank you.
    Chairman Powell, the statutory language in the CARES Act 
temporarily suspends accounting rules related to troubled debt 
restructuring (TDR), and that expires on December 31st. It is 
important that Congress extend this important tool to allow 
lenders to continue to work with their customers.
    What authorities do you have at the Fed to extend TDR 
relief administratively versus what Congress must do to ensure 
lenders can continue to accommodate borrowers?
    Mr. Powell. We actually don't have authority to extend TDR. 
It is an accounting rule. We have a lot of authority, though, 
and we will use it to make sure that banks continue to work 
with their borrowers, to encourage them to do so, I should say.
    Mr. Barr. There is some uncertainty among the auditing 
community about whether life insurers would qualify for TDR 
relief under CARES. This is a problem, because insurers make up 
over 13 percent of the commercial real estate lending market, a 
sector that is deeply impacted by the pandemic.
    Chair Powell, do you agree that life insurers, given their 
participation in the commercial real estate lending market, 
should qualify for TDR relief?
    Mr. Powell. I would have to check on that, and get back to 
you. Thanks.
    Mr. Barr. We think that is an important thing to look into.
    My time has expired. I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from New Jersey, Mr. Gottheimer, is 
recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Madam Chairwoman.
    And thank you, Chairman Powell and Secretary Mnuchin, for 
being here today.
    The COVID-19 pandemic, as we have been talking about, has 
caused ongoing global health and economic crises. While certain 
aspects of our economy are recovering, millions of Americans 
and thousands of my constituents are in dire need of help. We 
can't go home from Washington, given what is going on, without 
risking a double-dip recession.
    As you said earlier this month, Chairman Powell, further 
support is likely to be needed to avoid another spread of the 
virus, and to help individuals. We are obviously in the lame 
duck session of Congress. The American people have waited long 
enough. Our families, our businesses, and our communities are 
all suffering, and it would be unconscionable for any party to 
walk away from so many who are hurting right now.
    Yesterday, the Problem Solvers Caucus joined a bipartisan 
group of Senators in releasing a new $908 billion emergency 
short-term stimulus package. It is intended to be a critical 
downpayment to get through the next months.
    If I can start with you, Secretary Mnuchin, have you had a 
chance to review the framework, by chance?
    Secretary Mnuchin. First, let me just say I really 
appreciate the work that you have personally done, and the 
Problem Solvers have done, in trying to reach bipartisan 
solutions.
    I did review it briefly yesterday after my testimony, and I 
will be spending more time on it today. Again, I would urge 
Congress to move quickly on the PPP, for which there seems to 
be enormous bipartisan support. But, again, thank you 
personally for your efforts.
    Mr. Gottheimer. Thank you, Mr. Secretary. And I appreciate 
the work we have done together on this. And obviously, I hope 
this will be something that if we can get the support here, the 
Administration might support.
    If I could turn to Chairman Powell, would you speak to the 
urgency for fiscal relief, and what do you believe is at stake 
this winter for the economy and for families if we don't get an 
emergency package done in the next week?
    Mr. Powell. My view is that it would be very helpful and 
very important that there be additional fiscal support for the 
economy, really to get us through the winter. We have made a 
lot of progress faster than we expected, and now we have a big 
spike in COVID cases, and it may weigh on economic activity. 
People may pull back from activities they were previously 
involved in, or not get involved in new activities. So, I think 
it would be helpful if we could get that done, if you could get 
that done.
    Mr. Gottheimer. Thank you so much, Mr. Chairman.
    Just to follow up on that, obviously, local governments are 
struggling now, through no fault of their own. It is putting 
law enforcement, firefighters, teachers and their [inaudible] 
on the line. What do you think the impact will be, if we can't 
get extra resources to our State and local governments, on the 
economy?
    Mr. Powell. These are really decisions for you, but I would 
say that State and local governments provide critical services. 
You mentioned them. And State and local governments live with 
balanced budget requirements, unlike the Federal Government. 
And what happens when revenues soften and expenses go up is you 
see layoffs. And that was a big part of the story in the slow 
recovery from the global financial crisis a decade ago. We now 
have a little more than a million in layoffs so far.
    State and local governments are some of the very largest 
employers in the country, and they provide those critical 
services. I think that is a worthy place for you to look, in 
terms of where support might be appropriate.
    Mr. Gottheimer. Do you see it as sort of, just to follow up 
on that point, a ripple effect? In New Jersey, about a third of 
our businesses already, small businesses, have already gone 
out, including about 28 percent of restaurants. When you add 
that with the revenue declines for the State and local 
governments, and all of these businesses coming out, what do 
you see on the other side of the virus? And, again, with the 
vaccine, but what can be the economic [inaudible] that all of 
this brings along after the virus is behind us?
    Mr. Powell. I think, as you suggest, that you have a near-
term and medium-term difference. The near-term does look 
challenging through the winter. Small businesses--we are 
hearing all over that small businesses are really under 
pressure. And then, sometime in the middle of next year, it 
really does look like that may be the light at the end of the 
tunnel--we all hope so--and that the economy could be very 
healthy.
    The problem is, of course, people who lose their homes now 
or businesses that go out of business, these are sometimes 
small businesses that might have generations of sort of human 
capital built up in their activities. And once they are gone, 
they can't just be recreated. So, you could lose parts of the 
economy, and that will mean a slower recovery.
    I like to think of it as a bridge over this chasm that was 
created by the pandemic. We are trying to get as much of the 
economy and as many of the workers across that bridge to the 
post-pandemic economy. And I think we have done well at that, 
but there is still some work left to do.
    Mr. Gottheimer. Thank you so much.
    And I yield back.
    Chairwoman Waters. The gentleman's time has expired.
    The gentleman from Ohio, Mr. Gonzalez, is recognized for 5 
minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, for 
holding this hearing, and I thank both of our witnesses for all 
of your work throughout this pandemic. I sincerely believe that 
we will look back a decade, or 2 decades from now, and the work 
that you two did together will be looked at in the most 
favorable light. And so, I couldn't be more grateful for your 
service, so thank you both for that.
    Look, we can see the light at the end of the tunnel with 
two vaccines awaiting approval, and I think the bridge comment 
is exactly correct. We are looking to bridge from now until, 
call it April 1st or whenever that is. And I was pleased to 
join a group of bipartisan and bicameral Members yesterday as 
my colleague, Mr. Gottheimer, just mentioned, with the Problem 
Solvers Caucus to hopefully provide that bridge, and I hope we 
will be able to do that.
    Chairman Powell, before I move into some questions on that, 
going back to the Exchange Stabilization Fund a bit, the main 
purpose was to provide liquidity to the financial system to 
stabilize the financial system. As these programs expire, do 
you see the same or similar risks to the liquidity inside the 
financial system as you did, say, back in March or April, or do 
you feel like we are in a much better place today?
    Mr. Powell. We are clearly in a much better place. To be 
clear, the utilization of these facilities, most of them, is 
very, very low now. Nonetheless, we see them as serving a 
backstop function that a central banker would want, and we 
would want to leave that backstopping function in place for 
some additional period of time but not forever.
    If you look back at what we did in the global financial 
crisis, we left them out there until we were well past the 
difficulty, and then we unplugged them, put them in the attic, 
and put them away. None of them became a permanent feature of 
the landscape, and we hope these don't either. So, that is the 
way we think about it.
    Mr. Gonzalez of Ohio. Thank you. That is helpful. And 
hopefully, as we debate the next package, we can consider that.
    Secretary Mnuchin, in recent months, we have heard Speaker 
Pelosi on multiple occasions state effectively that nothing is 
better than something with respect to additional relief. In 
your estimation, is nothing better than something for my 
constituents back home?
    Secretary Mnuchin. No. Something is clearly better than 
nothing. And, again, I would urge Congress to do something, if 
it is just the PPP or more.
    Mr. Gonzalez of Ohio. And, of course, that is an obvious 
statement, which I think everybody knows, but for whatever 
reason, the Speaker has chosen that path. My understanding is 
you have continued dialogue with her. I am not going to ask you 
to divulge sort of the specifics of those conversations, but 
you have been involved in a lot of deals in your life, 
certainly as Treasury Secretary.
    As you have had these discussions, how would you 
characterize them with respect to willingness to actually get a 
deal done? Because I think there are a lot of people who like 
to talk around here, but when it gets down to it, actually 
don't do that much with respect to closing a deal. How would 
you characterize the discussions?
    Secretary Mnuchin. I would say the good news is when we 
really needed to get this done last March, it got done with 
overwhelming bipartisan support. Republicans and Democrats came 
together in an unprecedented response. When we needed to extend 
the PPP, people came together in an unprecedented response.
    Unfortunately, since that period of time, things for which, 
in my opinion, there should be absolute bipartisan support, and 
we could get done, unfortunately, the Speaker has had--a half a 
loaf is not good enough and wanted a full loaf. So, again, I 
would encourage Congress, particularly over the next few weeks 
in the lame duck, let's try to get something done.
    Mr. Gonzalez of Ohio. No. I couldn't agree more, and I--
again, to state another obvious point, my colleagues on the 
other side of the aisle are in the Majority. And in order for 
this to actually get done, we are all going to have to come 
together to do it, but really, the pressure needs to come from 
them. And I hope that they will use the leverage that they have 
to encourage the Speaker to put a real bipartisan bill forward, 
because as Chairman Powell said, and as you have said, as 
common sense demands, it is obvious that we need a bridge here, 
that there are people struggling. There are small businesses 
struggling. There are people who are unemployed who are 
struggling. And I can almost guarantee you to the person that 
every single one of them would prefer something to nothing. And 
I hope that this body will come to common sense and actually 
get that done.
    And with that, I yield back.
    Chairwoman Waters. Thank you.
    And I object to all of the fault being placed on the 
Speaker's back. I would advise the President to get involved 
and get off the golf course.
    Mrs. Axne, you are now recognized for 5 minutes.
    Mrs. Axne. Thank you, Madam Chairwoman, and I thank both of 
our witnesses for being here.
    As we all know, we are in dire straits right now. Iowa has 
now had increasing unemployment claims for 6 straight weeks. 
And, of course, I would like to remind everybody that we need 
to pay attention to the level of unemployment, not just the 
direction. This is all happening when week after week, we see 
initial claims higher than the worst that we saw in the Great 
Recession. That is 36 weeks in a row where we have seen record 
unemployment claims across this country.
    Meanwhile, The Century Foundation recently estimated that 
12 million people would lose their unemployment benefits the 
day after Christmas if we don't act. That seems very terrible 
for this country.
    Chairman Powell, what are the economic impacts of removing 
that support at a time when this recovery is so fragile?
    Mr. Powell. This is if the unemployment programs run out 
and expire at the end of the year. We would be concerned that 
the unemployment rate for people in the bottom quartile, for 
example, is about 20 percent still, and those are people with 
relatively low savings, low wealth. And we would be concerned 
that they would be vulnerable to losing their houses or their 
rental and just be in a very difficult place. So, we think that 
is an appropriate place to look for further help.
    Mrs. Axne. I appreciate that. As we all know, 1 in 8 
Americans are going hungry, more than 3 million businesses have 
closed, and we are approaching 100,000 people now hospitalized 
with COVID. So I am wondering, for either one of you, does 
seeing this kind of need and the discussion that we have had 
today show the importance of passing another COVID aid package? 
And how quickly do we need to get that done?
    Mr. Powell. I would just urge, as the Secretary has done, 
that this is a good time. This would really help the economy 
through these winter months and beyond. And, again, we can see 
the vaccines coming, but we have a bit more of the bridge to 
build, and I think it would be very important for the economy 
to receive that help.
    Secretary Mnuchin. I would agree with that, as I have 
echoed.
    Mrs. Axne. Thank you.
    And, Secretary Mnuchin, I did want to discuss the CDC's 
eviction moratorium that currently expires on December 31st. A 
study recently showed that 430,000 cases of COVID and more than 
10,000 deaths are due to lifting the earlier State and local 
eviction moratorium. Are there plans to extend that to possibly 
protect 10 million households from eviction this January?
    Secretary Mnuchin. I think, as you know, that wasn't our 
first choice. Our first choice was really assistance to those 
people, but I will discuss that with the President, and 
extending it.
    And, Chairwoman Waters, I have been speaking to the 
President every day and updating him on the state of the 
negotiations. He would like us to see additional funding.
    Mrs. Axne. Thank you. I hope we can get that done quickly 
so that we don't have a 20-day gap here where millions of 
people are going to get evicted. Soc, please get back to us and 
the chairwoman on what we can expect from that. Thank you.
    I would also like to discuss what you are doing with the 
$450 billion of funds for the CARES Act. I know we have had 
some discussion here. I am going to set aside the question of 
whether what you are doing is legal, because I want to get into 
why you are doing this. One explanation I have seen is that 
it's because you think Congress should use this for fiscal aid, 
and I don't disagree with that.
    The problem with this, though, is that if Congress wants to 
reappropriate money from the Exchange Stabilization Fund (ESF), 
we can do that the same as we can from the General Fund. The 
only real difference I can see is that leaving it in the ESF 
makes it a heck of a lot easier for a future Treasury Secretary 
to use this money quickly to provide for economic support. So, 
why are you choosing to make it harder to support the economy 
in the future?
    Secretary Mnuchin. I just want to clarify, because there is 
a bunch of confusion. Whether it sits in the general account, 
whether it sits in the ESF, all of this is completely governed 
by the law. And as I have said, I extended the pre-CARES Act 
facilities. If I was looking to do something that was 
political, I wouldn't have extended those.
    My result in not extending the CARES Act is merely an 
administration of my obligation under this law. It doesn't 
matter what account it is in. That has nothing to do with it. 
The money is administered pursuant to the law. And if Congress 
wants to change the law, that is fine. And the reason why I 
believe Mitch McConnell has put some new language in isn't in 
my interpretation of the law; it is because many of you seem to 
be confused and he wants to clarify it.
    Mrs. Axne. Reclaiming my time, Thank you, Mr. Secretary, 
but that is just not accurate. The CARES Act is very clear that 
existing investments can remain there, and that is what you 
have made happen with the Fed's facilities, so that answer 
isn't acceptable.
    Why are you looking for a way not to help American people 
right now? This isn't your money; it is taxpayer money, and it 
should be quickly available to the American people right now 
when we need the help. So, I see you undermining the American 
people on your way out the door. You need to reverse this 
decision so that these programs can keep supporting people.
    Chairwoman Waters. The gentlelady's time has expired.
    Mrs. Axne. Thank you for your service, and I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Tennessee, Mr. Rose, is recognized for 5 
minutes.
    Mr. Rose. Thank you, Chairwoman Waters, and Ranking Member 
McHenry. And I thank you, Secretary Mnuchin and Chair Powell, 
for being here today for this third oversight hearing required 
by the CARES Act. I want to thank you also for the great work 
by both the Department of the Treasury and the Federal Reserve 
throughout this pandemic response. Your fast action has allowed 
businesses in my district in Tennessee and across the country 
as well to keep their doors open, and to keep employees on the 
payroll.
    I also want to underscore the importance and impact of the 
CARES Act on stabilizing the economy. We continue to see strong 
economic recovery, and I hope we can continue that trend as we 
work towards the great American comeback.
    Congress has already provided approximately $1 trillion 
through bipartisan legislation, including the CARES Act, to 
stabilize State and local economies and support communities, 
including frontline workers, teachers, students, school 
employees, and employers and employees.
    In your testimony, you pointed out that $455 billion in 
unused funds remain from the CARES Act. Back in Tennessee, 
folks are talking about how these funds sit unused while House 
Democrats continue to discuss spending an additional $3.4 
trillion, and that is with a ``T,'' trillion, in the Health and 
Economic Recovery Omnibus Emergency Solutions (HEROES) Act.
    In Middle Tennessee, there have been several industries 
that are enjoying their best year ever while others have been 
completely devastated by the government-imposed shutdowns due 
to the coronavirus pandemic. The American private bus and motor 
coach industry is one of the latter. The motor coach industry 
plays a vital role in our travel, tourism, and music 
industries, and provides nearly 600 million passenger trips per 
year. In the wake of the pandemic, nearly all of the 3,000 
companies in the industry at some point were completely shut 
down, 36,000 vehicles were parked, and most of the over 88,000 
employees were laid off.
    We have billions of dollars sitting unused, and yet this 
industry still needs relief. Congress must act to provide 
targeted relief.
    Secretary Mnuchin, as a proponent yourself of targeted 
relief, can you detail what you would do to provide targeted 
aid to this devastated industry?
    Secretary Mnuchin. Yes. And let me just say, there is more 
than the $450 billion unused. There is actually another $140 
billion in PPP on top of that. But I would support $20 billion 
in additional money in payroll support to the airlines, 
identical to what we have done before in the CARES Act. I think 
that would be very meaningful in terms of employment and saving 
the industry.
    Mr. Rose. And I appreciate that, but unfortunately, that 
assistance didn't reach the motor coach industry, and so they 
have not enjoyed that same targeted relief that we saw go to 
the airline industry.
    Do you believe that the aid that you described should be 
included in an end-of-year package?
    Secretary Mnuchin. I apologize. I thought you were asking 
about the airlines. I would support additional aid to the motor 
coach industry as well.
    Mr. Rose. Thank you. Lastly, would you be willing to commit 
to having Treasury staff brief my staff and Senator Marsha 
Blackburn's staff before the end of the year on ways that 
Treasury might be able to provide targeted assistance to the 
bus and motor coach industry using any existing funds?
    Secretary Mnuchin. We would be happy to. I don't think, 
unfortunately, we can use existing funds, but we would be more 
than happy to go through that with your staff.
    Mr. Rose. Thank you.
    Thanks to President Trump's Operation Warp Speed, and the 
great American innovative industries that we have, we are 
getting closer and closer to widely distributing a vaccine. In 
Tennessee, if the FDA authorizes emergency use, we are 
expecting to see distribution beginning in mid-December.
    Chair Powell, could you speak to the effect that 
distributing an effective vaccine would have on our economy?
    Mr. Powell. Yes. Clearly, in the medium-term, which is to 
say, sometime in the middle of next year, we are not well-
positioned to give a precise estimate of when that might be, 
people will regain confidence that they can gather in various 
activities that now seem too risky because of COVID, and that 
will have a very positive effect on economic activity, on 
spending, and on hiring. So, we do see very positive things 
coming.
    I just would add, though, as I said in my testimony, the 
path is a little bit uncertain because we are still learning, 
going to be learning, about the efficacy of the vaccines and 
also about the speed of the rollout and who will get them and 
in what order and what the effect will be on the public. But, 
overall, I think we see a very positive set of developments 
coming at a somewhat uncertain time but not so long into the 
future.
    Mr. Rose. Thank you, Chairwoman Waters. I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from California, Ms. Porter, is recognized 
for 5 minutes.
    Ms. Porter. Thank you, Madam Chairwoman.
    Chair Powell, would you say the economic crisis caused by 
the pandemic is over?
    Mr. Powell. I'm sorry. I couldn't hear exactly what you 
said. I apologize.
    Ms. Porter. That's okay. Would you say the economic crisis 
caused by the pandemic is over?
    Mr. Powell. No, I would not.
    Ms. Porter. Okay. How long do you think it will take before 
we know?
    Mr. Powell. I think--well, before we know, I think we will 
know a lot in the next 4 to 6 months about vaccines. The real 
issue, though, is what are going to be the effects of people 
whose jobs may have changed or gone away? It is really the 
new--the post-pandemic economy is going to be different, and we 
are going to learn a lot about that in the second half of next 
year. And I think those people are going to need help, some of 
them.
    Ms. Porter. And I think that is, Chair Powell, a very fair 
answer. We can't know unless we have a crystal ball exactly how 
the recovery from this is going to proceed.
    Now, Secretary Mnuchin, who is also here with us today, 
apparently disagrees with you. In fact, Secretary Mnuchin is so 
certain that the economic crisis is over that he wants to ban 
the Fed from using any more of the $500 billion that Congress 
set aside in the CARES Act to help the economy. Two weeks ago, 
he wrote to you to request that you return the remaining $455 
billion because our economy, in his opinion, simply doesn't 
need it anymore.
    In response, you, Chair Powell, said that the outlook for 
the economy is extraordinarily uncertain. The Federal Reserve 
would prefer that the full speed of emergency facilities 
established during the pandemic continue to serve their 
important role as a backstop for our still strained and 
vulnerable economy.
    Needless to say, it is highly concerning that the two 
people tasked with stabilizing our economy do not agree on 
whether the markets are stable. But it actually doesn't matter 
what either of you two think because Secretary Mnuchin simply 
doesn't have the authority to recall the $455 billion.
    I am reading aloud now from Section 4027 of the CARES Act: 
``On or after January 1, 2026, any funds that are remaining 
shall be transferred to the General Fund,'' in other words, 
sent back to the Treasury.
    Secretary Mnuchin, is it currently the year 2026? Yes or 
no?
    Secretary Mnuchin. First, let me comment. I do believe 
there is an economic emergency.
    Ms. Porter. Secretary Mnuchin, reclaiming my time.
    Secretary Mnuchin. You are putting words in my mouth that 
are not correct.
    Second of all, okay--
    Ms. Porter. Reclaiming my time.
    Secretary Mnuchin. --the answer is that 4027--
    Chairwoman Waters. The time belongs to the gentlelady.
    Ms. Porter. Madam Chairwoman?
    Reclaiming my time, Mr. Mnuchin, would you start by 
answering my next question, and I will ask you others. Is today 
the year 2026? Yes or no?
    Secretary Mnuchin. Of course, it is not 2026. It's 
ridiculous to ask me that question and waste our time.
    Ms. Porter. Secretary Mnuchin, I think it is ridiculous 
that you are playacting to be a lawyer when you have no legal 
degree.
    Secretary Mnuchin. Actually, I have plenty of lawyers at 
the Department of the Treasury who advise me, so--
    Ms. Porter. Mr. Mnuchin--
    Secretary Mnuchin. --I am more than happy to follow up with 
Chairwoman Waters and the ranking member and explain all of the 
legal provisions. I am more than happy to make that access.
    Ms. Porter. Secretary Mnuchin, are you, in fact, a lawyer?
    Secretary Mnuchin. I do not have a legal degree. I have 
lawyers who report to me.
    Ms. Porter. Thank you.
    Chair Powell, are you, in fact, a lawyer?
    Mr. Powell. I am a former lawyer, a recovering lawyer.
    Ms. Porter. You have a legal degree, correct?
    Mr. Powell. Yes, I do.
    Ms. Porter. Okay. Secretary Mnuchin, you are trying to tell 
Chairman Powell to send over any remaining funds right now, and 
you are claiming, falsely in my opinion, that is what the law 
says. And you have gotten into a disagreement with someone who 
is actually a lawyer--
    Secretary Mnuchin. Are you a lawyer?
    Ms. Porter. --and, Congress, which actually wrote the law 
about what it says. So, let's go through with what the law 
actually says.
    Secretary Mnuchin. Okay. Actually, I wrote the law with 
Congress, for what it is worth. And, by the way, it is not $450 
billion he is returning. I think it is approximately $175 
billion.
    Ms. Porter. Reclaiming my time, there was no question 
there.
    Secretary Mnuchin, the CARES Act already says in exhibit--
in Section 4027, it says that you have to stop making any new 
investments, new investments, in Fed lending programs at year's 
end. It doesn't say that the Fed programs must stop making 
loans or purchases. You are making a decision that is not 
aligned with the statute or congressional intent.
    Chairwoman Waters. The gentlelady's time has expired.
    The gentleman from Wisconsin, Mr. Steil, is recognized for 
5 minutes.
    Mr. Steil. Thank you, Madam Chairwoman.
    Secretary Mnuchin, thank you for being here. Would you like 
to further your comments for just a minute on the last exchange 
there as to your rationale? I feel like you got cut off there 
for a minute.
    Secretary Mnuchin. Thank you very much. And, again, I think 
what I will do is follow up with the chairwoman and the ranking 
member so we clarify both 4027 and 4029. Again, I have had 
these discussions with the Senate. And, again, if there is any 
misunderstanding on this, again, this can be changed.
    Mr. Steil. I appreciate it. Thank you very much, and thank 
you for being here.
    Chairman Powell, the Fed balance sheet currently stands at 
$7.2 trillion, more than $3 trillion above where we started at 
the beginning of the year. At the hearing on June 17th, I asked 
you how the Fed would manage its balance sheet going forward to 
mitigate inflationary pressures. I think we need to keep this 
issue in mind in light of the unusual monetary and fiscal 
tactics we have been required to employ this year to maintain 
the economic growth and stability that we have had.
    When we spoke, you commented that during the last recovery, 
going back a ways, the Fed waited until it was, ``well down the 
path of recovery,'' before deciding what to do. You asserted 
that the balance sheet, I think in your words, ``doesn't 
present issues at the current time,'' suggesting that 
addressing the balance sheet size was not a priority.
    It is now 6 months later. Our economy has begun to recover. 
The unemployment rate has fallen from approximately 10 percent 
to closer to 7 percent. Multiple vaccine trials have been 
successful, and we are expecting distribution in the not-too-
distant future. We are not out of the woods yet, but there is 
cause, I think, for optimism about our economic recovery.
    Could you comment on the indicators that you are watching 
closely as you consider taking steps to begin to restore the 
Fed's balance sheet to its prepandemic levels?
    Mr. Powell. Sure. Our priority remains supporting the 
economy until we are really well through this. We are going to 
keep our rates low and keep our tools working until we feel 
like we really are very clearly past the danger that is 
presented to the economy from the pandemic. So, we are not 
considering pulling back any of our support for the economy, 
and we are not going to, until we feel very confident that it 
is no longer necessary.
    The time will come to start thinking about balance sheet 
issues, and we have the model of what we did in the last 
financial recovery. And I was at the Fed during those years 
when we were considering that. That time will come. It is well 
into the future. I think we know how to do it, and that is 
slowly and carefully.
    I think we have also seen all of these years of large 
balance sheets, and understandably, people were concerned after 
quantitative easing began that there would be inflationary 
pressures or market distortionary problems, but we really 
didn't see them. So, we don't want the balance sheet to be, in 
the long run, any bigger than it needs to be, but the main 
thing for us is to keep the support that the economy needs 
until we are confident that it no longer needs it.
    Mr. Steil. Thank you for your comments. If I can shift 
gears, Chairman Powell, as you know, LIBOR is linked to almost 
$400 trillion in financial contracts, so the implications of 
the transition away from the benchmark are quite significant. I 
am especially concerned about some of the tough legacy 
contracts which reference LIBOR and are unchangeable.
    On Monday, the Fed, the FDIC, and the OCC issued a 
statement recognizing some of these developments and 
reiterating, among other things, that banks should transition 
away from the U.S. dollar LIBOR as soon as practical. Are you 
concerned that some financial market participants may continue 
to reference LIBOR in contracts even after the relevant phase-
out dates?
    Mr. Powell. As you know, we have provided guidance to 
market participants that we would strongly discourage the use 
of LIBOR for new contracts after the end of 2021. And then, 
there is a proposal which will go out for comment, but the idea 
would be that LIBOR would cease to be published, would cease to 
exist, except in the tail in the remaining outstanding 
contracts at June 30, 2023.
    It is very important that people understand that LIBOR 
should not be assumed to continue to be published after that. 
That does mean there will be a so-called hard tail, and we do 
think that will take legislation, and we have been working with 
Congress and also at the New York State level on that. So, we 
think that is important but not urgent from a time standpoint, 
but something that we will need to get done.
    Mr. Steil. Thank you very much. Thank you both for being 
here.
    I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Massachusetts, Ms. Pressley, is 
recognized for 5 minutes.
    Ms. Pressley. Thank you, Madam Chairwoman.
    Chairman Powell, you have consistently publicly called for 
greater fiscal aid. You testified that, ``the risk of overdoing 
it is less than the risk of underdoing it.'' I agree with you 
here, Chairman Powell. This is not a question of either/or. We 
absolutely need further stimulus, but Congress has also 
provided the Fed with over $450 billion to support lending to 
cities, States, and small businesses.
    Now, in fact, in your March 23rd press release announcing 
these emergency lending facilities, you state 3 times that the 
Fed, ``is committed to using its full range of tools and 
authorities.'' Yet, in less than 24 hours, you gave up any 
resistance to Secretary Mnuchin's arbitrary demand to shutter 
these facilities by the end of the year, including the 
municipal liquidity in Main Street lending facilities.
    So, I want to just build on my colleague, Representative 
Axne's, line and justfurther sort of enumerate and unpack the 
sobering landscape likely before us. So, yes or no, please, 
with the ongoing pandemic, do you expect the number of cities 
and States facing historic budget shortfalls to continue to 
rise? Chairman Powell, yes or no?
    Mr. Powell. I don't really have a strong expectation on 
that, but that may be right.
    Ms. Pressley. I will take that as a yes.
    Do you expect further State and municipal credit 
downgrades, making it more difficult for State and local 
governments to borrow? There have been 337 downgrades so far. 
Do you expect that to happen? It is a yes or a no.
    Mr. Powell. I think it is probable.
    Ms. Pressley. Okay. I will take that as a yes.
    Are we facing an unprecedented wave of small business 
closures? Yes or no?
    Mr. Powell. I think that is uncertain. Unprecedented wave? 
I don't know that we know that.
    Ms. Pressley. Okay. Is the rescue of small businesses 
essential to any long-term economic recovery? Yes or no?
    Mr. Powell. Yes. It is important.
    Ms. Pressley. And would failure to provide relief to 
cities, States, and small businesses further widen existing 
inequalities, including, but not limited tox, the racial and 
gender wealth gaps? Yes or no?
    Mr. Powell. Look, I think it is--
    Ms. Pressley. Yes or no?
    Mr. Powell. I think it--I'm sorry. Yes-or-no questions for 
these questions--I am just going to answer you, which is that I 
think it is important that these groups--
    Ms. Pressley. Reclaiming my time.
    Mr. Powell. --get additional fiscal support. Thank you.
    Ms. Pressley. Please don't--I don't want you to filibuster 
here, okay, because these issues are of great import. And part 
of your job is forecasting, so I am leaning in on your 
expertise. So, again, yes or no, will this exacerbate racial 
and gender wealth gaps, failing to provide relief to cities and 
States and small businesses?
    Mr. Powell. I think there is a risk of that. I think there 
is a risk of that, yes.
    Ms. Pressley. Chairman Powell, the Federal Reserve lends at 
a ratio of 10 to 1, so if Congress set aside $400 billion to 
cover any potential losses, you can lend up to how much to 
these facilities? What is that amount?
    Mr. Powell. Whatever 10 times the amount of equity that has 
been pledged, so it would have been several multiple trillion, 
$4 trillion or so. Of course, that borrowing happened. It just 
didn't happen in the facility.
    Ms. Pressley. Over $4 trillion. So, you have a 
responsibility to support maximum employment. Yet in the midst 
of a global pandemic, you have been complicit in eliminating 
over $4 trillion in potential relief to cities, States, and 
small businesses. And then adding insult to injury, the 
Secretary wants to move this money to Treasury's General Fund, 
conveniently out of reach of the incoming Administration and in 
direct violation of the CARES Act.
    I know there has been this sort of, Jedi mind trick going 
on here, but we know what our intentions are. We can read. And 
the funds are supposed to be available for up to 5 years, so I 
am not even sure why we have been going back and forth on that.
    But I did also just want to ask about--let me for a moment 
turn to Secretary Mnuchin, just building on the line from my 
colleague, Congresswoman Porter, here. What does it state in 
Section 4027, subsection C, paragraph 2 of the CARES Act? I 
just want to make sure we are all operating with the same 
information.
    Secretary Mnuchin. Section 4027 allows, to the extent we 
have made, for example, an existing loan to an airline. If we 
need to advance additional money to that airline in a 
protective capacity, or if we have expenses, that is what 4027 
applies to. And, again, it says very clearly that there are 
certain funds that can be used until 2026, and will continue to 
be available in Section 4027. Sections 4027 and 4029 work 
together. Section 4029 has the December 31st--
    Ms. Pressley. I will just reclaim my time. I am reclaiming 
my time because, I don't know, we must be reading a different 
text. So, Mr. Secretary, Section 4027, subsection 2, paragraph 
2--
    Chairwoman Waters. The gentlelady's time has expired. Thank 
you.
    Ms. Pressley. Thank you.
    Chairwoman Waters. The gentleman from Texas, Mr. Gooden, is 
recognized for 5 minutes.
    Mr. Gooden. Thank you, Madam Chairwoman.
    Secretary Mnuchin, thank you for your prior support for 
credit risk transfer (CRT) as a means of reforming Freddie Mac 
and Fannie Mae, as expressed in Treasury and the 
Administration's housing reform plan. Does that support still 
exist? And do Treasury and the Administration still support CRT 
for the GSEs, and more importantly, the de-risking of Fannie 
Mae and Freddie Mac that protects taxpayers?
    Secretary Mnuchin. Yes.
    Mr. Gooden. Would you like to elaborate on that?
    Secretary Mnuchin. I think credit risk transfer is a very 
effective mechanism of supporting the institutions. I also 
think that capital accumulation is something that is very 
important, and ultimately capital raising, so that taxpayers 
are not at risk.
    Mr. Gooden. Thank you. As you know, I, and many of my 
colleagues in both Chambers of Congress and a variety of 
stakeholders who have filed comments, have urged FHFA to ensure 
a robust, risk-based CRT market in the new capital framework 
for the GSEs. And while I support the capitalization of the 
Enterprises, I have real concerns about the impact of FHFA's 
capital rule on the CRT market.
    The Financial Stability Oversight Council (FSOC) and 
Treasury provided a brief 4-page review of FHFA's 400-plus page 
proposed capital rule with little to no analysis of the impact 
on the markets for CRT or mortgage-backed securities.
    Do you think FHFA's capital rule provides adequate capital 
relief for CRT? And has Treasury, FSOC, or the Office of 
Financial Research examined the effects this rule could have on 
the CRT market or access to mortgage credit?
    Secretary Mnuchin. We have done some work on that, and we 
would be happy to follow up with you on it.
    Mr. Gooden. Thank you. I would appreciate that.
    Mr. Powell, you were filibustered earlier. Did you have any 
further comments? The floor is yours. I will give it to you. I 
have 3 minutes.
    Mr. Powell. Thank you. I just would say that, for example, 
the municipal facility--the level of municipal borrowing is set 
to exceed the all-time annual record this year, and that is 
because of the backstop of this facility. You don't measure the 
success of the facility by the amount of lending it does. It 
succeeded in restoring borrowing in the markets at very low 
levels for municipalities and other State and local government 
entities across the credit spectrum: small; medium; and large. 
So, I would just say that I think it has been quite a success.
    Mr. Gooden. Thank you. I appreciate it.
    Madam Chairwoman, I yield back.
    Ms. Dean. [presiding]. The gentlewoman from New York, Ms. 
Ocasio-Cortez, is recognized for 5 minutes.
    Ms. Ocasio-Cortez. Thank you both so much for coming to 
offer your testimony today and your expertise.
    Secretary Mnuchin, not to belabor the point, but I did want 
to dive back in here to Sections 4027 and 4029 that you are 
referencing. I do think it is important that we discuss this 
because you are bringing it up as the main rationale as to why 
you are kind of bringing these funds back into the Exchange 
Stabilization Fund.
    So, first and quickly, Section 4027 of CARES explicitly 
states that unused funds are to be returned to the Exchange 
Stabilization Fund on January 1, 2026, correct?
    Secretary Mnuchin. That is correct, and that will occur on 
January 1, 2026.
    Ms. Ocasio-Cortez. And that is with respect to the unused 
funds. Now, Section 4029--
    Secretary Mnuchin. No, it is not the unused; it is the 
unused funds in the ESF at that time, that is correct.
    Ms. Ocasio-Cortez. Yes. Thank you.
    Section 4029 refers to rescinding authority to making new 
loans, right? So, the law explicitly does contemplate--it has 
that Section A, B, and C--and it does explicitly contemplate 
that remaining funding as of January 1, 2021, which is in just 
a matter of weeks, to be available for restructuring, 
modification, amendment, and administrative costs. Is that 
right?
    Secretary Mnuchin. That is correct.
    Ms. Ocasio-Cortez. I was wondering if I could give you the 
opportunity to discuss, instead of choosing to return those 
funds--and you are choosing to return those funds, right?
    Secretary Mnuchin. No, I am not choosing to return those 
funds. Whether the funds are returned or the funds aren't 
returned, 4029 governs both direct and indirect. So, again, I 
could have allocated all $500 billion on day one to the Federal 
Reserve. I allocated $200 billion. It really is irrelevant. 
Section 4029 governs the same provision, whether money is 
sitting in any of the accounts. That was the purpose of 4029. 
If you don't read it that way for 4029, then it shouldn't have 
existed. There was no purpose to have the December 31, 2020, 
date. And, again, I personally negotiated these documents.
    Ms. Ocasio-Cortez. I understand. And I am trying to seek 
some clarification because we are in such a desperate position. 
Given the unfortunate gridlock, I think if--that we are all 
kind of in--we are all aligned in interest in trying to figure 
out where we can explore maximum flexibility as offered by the 
statute, and so I am just curious.
    Instead of choosing to kind of return--or rather, instead 
of returning these funds, instead of reading the interpretation 
as returning these funds to ESF, could you use, could we use 
this modification statute to recapitalize loans?
    Secretary Mnuchin. Recapitalize existing loans?
    Ms. Ocasio-Cortez. Yes.
    Secretary Mnuchin. Again, in my example, we have made 
airline loans.
    Ms. Ocasio-Cortez. Yes.
    Secretary Mnuchin. So, people are focusing on the Section 
13(3), these facilities. This governs both the direct loans and 
the indirect loans. In the case of an airline loan that we have 
already made, and we need to make protective advances after 
December 31, 2020, the statute allows us to do that. And, 
again, it doesn't matter whether I had allocated $500 billion. 
I just want to put this in perspective. Of the $190 billion I 
allocated, that would have done $2 trillion of lending, I 
believe we have done about $25 billion in total. So, this is 
irrelevant in the broader scheme of things.
    Ms. Ocasio-Cortez. And to kind of turn to your airline 
example, are there other examples of advances that could be 
provided ahead of the sunset date?
    Secretary Mnuchin. Again, on any of the existing underlying 
loans. So if there is a Main Street loan that has already been 
made, and that Main Street loan needs a protective advance 
after December 31, 2020, that can be done. The difference 
between Sections 4027 and 4029 has to do with existing loans 
versus new loans. So, again, it is very clear. Section 4029 
says that making new loans, loan guarantees, or other 
investments shall terminate.
    Ms. Ocasio-Cortez. Thank you very much.
    Ms. Dean. The gentleman from South Carolina, Mr. Timmons, 
is now recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman.
    I want to first align myself with the comments from my 
colleagues on both sides of the aisle. We need to help small 
businesses across this country. It is critical. It is past 
time. Businesses in my district in the State of South Carolina 
are struggling. We have tourism-related businesses that are set 
back. We have businesses--bars, restaurants, yoga studios--that 
are struggling, and that is in South Carolina, where we are 
mostly reopened.
    Here in D.C., they just went to 25-percent capacity for 
restaurants. The hotel I am staying in has permanently closed 
their restaurant and their rooftop bar until the restrictions 
are lifted.
    We need to help the businesses that are being put out of 
work by the government. Government closures are helpful in 
certain cities, but in others, we need to safely reopen. And 
any business that is being closed because of the government 
must get relief. It is a taking, and it is wrong.
    So, first, we need to get additional PPP loans. We need to 
help the businesses that are struggling the most, but we have 
to be surgical about it. We don't need to paint with a broad 
brush.
    To that end, my first question is to both of you. There is 
no denying that the Federal Government has spent an exorbitant 
amount of money this year to combat both the health and 
economic toil of the virus. As our national debt climbs towards 
$30 trillion, it could very well hit $30 trillion next year 
between the next COVID relief package and deficit spending for 
next year, but we as policymakers are looking to provide 
targeted relief for our constituents.
    How do we get the best bang for our buck? In other words, 
what type of economic relief or stimulus will be the most 
effective in preserving and creating jobs? And, secondly, how 
would you recommend policymakers address our mounting debt over 
the next few years?
    Secretary Mnuchin. I would say for small businesses, the 
simplest and most effective thing that can be done is to 
authorize me to use the $140 billion sitting in the accounts of 
the General Fund for additional PPP loans. We spent a lot of 
time on 4027 and 4029. I, unfortunately, don't have the legal 
authority to spend this money, and I would like the legal 
authority. That would be the simplest thing to do.
    Mr. Timmons. My next question is, is that enough? What 
about the businesses that have had 97-percent revenue loss, 
whether it is an event venue or a minor league baseball team or 
any other business that has been totally shut down? They are 
not looking at this as, we need more PPP loans. They are 
looking at it from the perspective that the government has 
literally ended all revenue. What do we do for those 
businesses?
    Secretary Mnuchin. The good news about PPP loans is, if you 
use the money correctly, they go and immediately become grants 
and they are forgiven. And I do agree, we should pass 
legislation to simplify the grant forms. And I agree with you, 
stages, restaurants, entertainment business, and $140 billion 
isn't enough. I would allocate $300 billion to this 
immediately.
    Mr. Timmons. I couldn't agree with you more, and I 
appreciate that sentiment, and I urge everyone involved that we 
pass this immediately. It needs to be done before Christmas. 
And I don't think it is productive talking about whether the 
President is playing golf or not. Everyone is at fault. 
Politics are what is to blame, and we need to rise above the 
politics and we need to get this done.
    Secretary Mnuchin, yesterday, before the Senate Banking 
Committee, you indicated that Fannie and Freddie should not be 
released from conservatorship without appropriate capital. Can 
you expound on that a bit? Does that mean that they should have 
at least the required amount of capital under the FHFA's new 
capital rule? And would that be the minimum capital level or 
the minimum capital level plus the buffer specified in the 2020 
rule?
    Secretary Mnuchin. Let me just be clear. Despite the fact 
that the Director and I are having conversations, we have made 
no decisions at Treasury whatsoever yet. We are contemplating, 
but there could be a scenario where at some point, between 
basically the zero capital they have and the full capital 
requirement, there would be a consent order, and they would be 
released subject to a consent order. But as I said yesterday, 
there has to be significant capital for them, in my opinion, to 
be released.
    Mr. Timmons. Thank you.
    I want to really thank both of you for all of the work you 
have done in the last year. It has been truly remarkable. And I 
am optimistic that we are going to get on the other side of 
this pandemic soon and get our economy back up and running.
    And with that, I yield back. Thank you.
    Ms. Dean. The gentleman yields back.
    The gentlewoman from Virginia, Ms. Wexton, is recognized 
for 5 minutes.
    Ms. Wexton. Thank you, Madam Chairwoman. And thank you very 
much, Secretary Mnuchin and Chairman Powell, for joining us 
here today and for all of your work during this pandemic.
    Secretary Mnuchin, one of the facilities that you are 
allowing to expire at the end of the year is the Main Street 
Lending Program which, as we have discussed, has had a number 
of issues and I would submit has been really kind of a 
disappointment. It was designed to support up to $600 billion 
in lending to small businesses and medium-sized businesses, but 
in 8 months, it has only supported about $5 billion of loans to 
about 420 companies.
    Do those numbers sound right to you, Secretary Mnuchin?
    Secretary Mnuchin. They do. And I would acknowledge that I 
am disappointed as well that there wasn't more take-up. It was 
something the Fed and Treasury worked very hard on, but it was 
very difficult to design a program that could really be used.
    Ms. Wexton. One of the loans that [inaudible] was to 
Wellshire Financial Services, which is a company that is in car 
title lending. And I assume you are familiar with this loan 
because it has been reported in the media lately. Are you 
familiar with this loan that was made?
    Secretary Mnuchin. I am really not familiar with the loan. 
I have seen certain things in the media, but I don't have 
access to the underlying loan documents and the underlying loan 
files that the Fed has.
    Ms. Wexton. So, you didn't have a role in making this loan 
because it was only between the lender and the borrower, right?
    Secretary Mnuchin. I had no role other than setting the 
policies with the Fed Chair for the facilities.
    Ms. Wexton. Okay.
    Secretary Mnuchin. And I assume the loan complies, but I 
don't know.
    Ms. Wexton. One of the policies, though, was that those 
loans would not be available to finance or lending 
institutions, correct?
    Secretary Mnuchin. I believe that is correct, but I am not 
familiar with the details of the loan, as I said.
    Ms. Wexton. I will tell you a little bit about it, because 
they were able to exploit a loophole in the law by organizing 
in Texas as a consumer credit access company rather than a 
lender, and they did that in Texas to avoid their usury laws 
there. And now, they have a $25-million loan from the U.S. 
Government, taxpayer-funded, at 3 percent, which they are 
lending out to people at 350 percent.
    Assuming that is correct, would you agree that this 
violates the spirit and the intent of the law and the 
regulations?
    Secretary Mnuchin. I would, and I would expect that loan 
will be reviewed and audited.
    Ms. Wexton. Okay. So you agree that it is not a good look, 
especially given that it has come to light that the owner of 
the company is a major donor to the President?
    Secretary Mnuchin. Again, as I have said, I don't know the 
specifics of the loan, but I agree, based upon what you are 
saying, that was not the spirit and the intent of the use of 
the loans.
    Ms. Wexton. Can I get a commitment from you here today that 
you will review that loan and consider clawing back the money?
    Secretary Mnuchin. You will have to get that from the Fed, 
because they administer the program. I don't administer it. I 
don't have that ability. But I am sure Chair Powell will 
respond to that.
    Ms. Wexton. Chairman Powell, can we get a commitment from 
you to consider clawing back the money, and to review this loan 
to Wellshire Financial Services?
    Mr. Powell. It is really inappropriate for me to try to 
comment on individual loans. Like the Secretary, I am not 
involved in the process. I will say this. People make 
representations. We set out clear rules, they have to be 
obeyed, and we will always look. And if they are not obeyed or 
if incorrect representations are made, then the consequences 
will follow. And we will look at all of the loans in that 
light.
    Ms. Wexton. Very good. Thank you.
    Secretary Mnuchin, a lot of discussion has been taking 
place in this hearing today about whether these programs have 
to expire at the end of the calendar year, or whether you are 
allowing them to expire. And I understand that you are saying 
your reading and your interpretation is that they must expire, 
and you don't have any discretion in that. I can't help but 
suspect that had the results of the election for President been 
different, your interpretation would be different. But I would 
inquire, have you had an opportunity to speak to incoming 
Treasury Secretary Yellen?
    Secretary Mnuchin. I have.
    Ms. Wexton. Okay. Very good. And have you discussed with 
her your intention to end these facilities?
    Secretary Mnuchin. I have discussed it with her. We are 
cooperating with the transition. I had a very good working 
relationship with her when she was the Fed Chair. And I have 
advised her that my reading of this and my interpretation was 
nonpolitical and was following the law. So, yes, I did advise 
her of that.
    Ms. Wexton. And was she disappointed or did she disagree 
with your interpretation of the law?
    Secretary Mnuchin. She didn't reflect an interpretation one 
way or another.
    Ms. Wexton. Thank you very much.
    I will yield back.
    Ms. Dean. The gentlewoman yields back.
    The gentleman from Texas, Mr. Taylor, is recognized for 5 
minutes.
    Mr. Taylor. Thank you, Madam Chairwoman. I appreciate that. 
I appreciate this hearing, and I appreciate you gentlemen's 
hard work during an unprecedented 2020, one that we really 
didn't see coming.
    I want to talk about the policy decisions that are being 
made in this building versus broad help, which is what we did 
in the spring, versus targeted help, which I think is something 
that we are talking more about. Heretofore, I have heard some 
reluctance to go to targeted specific help, and I will use 
airlines as an example. That is something we made a decision on 
in the spring, that we were going to give targeted, specific 
help to the airline industry, because there is a need there.
    [Audio malfunction.]
    Mr. Taylor. Madam Chairwoman, can we get that--
    Chairwoman Waters. If you would suspend for a moment until 
we get the audio straightened out.
    I think you can resume now.
    Mr. Taylor. Okay. Thank you.
    And so as we think about--something I have been very 
concerned about is the hospitality space, largely because the 
unemployment numbers are so enormous. We are talking in the 
range of 10 million people who are currently unemployed as a 
result of COVID, and approximately half are just in one 
specific sector, in the hospitality space. So it is my concern 
or belief that we need to be targeted in this building.
    And I will point out that the Problem Solver package that 
came out yesterday, the PPP reload, was designed specifically. 
It is a much smaller number by saying you have to have a 35-
percent drop in revenue, so that created a limiter of kinds to 
say, hey, if you are doing well, you are not going to be able 
to get a PPP reload. And I have businesses in my district that 
do telemedicine, and their sales are up 100, 200, or 300 
percent because telemedicine is a big thing. They are doing 
better. They don't need a PPP loan. They still have business 
problems, but it is not a PPP reload that they need.
    Chairman Powell, would you concur that it is time to begin 
to think more about specific, targeted help rather than broad 
help into sectors that are in harm's way?
    Mr. Powell. I think the timing and the scope and the 
components of this are really up to you. I would say I do see a 
number of areas, and I mentioned them earlier, including small 
businesses, that do need help, and I think that would be 
probably very helpful for the economy were that to happen.
    Mr. Taylor. And I will point out it is probably better for 
the taxpayer rather than just handing out tons of money 
everywhere, to be specific.
    Secretary Mnuchin, would you like to speak to the need of 
targeted assistance versus broad assistance?
    Secretary Mnuchin. Yes. I agree completely. And as you have 
rightly said, if we are going to do more PPP loans, we should 
have a provision that companies' revenues are down. That is 
pretty straightforward.
    Mr. Taylor. Okay. I certainly appreciate your guidance and 
insight, and I will continue to advocate on that front.
    And I have to admit I have been somewhat entertained by the 
discussion about Section 4029, which I have had to pull up and 
read just to make sure I was thinking about it correctly, and I 
will just read 4029(b). ``On December 31, 2020, the authority 
to provide under this subtitle to make new loans, loan 
guarantees, or other investments shall terminate.'' That seems 
very clear in terms of--that is 4029(b).
    So, the ability for you to make new loans, Mr. Secretary, 
new loans, loan guarantees, or other investments terminates. 
That is what the law says. I think that is what you are saying.
    Secretary Mnuchin. It is. And as I have said, if anybody on 
this committee doesn't think that is what it said, and they 
think that doesn't apply, then they would have given me 
unlimited authority to use this money forever.
    Mr. Taylor. Sure.
    Secretary Mnuchin. And I don't know why 4029 would have 
been inserted. So, I haven't had anybody rightfully explain if 
4029 doesn't--what was the purpose of it?
    Mr. Taylor. Sure. And 429B, again, it could have said 
December 31, 2021, in which case it would go on for another 
year, but it is clearly the end of this year that is the 
termination of your authority under the law.
    And I just want to say that I am a believer in equal 
protection under the law, and I commend you for following the 
law and reading the law and not trying to twist it into 
something that it was never meant to be. The law seems very 
clear to me, Mr. Secretary, and I certainly applaud your 
efforts to comply with it despite a lot of bizarre efforts to 
try to twist it into something that it is not.
    Secretary Mnuchin. Thank you.
    Mr. Taylor. Thank you.
    Secretary Mnuchin. I wish we spent as much time talking 
about PPP loans as we have as Sections 4027 and 4029. And I 
would also just say, when we passed this law, we thought it was 
highly unlikely that we would need to be using these at this 
period of time.
    Mr. Taylor. Thank you, Mr. Secretary.
    Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Massachusetts, Mr. Lynch, is recognized 
for 5 minutes.
    Mr. Lynch. Thank you, Madam Chairwoman.
    I want to thank Chairman Powell and Secretary Mnuchin for 
attending this hearing and for helping the committee with its 
work.
    So, let's talk about January 1st, because we have much 
pandemic-related support that is going away right now unless 
action is taken. We also had last week, I think, 827,000 new 
unemployment claims. Again, going back to the rental assistance 
that is pandemic-related, that is scheduled to expire December 
31st as well.
    Chairman Powell, we are going to be in a bad place, I 
think, on January 1st. And even if there were a last-ditch 
effort to--by Congress to put something in place, what we saw 
in the CARES Act was there was a considerable lag time before 
we could actually get the help out to the American people, 
whether that was small businesses or people waiting for 
stimulus checks or supplemental unemployment benefits, working 
with the States.
    Is there a power that you have, independent of Congress, in 
terms of appropriations? Let's take renters' assistance for 
right now, the forbearance that we might allow renters who 
don't have the ability to pay their rent. Of course, we would 
have to protect the small landlords, the landlords who are out 
there who are getting pressure from banks and mortgage 
companies to render payment to them, and then ultimately to the 
bondholders as well, that underwrote those mortgages and are 
expecting payments.
    Do you have independent power that might provide relief in 
the short term until Congress can get its act together and come 
to agreement on a larger package similar to what we did in the 
CARES Act?
    Mr. Powell. Sir, we do have broad powers, but we don't have 
those kind of powers. Those are really powers that fall to the 
legislature. Nobody elected us. You created us under statute. 
You gave us very specific powers, and they don't involve--
    Mr. Lynch. I understand that. But I was here in 2008, and 
the folks on your side of the table were doing their darnedest 
to rescue Wall Street. And now, it is Main Street that is--and 
so, I am just asking for the same consideration and the same 
sense of urgency when it is regular workers or just average 
families who are struggling to pay their rent. I would just 
like to see that level of urgency and seriousness that I saw 
back in 2008 when we were trying to rescue the big banks. I 
have to be honest, I think that I see a little bit of laissez-
faire with respect to average families. I don't see that sense 
of urgency.
    And, Mr. Secretary, with all due respect, you seem way too 
eager to give away or give back or render back the resources 
that were available. I didn't see a long and hard discussion 
about how we can get this money out to the people who need it. 
Rather, it was, well, this is what the law says, so I am going 
to do it. And I didn't see any extraordinary effort on the part 
of Treasury to find a way, going to court, asking for an 
interpretation to say, do I have the ability to continue this, 
these payments and this relief to the American people or am I 
prohibited from doing so, rather than huddling with the lawyers 
who work for you. And I have lawyers who work for me as well. I 
didn't see an extraordinary effort on your part to try to find 
a way to make sure that the incoming Administration has some 
resources to deal with this problem.
    Secretary Mnuchin. I just want to be clear. I spent the 
last 4 months trying to work with Congress to get additional 
legislation passed. I have been on probably a hundred calls.
    Mr. Lynch. We all have.
    Secretary Mnuchin. What people need is a fiscal response. 
These programs were not used. So, let me just be clear: People 
need--and, again, people need more PPP money. They need grants. 
They need airline support. They need unemployment insurance. 
These facilities were not being used. And I have worked every 
day to try to get Congress to pass more legislation. So, I 
don't appreciate that comment that I haven't worked hard.
    Mr. Lynch. Well, sir, I would just say that what I saw when 
Wall Street was on the hook was creativity to the nth degree in 
ways of repurposing money to make sure they got what they 
needed. And I would just--
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Lynch. I yield back.
    Chairwoman Waters. The gentleman from New York, Mr. Zeldin, 
is recognized for 5 minutes.
    Mr. Zeldin. Thank you, Madam Chairwoman.
    Secretary Mnuchin, feel free to use some of my time here to 
complete your thought. I will yield to you.
    Secretary Mnuchin. Thank you. I was just saying if I had 
any legal authority or I could get the President to sign an 
Executive Order tomorrow to send out the $140 billion to small 
businesses that need PPP loans, I would do that.
    And, again, for all of the conversations we have had on 
these facilities, which were barely being used, most of which 
did support big corporations, I might add, and not Main Street, 
enough money to Main Street, Main Street needs more money, 
grants, PPP. Thank you.
    Mr. Zeldin. Thank you, Secretary Mnuchin and Chairman 
Powell, for being here today. And thank you to Chairwoman 
Waters and Ranking Member McHenry for holding this hearing.
    Secretary Mnuchin and Chairman Powell, I want to start off 
by saying thank you to both of you for your leadership during 
this pandemic, especially as it pertains to standing up and 
fine-tuning these needed liquidity facilities.
    First off, I would share that, with regard to the Paycheck 
Protection Program, I have heard from business owners in my 
district, from local mayors and others about how the Paycheck 
Protection Program has not only saved small businesses and 
small business jobs but saved the entirety of Main Streets in 
the First Congressional District of New York.
    With regards to the facilities, the original Municipal 
Liquidity Facility term sheet excluded my home County of 
Suffolk where my constituents live, but the Federal Reserve and 
Treasury listened to the concerns that I and others raised 
about lowering the population thresholds for eligible issuers. 
This provided greater access to a much-needed backstop 
financing tool for many State and local governments and 
entities, like the MTA.
    I want to say thank you for your attention to this critical 
market and the commitment to remaining vigilant of any problems 
as they arise, because we need all levels of government to work 
together. This is not a time to be Republicans first or 
Democrats first. This is a time to be Americans first.
    Secretary Mnuchin, late one night, got on the phone with my 
local Democrat county executive to talk to us about the 
Municipal Liquidity Facility and getting eligibility for 
Suffolk County, and you listened to our concerns.
    The Municipal Liquidity Facility is set to expire at the 
end of this month, and all unused CARES Act funds at the 
liquidity facilities, to my understanding, will be returned to 
the Treasury Department, but I want to make sure Congress, 
Treasury, and the Federal Reserve are working together and 
remaining vigilant into 2021 as well. To ensure adequate 
municipal debt liquidity, the Municipal Liquidity Facility 
should remain in operation into 2021, until we know for sure we 
are out of the woods.
    The onus is not just on the Federal Reserve and Treasury. 
Congress needs to step up to the plate and get a COVID-19 
relief bill across the finish line.
    Secretary Mnuchin, I know how hard you have been working 
over the course of what has been many months, which is why I am 
glad that you had an opportunity here to help clear the record 
as to the allegations and the charges that were just being made 
in your direction. You have been working extremely hard, and I 
want to thank you for your efforts in negotiating the next 
bill.
    Congress provided support for State and some local 
governments in the CARES Act, but limited the support for local 
governments with more than 500,000 in population.
    Chairman Powell, in a Senate Banking Committee hearing in 
May, you talked about the negative effects on the overall 
economy that come about when State and local governments face 
serious fiscal constraints, citing evidence from the 2008 
financial crisis. It is clear that fiscal solvency at all 
levels of government is important for economic recovery.
    Can you elaborate on the importance of the health of all 
levels of government for the health and growth of the overall 
U.S. economy?
    Mr. Powell. State and local governments, as you suggest, 
provide critical services--fire, police, sanitation, all of 
those things that people depend on for public safety--and live 
under balanced budget requirements in essentially all of the 
States. So, what happens when costs go up and revenues go down 
is that they lay people off. They have laid off more than a 
million people so far. And that was a big problem in the years 
after the global financial crisis. We hope it doesn't become a 
big problem here.
    But these are critical government services, and, as I have 
said, it is up to Congress and the Administration, but I think 
that is an important area to look at for further support.
    Mr. Zeldin. Again, I thank you both for all of your efforts 
since we were first hit by this pandemic.
    And again, thank you, Chairwoman Waters, and Ranking Member 
McHenry, for holding this hearing. I yield back.
    Chairwoman Waters. Thank you.
    The gentlewoman from Hawaii, Ms. Gabbard, is recognized for 
5 minutes.
    Ms. Gabbard. Thank you very much, Madam Chairwoman.
    Thank you both for making the time to come and have this 
discussion today.
    Secretary Mnuchin, you made a comment about how you wish 
there were more questions about the PPP program. I wanted to 
ask you to talk a little bit about that today, given a comment 
you just made and also the news that has come out about how 
some of the largest businesses that qualified under PPP took 
the majority of the money.
    So, as we look to a new stimulus package, whether it is 
this year or it comes out early next year, what improvements 
would you recommend that the PPP program take on to ensure that 
the majority of those dollars are actually going to the small 
businesses within our communities, who are barely keeping their 
heads above water, trying to survive?
    Secretary Mnuchin. Thank you. When we created the original 
program, the entire economy was shut down. But now that that is 
not the case, I agree with you, it should be much more 
targeted. I think it should be focused on the smaller 
businesses. I think it should be focused on a revenue decline.
    Chairwoman Waters and I worked on a set-aside to make sure 
there was money available for underserved areas. I think that 
is something that should be done again. We have signed up many 
more Community Development Financial Institutions (CDFIs) since 
then that are ready to go.
    I also very much support a program of investing $10 billion 
to $12 billion in CDFIs so that they can do $100 billion of 
lending. I think there is big bipartisan support. I have spoken 
to Chairwoman Waters, Senators Warner and Crapo, and others. 
So, I think there are a lot of things that could be done very, 
very quickly that would have a big impact.
    Ms. Gabbard. There is no question that the need is there 
and the frustration, especially as these reports come out about 
where the money has gone, and a lot of folks have been left 
stranded.
    I want to pivot for a second in a different direction that 
hasn't been covered today in the area of sanctions. I served on 
the House Foreign Affairs Committee for my first 6 years in 
Congress. And both in Congress as well as in the Executive 
Branch, sanctions are often one of the first go-to actions to 
take within the realm of foreign policy, for a variety of 
reasons.
    I recently pulled the list of U.S. sanctions that we have 
on countries and industries and individuals around the world, 
and it is a very exhaustive list, as I am sure you are aware, 
with some sanctions even going back decades.
    Can you speak to the Department of the Treasury's process 
and whether or not you work with other Federal agencies and 
departments, like the Department of State, Department of 
Defense and others, to assess the effectiveness of these 
economic sanctions once they have been levied? And if you do 
that, how often, really with the intent of saying, okay, these 
sanctions have been put in place, are they achieving the 
intended objective and, if not, what are they doing and what 
unintended negative consequences are there?
    Secretary Mnuchin. First, let me just say I really 
appreciate you bringing up this subject, and I would be more 
than happy to follow up with you offline. I spend an enormous 
amount of my time--really, before the pandemic, I was spending 
50 percent of my time on the sanctions. I think they are very, 
very effective foreign policy tools.
    We coordinate 100 percent with the State Department, the 
National Security Council, and the intelligence agencies on 
anything we do. We have a robust interagency process. I am 
going to encourage Chair Yellen to spend time on this. I also 
want to thank the committee and Congress. You have given us a 
lot of funding over the last 4 years. We have increased the 
number of people we have in these areas.
    And these are very effective tools, combined with our 
strong military. But in many cases, they are very, very 
powerful tools and don't put our military in harm's way.
    Ms. Gabbard. Before my time runs out, if you can speak 
briefly, and if not, I would like to follow up with you, I 
would love to know what specific mechanisms and measures of 
effectiveness you and these other Departments use in order to 
make sure that they are achieving an intended objective as well 
as what measures of impact do you use to say, hey, these 
sanctions against this country were intended for this purpose, 
but it is actually stopping this country from getting medicine 
and food and basic supplies, creating a negative humanitarian 
effect.
    Secretary Mnuchin. That is a very thoughtful question, I 
might just add. In the best-case scenario, we see a specific 
action as a result of the sanction and we remove the sanctions, 
but we also work very hard on humanitarian issues and issuing 
licenses for them.
    Chairwoman Waters. The gentlelady's time is up.
    The gentleman from Ohio, Mr. Davidson, is recognized for 5 
minutes.
    Mr. Davidson. Thank you.
    Madam Chairwoman, thank you for the recognition. Chairman 
Powell and Secretary Mnuchin, thank you for the time you have 
given us today. I really appreciate the way you have handled 
our questions and the way you have pointed out what the law 
that Congress passed actually says and, frankly, for faithfully 
following that law.
    We do need fiscal policy, not just monetary policy, and, 
frankly, we need Congress. From the way it sounds, some of my 
colleagues would just strike Article I from the Constitution 
and have the Executive Branch do everything.
    I am glad that this body stays relevant, and I am hopeful 
that we can do some of the good things that did happen.
    Let me highlight a couple of things that my constituents in 
the Eighth District of Ohio share with me. One, Chairman 
Powell, the Federal Reserve had a very robust and very swift 
and decisive response in the last half of March and in the 
early days of April. Those first 2, 3 weeks, there was a true 
liquidity crisis that was hitting our markets and truly global, 
because the demand for dollars wasn't just here in our markets; 
the demand was global.
    You saw OPEC countries dump oil into the market, sucking 
cash, U.S. dollars into their countries, as a way for them to 
get liquidity. But you saw holders of all sorts of assets, 
including municipal bonds, generally considered very safe and 
liquid, disappear. There was no buy side.
    So, the Federal Reserve's response in providing liquidity 
there, to me, fits right in line with the whole purpose of the 
broad authority under Section 13(3). But, nevertheless, we saw 
under 13(3) some distortions that have carried over as we have 
seen the size of the Fed's balance sheet grow, and some of the 
questions on that, I think are relevant. How big does it grow? 
Well, big enough to make sure we provide economic stability--
that was the clear intent of the CARES Act--but not so big that 
it causes true economic distortions.
    And where the inflation is showing up isn't in consumer 
prices. A lot of people fear and, frankly, know that it is in 
marketable securities on Wall Street. And while that benefits 
retirement savings, it accentuates the wealth gap.
    Secretary Mnuchin, thanks for calling attention to the 
Payroll Protection Plan. That was tremendous for Ohio's Eighth 
District. In our district, we had about 9,000 loans made, and 
80 percent of them were for $150,000 or less. So, they were 
small loans, overwhelmingly made by smaller lenders.
    And what was the effect of that? We had over 100,000 people 
in Ohio's Eighth District stay on payroll. The loan did go to 
the businesses, of course, but for the purpose of keeping 
payroll happening. And the benefit was that so many of these 
individuals and their families kept benefits, health insurance, 
and other things that come with employment. So, it has been a 
tremendous source of stability.
    So, I congratulate my colleagues on the success of the 
Payroll Protection Plan, but, frankly, on Treasury and the SBA 
and others, all of the banks that made this functional.
    The concern I have is the slow-walking of forgiveness on 
the back end. So, I hope you can give some attention to that. 
And, as time dwindles swiftly, I want to get to one topic that 
is emerging. We have seen the rise of digital assets and, 
frankly, to the extent that some people have proposed a central 
bank digital currency as a response to our monetary situation 
right now.
    And I think it is important that we do that very 
thoughtfully [audio malfunction].
    Chairwoman Waters. I think there are some technical 
difficulties here.
    We are past our hard stop, and I apologize for that. We are 
5 minutes past. And so, I would like to thank our distinguished 
witnesses for their testimony today.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.

                             [all]