allowing the fed to purchase it is very expensive toget rated as an issuer by one of the public writing firms, and sometimes they are the only one that's can access the market so there are many companies that issue investment debt, and they can purchase debt without sacrificing credit quality chairman powell in may, when we spoke about this issue you said that we, meaning you and secretary mnuchin your working on the problem can you give us a update on if they will allow nica debt for these facilities >> we did open up the ratings to

three additional firms that had significant business in particular sectors it's not just the three but we understand that leaves some companies that don't have a rating as we open these ratings, the process of opening, we're looking for an answer there. niac is not a nrsro. and you know it has not been traditionally used in this way so we're looking at options there. >> so -- so you have not opened it yet, but you have not foreclosed the possibility >> any kind of time frame you put on that? >> we talked about it yesterday. we're working on it.

i think that soon, let's say >> okay, i just want to stress again that there are dozens of companies that have very strong blast sheets and employ tens of thousands of people, and they choose not to go to a public rating agency but they are in many ways in the same position as a publicly traded company that use use these facilities and i really hope that the federal reserve and the treasury can find a way to treat everyone in an equitable fashion and protect as many of those jobs as possible as we try to open up our economy and get back to something more normal mr. chairman i think i will yield back, i know we have a lot of people in the queue for questions. >> thank you, chairman powell, for your good work

i appreciate your steady hand. i want to step back a little bit. the unemployment rate right now is 13.3% and refresh my memory, at the peek of the great recession, folks are bounces all of the walls around here. we were at 10.6%, right? >> something like that, yeah, it was in the tens. >> so if you consider the fact that has been pointed out several times that the low wage workers are the ones really severely hurt, and since we have a lot of poverty in rural america, can you give me a quick assessment about the programs and if they're working in the areas that it is really needed and look, it is needed across the country.

it t may be very conservative. but with unemployment where it is at, are we getting it to crucial america? >> i like to think that we are through the play check protection program the facility, we made that easier for small bankss to use because they can transfer it fully. and that gooefs them balance sheet capacity so that should help and it should help borrowers. also main street, you know, is for larger companies and some of those in rural areas >> so what about in particular the ones that really got crashed in my state.

workout facilities, motels say the hospitality industry >> that is true across the country. anyone that is eligible and borrow, in terms of broad eligibility and you're looking back to financials the way they were prepandemic, you're looking at 2013 financials. >> is there a way to do any oversight, i have been told by

several businesses look, the money is there and i have not been impacted by ko vid. >> well, so, it is interesting, we have nod made any main stream investment grade loans it opened wide open for lots and lots of companies that borrowed including those that that had dropped blow investment grade. >> so let me approach something else that i know, and i know you don't consider yourself with debt as much especially one as significant as this but when obama left the debt was $19.9 trillion 3.5 years later, it is over $26

trillion can you tell me, and you can forecast this amount of debt, can you tell me what that debt's e impact will be on uninflation going forward. the debt is rising and that is, by definition, unsustainable and what happens overtime is future generations, our kids and grand kids, they will be spending their tax dollars going to service debt when we were in control. when we were adults in america and every generation is spending on the things they need.

so the longer run issue is one of generational inequality we have a lot of fiscal and borrowing power. we have the world's best economy, the most viral economy, the best institutions, so we can borrow a lot but i think that we need to get back on a sustainable path i will close up by saying, though, that a time to work on that, hard, is when the economy is strong, unemployment is low, there is growth, that's when you want to work on that those concerns are always going to be there but i would not prioritize them at a time like this when the spending is giving us a better economy going forward. >> we should have been prioritizing that before the collapse

>> thank you >> good morning, mr. chairman. i just want to go back a little bit to earlier in the pandemic there is a letter with senator warner for the treasury regarding mortgage forbearance and i will quiddity. thankfully it has been modest. there is still a concern, and the need for the fed to establish a liquidity facility do you forsee the need for a liquidity facility in the near term and what kind of warning signs would you be looking out for to indicate that need if you have an interest. >> we were worried, i would say we were more worried a couple

months ago about stressing buildibuil -- stresses building up like you did now we will monitor that carefully as of right now it doesn't look like there is a need for a facility >> the fed said that the stress test will be released on the 12th of june considering the importance of how they understand the response to the banks, this is highly anticipated. this is one that we're looking forward to and i think there is anticipation with the release of that information i have been tracking the integration of stress test results with nonstress test requirements in the stress capital buffer can you tell me more about what the fed will be releasing on february 25th and whether or not it will include the analysis and

requirements >> yes, i believe it will. and of course we're just in the process that is nine days away >> after a release on the 25th, what comes next. will banks have to resubmit to capital plans. >> again within we're making that on the 25th, and we're actively, nine days before we're actively engaged in considering those issues >> okay. let me run along a different route. given the length of time that we will be in the environment in

the past few years they have sold bonds and they have sovereign bonded with 100 year maturities there is a ultra long treasury >> that is squarely in the department of the colleagues you know, and as you know secretary mnuchin looked very carefully at they looked earlier in this administration, so again it is not something that the fed really plays a role in society >> thank you, mr. chairman,ly yield back thank you, senator warner. >> thank you, mr. chairman if is good to see you chair powell

i don't know if you saw but ben b b bernacke and 130 other economists wrote a letter saying we have a real need for stimulus also how enormously damaging the covid 19 crisis has been to communities of colors. i think we all applauded the may unemployment numbers, but as you know the unemployment numbers are still going up and i think there is a common point of evidence that a prolonged economic downturn will damage the opportunities and welt ac m

accumulation for all americans a suggest that you and i have talked about a number of times is the important resource for these communities. that they provide and that they provide long term investments in these neighborhoods. but as we look at ndis and cdfis, many are held back from boosting investment because of lack of capital or lack of access to liquidity and other organizational limitations would you agree that the building capacity at these institutions could provide a significant response to the downturn by boosting access to the credit for sm of the small minority owned biss that i think

will be in really tough shape? >> so as you say i think the cdfi and the mdis are very important in their communities we have a strong citizenship with those institutions and we do what we can to foster their conduct and business and we're heavily engaged in cdfi and mbis. >> i think if we could really lean in and be creative at this moment and provise these institutions the proper resources, they could not only be an important component of fighting the economic inequality that again i appreciate you making your comments about racism but also about seeing the kind of economic renewal that we so desperately need in this part of america

now i have been working with a number of proposals. it is direct private and public money as part of a longer term strategy to rebuild the communities and foster economic growth and while the direct equity is better than a treasury direct d ed investment. we're also looks at a facility that would have a federal -- not have loans forgiven, but there would still be invest from treasury but by helping to clean up the blast sheet on some of these entities, that would dramatically increase liquidity.

i think it would be of enormous also have here i think this is completely consistent with the fed's goal of maximum stable employment and as so many of my colleagues and you have acknowledged, the persistent economic december iss this has to be dealt with. the protests are not just about economic injustice but also long-term economic disparity as we roll out this plan i ask that you and the fed within the bounds of your authority would really lean in i think we really have not an opportunity and obligation to make sure these institutions are better able to be part of a

recovery if you could make a quick comment on that i would appreciate it. >> as you know and as we asked on other occasions, 313 facilities don't tend to target particular beneficiaries but rather broad institutions and anyone that meets the requirements can take part in the facility, but suggest to that i'm very happy to take a look at this idea. >> 40% of americans make less than $40,000 a year out of work, i think that is a broad based problem that the country has to address. >> thank you, senator purdue is senator purdue with snus we'll move on until he gets back we'll go to senate eor tillis.

>> thank you, can you hear me? thank you chairman powell for being here i am -- i just corrected an ech i think. i heard vice charity quarrel talked about adding additional elements to our stress testing and some of that, i'm sure, is a natural evolution of what you're learning about what works and what doesn't work. and i heard more recently they will add on another layer to specifically focus on the circumstances that we found ourselves with one of the concerns that i have with that is i think the banks institutions have about twice as much cable as they had after the financial crisis

and it seems to know be at odds with relying on the banks. and in support financial intermediation a part of what i'm asking is if we're going if we're working with the banks is this the worth possible time >> we're just in the middle of making those decisions so i'm going to have to say that i hear you, i hear your comment loud and clear and we'll probably have the discussion after we make the announcement on the 25th

as we mentioned publicly we're doing sensitivity analogies which seems like the right thing to do. >> thank you, and i'm looking forward to future announcements and i'm looking forward to a future announcement. i understand that regulators are on board do we have any idea of when we can expect action on that? do you have any read on when we will see that? >> soon, that's all i know i wish i could be more specific, but that's what i'm told, soon >> do be fair, i know that cuts

across a lot of lanes. i hope it is sooner rather than soon i think it was last week that you said the fomc is not even thinking about raising rates i think you said they're likely to stay at zero between now and through 2022 that feels like the guidance is in the calendar. i think it informs that setting that you didn't make any mention of the old curve control and i was curious was that just not right for that particular discussion or you don't -- do you believe there is not a place for yield curve control in this

dialogue >> i did say that, but we're not even thinking about thinking about raising rates. what came out of that was a summary of economic projectioning showing that committee members didn't see the likelihood under the current expected past. and the yield during and control in the press conference. but i just echo what i said earlier that this was a briefing on the historical use of yield curve control by the united states that lead to the fed treasury, of course, and on some current usage by the bank of japan it was to awant the committee with what it is and why some other central banks have used it we have not made another decision to go forward on that

we repeatedly look at negative rates, but in the case of negative rates we decided it is not something that we think is attractive for us here in the united states. and it was to see if it could be useful >> the only thingly submit ma it a question for what i consider to be the donut hole travel, lee sure, hope tells those fist into the crisis are going to be the last out i don't think the treasury has the authority they need for a facility for them. >> thank you for being here with us today we're facing an economic crisis that is facing businesses and

families across the country. two weeks ago many people celebrated the latest job numbers. but we're not going to be able to build a successful recovery if we don't understand the scope of the problem so i wanted to dig in just a little bit today are jobs coming back at the same rate for both black and white americans? >> are they coming back at the same rate. no, actually i think the answer is no i think the black unemployment rate did not come down as fast as the white unemployment rate >> as i understand it white unemployment fell to 12.4% and black unemployment actually rose >> yeah, it ticked up. >> the tenths numbers, i would have known that the day after the report, but -- but yes, in

principal, correct >> it came down for white americans and went up slightly for black americans. >> so back in march, a temporary extension of that unemployment program and now we're close to that help running out. some people in congress want to hem that expire. so you noted that the unemployment rate is higher for young americans. if congress lets unemployment insurance benefits expire, who will find it hardest to pay their bills or to afford gross ris. >> minorities are well

represented. >> this has been hard on millions and millions of americans, and i know you have been thinking about this issue is it accurate to say that our economy is healthy when there are serious racial gaps in how americans are doing? even when our economy is healthy we have longer issues and that is one that has been with us for a long time. >> that is not a healthy feature of our economy >> thank you, i appreciate your focusing on this issue the hardest. they have faced the biggest decline in employment and the largest proportion of deaths from covid 19.

the minute that jobs start recovering for white americans we can't just say that the problem is fixed senate republicans are egger to let this help exexpire and we still have 20 million people out of work and the unemployment rate is going up inequality does not happen on it's own it is the result of policy choices. who we help and whose pain matters. congress can help by reauthorizing expanded unemployment and doing it now. thank you, mr. chairman, i appreciate you being here today. >> thank you, chairman, for your testimony today. i would like to talk about ra s

realization. in arizona we're seeing the economy is starting to recover somewhat, but there is were for businesses in every sector it is really crossing many sectors in the 2008 crisis arizona was really hurt deeply in this heart and very concerned in monitoring what is happening in the sector. so since real estate goes across -- could you elaborate on that, is there discussion about a real estate focused facility to help out in this area >> i would say that like other companies, realizati estate rel companies, i also point to the

fact that commercial mortgage backed securities are part of a massive loan facility. we open up the facilities for the companies, any company from any industry that meets the financial requirements of the facility can take part we don't target facilities toward individual industries so much >> i was talking about residential mortgages. the mortgage servicers, and the mortgage services, very large liquidity requirements, and the question is will they will able to address that problem.

and then there was a heavy wave of refinancing with lower mortgage rates some of those concerns have been alleviated a little bit. >> thank you nar clarification >> they have been see e.g. this a lot. what are you seeing on this sector is there anything in your agencies port to help this or will you go back to the overall facilities or anything this is a sector that has been hit hard >> yeah, very, very hard it is airlines, travel, hotels, it is really any business that depends on getting people

getting people together. and so, you moe what we have done is create these facilities and they look back to the financial performance of the borrower, if you were in reasonable financial shape before the pandemic in principal you can be an eligible borrower >> great, thanks, on a different note on page six of the monetary policy report, there is a graph that shows unemployment rates among several demographics we have 22maytive american

drieps, and will you commit to helping this community that needs help right now as well >> we do keep very good track of all of that and particularly if there is a bank of minneapolis that has a real specialty in that area. and we'll be happy to work with you on that. >> great, thank you, just to wrap up what is your level of optimi optimism, what is your level of optimism going forward >> i'm confident that we will

have a full recovery i think it is the largest economic shock, and the economy will recover from that, but we have to be patient with it i think a lot of people will come back to work, but there will be a significant number of people that don't go back to work and that is where there will be lots of unemployment overtime i think we will get back as most forecasters believe it will take some time to get all of the way back to where we were will we get back to where we were great. >> thank you for all of the work that you're doing. i want to go back to the letter

that the next stimulus must be large and commensurate according to the cbo estimates without asking you to commit to a specific amount, is there a bigger risk for our economy that we provide too little support or that we do too much? >> i don't know what is in the letter that they wrote, so you know i would say this. the shot that we received was the largest in living memory so you know 14% of gdp for these programs is a great deal and the question that we will all have to answer over time

and these things are really having a big effect now. >> are you starting to reconsider -- are you starting to reconsider the relationship between deficits, inflation, and growth >> the thing about inflation is that it is, it has been sort of downward pressure on inflation around the world for a couple of decades. so the models would have called for, with big deficits, they would have called for higher inflation and higher interest rates. we don't see either of those

things so i think we're not working on the hypothesis that higher inflation is a likely outcome. >> okay, in your modelling, what assumptions are you making about covid rates in the next several months >> we look at different scenarios. wemodel a scenario where there is a second wave, a baseline which is that, you know, essentially covid rates come down overtime and there may be outbreaks and that kind of thing, but we don't have that level. we look at different scenarios >> can we drill down on that and

i will take this offline and issue a question for the record. it seems to me that a lot of this will depend on what is happening with the virus i would like to understand what are your inputs, and finally i asked you to suspend dividends and you said you're considering dividends and i'm wondering why you are conducting some conditions, and why you're not doing more going forward >> that is exactly what we're doing. that question is one that is at the heart of our stress testing that is future scenarios

>> we will announce the results of the stress test on the 25th of june. >> thank you >> thank you is senator kennedy back with us senator moran? are you with us senator moran? >> thank you, i'm happy to step in thank you for being with with us today. you and i in the past have talked a couple times about my concerns about black rock having such a facilitating -- and the

concerns that were relevant to the potential of investment in energy industry particularly the oil and gas industry in my state of north dakota and what it seems to know be an excessive standard that they have applied in terms of climate and what not. however in recent days or weeks, i have been more concerned about that standard, their standard, of climate investment in a different standard for foreign investment in chinese companies and companies that don't meet the same enforceme menment dema that don't have the same accountability and transparency.

it is an issue that required us to send a different letter in light of what i think appears to be a double standard so in light of the difference to provide the congress, should i be concerned about their role in the cares act and can you give me some insurances that they are -- this part of black rock won't impact the public's funds and the public's interest in the oil and gas industry vibrant, and the important national security they provide? >> senator, i would say there is no reason to be concerned.

our facility is the only companies. they bring particular skills that we don't have and that they do have. and that is really what this is about. >> i appreciate that insurance and they are protecting those same companies and i appreciate that >> mr. chairman this is john kennedy, i'm on now. >> thank you, we're going to go to senator van holland next and you will be after that >> thank you, sir. >> if he is not on then we will go to you. >> thank you for all of your good work and i rp appreciate

your quick and thoughtful aktss by the fed reserve to respond to the covid-19 pandemic that has, as we have seen, infected more than a million americans i also agree with you that congress and the president must continue to act. our work is not done and we have to continue to invest in our families, our businesses, so let me talk to you i know you're aware of it. the hospitality, are the peoples, it has been one of the hardest hit. nearly four in ten of all job

losses and more than eight million workers are unployemplod this is worse than the economic impacts. in nevada 25% of our work force is in the hospitality and entertainment industry we had more than $400,000 so i heard you address this issue, but let me ask you is there more that the federal reserve can do to help the hospitality sectors.

we will be the last ones out >> all of the things that are most -- so to support the economy, that is the tool that we have. so any company that meets the eligibility requirements for our facilities is welcome to borrow. that is really the tool that we have we can't, you know, we do as i like to say, we do lending not spending we can lend to solvent pborrower that can service a loan. we look back to last year's prepandemic financials to see if you're qualified we don't look at how you disgall

if i companies that have been affected by the pandemic that is what we really have to offer. >> this is something that i'm hearing also in my state can the federal reserve take a stake in the company to mitigate solvency problems? >> no, we can't do that. >> let me ask you this, we also know that government job losses total 1.5 million. and there are work on the way. the national governor's association requested said to state and local governments. >> i don't have a specific projection butt stat-- but stat, effectively, have a balanced budget requirement when they see revenues dropped

and costs rise, they cut essential services both of those things can weigh on economic opportunity. in addition to the economic cost of those things. and we don't play a role in fiscal policy, but i think that state and local governments and their major employees, providing essential services, and that is certainly an area worthy of your interest >> i know my time is running out. let me ask you this one final question would the fed consider making changes to the municipal left. an provide that that would be able to provide more assistance to local governments >> we have repeatedly made adjustments. >> no, we can't do grants.

we can only lend, the law is extre extremely clear on that. it is congress that u made that rule >> if congress wants to make grants, that is entirely congress's choice. >> thank you senator kennedy. we got you >> okay, you got me? both mr. chairman's, i apologize for being late i was at another hearing and if these questions have been asked and answered, if you could just give me a short answer i will answer it. >> when is main street lending open >> it is open now.

the facility will be within a week or so, open to receive those loans. >> in terms of demonstrating credit worthyness, hainess, have a decision other than the big three or four? >> yes, we looked carefully at all of the rating agencies, the nrsros and we have three additional they have a record of significant experience and usage in the private sector so the investors rely on them and the answer was there were three in different areas that had that. so -- have you made a decision about the minimum amount of the loan >> we lowered it had to 250,000.

we have, yes, and we're carrying that over into the nonprofit part of the country. >> i think that is a positive development. how big is the federal reserrv >> how was -- how big was it at the end of december? >> low fours low 4 trillions. >> how long do you think it will take to reduce the size of that balance sheet to something, some amount that's not other worldly? >> that's an interesting standard i think when the time comes and the crisis is over and we're not purchasing assets at this kind of pace, what we'll do probably and that will be some time out but what we'll do is what we did in 2014 that to 17 that really works. we just froze the size of the

balance sheet. as the economy grow, the balance sheet shrinks as a percentage of the economy and that was a very peaceful period during people weren't worried about the size of the balance sheet but it declined from 25% to 17% or something like that. that's some years away but this is probably the way we start. >> chairman, i can't see the clock. how much time do i have left >> you have two minutes. >> okay. mr. chairman, none of us can predict the future, of course. in our economy is estimated to take a real hit this year, as you well know. the intelligence unit of the economists says that we're going to have a gdp drop this year of about 4% they're projecting europe will be even worse.

they're projecting about 9% or great britain, 9% for france i think 6% for germany can we recover if the european union, one of our biggest trading partners takes much longer for themselves to recover? >> a weak global economy, a weak european committeconomy will we u.s. activity. they're great area of exports for trades of all kinds and europeans spend money here on tourism, a lot weakness around the globe does hurt the u.s. economy. >> okay. >> thank you, mr. chairman i want to yield back my time since i went way over at the last hearing

>> you're ja gentleman and a schol scholar. are you here senator jones. >> thank you, mr. chairman thank you very much. chairman powell, thank you again for being with us and thank you for your service and all you and the fed have done over the last few months it's been really extraordinary i want to echo my appreciation for your comments about the systemic racism that we see in america. today on the floor, you may have some interest. five of my colleague, three republicans and three democrats at 3:00 will be reading dr. king's letter from a birmingham jail in its entirety. i believe his message of 1963 is as important today as it was then i know we focused a lot on the data and how it's affected minorities in this country, particularly, our black population

latest data showing the black unemployment rate at just under 17%. h hispanic unemployment rate at 19% while the white unemployment hovering around 14 african-american businesses declined by 40%. a stark contrast to the 17% drop we have seen for white owners. cnbc declared we have a housing apocalypse coming before us. alabama servicesthat does so much for the poor and needy said the avalanche of evictions is here and foreclosures aren't far behind i want focus machiy questions or minority communities instead of the overall economy.

what down side risk do minority communities see if unemployment benefits are not extended? >> minorities are substantially over represented in the unem plo - unemployed something like 25 million people had their employment disrupted as a consequence of the pandemic in that group, minorities are very much over represented all measures that help that group help them and all measures that don't help them make life tougher for them >> measures that we can keep people on the payroll, make sure that they have and i know this has been a concern, there's no incentury tifr secentive to sta payroll but where we can provide incentives to get back to work, you would favor that, i assume

>> we don't take position on particular aspects of fiscal policy but i would say this, there's going to be a lot of people going back to work in coming months. they will be a lot of people who can't because if they work in -- we were just discussing in the travel and entertainment industry, it's going be a while. some form of support for this. people going forward, in my view is likely to be appropriate. during the great recession i think unemployment assistance was reauthorized on a number of occasions. it's not only can they not go back to their old job but there's no jobs in that industry and it's just really tough for them, at least for a period of time to give them support and balance that be incentives to get back to work >> thank you similar question with regard to minority communities with regard to businesses.

minority business owners face enormous risk as it is even before this pandemic started the same question. what are the down side risk for minority businesses if overall business aid is not extended by congress >> i think we, as i mentioned during my opening remark, the small businesses of america, that's where the jobs are created on net what you don't want is a wave of avoidable insolvencies that will weigh on the economy for years that's all the more so true of minority businesses because of the important role they play in our economy and in the communities. >> all right finally, again, focusing on minority communities if renters and homeowners are not helped with extended moratoriums, what affect will that have on the minority

communities in america >> evictions and forclosures have well documented negative impacts on people's lives. during a pandemic, which is still ongoing, it's particularly important because you wind up sleeping in somebody else's basement or in a shelter or something when that happens. it's not a good time for people. it's ways to avoid that, keep people in therapy homes. >> thank you >> thank you chairman powell thank you for being here again seems like you were just here. thank you for your leadership. i think what the fed has done to provide liquidity has been absolutely historic and has helped us avoid a major meltd n

meltdown i have a question. treasury debt increased by 2.9 trillion and a lot of that is in the last few months. for example, in the month of april is treasury issued 1.4 trillion of new debt 430 billion was absorbed by the domestic market only the balance of that which taken up by the fed, as i understand it i don't know how long we can do that the question is are we not effectively, i hate to use the term but monotizing the debt this current pace will demand ever catch up or will we have to think about a rebalancing at this point >> that's not our intention. the very high level of both treasury and mbs purchases that we affected in march and april

was really because the markets have stopped working and treasury markets are the most important financial market in the world and the primary dealers and the bank's balance sheets for full. everybody wanted very short term cash for treasury obligation didn't want treasury bonds there were no buyers and it was a very difficult situation we went in and bought a lot. it wasn't in any way about meeting treasuries supply. it continues not to be we really don't think about that there are also u.s. treasury debt is an attractive asset around the world there's a lot of demand for our paper. really it was about market function it does have a positive effect on financial conditions too. you're taking long duration assets out of people's hands and they buy other things. it has positiv