this issue i'm thinking particularly not only about the banks but their customers, businesses and the consumer who is going to be faced, all of these institutions and individuals are going to be faced with the prospect of having to round up or round down and in a time when pennies are the difference between profitability and loss, it seems like it might be a bigger concern than the announcement from the fed would indicate that it is. >> so i would encourage your banks to get in touch with their reserve bank i don't know whether you're atlanta or st. louis, but which it may be both in your district, i don't know but in any case, they're responsible for this, and we're working on it. >> thank you, chairman i would just encourage you maybe to put out some more robust guidance for banks so they don't

feel -- the banks that i've been speaking with all have the opinion that they don't know what to tell their customers i would just encourage you to maybe put out some more robust guidance to them >> i want to thank you for bringing that up i'll certainly do that >> i am a co-sponsor along with several other members of our committee of hr2650, the payment choice act of 2018 -- >> that's fed chair powell testifying in front of congress for the second day we'll continue to follow that, and welcome, by the way, everybody, to "the exchange. we'll dip back into that in just a moment, but we just got breaking news out of the justice department let's bring in ylan mui for that what's going on, ylan? >> reporter: the justice department is trying to revamp platforms for facebook, google and twitter. they want them to remove the liability shield for civil action if they are found to

solicit federal activities, such as fraud or scams. they are also calling for carveouts for child exploitation, terrorism or cy r cyberstalking, and they want to make sure the protection won't extend to antitrust claims they want to clarify the law by moving the reference to objectionable content and replacing it with more concrete term such as unlawful or terms that promote terrorism industry groups are against it, and the big caveat here is that the doj can't do this alone, it would need congress to act however, though there are republicans that would back this, and even some democrats who believe the law needs to be changed, kelly, there is also skepticism that this is just another salvo for the president against tech back to you. >> given the president himself has tweeted about repealing it,

does this feel to you like it's the first step in what could be more to come, or would this be the total of what we see from the doj? >> reporter: i think there could certainly be more to come across the government the doj has been working on this for about a year, but it does dovetail with the president's recent executive order which would require the sec or ask the sec to promulgate new regulations in this space as well i think what you're seeing is a number of agencies take this on as the president becomes increasingly concerned that some of these platforms are perhaps violating free speech and also bias against conservatives >> yeah. ylan, we appreciate it if you get more information, please do bring it to us ylan mui with the latest announcement as it pertains to second 230 let's go right back to congress where we're hearing from fed chair jay powell with arguments up somewhat. a small rally on the dow this afternoon, 30 points higher. let's listen in.

>> in terms of the availability of that liquidity, the preferences, the payment of wages over the servicing of debt by corporations? >> no, there aren't, and we're implementing the law that you passed the cares act specifically does not apply those things, and we don't i think it's up to us to kind of rewrite the law to achieve goals we might have. >> having lived through the political fallout of the t.a.r.p. program when america saw banks and the auto companies bailed out and the preservation of an awful lot of shareholders and the bondholders associated, i'm very sensitive to programs that ultimately use public money to allow corporations to avoid bankruptcy and service their debt and ultimately pay dividends. so i just commend that to my colleagues as something of real

concern. because when the story is told here, i think a lot of -- and i'm not just talking about corporations, i'm talking about the car wash guy down the street who qualified for a loan a lot of that money will have been used to keep banks solvent, to preserve loans and to service bonds. chair powell, i want to tell about another deep concern i have on this in my one decade plus or minus doing this, this is now the second time in which it has been necessary for the government, the federal reserve and fiscal policy to step in in a truly massive way to bail out the economy. ten years ago it was the banks, it was the auto industry, now we're seeing the airlines and the list goes on and on and on the worry i have, which relates to my first worry, is that actors in the private market -- and i was once in the private sector -- are going to decide that they can take on a lot more

risk, repurchase shares, dividend capital, because when the going gets tough and catastrophe hits, we'll be there to bail them out i want to use my last, i guess, 40 seconds or so to ask you to reflect on whether you think that the activities of the last six months and of the last ten years have created significant moral hazard in our market system >> so let me first say that, of course, the intended beneficiaries of all of our programs are workers and were able to keep their jobs because companies can finance themselves that's really the point of it. you raise a good question, and i would just -- certainly it's a concern, and that's why generally we don't look for ways to insert ourselves into markets when they're functioning this is a world historical event unlike any other the situation that happened is one where we really felt like we had to come in with all of our

tools as aggressively as possible i don't regret those decisions i do realize that's why i always say we'll put the tools away, and i take it very seriously ultimately in a free market, in an economy like ours, you should get the benefits of your success, and the cost of your failures, too. that's the way it should work. >> mr. stile, you're recognized for five minutes mr. stile present? if not, mr. taylor, you're recognized for five minutes. if not, mr. lucas, you're recognized for five minutes.

>> my curse or r is on the righ side of the screen, chairwoman thank you. >> thank you >> i've worked very diligently to unlock at least 4 to $5 billion capital available to the economy. i hear rumors that we might be getting closer to such a rule being announced. any insights you could provide on that? >> i'm happy to be able to confirm those rumors we are indeed getting close. i've been under strict orders not to give you -- which i will obey, not to give you an actual date nonetheless, it's very clear that we are -- it's been a long road, i will agree with you, but

we'll get there very soon, i'm told >> i've spent enough time on farm bills i have enough patience i'll wait you out. the fact you're making progress is really important. that said, chairman powell, there have been a lot of comments made about the nature of the programs that have been put together and the way the fed has addressed this unprecedented set of challenges we've had in the first part of the year that said, in your experience as a fed chairman, in your academic training, could you ever have imagined a pandemic of this magnitude with this kind of economic impact, not just on the united states but around the world? >> no, i certainly didn't. like everybody else, i was aware that there were things called pandemics and that they could have consequences, but you essentially had, all over the world, governments and people sort of deliberately stopping a

lot of economic activity, and we'll see negative -- we'll see declines in economic activity that just are beyond any in living memory because of the disease. it can be a natural disaster, so i do think this is -- i certainly hope this is a once in a lifetime event, and i hope market participants don't grow to think of it as something that will react to any old thing. >> absolutely. you and i discussed many times before, coming from my part of oklahoma, the great depression of the 1930s, the dust bowl, the dramatic effect of fed policy in '29 and '30 and congress' policies, the administration at that time's policies that made things so dramatically worse reporters of the population in my hometown went away and have not come back. it's fair to say that what we in congress have done and the fed

and treasury have done, the implications are still cheaper than the reaction. putting the economic train back on the tracks costs a lot more than keeping it on the tracks. >> i feel very strongly that way, i really do we're going to come out of this, and the more we do now, the stronger our economy will be, the better we'll keep people working, get tax revenue back up and have a strong keconomy to pull us forward and service the debt our banks will have taken losses, households will have run down their capital, everybody will nonetheless, the economy will be stronger and that will help everyone >> and ultimately fed policy will reflect that new reality as will fiscal policy , and the united states congress has to reflect that new reality the piper will have to be paid ultimately that bill to pay is how we get to the point of being able to pay. >> that's right, and that's why

i think this is not a time to worry too much about, you know, the longer run fiscal situation. we'll have to return to that, but i would say this isn't the time to prioritize it. >> one last thought representing a substantial part of the rural area of oklahoma, making sure the fed programs work as well in the countryside as they do in the money centers in the big urban areas is critically important from my perspective. making sure those facilities are available to everybody helps assure the robust recovery we don't want to leave any particular regions or parts of society behind as we come out of this and i believe you're working aggressively in that area. >> we have tried to, and in fact, i would point to the things we've done with the municipal facility where we made sure states that have more rural populations and don't have a lot of big cities, nonetheless have the benefits of that facility. we'll continue to adjust all of

our facilities to try to serve that goal. >> with that, madam chair, i yield back the balance of my time >> thank you mr. heck, you're recognized for five minutes >> thank you, madam chair. i'd like to start by thanking you for setting up the phone call the other day with chair powell regarding the issue of commercial real estate and the future of that market and its importance i don't have time to get into that today, and i wish i did, because we still have a problem, and i'm wearing the alarm bell again. you know, since i was privileged to join this committee nearly eight years ago, i've asked at every single hawkins hearing, when does america get a raise? the truth of the matter is that for far too long, indeed, i would suggest 40 years, we have been content, and some people have supported, frankly, running the economy short of its potential. i remember when i got here that there were people both on and

off the fonc that thought if we ever dipped below 6% unemployment, it would trigger inflation. then it was not 6, but 5, 4, 4.5. what we know is we ran this economy between 3.5 and 4% unemployment for two and a half years and we maintained, in fact, we were short of the price stability target the fact of the matter is that during your tenure, mr. chair, and i tip my hat to you, sir, you've opened people's eyes about the importance of a tight labor market you did this yesterday in the senate, you've done it again here today and you've done it in public utterances. we can't thank you enough. well done, sir you have pointed out rightfully that tight labor markets help with wage growth, but especially with employment levels and wage growth for people at the lower end of the income spectrum again, i want to thank you

but the fact remains, mr. chair, that the mission of the fed is no different today than it was over two generations when it never allowed the economy to operate at a tight labor status. the law hasn't been changed and the rules and the regulations haven't been changed, so we're going to get past this at some point, and the sooner the better but my question for you is, short of you having a lifetime appointment, which, by the way, i would support, sir, but short of you having that, how can we be assured that what you have so appropriately pursued will continue and i want to preempt you a little bit, if i may, mr. chair, by saying every federal entity in the history of civilization has resisted opening up the underlying authorizing act for that entity, and the fed has been no different in my conversations with them. to some degree i get that. i mean, it's as though you're

channelling will rogers who said once, people feel about congress the same way they do when baby gets ahold of the hammer you're worried about what might happen if we opened up that act. but there is no assurance that what you have rightfully pointed out, what you have rightfully pursued will continue to be pursued. how do we assure ourselves that what you have figured out and what you have led the fed to do will continue into the future if we don't change the law, sir did i stump you, mr. chair >> i forgot to unmute myself sorry. i actually think the law as written does accommodate what we've really learned, what a lot of us have learned and that is -- for many years, when we were growing up, inflation was a problem. people were imagining that they really had to watch carefully or

inflation would move up and it would hurt people on fixed incomes more than anybody else what we've learned is that, you know, these disinflationary forces we've seen around the world for a quarter century, they're here to stay for a while, and we live in an era of continuing downward pressure on inflation. that gives us the ability to have very low levels of unemployment i don't think anyone hasn't learned hat. and i don't think it's going to be if you change the law to -- the situation will change, the economy is ever evolving, so i don't know that changing the law is what we need to do. i do think we get that, and i think economists broadly do get that now, andthat's why we're so eager to get back to where we were and below we weren't seeing inflationary pressures at 3.5%. what we saw was the gains in wages going to people at the

lower end of the wage spectrum for the first time in a very long time. i can't tell you how much we want to get back there and how fast we want to get there. so we'll be using our tools that way, and that's really how i look at it >> thank you again, sir, for your leadership. >> thank you >> mr. stile, you're recognized for five minutes mr. stile available? if not -- >> we can't hear you, brian. >> mr. stile, are you recognized for five minutes >> he's talking but we're not hearing. >> can staff look into whatever technical difficulty there is? he's unmuted, it appears

>> we have a little technical difficulty here. we're checking with our staff. >> as we wait for them to sort out some of those technical issues, let's take a quick check of the markets right now we've been seeing modest gains throughout the session as chairman powell has been speaking dow, s&p, nasdaq all up a couple tenths of one percent today. again, the chair making no major headlines that have moved us around so far, but yesterday still the markets were a little uneasy after he talked about ending stimulus if the markets would start to recover not much in that vein yet today. there you can see kind of the movement throughout the session. more or less flat. the ten-year treasury yield is one to keep an eye on. the whole treasury complex in particular, there was a 20-year complex at the top of the hour that seemed to have decent

demand the 10-year yield is just under 35 basis points, the 30-year under 1.5% let's go back to chairman powell >> wished be able to underpin our markets and minimize the damage to our economy. it's amazing to see what you've done, the impact it's had, and we certainly appreciate all your efforts. thank you very much. with regard to my questions, in your most recent monetary policy report, you stated how lending standards for both households and businesses have become less accommodating and barring conditions are tight for low-rated households and businesses what i think you're seeing is financial institutions are beginning to look three or four months down the road and preparing for regulators and their exams to come into their institution after this period of forbearance and begin

classifying loans and banks to reserve those assets i can tell you that if the regulators do not give forbearance to these institutions and they start classifying whole lines of business, there's going to be a real problem with a credit shortage in rural areas and low mi communities do you believe the regulator should be providing this forbearance and what do you believe it should look like? >> so we are encouraging our supervisors to encourage banks to work with their borrowers and not to jump to criticized loans and to take on board, you know, the situation that we're in. we're communicating with them a lot in that respect, and i hope that's getting through to the ban banks, and that's, in effect, getting through to the borrowers. we don't want to force anything

to automatically happen. i guess it's natural that in a situation like this where businesses are partially closed or people aren't spending, you'll see concerns about credit, but, you know, this is clearly a temporary period and we're just going to continue to urge banks to work with their customers, household and business customers -- >> i appreciate that comment, sir, but in your earlier comments you talked about some businesses struggling and the need for forbearance, and i appreciate that, but i can see you haven't gone through this ppp program, that the banks with their accountants and attorneys close at hand are very reluctant to do anything unless there is physical guidance there, some words on paper that they can point to and so i've got a bill to try and put something in place that they can point to to give them the kind of forbearance and protection they need to then be

able to give forbearance to the customers. my biggest fear is we have a situation like '08 and '09 where they close down entire industries and hurt local communities and wind up losing banks in the process we can't do this in this situation. it's too broadbased. if we do that, we'll never again out of this downturn, and i'm hopeful you will work out something the banks can point to to provide the kind of forbearance they need, the center they need to manage their customer base. >> we're trying to give them that, and we're also doing additional training of supervisors. i would just point out, too, that banks came into this quite well capitalized, so that helps as well. there is going to be some more guidance, though, interagency guidance on post-pandemic exams and how we conduct those we're working away at it, and,

you know, we really want to hear from banks and from supervisors and anybody to the extent this looks like it's not getting through. because we really don't -- this is effectively a natural disaster and we want to treat it like that. >> just a quick comment here i know that secretary mnuchin made a comment the other day that he's seeing an increase in deposits i know anecdotally locally here, it looks like there is a 10% increase in deposits, savings have increased have you seen that same thing happening? what do you ascertain from that as to why and what kind of effect down the road it will have on the citizens of our country having that sort of money at hand ready to be spent? >> well, part of it is the answer is yes, we are seeing a lot of that. you saw it in the income data where people are holding just very, very high levels of

savings right now. part of that is they're getting ppp loans and some of those additions to personal bank accounts and checks. but to get to your point, there is a lot of spending power and we're beginning to see that in the spending data. i think it bodes well for the next few months. >> thank you i yield back, madam chair. >> thank you mr. vargas, you're recognized for five minutes i'm going to go back to mr. stile. has the problem been corrected with mr. stile >> i hope so, chairwoman waters. have you able to hear me at this time >> yes >> thank you, chairwoman waters.

thank you for being with us here today, chairman powell i appreciate being able to be here in person as we work through some of the technical glitches here. during and immediately following the financial crisis of 2009, the federal reserve's balance sheet grew by north of $2 acng 5 trillion in your comment following up to congresswoman ann wagner's question, you noted that the federal reserve has been mostly holding to maturity. i'm wondering if you could comment what the economic indicator that you are looking at at the federal reserve between 2009 into 2019 as the federal reserve dropped the balance sheet by roughly half of a trillion dollars, and whether or not those same economic indicators will be guiding you as you make determinations in the fed as to whether or not you'll be needing to hold those reserves all the way through their maturity or if there will

be opportunities to reduce the fed's balance sheet in advance of that maturity >> we waited until the economy was well down the path of recovery before we even started to think about shrinking the size of the balance sheet. the other thing that we did was we froze the balance sheet at the end of 2014. we froze the size of the balance sheet -- pardon me -- for a period of three years, so the economy was growing, and therefore the ratio of the size of the balance sheet to the economy was declining. i think we declined from maybe 25% gdp to maybe 17, 18% so that's a passive way to allow the bank balance sheet to shrink relative to the economy. i think in this situation, you know, we're thinking that we may do something like that, but it's so far down the road i think we're at the beginning of the second phase of this

process, the one where the economy begins to recover from the shutdown period, and that period will take some time, and then there will probably be a lengthy period as we get back to full employment. so it will be a while before we start really thinking about how to shrink the balance sheet. i would say that at current levels or current planned levels, if we know now that the balance sheet doesn't present issues in terms of either inflation or financial stability, those were big concerns as we grew the balance sheet during the last crisis >> obviously we don't have the inflationary pressures today i do hold some concern that we may see inflationary pressures in the future as the fed balance sheet has now increased beyond $7 trillion. obviously you and your colleagues at the federal reserve will continue to watch that let me shift here slightly we've seen articles recently related to collateralized loan obligations, risks that that may

pose in the banking sector i think what's important to note is banking institutions came into this crisis with a much healthier balance sheet than they did in 2009 there was potential risk in a collateralized loan phase, including that banks may have broader systemic risks can you comment as to whether or not you hold that view or whether or not you believe banks came in with a strong balance sheet and are therefore well capitalized to weather these challenges >> sure. the clos are quite different than the things that were a problem back in the crisis we have a lot of transparency into what's inside the clos. we regularly include them in our annual stress tests. we stress them really hard to see what kind of losses they produce. they're also not that large. i think it's less than one-half of 1% of the assets of the banks are in these clos. it's something -- they contain

leverage loans we've been all over that problem for several years and looking a the that carefully, so i think the comparison to the financial global crisis is not the right one, however, it's an issue we'll continue to monitor. >> i appreciate that, and i appreciate you monitoring that as well as the increases in the fed balance sheet and the risk that may pose to inflation down the road i appreciate you being here today and i yield back thank you. >> thank you mr. vargas, you're recognized for five minutes if mr. vargas is not present, we'll move on to ms. ackney. you're recognized. please unmute yourself >> good day, chairwoman, and hello, chairman powell thank you so much for being with us again today and thank you for all the good work that you do. we're very appreciative.

obviously we know these are difficult times that we're in for the second time in a dozen years. we're in a severe recession. i believe in may we saw that 20 million less americans had jobs than they did three months prior, so unemployment is at its highest rate since world war ii and the fed's projections have that remaining at almost 10% through the end of the year. we've also discussed, to make matters worse, that situation appears far worse for lower income workers than it does for others who are making more chairman powell, you've somewhat alluded to it today, and i believe yesterday. i think you said you've been concerned about the overall deficit for the long term, but the time to address that is when the economy is strong, not when we're in an economic crisis. is that correct? >> i'm sorry, i forgot to unmute myself again so, yes, i do think that, that

ultimately the debt can't grow faster than the economy forever. that's sort of the definition of an unsustainable path. we've been on that for a while now and we need to address it. we have no choice. ultimately we have to address t. the ti -- it the time for that is when the unemployment is low and the economy is growing >> thank you for that. i want to see what lessons we can look at to help deal with this one i had an opportunity back in the 2009 stimulus bill time frame that i know we devoted about 20% of that total aid to fiscal support for state budgets, and that's when i was working at the state of iowa and in charge of supervising some of that funding. one thing that i saw was that when that assistance started to end in 2010 because of balanced budget requirements that we had, for instance, in the state of iowa, we had to cut budgets,

meaning teachers, firefighters, public servants, et cetera, lost their jobs then i've also seen some research from the international monetary fund and others showing that these cuts were a drag on the economy for several years afterwards, and some of those estimates showing that the jobs lost due to these cuts obviously upset the job growth in the public sector entirely does that impact seem like it might be part of the reason why the recovery from the 2008 recession was so slow? >> yes, that is a finding that economic research has comeup with, i think, pretty clearly. >> i appreciate that it seems like we're in agreement that supporting state and local budgets is a key step to supporting the recovery process. i know we're absolutely trying to work on getting that piece through the house, and it's something that i've worked on. do you think that's something congress needs to be doing more on to make sure we recover our economy? >> as you point out, state and

local governments are large employers and they provide critical services to people, and there's a balanced budget provision, effectively, in every state or almost every state. so when there are budget problems, what happens is you see layoffs and cutbacks on essential services both of those create not just human misery, but they also weigh on the economy i do think it's an area where congress needs to look >> thank you obviously, we're trying to push that through i actually have a bill that i wrote previously that directly supports state and local government for lost revenue to assure that these job cuts don't happen again i appreciate all you're doing to help us shore up our economy at this point, give us the guidance and the oversight that we need, and i'm grateful for your being back here today. i'm hoping we can move a state and local government bill forward.

thank you so much and i yield back >> thank you mr. isaiah, you're recognized for five minutes >> thank you, madam chair. i appreciate it, and i, like the ranking member, just think of our mutual friend andy barr right now and his daughters. i know, chairman, he would love to be here to grill you about a number of issues as he and i had both previously chaired the monetary policy and trade subcommitt subcommittee but i need to touch base on the paycheck -- sorry, two things. main street business that is not eligible for the protection program, and as you well know, a huge part of our manufacturing economy is in automobiles, especially automobile parts. those account for about 900,000 jobs, 125,000 of those here in michigan alone what we are seeing and hearing

from the large automobile manufacturers is their concern for their suppliers. their suppliers are telling me, which i have a tremendous number of here in the second district of michigan, that they are having some liquidity issues not that they don't have -- weren't properly funded previously, it's liquidity right now. i talked to a lending program that provides lending using the state lending program. i think you said we are there and standing up the main street program. i'm not as convinced, i guess, of that and i'd like to make sure you can maybe clarify what that means i need to have that done now,

and what i want to know is will you commit to secretary mnuchin to have a dedicated program to keep production for key links in the motor vehicle part production viable. if we lose them, that is going to be a huge part of our industry to be hit i wonder if you'll commit to working on that. >> the facility is open now for lenders to register, so those companies will have banks that they work with, their regular partners in business, and those banks should be in the process of registering with the boston fed to become an approved lender in the main street facility. at that point they can make main street loans right away, and very surely they'll be able to put 95% interest in those loans. we're there, effectively, if their banks are. >> how about a separate facility within that realm? >> we don't do facilities for

individual industries. what we do is we set -- the requirements that we set up should be a very good fit for the companies you're talking about. essentially we're looking at 2019 financials, and you can borrow at a multiple of your 2019 earnings and that can be a 4 or 6 depending on the loan you want and the kind of company it is it would be a perfectly good fit for this facility, and we don't do facilities designed for individual industries, we do facilities of broad applicable ability, and anyone who meets those requirements can borrow. >> so i hear no on a program dedicated to the automotive industry, correct? >> that's right. >> okay. i think that's a mistake however, i need to move along to another unintended consequence, i believe, as part of the paycheck protection program and a company that is not able to

take part in that but is waiting for this main street lending program. i have a company here in michigan in the district that probably many of my colleagues have had their product, lacome they're coffee and a fast-growing factory with facilities here. they're based in philadelphia. for the past six years, they have been focused on growth and that also means they have had to borrow funds which has led to an accumulation of quite a bit of debt the rules are clearly written so that lacome would not be able to participate in the main street program. i believe the leverage in the program is currently drafted it provides companies such as lacome that would otherwise be viewed as success stories when using different metrics. as the rules are apparently written, it prevents companies

from going to facilities that need the money the most. i know you're against companies being bailed out, but we're talking about companies that had to accumulate debt i'm working with some colleagues with a bipartisan letter we would appreciate if it would be approved and i'd be willing to hear from you off line on that >> for each of those kind of companies, if we're missing something, we want to understand that we've been willing to adapt these programs consistently, so we'll look forward to talking about it >> thank you, wonderful. appreciate it. >> thank you mr. mcadams, you're recognized for five minutes >> thank you, madam chair, and thank you, chair powell, for being with us and for your leadership during this difficult economic situation due to the coronavirus. so, chair powell, since the last time you were before this committee, the occ moved ahead with its rewrite of the

community reinvestment act, or the cra. in light of the renewed focus by congress to address racism and systemic issues throughout our economy and throughout our nation, i think it's particularly important that we get the cra correct. since its purpose, its historical purpose, was to address black and minority individuals and communities and to have financial institutions meet the credit in these communities. i think many of my colleagues share my concerns that the occ's rule misses the mark and probably does more harm than good i'm glad the fed did not sign on to rule 19 in january mayor brainerd gave a speech she said, we hope to find broader answers for reform and

find a way forward to the best approach now that the occ has finalized its rule, is there any update you can provide to the committee on how and when the fed may move forward on the federal input it received on its cra framework? >> sure. first of all, cra for us is an extremely important law, and we agreed that it's a good time to update it. we would want to update it in a way that has broad support among the community of beneficiarbene that's always been our one non-negotiable position for it we're still working on it, and i do think we'll move forward with it i don't have much for you on timing of it, but there's been a lot of great work done, and i like where we are on it in terms of the things -- the ways we've been thinking about modernizing it we will ultimately move forward, and i can't say exactly when,

but we're not going to let that work go to waste >> thank you we look forward to hearing more about that and following that. next question, my perception is that congress and the fed has done a decent job of keeping the economy on life support. we clearly aren't doing great yet, and the response has been uneven, but you have double digit unemployment numbers and higher unemployment rates for african-americans, for instance, and some sk toectors are hit ha than others. we had the option when this pandemic broke out of acting quickly and acting per fefectpe. we chose to answer quickly and i think that was the right move. of the 50 billion that congress allocated to the fed and the care act, some of that was set aside for the facility you discussed and other facilities my question is, how do you intend to use the remaining funds? i understand it takes time to

set up various facilities, but i also worry if we don't move fast enough, businesses and individuals and communities may suffer as a result >> first let me agree that i think the actions, physical actions, that you took were incredibly timely and will be judged over time nothing is perfect it's an emergency, you do the best you can i think the ppp program, the ui program, i think all those are certainly helping the economy out of what could have been a so much worse situation in terms of the rest of the cares act money, it's there when and as we need it. we have a lot more ability to use our lending powers should that be necessary, should it be appropriate, and, you know, we're certainly willing to do that i think we've kind of gotten to maybe the end of the beginning here, and now we're getting into the phase of the reopening of

the economy, but that money is there if it's needed of course, secretary of the treasury actually has the legal authority to deploy that money as he sees fit, but it would be one of the things he could do is put it in our programs, and we stand ready to do more if more needs to be done >> do you see that essentially as being more of the same as necessary, or is there anything else you're looking at, any other gaps that keep you up at night? >> i think we've covered now between -- we've got nonprofits now on main street that will take us some time. we've got small, medium and large companies. we've got state and local governments. i think we've covered a lot of the waterfront we're always open to additional ideas. mainly it's a lot of execution now and just continuing to improve what we've done to make it do its job better >> thank you i yield back

>> thank you mr. vargas, you are recognized for five minutes >> thank you, madam chair, and can you hear me? >> yes, i can hear you, mr. vargas >> i just want you to know i never abandoned you. i was here the whole time. my microphone wasn't working it was sad, though, to hear the news of andy's wife and family andy is a friend to awful us, as you know on our side, too, we love him and it's really tragic we'll keep his wife and his family especially now in our prayers. again, thank you, mr. mcadam, for letting us know. i don't agree with mr. heck, mr. powell, that i'm in favor of a lifetime appointment to you. i wouldn't do that i wouldn't shorten your life like that. you're too good of a guy that wouldn't be fair at all but i do have to commend you i think you're one of those what i would call those republicans of old, stable, dignified,

intelligent, fair, charitable. i think everyone has been looking to you for guidance and i think you've been the right person at the right time, and again, i do want to commend you. i also want to commend you for highlighting the disproportionate impact that this pandemic has had on communities of color, latinos, african-americans and especially the poor my district is composed of all of imperial county, which is a border county here, to mexico, and part of sandio county. 70% of my district is latino, and unemployment was a striking 70% in april that's what we had in the great recession, 20 to 25%, and the bureau of statistics says the rate in sandio county also extended to 7%

chula vista, the next city up, and then the city of san diego the unemployment here in april was about 20%. the disproportionate impact of this pandemic of our economy is clear in my district what policies has the fed pursued specifically on reducing the high rates of unemployment for african-americans and latinos during this pandemic, and what policies has the fed put in place to help ensure that latinos, african-americans are not suffering from this disproportionately high unemployment rates as we emerge from this recession? >> i'm tempted to say that all of our policies are focused on that problem the way this pandemic worked is it hit companies and parts of the economy that were service economy companies which involved getting people together in tight quarters and either feeding them or giving them drinks or flying them around or entertaining them those are service jobs which happen to be overly represented.

the work force happens to be consistent to a large measure of low and moderate income communities and minorities so an extraordinarily large portion of those laid off are from those parts of the economy, and the numbers show it weighs heavily on the latino population as well as african-americans and women. so the tools we have are the tools we have. we're supporting the flow of credit in the economy to companies so that they don't feel financial stress. we're trying to create an environment in which people have the very best chance to go back to their old job or to get a new job. that's really what all of our efforts are about. nothing more, nothing less >> mr. chairman, i think you know -- and i agree with you, the type of job that you just described also relies a lot on tourism and restaurants and that service economy. they seem to be the last ones that are going tocome out of this recession people don't feel comfortable going back so without unemployment insurance and the enhancement,

how are these people going to make it? >> that's exactly -- we're going to see lots and lots of people go back to work here in the next few months, we believe that. but the people who are in those parts of the service industry, tourism, of course, service industry, many of them will struggle until the pandemic is really in the history books. that's going to be a problem i think the people are going to need support i think as the years wore on, congress, you know reupped employment insurance a number of times just to keep people in their apartment, keep them there, not being evicted, not having to move into a shelter or a crowded place. by the way, that's a place where the disease can spread mor quickly too. so i think it's important we provide that kind of help.

i appreciate those words i hope you use your influence to make sure that happens one of the things you said was this pandemic was -- thank you very much for being here and continue to be the person you are. we have a lot of faith in you. >> thank you mr. taylor, you're recognized for five minutes. >> madam chair, can you hear me? >> yes, i can hear you. >> oh, terrific. chair, i appreciate you being here we are all concerned about the economy as it goes to recover with job something that's of deep concern to me are the properties that have long-term mortgages where the lender has very little flexibility in their able to forbear. we as a congress saw the need to forbear, providing guidance on the 13th, encouraging banks which are the biggest learneders in our economy to forbear.

we have given guidance to fannie and freddy to forbear. we have worked on legislation and financing, trying to help encourage forbearance. there are pockets in the economy where there's not the ability for the lender to forbear at a level that will help get to the other side i'm specifically concerned about three subsectors in real estate. hospitality, student housing and indoor retail, because of pandemic they have very little cash load. they cannot service the mortgages. they cannot pay for utilities, can't pay for insurance, can't pay property tax i've been working with members from all over the country who share this concern. i perceive that absent action by this body by congress -- or

actually, by the federal government, we're going to see a wave of foreclosures beginning in the fall and going through next spring. i think that impact on job will be very material, working in hotels, student housesing, where you have a university town that needs the housing to run the university those foreclosures will be very serious especially when the property itself is foreclosed and it doesn't have the expertise to reopened that business so assuming that you were to see things the way i see it, where there's a coming cataclysm here, do you have the statutory authority, you and the treasury, to open up the main street lending program or any of your other programs to provide lending authority to someone to then in tern help these properties that are in trouble that can't make their mortgage

>> so there are limits, as i think surreferring to, in what we can do. of course there are lending powers and very explicit in the law that we have to conclude that we're adequate -- we have to have evidence that we're adequately insured, and we cannot lend to insolvent borrowers. within that, with he can take a lot of risk. and, you know, the question is, for companies like that, you really hit the most affected sectors. it's -- we would have to be lending on some sort of an asset-based basis. >> sure. >> it is something that we are looking at. >> i know you're looking at that my question, again, it's a yes or noquestion -- can you do this without an act of congress? or do we, congress need to take an act to give you the authority? do you have the authority today -- if you decided, hey, this is important, we've got to do it, we can make these loans

to the lower leveraged healthier policies to try to get them to the other side, if we get them to the other side, we'll be able to reemploy people and communities will survive there are whole communities that are going to die or be very badly impaired if they lose their hospitality he services, or shopping centers are extremely important to that community. do you have the authority or does congress need to act to give you the authority >> my guess is, without seeing the numbers, if you're talking about low-leverage situations where it really is a liquidity problem, we have that authority. we do have that authority. some of the cases, though, it's totally -- company -- >> -- by a security loan, average leverage is 63%, so normal real estate is levered 15 to 17 times ebitda, to put it in

main street terms. that's well outside the range what you have stated by rule that you can do. my question again, is do i have to pass a law you can go lend into this space? or do you have the authority right now to say, you know what, there is a problem, we're going to take action. >> i think some of the problems in that space will be better served by fiscal policy. i think we can probably reach some of them as well, so the answer might be both >> okay. thank you. madam chair, i yield back. >> ms. weston, you are granted five minutes >> thank you, madam chairman thank you, chairman powell, for joining us today and all that you're doing in these difficult times. one of the most stabilizing things congress did was to extend unemployment benefits by extending it an extra $600 per week on top of the benefits that the state provides in virginia, or maximum weekly

benefit is $378, so the extra money has been a huge relief to the over 822,000 virginians who have filed for unemployment benefits since march 15th. but these unemployment benefits, enhanced benefits are set to expire at the end of july. do you anticipate the unemployment rate falling significantly by that time >> i would say reasonably many forecaster would say and i would agree that we should see strong job creation between now and the end of tro july. that may mean that the unemployment rate comes down so one of the arguments against continuing this benefit is that it's too generous. some of my colleagues are suggesting that employers are having a hard time getting employees come back to work, because unemployment is more

lucrative. is that something that you have encountered as far as your regional surveys of business activity and the data? have you giersch any information that employers are having trouble -- employ crease are saying i would rather kick back and collect my unemployment. sort of a bit different from that many employees are reluctant to go back quickly. it may partly be that the $600 is generous compared to what they may we know that many weren't making that much, combined with the other unemployment insurance, but if it's a service economy job and you're very close to someone, it's a barbershop, a beauty parlor, a nail sallen, any of those things, there's also still reluctant on the part of workers to go back to work at all and if they can delay that more broadly, i would say, of course that program ends at the

end of july. i would say probably it's going don't important that it be continued in some form >> i'm glad to hear that and what you talk about it's pretty consistent with what i'm heari hearing, and also you know, a lot of people in my district are having trouble accessing child care at this time now former fed chairs have -- that would tie federal unemployed benefits to the state of economy do you agree that we should tie rads tans to the conditions in

the so i, or what are your thoughts on the processes that would have set triggers for the legislation and the benefits to continue >> i think you have almost two nonts. there's a number of proposal that have come out, and i think it's -- no doubt you're thinking what should the next bit of support look like? i think some of those ideas are very it is interesting not only would i want to endorse a particular idea or program i want to thank you for your transparency and the plans that the fed is administration and these listening session and your willingness to make changes to