and is chair since 2017. mr. powell has testified before the committee and i believe he does not need any further introduction so without objection, your written statements will be made part of the record each of you will have five minutes to summarize your testimony. when you have one 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 member's times secretary mnuchin, you are now recognized for five minutes to present your oral testimony. >> thank you very much mr. barr, let me express my condolences for your loss. chairman waters, ranking member mek henry and members of the committee, i'm pleased to join you today to discuss how the treasury department and the federal reserve are working together to provide liquidity to the credit markets, business, households as well as state and municipal governments. we remain committed to making sure that every american gets

back to work as quickly as possible america's economy continues to recover from the challenges posed by the covid-19 pandemic the jobs report for the month of may vastly exceeded expectations with the record gain of $2.5 million jobs after experts had predicted nearly 8 million loss. while the unemployment rate is still historically high, we're seeing additional signs that conditions will improve significantly in the third and fourth quarters of this year the blue chip report is forecasting our gdp will grow by 17% analyzed in the third quarter and by 9% in fact fourth quarter. the u.s. chamber of commerce reported this month that 79% of small businesses are at least partially open and half of the remaining businesses are opening very soon. retail sales rose in may by 18%, more than double the expectation. investors in business have historically high cash positions, the highest levels since 1992 indicating that

private capital is ready to return as communities reopen we are in a strong position to recover because the administration working with congress on a bipartisan basis to pass legislation and provide liquidity to markets in record time in particular, the ppp is keeping tens of millions of employees connected to their jobs economic impact payments are also helping millions of families and workers through these challenging months we are monitoring economic conditions closely certain industries such as construction are recovering quickly while others such as retail and travel are facing longer impacts and may require additional relief. we look forward to continued conversations with you to address these critical economic issues treasury has been hard at work implementing cares act program the ppp we approved over 4.8 million small business loans for 519 billion. economic impact payments we distributed nearly 160 million

payments in record time. programs to support aviation and other eligible business we have approved and dispersed over 27 billion to over 500 airlines and other aviation business preserving hundreds of thousands of jobs. we're in the process of documenting loans to business and critical national security for approximately 25 billion the coronavirus relief fund from this fund we've distributed $150 billion across states and local governments, nearly half of all additional money to tribal governments. the cares act also granted treasury the authority to provide 454 billion to support federal reserve lending facilities under section 13.3. since march 17th, using funds available, i have approved a number of federal reserve programs the commercial paper program, primary dealer program, the money market mutual program, the tlf, the primary corporate

facility the secondary facility the main street facility the municipal facility and the ppp lending facility we have committed approximately 200 billion to support these the announcements of these programs have helped unlock markets and promote much-needed access to liquidity. we have over 250 billion remaining to create or expand programs as needed while we're beginning to have conversations about supplemental relief legislation, we look forward to working with congress on a bipartisan basis in july on any other further legislation that will be necessary treasury has already been entrusted with a tremendous amount of funding to inject into the economy. we're closely monitoring these results and seeing conditions improve. we would anticipate that any additional relief would be targeted to certain industries that have been especially hard hit by the pandemic with a focus on jobs and putting all americans back to work who have lost their jobs through no fault

of their own the treasury department is implementing the cares about with transparency and accountability we are providing information to the government wide reporting on usa spending and updates to congress we're also cooperating with the congressional oversight committee, gao and others. we are pleased that the federal reserve has announced plans to boost loan information on its website regarding its facilities chair powell and i have had very productive initial meetings with four members of the oversight committee and we look forward to continuing to work with them thank you very much. >> thank you chair powell, you are now recognized for five minutes to present your oral testimony. >> chairwoman waters, ranking mcmchenry and other members of the committee, thank you for the opportunity to testify today to discuss the extraordinary challenges our nation is facing and the steps we're taking to address them we meet as the pandemic

continues to cause tremendous hardship taking lives at home and arnold the world this is a global public health crisis and we're grateful to the health care professionals and to our essential workers who help us meet our daily needs. these dedicated people put themselves at risk and service to our country beginning in march the virus and the force ft measures taken to control the spread induced a sharp decline in economic active and surge in job losses. as the economy reopens, incoming data are beginning to reflect resumption of economic activity. many businesses are opening their doors, hiring is picking up and spending is increasing. the economy has entered an important new phase and done so sooner than expected while this bounceback in economic activity is welcome, it presents new challenges notably the need to keep the virus in check. while recent economic data offer some positive signs, we're keeping in mind that more than 20 million americans have lost their jobs and that the pain has

not been evenly spread the rise in joblessness has been especially severe for lower wage workers, for women and for african-americans and hispanics. this reversal of economic fortune has caused a level of pain that's hard to capture in words as lives are up ended amid great uncertainty about the future the path forward for the economy remains extraordinarily uncertain and will depend in large part on our success in containing the virus a full recovery is unlikely to occur until people are confident that it's safe to engage in a broad range of activities. the path forward will also depend on policy actions taken at all levels of government to provide relief and support the recovery for as long as needed the federal reserve is strongly committed to using our tools to do whatever we can for as long as it takes to provide some relief and stability to ensure that the recovery will be as strong as possible and to limit lasting damage to the economy. after lowering the federal funds rate to essentially zero, our actions so far fall into four

categories stabilizing treasury and agency mbs markets, money market and liquidity, liquidity and funding measures, direct efforts to support the flow of credit in the economy and targeted regulatory measures to support those efforts. so far, we created 11 facilities under section 13.3 of the federal reserve act to support liquidity, funding and the flow of credit to householded and businesses and state and local governments. without access to credit, families could be forced to cut back on necessities or lose their homes. businesses could be forced to downsize or close resulting in further losses of jobs and incomes and worsening the downturn our emergency lending facilities have all been undertaken with the approval of the treasury secretary and many are supported by funding from the cares act. their status and effects are discussed in greater length in my written statement which i provided to the committee. the fed will continue to use these power forcefully, proactively and aggressivively until we're confident the nation is solidly on the road to recovery

when the time comes, after the crisis has passed, we will put these emergency tools back in the tool box i would stress that these are lending powers, not spending powers i will also note that we design our facilities to work for broad ranges of businesses and municipalities we do not target particular firms or industries. elected officials have the power to tax and spend and to make decisions about where to grant -- where to direct such targeted relief. the cares act and other legislation provide direct help to people, businesses and communities. this direct support is making a critical difference not just in helping families and businesses in a time of need but also in limiting long-lasting damage to our economy. public faith in our operations depends on transparency. at the fed we're committed to that transparency particularly in deploying our emergency powers thank you. i look forward to our questions. >> thank you very much, chairman powell i now recognize myself for five minutes for questions. as i mentioned in my opening, the pandemic is strengthening

and so too must our response two weeks ago chair powell when i asked you about the need for more congressional action to protect our communities, you said -- and i quote, there are something like 25 million people who are still dislodged from their job in full or in part due to the pandemic. i would think it would be a concern if congress were to pull back from the support that is providing too quickly, end quote. unfortunately tomorrow this is exactly what will happen if the senate does not pass the hero's act. tomorrow, the ppp program stops taking new loan applications the ppp should be extended immediately so that the remaining $135 billion in funding can support small businesses also happening tomorrow millions of families will be unable to

pay their rent and mortgages in june, one third of renters couldn't pay rent. 4.2 million homeowners are currently in forbearance because they're unable to pay their mortgages and evictions have already started in many states where local elix have expired. themorer tory should be extended, it is not consciousable to simply delay an eviction and foreclosure crisis. congress and the administration must provide support to struggling low income families to cover their rent and utility payments so chairman powell, millions of families are at risk of being stripped of their home do you think congress should provide financial assistance to ensure people stay in their homes? >> thank you, madame chairwoman. so i tried to keep my fiscal comments at a very high level. and i -- that actually that comment you referred to was referring to the unemployment insurance that expires at the

end of july. and i think for the specifics of what you need to be doing, i think we have the treasury secretary here and i would defer to the treasury secretary on a fiscal matters here. >> okay. so you put it off on mr. mnuchin. you made some changes to broaden the liquidity facility, many ju jurisdictions like the territories are locked perhaps there's a way that guam may be eligible. did you find a way to take a serious look at that and determine whether or not something could happen >> yes, we are taking a serious look at that so the territories themselves are not investment grade rated and weren't before -- they were not before the pandemic set in and that's the minimum standard for access to the municipal liquidity facility of course businesses in the territories would be eligible for the main street facility some of the revenue-based facilities that guam has are

investment grade rated but below the minimum and we're actually reviewing our credit standards in the municipal liquidity facility at the moment to determine if there's a way to adjust the facility in a way that would make eligible some credit worthy issuers without sort of violating the spirit or letter of section 13.3 >> thank you secretary mnuchin, with critical unemployment support expiring next month and today marking the last day that treasury and sba claim that new ppp loans can be approved does the administration support extending these programs as proposed in the hero's act? >> well, we do support additional legislation and we look forward to working with the house and the senate on that as it relates to the ppp. i already had conversations with the sba committee in the senate about repurposing that $135 billion and think that should be done and look forward to working with both the house and the senate so that we can pass legislation by

the end of july. >> thank you very much i now yield to -- >> maybe not. >> no. the gentleman from north carolina mr. mchenry is now recognized for five minutes. >> thank you thank you for your testimony secretary mnuchin, i think there's wide agreement that your engagement in the ppp program made things largely better right? the treasury expertise in making sure that sba could deliver on this -- in this really seminal program of the cares act, it's proven out because you had 4.5 million small businesses that have benefitted from it and the effect is pretty wide scale. so, what would you say regarding the additional funds that are purposed for ppp

what should be our focus as policymakers on repurposing that $134 billion how could we best do that the 7a program, is that expedited loan programs how do you see this fitting in given the actions of main street and other facilities you've stood up through the fed >> well, thank you i appreciate your comments i think at the time when we passed the last cares act, the economy was in very difficult shape and we needed to get money quickly. as i said before, programs that took three or four months were not the focus. i think that there's -- there appears to be bipartisan support in the senate to repurpose the 130 billion for ppp, extending it to businesses that are most hard hit, that have a requirement that their revenues have dropped significantly, things like restaurants and hotels and others where it is critical to get people back to work >> okay. and so that seems like a reasonable step in the right

direction. chairman powell, the reputation you've garnered this year in particular is that your actions have been predictable in that you signal what you're going to do and you follow through on it. transparent in that you lay out the metrics for action you therefore follow those metrics. incredible one example is that at announcement you said that you're going to support corporate bonds and by saying that you're going to support corporate bonds, the market acted as if the fed already had the program up and running to the point where once you were up and running, people ask why you followed through on that program. now, i think that's important to note that transparency, that guidance, that communication has been effective in this opening stage in setting up these responses. so, along those lines, the fed

took what i would call strong medicine in terms of action on the stress test to restrict dividends and buybacks and in restraints on these large financial institutions i would call that quite strong medicine i think what we want to understand are the metrics that the fed is going to use in order to make these judgments and assessments sort of in this next phase over the next couple of months for these large financials >> so, i think you have to start with the sort of two major effects here one is that the banking system is very strong, has been a source of strength the banks have been -- taking on a wave of deposits and making loans. a source of strength in this crisis unlike the last crisis

they were a source of weakness it's highly uncertain. so to preserve that strength, what we have done is stopped all share repurposes and stopped increases in dividend and preserving the level of capital in the system. to address the uncertainty in looking forward, we did run these three sensitivity analyses and they were really to assess the overall strength of the system in the face of these downside cases we found that the majority of firms were still adequately capitalized, sufficiently capitalized in all of those scenarios, not with standing that, what we did was that we said for the first time in the history of these tests, we said, we're going to ask the banks to resubmit their capital plans we're going to distribute scenarios and look at the results again as we learn more about the path of the crisis and in terms of the precise metrics we're looking at, we'll be providing more clarity about that going forward. >> but based off that uncertainty, you want to make --

you're asserting as a regulator that you will actively review this to ensure that we don't have a financial crisis as a result of this health crisis >> yes we're going to keep monitoring this we're learning so much every quarter. and the path the economy is highly uncertain in our system, dividends are declared every quarter we stopped the overwhelming majority of distributions. so we think that's the right place to be. >> thank you thanks for your leadership and effectiveness. thank you, as well, secretary mnuchin for your effectiveness and leadership yield back >> thank you i now recognize the gentlewoman from new york, ms. maloney for five minutes >> thank you and welcome. secretary mnuchin, i would like to ask you about a very troubling oversight issue. as you know, i'm the chair now of the oversight committee and i take these matters very seriously. and i hope that you do, too.

in the cares act, we created the pandemic response accountability committee or prac, a committee of independent inspectors generals that is charged with overseeing all of the money spent in the cares act and identifying waste, fraud and abuse. last month the general council's office and treasury issued a legal opinion that questions prac's authority to oversee trillions of dollars of cares act spending to put it bluntly, this legal analysis is so bad that it borders on bad faith the opinion claims that no evidence that congress did not intend for the prac to have oversight, authority over anything in the first half of the cares act, including the ppp

program and any of the fed's lending facilities or the 150 billion in funding for states and local governments. so, i would say secretary mnuchin, that this interpretation is wrong, that is it just plain wrong. senator gary peters and i proposed and authored this section of the law, the prac act. i was heavily involved in negotiating those provisions in the cares act. and i'm telling you that congress's intent was for the prac to oversee all of the spending in the cares act. not just one half of the cares act. but all of it. that was our intent, and that was what the bill said explicitly the interpretation from your general counsel's office is already causing problems because it's hindering the prac's ability to monitor how the states are spending their cares

act money. so, now secretary mnuchin, i would say that we have worked very productively together and in good faith negotiations on the beneficial ownership bill and other bills before congress. so, i hope that you'll take my concerns about this erroneous legal opinion seriously. so this is what i would like to ask today. i would like you to commit to interpreting this section of the cares act as congress intended with the prac's oversight authority applying to all the cares act spending i think this is a small step but a very important one that you can take to show that you're serious about the oversight of the trillions of dollars in the cares act. >> well, thank you and i appreciate your comments and i assure you we are very much committed to working with the oversight committees on transparency now, as it relates to this, i

can assure you it was not bad faith. i'm happy to have our office follow up with you it has to do with a technical issue of recipients reporting. as it relates to the issue of monitoring state spending, i'm more than happy to put the prac in touch with our inspector general who has primary oversight and make sure whatever information specifically the prac wants on the states that we accommodate. >> well, i would say that that's not what i'm asking. what i'm asking is will you commit to interpreting the prac's oversight authorities as applying to all of the cares act spending that was our intent. i wrote that section of the law. that was what congress wanted. there's no problem with the interpretation it's very clear and explicit will you commit to allowing the oversight that was in the bill >> i appreciate you wrote that portion. i would also say i appreciate i had very direct discussions with people in the senate about various different oversight.

that's why we agreed to a new oversight committee with full agreed to provide information that was not required under 13.3 so we have full transparency i'm happy to follow up on the specific concerns as to which different entities should receive what information i think it's important that there is not bureaucratic overlap. but again, let me emphasize, if the prac needs certain information, we will try to do what we can do accommodate it. >> well, i'm very disappointed with that answer i guess we'll have to pursue a legislative solution it was very clear that the intent of congress is that prac would have oversight of all of the cares spending i yield back i'm out of time. >> the gentlewoman from missouri ms. wagner is now recognized for five minutes. >> thank you, madame chairwoman. and thank you for joining us today secretary mnuchin and

chairman powell. i want to commend you both from the outset for your leadership here during this unprecedented time both the united states department of treasury and the federal reserve system have shown their ability to both effectively and rapidly respond to the economic crisis caused by covid-19 by providing trillions of dollars to stabilize our economy. chairman powell and secretary mnuchin, lender registration for the main street lender -- lending program went live on june 15th, i believe do either of you know how many lenders have registered so far, and do you know the average size of the lending -- lenders participating. if not, when do you think this information might be made available? i'll toss it to either >> sure. so in the range of 300 banks and

it may be higher than that, that number is a few days old have entered the registration process. it takes a few days. i can't tell you exactly how many but that's how many will come out of the pipeline. >> average size of lenders participating? >> don't know. the size ranges from, you know, the large to the very small. and very small are particularly well represented, but it does range across the full spectrum. >> you will be providing this information to us on a regular basis. >> yes we're working with the borrowers to figure out the right way to connect lenders and borrowers and borrowers and lenders to get in touch with you. we're working with the lenders to put something together that will make that happen in the most efficient way. >> thank you chairman powell n your efforts to create broad-based programs, do you think that the main street facility will need to expand any further to meet the needs of our businesses?

>> let me say we're -- as you've seen, the secretary and i have worked very closely on this. and we've been very willing to learn from experience and learn from what we're hearing from different parts of the economy so, we -- >> we certainly did with the ppp program. i hope we would approach this the same way. >> we will as you know, we're in the relatively early stages of opening up a non-profit main street facility. and i think we'll be watching as regular main street fully comes on line and continues to look to see whether there are ways we can improve it. >> thank you chairman powell, last week's release of the federal reserve's c car outcome and more importantly the results of their covid-19 sensitivity analysis underscores the resilience, i think, of the banking system while we can all agree that the level of uncertainty in the economy continues to be high given the progression of the

covid-19 pandemic, i believe the federal reserve subjected c car filers to extraordinary assumptions regarding unemployment and gdp contraction, despite these assumptions, the 33 largest banks remained above minimum tier 1 capital requirements. given that, i'm wondering why the federal reserve has indicated firms will need to resubmit capital plans and in addition there will be an off cycle supervisory stress test in the, quote, latter part of the year the federal reserve already concluded firms capital planning, management processes, approaches and assumptions past the toughest test. so, could you explain that, please >> sure. so what the 33 institutions all passed was the regular way severely adverse scenario that we wrote before the pandemic arrived. that's what controlled the

outcome at this time we also -- remember, the pandemic arrived right the middle of the stress test period so we quickly devised without going through your usual very thorough vetting process three alternative sensitivity analysis one of which was a v-shaped recovery one and u-shaped a one a serious double dip these are very serious downside cases. we didn't use them to evaluate individual institutions but rather to evaluate the broad range of institutions. and we didn't -- >> i'm running out of time why lock up additional capital now? i guess, this is -- this has the potential to have i think a chilling effect on the economy at exactly the point where banks need to provide credit and liquidity to households and businesses to facilitate economic recovery and support financial intermediation in the capital markets. i leave you with that. >> we didn't do that we're not looking to raise capital standards. >> okay. >> during a crisis that's not what's going on here. >> thank you for that

clarification. i yield back >> thank you the gentlewoman from new york, is now recognized for five minutes. >> thank you, madame chair and ranking member mr. secretary, at any time have you been blocked by president trump or anyone else at the white house providing access to information requested by congress or an oversight body? >> no. >> have you ever been presented -- have you ever presented anyone within the treasury department or the administration more broadly from providing access to information requested by congress or an oversight body >> well, if you're referring to an oversight body, not that i'm aware of, no >> okay. so, here you are, sir, tonight

the ppp program expires. and you are advocating for extending that authorization so, you are telling us that you are already discussing this with the senate but there is a role for the house. and so -- >> of course >> yes >> and i will remind you that nothing will move unless we have those conversations. as chair of the house small business committee, i cannot be able in good sense to make a determination as to where the program should go or what tweaks or what reforms the program needs unless we have access to the data when are you going to provide the data to our committees >> i believe we said by the end of this week and we've reached

out to your committee to make sure we establish secure -- >> no. we got a letter. but, no date has been -- >> it's supposed to be delivered by the end of this week. so i will assure -- let me just say, i'm more than happy to speak to you if you would like to set up a time to speak. >> sir, we have been contacting your office every week asking for you to appear before this small business committee with the administrator. i spoke to her last week she intends to come before the committee. >> okay. >> you are saying here that we need to take care of those most hard-hit businesses in this next repurpose of this $135 billion that are left. but we need to know if the program worked as intended by congress we know that 4 million businesses accessed the program.

but what about the millions of minority and women-owned businesses that were not able to access the program so, you're saying maybe restaurant might need to get a second loan. i just heard senator marco rubio, well, no one should get a second loan unless we know that most businesses who are struggling get a chance to get a loan chairman powell, as chair of the house and small business committee, i am particularly concerned about the state of our nation's small businesses. as the pandemic poses an acute risk to their survival how would the failures of small businesses especially those that are women or minority-owned adversely affect the communities they serve, particularly those of color what impact could this failures have on future labor market

conditions >> of course the effects could be very significant. small businesses generate most of the jobs and most of the growth in the economy. so that could be very important, particularly in minority communities. >> chairman powell, earlier this month ecd said the pandemic has triggered the most severe recession in a century and warned that a global economy could contract by 7.6% this year should a second outbreak hit do you agree with this assessment >> that particular number there's a range of assessments but i would say that's in the range. yes, i can't think of a more -- >> and what impact do you see a second outbreak having on both the u.s. and the global economy? >> well, certainly -- i certainly wouldn't forecast that so this just hypothetically a second outbreak could, you know, force governments and force people to withdraw again from economic activity and i think

the worst part of it would be to undermine public confidence, which is what we need to get back to lots of kinds of economic activity that involve crowds. >> thank you i yield back >> thank you mr. lucas, you're recognized for five minutes >> thank you, madame chair chairman powell and secretary mnuchin, thank you for attending this hearing today and i want to begin by commending chairman powell on finalizing the affiliate margin rule this may be the last time we discuss this, sir. while these rules may seem abstract and difficult to understand, they have a real impact on agriculture and oil and gas producers back home that use financial derivatives to manage risk and plan for the future which we have seen in past months can be to put it mildly unpredictable that said, as both of you know, commercial, paper finance is wide array of economic activity and provides liquidity for companies to meet their

operational needs. with the commercial paper market under significant strain due to covid-19 in mid march the federal reserve established the commercial paper funding facility to encourage investors to lend in the paper market which ultimately supports business and jobs across the country. chairman powell, could you describe the current indicators of how the commercial paper market respond to the creation of facility and tlaz been a decision a discussion i should say to expand the facility to address liquidities? >> the commercial paper facility has substantially healed, as you point out, it really closed there in the beginning part of march as so many markets did and when we announced the facility the highest graded borrowers were able to borrow again so largely but not completely that market has returned to fairly normal function we're watching it carefully. i would say we're not currently assessing whether to broaden that facility, but should the

situation deteriorate, we would have that as an option >> thank you secretary mnuchin, there have been reports that china is restricting global agricultural imports due to covid-19. how are we working to resolve this with china? and do you anticipate this impacting the terms of the phase 1 trade agreement to purchase $200 billion in u.s. goods and services particularly the commitment to purchase $40 billion in u.s. farm products? >> well, let me just first emphasize we have very serious concerns about the lack of transparency from china as it relates to covid having said that, we have every expectation that they will support and live up to the phase 1 agreement and they are well on their way for those commitments. >> one last question native american tribes have been hit particularly hard by covid-19 tribal employment is often concentrated in arts, recreation

and accommodation industries how has the federal reserve and treasury been looking specifically at the economic challenges faced by tribes >> i can answer it as to main street, of course, the tribal businesses are eligible for participating in main street. that's where a lot of economic activity is there. the tribes themselves are not really general obligation issuers. so they're not particular candidates for the municipal facility. >> thank you with that madame chair, i yield back the balance of my time. >> thank you mr. chairman, you are now recognized for five minutes. >> thank you secretary mnuchin, i'm a very nice guy so i won't mention the press reports that say over a billion dollars in stimulus payments have gone to people who are deceased but i will urge you to adhere quickly to the agreement that you've made with the senate small business committee to very

quickly release the names and data about all ppp borrowers that borrowed over $150,000. chairman powell, back on march 12th i sent you a letter urging that you prohibit stock buybacks by banks you have done so thank you very much. about two weeks ago you went on the record to say i would think that it would be of concern if congress were to pull back their support, having just said that there are 25 million people who have been dislodged from their job. i thank you for that advocacy and i hope congress listens. we need to do more to stimulate this economy under these circumstances. secretary mnuchin mentioned the support that he's providing to local and state governments. but that is all in the form of loans. of course, almost all state and

local governments can't run a deficit. so with their revenues down by hundreds of billions of dollars, i hope we pass the hero's act and actually provide aid to state and local governments. and one issue chairman powell, fort main street lending program that is particularly relevant to commercial real estate is that if they get a loan from you, they violate the loan kof nans they have in their existing mortgage i look forward to working with you on that. one solution is the business borrow's protection act. certainly getting a loan on a program we authorized because of the covid crisis should not trigger and make a pre-existing mortgage immediately due and

payable. i want to -- spent this morning at the white house with a few of our colleagues getting briefed on russian involvement in afghanistan. and it appears to me secretary mnuchin that they have been bold they have killed our soldiers. because when we do something else we catch them on, we don't sanction them very much. the debate now is whether they took the obscene step of putting a bounty on the heads of individual soldiers or whether they've limited their involvement to afghanistan to just aiding the taliban but not correlating that aid to how many dead americans this or that operation created. and of course the response from the administration to this seems to be well let them into the g8 and otherwise help them.

that kind of lax response will lead to more deceased american soldiers under the chemical weapons act, which congress passed a couple years ago, your department was supposed to sanction russia for their violation of chemical weapons act when they used poison to try to assassinate a russian dissident in britain but you opted for the weakest sanctions allowed by the act it doesn't apply -- what it does is it prohibits certain loans from americans to the russian government but it doesn't apply to ruble transactions it doesn't apply to loans to state-owned enterprises and it apparently doesn't apply to purchases in the secondary market given the fact that our undersanctioning of russia led to at least aiding the taliban in a general sense and according

to press reports has led to the specific putting a bounty on our soldiers could you revisit your decision on this existing law and impose these bans on ruble transactions, state own enterprises and secondary markets? >> well, you covered a lot -- >> must be a tough question. you took off your mask >> let me just comment on we believe we followed the law and selected amongst a series of items at the time. but i'm happy to go back and i recall the situation i'm happy to go back and look at it again, i'm also -- >> there are credible reports they put bounties on our troops. please look at it again. >> well, again, on that, i just want to be clear, so for the record, i am not commenting on classified information nor do i think it's appropriate in this setting to talk about alleged information that's in the press.

>> mr. posy, you're now recognized for five minutes. >> thank you, madame chair and ranking member for holding this meeting today, hearing, to review the treasury and federal reserve's pandemic response. mr. secretary, i want to commend your efforts and those of the president's team but most especially you in working with congress to put relief in place during these extraordinary times. and the stimulus checks and paycheck protection program have been tremendously successful in bringing much-needed relief to hard-hit american families it's been huge nothing anything like it before. it's great very best there is >> thank you >> i want to commend chairman powell for his leadership to keep the financial markets stable and liquid in the face of the downturn in the general economic conditions we await full implementation of the main street lending program and i'm looking forward to

hearing more about that. first question is our nation's hotels are facing one of the most severe downturns in demand in our economy plummeted as much as 80% in our downturn and extreme curtailment of travel as you know. i'm wondering and i would like response from both of you if you have the authority you need under section 13.3, sub 3 of the federal reserve act and more broadly the cares act to address liquidity and cash flow crisis that the hotel sector will be going through. so either one first. >> i'll go ahead so, we are not looking for additional authority under 13.3. our authority is to lend to solvent institutions and programs of broad publicability and any company in any sector that meets those tests can borrow at one of our facilities. >> okay. >> yeah. i would just -- the only thing i

would just add to that is that we do appreciate and certain comments have been made by this committee already and others as it relates to loans that are in securitizations and particularly hotels and other real estate that was properly levered beforehand, it does not lend itself as well to the 13.3 facilities when we continue to look at that >> okay. >> mr. chairman, some of our businesses including again the hotelers are warning that they're inability to make payments is threatening the servicing of commercial-backed securities i wonder if you can bring us up to date on the status of the cmb market. >> one of the programs of the cmbs market is there are very strict contractual obligations one of the things i think we need to look at in the next cares act is additional funding for these industries that are the hardest hit so they can continue to rehire people so

that occupancy increases that they have employees that they can maintain >> great thank you. i recently wrote to both of you expressing my concern for businesses that are asset-based and i believe they'll face hurdles to assessing main street lending facilities because of the nature of their business challenges, their ability to meet lending criteria based on the earnings before interest tax, depreciation, amortization. aircraft developer in our district rnd organization falls into this category and i wonder if you could tell me what the possibilities are of providing access to main street lending facilities for businesses like that and you can go first, mr. secretary. >> we've discussed about looking asset-based financing. that's something we continue to discuss with the federal reserve. >> okay. mr. powpowell?

>> yes, that's where we are. >> thank you, madame chair i yield back. >> thank you mr. clay, you're now recognized for five minutes. >> thank you so much, madame chair and thank both witnesses for your participation today mr. secretary, i'm somewhat troubled by recent reports that some banks have taken stimulus payments from individuals and families with garnishment orders or negative account balances to offset unrelated debts owed to them i find it troubling that banks would serve as debt collectors at a time like this when families need the resources most when will treasury issue guidelines articulating your expectation that financial institutions refrain from taking

stimulus funds away from their customers during a time like this >> well, let me first say i agree with you and that i think it would be awfully unfortunate if banks are doing that. we have had inquiries about the issue of garnishment and we agree from a policy standpoint that there should have been no garnishment unfortunately that's something we need to address in the next cares act if we do additional direct payments because there are certain state laws that were not overridden in the existing cares act. but my understanding that's a state issue and not a federal issue. we agree from a policy -- >> but think about the cruelty of the policy. wouldn't you want to -- >> as i said, agree with you on the policy. >> couldn't you issue a blanket. >> unfortunately we can't. we asked our legal department. that's one of the things we would want to fix in the next cares act. we agree with you from the policy standpoint.

>> thank you chairman powell, for many non-profits and small businesses, earnings before interest taxes depreciation and amortization is not awidely used metric. have you considered applying other mettics of debt, future growth or financial health to the main street lending program, so that non-profits and small businesses are fully able to participate? >> yes we have. particularly for nonprofits. earnings before interest, taxes didn't make any sense. you don't need to take taxes out. they don't pay tax we're looking at a range of and we put this out for comment. we got a lot of very thoughtful comments from the non-profit community looking at cash flow and also financial resources more broadly in terms of companies,

pre-ebitda it's pretax cash flow t there are other metrics. probably the next one in line is something along asset based. that's something we're look at with the treasury. >> under the main street lending program, you reduce t the minimum loan threshold from one million to 250,000 and then by expanding the program to non-profits, would more than 50 employees. however many small businesses may not need 250,000 has the fed considered eliminating the minimum loan threshold all together >> we have not considered eliminating it yet we're just not rolling with loans. you get into a very different kind of lending when you're done lower. these are personal loans rather

than business loans. they are guaranteed by the business operator. we could look at that. >> i mean, it's kind of concerning that you have the threshold of 250,000 when small business in st. louis needs 100,000 to survive through this pandemic until they get back on their feet any consideration give tennessee -- given to accommodate >> we can see ourselves lowering this threshold again just to be making small loans would be difficult those people may be better dealt with through fiscal policy i can see us looking at a lower threshold. thank you for your responses >> thank you i yield back >> mr. scott, you're recognized

for five minutes >> thank you chairman powell, we all know that job loss have disproportionately impacted women, african-americans and other minorities but at the same time our capital markets have improved significant ly since te epidemic why is this? is it something you're doing to help the capital markets than helping job losses corrected >> no.

the objective is to take the people whose lives have been disrupted and have a chance to go back to their old job or get a new job. every one of them helps in that direction. >> i know that's your goal something, what i'm trying to get at is, is it correctable are there some things you can do something to fix the staggering and lowering unemployment and soaring rise in our financial capital markets. >> we're trying to -- what we have been trying to do is create accommodative financial conditions and supportive financial conditions so that when the economy reopens, we sort of closed down the economy. when the economy reopens that expansion can be vigorous and

strong our support is part of what's driving the job growth that you saw in may while we got both of you here, i want to pick on what chair lady waters was saying. we got a great opportunity here. this goes right into the belly of our economic wheel house. jobs, keeping people secure because it's coming, man when you lose 25, 30 million -- people lose their jobs, how they going to pay their house note? how they going to pay the rent

how they going to pay utilities? more than that, how the banks and financial institutions going to get their mortgage payments in so that they can make payments for the securitization of those mortgages that keeps our financial system healthy it may not be everything that you agree wus on but this is one that's very important. none of the lending facile tills have targeted the need of our agriculture industry

why do i mention that? food it's coming. i can't see why people can't see this crisis. food shortages are coming. it's almost like the farmers have been the forgotten ones are they qualifiable as small businesses many of them don't know. they're sort of out there just drifting along the misty flats what are you all doing to help lift up and make sure that we give our farmers, our rural communities the kind of help that they need because all the food chain is going down you hear about the closures. the food processors are going out. farmers are coming these are most, most of them but they are very important. why can't they be qualified as

small businesses where are they getting lost in the shuffle. if we get a food shortage. >> thank you >> i would edge courage all the members to keep their masks on, please >> thank you, madame chair thank you for your great leadership during this time. as we have gone through this, you have been very responsive. you have been very cooperative i can tell you from discussions that we had in different settings, you have implemented lots of suggestions that we come up with as a group for that we're grateful. leaders make tough decisions in tough times. you both exhibited the ability to make those decisions. thank you very much. both of you in the past have

expressed your support for ho e housing financial reform you committed to reviewing your perspective policies to determine whether it's sound to u.s. counter parties i'm edge couraged by the questions prosed that would seem to indicate the remain room for revision before the rule is final. i ask each of the gentlemen whether you agree that's appropriate that the enterprises should receive meaningful credit >> i agree that they should

receive relief we should encourage them to do credit risk transfers with credit worthy counter parties and i can tell you that it's beginning to review these issues as well. >> okay. thank you. as you know it's hard for me to let a hearing go much of this year the federal reserve and the fdic and lcc intera rule to delay for two years the estimated impact on regulated impact of cecil followed by a three year phase in most recentl