tv Treasury Secretary Mnuchin Federal Reserve Chair Powell Testify on... CSPAN December 1, 2020 9:00pm-11:26pm EST
secretary steven mnuchin and federal reserve chair jerome powell testified before the federal reserve oversight committee. at 2:00 p.m., the house is back for legislative work on a bill requiring the securities and exchange commission to prohibit and delist any foreign company whose public accounting firm does not adhere to u.s. auditing standards. on c-span two, the senate is back at 10:00 a.m. eastern to consider judicial and executive nominations. 9:15 am, a senate armed services subcommittee hears from the navy and marine corps leaders about military readiness. that is followed by a homeland security subcommittee hearing on the government's response to cyber threats during the coronavirus pandemic. treasury secretary steven mnuchin and federal reserve chaired room powell encouraged
congress to take action on additional coronavirus relief while testifying before the senate committee. secretary mnuchin also faced questions about his recent decision to end several federal reserve emergency loan programs. this hearing is almost 2.5 hours. >> 3, 2, 1. this hearing will now come to order. is in a hybrid
format and the hearing room has been configured to maintain the recommended six foot social distancing between senators, witnesses and other individuals in the room necessary to operate the hearing, which we have kept to a minimum. , a those joining remotely few videoconferencing reminders which you should be familiar with at this point. once you start speaking, there will be a slight delay before your display on the screen. to minimize background noise, click the mute button until it is returned to speak or ask questions. issue,e is a technology we will move to the next senator until it is resolved. i remind senators and our witnesses the five-minute clock still applies. those remote should have on your screen one of the boxes labeled clock which will show how much time is remaining. we've had some trouble getting those boxes to everyone screen or at least getting everybody to be able to find them and follow them.
we are going to continue the .ractice we started at 30 seconds remaining you will hear a bell ring to remind senators that their time is almost expired. i encourage the senators and our witnesses to recognize that bell and wrap things up on the answers as well as the questions in time to keep with the time -- within the five minutes. to simplify the speaking order process, senator brown and i have agreed to go by seniority. today we welcome the witnesses to provide testimony as required under title four of the cares act. mnuchinesses are steven , secretary of the department of treasury and the honorable jerome a powell, chairman of the board of governors of the federal reserve system. welcome to both of you. on november 19, treasury secretary mnuchin requested for
the federal reserve to return unused funds edited appropriated under title iv of the cares act. i agree with secretary mnuchin on the success of the 13 cilla days and the termination language in the cares act. facilities were effective and fulfilled their purpose to stabilize markets, facilitate credit flow and provide liquidity. the wall street journal editorial board summed it up well. all of these programs were created in an emergency at the onset of the pandemic when the financial markets were in danger of melting down. adding that the programs worked. even as the pandemic and government shutdowns have waxed and waned, a financial markets have healed. lending spreads have fallen and liquidity is ample in nearly all markets. the most recent federal reserve financial stability report pointed to some of these
successes. it said the announcements of the primary market, a corporate credit facility, secondary market corporate credit facility and municipal liquidity facility in late march and early april in to rapid improvements corporate and municipal bond markets well ahead of the facilities actual opening. said since the announcement of the backstop facilities and funding market stabilization measures, more than $1 trillion in new nonfinancial corporate bonds and more than $250 billion in municipal debt have been issued. purchased almost entirely whether private sector. with respect to asset-backed securities, the report noted similar to others facilities, while outstanding balances in the back securities facility have remained modest, a spreads in the asset-backed securities market have narrowed
considerably and private market issuance has resumed. the just one month until december 31 termination data, only 195 billion dollars of the $454 billion needed to be allocated to the facilities. those facilities have not been extensively used today. unused $455e billion to treasury now allows those funds to be made available for other important purposes such as providing more targeted relief to sectors of the economy that need it most or to reducing the national debt. the cares act funding supported these facilities and supporting these was always intended to be temporary. additionally as was mentioned in both secretary mnuchin and chairman powell's letters, the exchange stabilization fund has non-cares act funds that are available to the extent permitted by law to capitalize any federal reserve lending
facilities as needed. facilities setr up with non-cares act fund including the commercial paper facility and the money market liquidity facility. continues tod-19 spread across the united states and the world, there is hope in the economic recovery that we have seen so far and the reports of promising highly effective vaccine trials. however we continue steps that we can take to help americans and businesses that need it the most. republicans have tried for months to get another targeted partisan covid relief package past and signed into law to provide support for those in need. but democrats have rejected those efforts. it is time to find agreement where we can on a targeted bipartisan basis provide relief. turning for a moment to regulations. the cares act included other
meaningful pandemic related programs to provide relief to americans. i have heard from banks and credit unions concerned about breaking through regulatory thresholds that stand to impose a much greater regulatory burden due to the temporary growth they've experienced from customer -- deposits in pandemic related programs like the paycheck protection program and the economic impact payments. on november 20, the fed, fdic and occ took an important step to mitigating banks regulatory burden by giving community banks under $10 billion more flexibility to use their asset size on december 30 1, 2019. for applying various regulations. i appreciate the banking agencies taking this action which will foster a more certain regulatory environment and incentivize their participation in future pandemic related programs should they be needed. housingy mnuchin,
financing reform remains a top priority of mine. last year i released a housing reform outline which builds on many of the same principles from previous efforts. while my preference was for congress to pass a bipartisan deal, it is long past time to make the hard decisions and address this last unfinished business of the financial crisis. because of that, i would encourage you and the director of the fha to take important steps that move the system in the right direction. the status quo continues to be unacceptable. i want to thank each of you for joining the committee today to discuss the cares act and other important issues. brown i turn to senator for his opening, i want to take some time to thank both senators mick sally and jones for their contribution and time to this committee. i have enjoyed working with them, sending time with them -- spending time with them and they will be missed. i wish you both the best.
finally i want to thank senator brown and his staff for the time we worked together on this committee. i've appreciated our time committee -- time on this committee and our friendship. even though we may not seen eye to eye. senator brown. sen. brown: thank you mr. chairman. i welcome secretary mnuchin and chairman powell. what theike to second chairman just said. i want to thank doug jones and martha mcsally for their service on this committee, they both contributed a great deal. chairsou since is the last chairing i believe, a thank you for your leadership, decency and patience. i also certain -- you can run but you can't hide since i also serve on the finance committee. i want to thank the rest of your it's working together, been really meaningful and
productive. we've worked together to deliver work and strengthen our review of foreign investment, to hold russia and north korea accountable, to give manufacturers the tools they need and to continue to protect our communities from terrorism attacks. i look forward to next year to working with our colleague senator toomey on these and other issues. i also appreciate the chair and his staff's work to hold so many of our hearings virtually during this pandemic, protecting the people who work in the capital where the virus should not be a partisan issue, on this committee had largely has not been. i wish it was the same throughout this building and the senate. it is something i wish there were more of. the two months since you were last year, the situation around the country has only gotten worse. the virus is spreading unchecked , economic growth is declining.
the number of new daily covid-19 cases up fourfold. daily deaths have more than doubled in many parts of the country, the case numbers and the spring. i spent much of yesterday talking to hospital leaders feeld my state who all besieged, they are doing their work, but health care workers are heroes, we don't simply give them enough support. 700 48,000 people filed for unemployment insurance. in october, 3.4 million homeowners were past due when their mortgages, many of them will run out of forbearance options by april. as many as 40 million renters will spend the holidays worrying that they will be evicted on january 1 if their government, if we don't do their job. hide all those numbers are real
families who are doing their best trying to figure out how to get by. during thanksgiving weeks, there were hour-long lines -- there were hours long lines. we have had a president who has simply given up on leaving the country and as far as i can tell , secretary mnuchin, you are leaving the country worse off and we found it. why 80etty obvious million americans voted for a new leadership by a decisive margin. other than using your final months in office to work for the people who you have sworn to serve, you appear to be trying to sabotage our economy on the way out the door. after the election to cancel the federal reserve lending programs, and taking away critical tools to invest in the communities and small businesses that make this country work. there is no legitimate justification for it. i met with restaurant owners remotely by zoom.
60 restaurant owners in this state, all of them are struggling as you know. either you are purposely trying to stop president-elect biden and treasury secretary designee yellen from getting the work or you are delusional and you think because the stock market is up, and i understand taking the lead from the president that when the stock market is up, everything is fine. either way, it is malpractice. was the only -- it was only the end of october when you finally reduced medical loan size on the main street program to 100 thousand dollars so it would work for small businesses and communities. now after all the waiting and adjusting, of the program finally gets going and you take away another tool to help american businesses and workers. even at the chamber of commerce said shutting down programs closes the door in terms of liquidity options.
it's always the same story. when the biggest banks and the largest corporations need help, their allies in washington spring into action. when the rest of the country needs investment and support, you want to pretend he can't afford it. citing congressional intent is a flimsy justification. we did not intend for struggling businesses to have to wait over three months to have access to a lifeline in the cares act. we didn't intend for the requirements terms to be amended several times. we certainly did not intend for the legislation passed in march to be the only efforts the united states of america would take to fight a once in a generation crisis. anyone whose watch the news in the last month will know this is the time for action, not for retreat. we watched hospitals fill up again. gig workers, self-employed workers lose their unemployment insurance just in five weeks. small businesses, local government -- local governments
are running out of money. we have the world's greatest economy, the resources to rise to the challenge. secondary minutia, you appear to believe this is the best we can do. in this election, americans made clear they did not buy that. we know we can do better, we've done it before. inero and bill spriggs said september we didn't win world war ii by worrying about whether or not we could afford it. we were in a global crisis. he marshaled all of our resources and talent to rise and meet it. we pay down the debt with rising wages. and if we learn anything from this crisis, we can do the same thing again. remember what we did in march? we came together and took action and made a real difference in people's lives. we put money in people's pockets, we help them pay their bills, we kept spending in this
economy. we kept 13 million people out of poverty. those restaurant owners yesterday in ohio said their situation is more perilous today than it was in february, march, april and may. we should do a comparable kind of action. helped did in march everyone, including the stock market. there is no reason other than a lack of political will that we can do the same. workers about to lose their jobs don't care about the data on the calendar who was sitting at the secretary's desk. they care about results. secondary minutia and, if you and president trump won't deliver on it, the least you can do is get out of the way. i know chair powell was clear in previous hearings that we need more stimulus. ,e need a big stimulus package one that reaches beyond wall , this emaciated mcconnell version doesn't reach beyond
wall street. one that shows up in people's paychecks, not just corporate balance sheets. i hope the american people get reassurance the federal reserve will be part of that. it's time for us to use every tool available to rise to meet this challenge. sec. mnuchin: we will now -- sen. crapo: we will now introduce our witnesses. secretary mnuchin, you may proceed. sec. mnuchin: thank you. ranking member brown and members of the discusse i'm pleased to the unprecedented response to support the coronavirus pandemic. we continue to work to implement the historic cares act with speed, efficiency and transparency. our job not be complete until every american gets back to work. when i last testified for you in september, i stated america was in the midst of the fastest
economic recovery from any crisis in u.s. history. i'm proud to say while there are still more work to be done, that statement is even more true today. in the third quarter, gdp grew by 33 percent, beating expectations and nearly doubling the previous record set in 1950. americans are getting back to work, the october jobs report showed the economy has got back 12 million jobs since april. more than 50% of all lost jobs due to the pandemic. the private service sector which includes industries impacted by the initial economic shutdown has regained 58% of the lost jobs. the unemployment rate decreased to 6.9%, a rate not expected to be achieved until the fourth quarter of 2021. the historic bipartisan cares act providing economic relief critical to supporting a robust economy. additional economic shutdowns continue to impair this remarkable progress and cause
great harm to american business and workers. based upon the recent economic data, i continue to believe that a targeted fiscal package is the most appropriate federal response. i strongly encourage congress to use the 450 $5 billion in unused funds from the cares act to pass an additional bill with bipartisan support. the administration is standing ready to support congress in this effort to help american workers in small business to continue to struggle with the impact of covid-19. treasury has been working hard to implement the cares act in a transparent and efficient manner. we released significant out of information to the public on our website and on usaspending.gov. in many instances we released more information than what is required by the statute. we work with the treasury inspector general, the treasury
expectorant -- inspector general for tax in the new -- and the gao. we provide regular updates to congress with this marking my eighth appearance before congress for a cares act hearing. we also have significant toources to responding hearings and it -- and individual members of congress across the aisle. we remain committed to working with you to accommodate congress' legislative requests and the government approach to defeating covid-19. i'd like to thank the members of the committee for working with us to provide critical economic relief to the american people and i'm pleased to be here to answer any questions. sen. crapo: thank. chairman powell. thank you for the opportunity to update you on our ongoing measures to address the hardship brought by the
pandemic. our public health professionals continue to develop -- develop our most important response and we are grateful for their service. the federal reserve, along with others across government is using its policies to help alleviate the economic burden. since the pandemic's onset, we have taken forceful actions to provide relief and stability to ensure the recovery will be as strong as possible, and to limit lasting damage to the economy. has continuedity to recover from its depressed second-quarter level. the reopening of the economy led to a rapid rebound inactivity and real gdp grows an annual 33% in the third quarter. in recent months, the pace of improvement has moderated. household spending on goods, especially durable goods, has moved above its pre-pandemic level. in contrast, spending on services remains low largely because of ongoing weakness in
sectors that require people to gather closely, including travel and hospitality. the overall rebound in household spending is due in part to federal stimulus payments and expanded unemployment benefits would provide essential support to many families and individuals. in the labor market, more than half of the 22 million jobs lost in march and april have been regained as many people were able to return to work. as with overall economic activity, the pace of improvement in the labor market has moderated. although we welcome this progress we will not lose sight of the millions of americans who remain out of work. the economic downturn has not fallen equally on all americans and those least able to shoulder the burden have been hardest hit. in particular the high level of joblessness for lower wage workers in the service sector and for african-americans and hispanics. the economic dislocation has upended many lives and created great uncertainty about the future. as we've emphasized throughout
the pandemic. it will depend in large part on the success to keep the virus in check. the rise in new covid-19 cases here and abroad is concerning and could prove challenging in the next few months. the full economic recovery is unlikely until people are confident to reengage. it's very positive for the medium term. significant challenges and uncertainty remain including the timing, production and distribution and efficacy across different groups. it remains difficult to assess the timing and scope of the economic implications of these developments with any degree of confidence. the fed response has been guided by our mandate to promote maximum employment and stable prices for the american people along with our responsibilities to promote the stability of the financial system. we have taken broad actions and support the flow of credit in the economy.
our actions taken together have helped unlock almost $2 trillion of funding for businesses large and small, state and local governments, since april. this is kept organizations from shuttering and put employers in a better position to keep workers on and hire them back as the economy recovers. these programs serve as a backstop to keep credit markets and help restore the flow of credit from private lenders through normal channels. we've deployed these to an unprecedented extent, our powers areending available only in unusual circumstances such as those we find ourselves in. many of these programs have been supported by funding from the cares act and i've included detailed information in my written testimony. soleares act assigns authority over its funds to the treasury secretary subject to the statutes specified limits. secretary is indicated these do not allow cares act funding
facilities to make new loans after december 31 of this year. the federal reserve will return the unused portion of funds allocated to the lending programs backstopped by the cares act in connection with their termination at the end of the year. funds areact available to support emergency areing facilities if they needed. everything the fed does is in-service of our public mission. we are committed to using our full -- full range of tools and we hope the recovery will be as robust as possible on behalf of communities across the country. thank you. sen. crapo: my first question i think will be towards you secretary mnuchin. i'm quite surprised to hear you criticized for following the law. in how you have dealt with the return of the cares act funds. we were in the room together negotiating these provisions as the cares act was created.
interestingly, it seems to me that the real problem here -- you will recall you and we were accused of treating it as a slush fund and now, when we have terminated these funds as required by the law so that we can utilize them more effectively in the next act, the criticism is that this fund should not have been terminated. i find that kind of confusing. that's also confusing in the context of the fact we have very kind ofto the relief and follow-up legislation that we've now been criticized for not doing. just a few months ago, extending things like the paycheck protection program which would help those restaurant workers that senator brown mentioned, extending and improving it by the way. redirecting some of these funds so that those industries and sectors of our economy that have not yet been reached by the 13
facilities and give a kind of direct support system put into place. adding rental assistance that we need to have in my opinion which i've been working hard on to get. as we try to get these things, they were rejected by the other side. orit's just confusing to me a little bit surprising to see these kinds of attacks leveled today in this hearing. youecretary mnuchin, could help make a little sense from your point of view as to why the thesion to make -- make return of these funds away from the 13 three facilities at this time is the best thing and what the intent you had was in making that termination? sec. mnuchin: thank you mr. chairman and let me first say i want to thank the senate for passing the cares act which is 96-0. and as you know, i lived in the
lbj room for over two weeks. i'm very familiar up eight i personally negotiated many of these provisions. as a matter of fact, i brought the cares act with me because i reference it and keep it next to my desk. recall,just ask you to you and i were sitting outside senator schumer's office with his staff. it was after 1:00 in the morning on the night we finally finished this and i asked you to come to sign off on behalf of the leader and others the final redlines. we went through this carefully. i would direct you to section 4029, which is very clear which says except as provided in subsection b on december 30 1, 2020. the authority provided under the subtitle shall terminate. it was very clear. my decision first of all of want to thank chair powell because he
is been a terrific partner and everything we've done. i really want to thank him and the people at the fed. he and i have been speaking constantly in deference to him, i did extend the floor of the facilities that use non-care is money. -- non-cares money. it was not an economic decision. i'm surprised to hear senator brown use words like sabotage, no legitimate just dictation -- justification. i be more than happy to see you and your staff and walk you through the legal analysis. this is perfectly clear, the senate provided unprecedented authority to the secretary of treasury in giving the 500 billion dollars. the statute was clear. i find it implausible that any member of this committee believed that in voting for the cares act you were authorizing me to authorize $500 billion to
make loans in perpetuity. thisu do not read expiration, then you must read this that there was a loophole in the law that i could invest .he $500 billion forever i don't believe that was the intent. i would also conclude, i echo what senator brown said about restaurants, the president and i believe that restaurants have been unfairly targeted and i would urge congress to support another $300 billion in ppp, this would have a real impact. these restaurants need grants, they don't need loans. sen. crapo: thank you. by the bell, i don't have time to ask you questions chair powell. i will ask you later or send them to you in writing. senator brown. sen. brown: thank you mr. chairman. secondary mnuchin i see your
testimony today you really don't understand what's happening with families across the country. almost celebrate your marvelous work by you and the president that the country so decisively rejected. one of my favorite abraham lincoln quotes is used to talk about going out and getting his public opinion back. it's pretty clear, i appreciate what you said about restaurants but it's pretty clear you have left behind the admin it -- and administration has left behind, the president is only concerned about seeing something that's not there. so many republican judges and a few courageous were public and officeholders have spoken out against. at our last hearing i asked you to read a piece by pro-public about small business owner in cleveland whose business couldn't get along well giant corporation occupying the same building has gotten plenty of taxpayer support. i'm hoping you would have read
it and made a more serious effort to understand what's happening in places like cleveland and mansfield and shelby in springfield, ohio. millions of american workers are still struggling. millions more out of work. the numbers are going in the wrong direction. -- you would not determine that from your comments today. it's clear you were never .erious about fighting it's clear you never serious about fighting for the real people who make this country work instead of making a deal that would have done more to help them. you made life a little bit easier for the nation's biggest banks. now you've killed the cares act loans that were supposed to be a tool to help smaller businesses and their workers. it looks like you and the president and others in the current administration are trying to spend your final days in office preemptively sabotaging the next
administration's efforts to clean up your mess. but you still work for the american people even though i don't think you are acting like it. i wish you and your administration would stop crowing about the stock market and stop passing the buck instead of doing the hard work. my question is for chairman powell. you are around -- you will be around the beginning of the next administration and part of the cleanup crew. i appreciate the conversations we've had where you've made clear that congress needs to do more fiscal support. you've also committed recently we are taking action, not going back to the same economy and it will be more difficult for workers going forward. treasuryn how that action support of the stock market. what can they do to make sure workers don't get left behind again? chair. powell: thank you senator
brown. provided ande have continue to provide very strong support for the economy and workers in particular through the use of our tools we remain committed to using all of our tools to their fullest extent for as long as is necessary. to get us through this difficult period. we thought about this collective effort, this governmentwide effort as one that involves getting the people and the businesses that constitute the economy across the chasm created by the pandemic. adding them safely to the other side to the post pandemic economy. that the fiscal policy particular the cares act deserves the lion's share of the that bridge.ating we may need more on that front. from the standpoint of the fed,
they will continue used tools and those will include section 13 three facilities which remain available to us under the law. the secretary pointed out they can be backed up by exchange stabilization funds should the legal requirements be met. sen. brown: does the fed have an obligation to address the problems of inequality that many argue fed actions have amplified especially in addressing inequality in communities of color? chair. powell: i think inequality is a very important and ever more broadly understood problem in our economy. these persistent disparities along racial and gender and other lines really hold our economy back. i think the fed has a contribution to make there. if not the principal contribution. policy andcal congress and the private sector have very important roles there. what we can do is a lot of what
we are doing which is to focus on maximum employment which is your order, that's the goal you set forth for us to really take that idea seriously. i think you've seen that with the recent modifications your operating framework and focusing on these issues more. sen. brown: thank you mr. chairman. sen. crapo: before we go to senator toomey, i have to say secretary mnuchin, you've been accused of killing the cares act loans for small businesses. i think that's mostly the ppp program which we have tried to re-energize and extend on the floor the senate only to have it killed by the other side when we were trying to do that. we will continue to have these debates back and forth. sen. toomey: thank you very much mr. chairman. as this might be the last banking committee hearing of your chairmanship, i do want to thank you for your leadership and the very hard work and outstanding work you've done. it's a pleasure working with
you. what i want to do is i want to foraud secretary mnuchin closing the 13 three facilities by year end, exactly as the law requires and as congress clearly intended. i want to think chairman powell for returning the unused cares funds back to the treasury. congress entrusted both of you with some extremely powerful unprecedented emergency and yet temporary tools. and i commend you for working together to deploy those tools for their intended purposes and then putting them away now that that specific purpose is been achieved. i think it's important to review what was happening and why we designed the cares act as we did. we hadt is in march, unprecedented turmoil in our capital markets, threatening states and to access capital.
credit markets run the verge of freezing up. there was a mass investor flight to cash and in many cases there were no buyers in sight. credit was not flowing to any institutions that needed it and this freezing of our financial system was a very serious threat that it could precipitate a full on depression. the deputy it -- deputy associate director for financial stability at the fed noted in a congressional oversight testimony. marchd the conditions in were unprecedented, far worse than during the onset of the financial crisis in late 2008 or even in the days after 9/11. when the meniscal market was closed. interest rates soared, mutual fund investors pulled $41 billion of assets out of the market and market functioning deteriorated to the point that buyers and sellers had
difficulty determining prices. ultimately this meant state and local governments were effectively unable to borrow, with most new issues canceled. chairman, that was the problem that congress was seeking to address, solved by providing the cares act funding for temporary emergency ,acilities the intent was clear the facilities were designed to create a liquidity backstop until the crisis passed and then cease operations. no later than the end of 20/20 in any case. last week i would point out every republican on this committee signed a letter sent to secretary mnuchin and chairman powell affirming that this was in fact our interpretation of the law and the intent of congress. i also think it's important to underscore how remarkably successful these facilities were in achieving that intended purpose of stabilizing credit markets and restoring the flow
of private credit. they worked better than i think most of us even thought possible. markets didn't just improve, they did not just restore liquidity, but we reached record volumes of debt issuance, we did ,o at low spreads, low yields affordable interest rates, regional banks extended credit to their customers and according to business surveys, unmet demand for credit among creditworthy borrowers was almost nonexistent. let me go through some of the arguments we've heard for why we should not have closed down these facilities because i think they are all mistaken. one was that the viability of the credit market depends on these backstop facilities. while that's clearly been disproven by the fact the announcement of their end brought absolutely no disruption to any financial markets that i can tell at all. the second suggestion by some is that we need to keep these facilities around because some bad thing might happen someday in the future.
well it's always been the case that you could imagine some bad thing happening in the future. if some terrible thing were to happen to threaten the viability of our financial markets. the treasury and the fed should come back to congress and ask for appropriate facilities at that time. others point out their whole industries that are in big trouble. that is a true fact, especially travel and hospitality and entertainment. where consumer demand has basically disappeared. it's up to congress to decide what to do about that. it is not up to the fed to lend money to what are probably insolvent companies. let's be clear, of these facilities were designed for a very specific purpose, they achieve that purpose more successfully than we could have reasonably hoped and we should not use them to morph into some other purpose like as a supplement or complement to fiscal policy. i want to thank the chairman and the treasury secretary for
really the outstanding work they did in helping to ensure the viability of our financial markets and thereby avoid a prolonged discussion. sen. crapo: thank you senator toomey. sen. reed: chairman powell, you said fiscal policy actions that have been taken thus far made a critical difference to families, businesses across the country. even so, the current economic downturn is the most severe in our lifetime. it will take a while to get back to the levels of economic activity at the beginning of this year. and it may take continued support from both monetary and fiscal policy to achieve the chairman powell, how long will it take us to get back to pre-covid level of economic activity and employment without any further fiscal relief this year, congress?
chair. powell: it would be very difficult to say how that would play out in terms of the timeline. i will say though that first of all the economy hasn't actually performed -- it been more resilient to spikes in cases then expected. nonetheless, so we've had a recovery it's been faster than most forecasters have expected so far. nonetheless, we have a long way to go. we have the order of 10 million people who lost their jobs because the pandemic and for reference, that is more than lost their jobs during the global financial crisis in the united states. it's a lot people. it's a long way to go and we can both acknowledge the progress and also point out just how far we have left to go. as i said earlier, the lion's share of the credit should go to fed policy. the timing and scope and the size in the components of that
are entirely up to you. i just point out we will use our tools until the danger is well and truly passed and it may require help from other parts of government as well, including government -- including congress. sen. reed: also in your press toference, you pointed out the desire to keeping this andode short as it can be avoiding unnecessary business bankruptcies, unnecessary household bankruptcies, and there's a real threat of those things and we are trying to do everything we can. we are beginning to see that right now. several of my colleagues alluded to the fact these eviction in areclosures moratoriums expiring pray there could be thousands of people thrown out of their homes, which would affect the financial markets and in that case, it might be good
to have a facility backed by the cares act. issues aren't hypothetical. they are not a crisis in the future we don't see. they are very real. they are coming unless we take appropriate action. think these threats are substantial? chair. powell: as i mentioned in my testimony, there is a real distinction between the near-term and medium-term. in the near-term, we see the spread of the disease and what we are hearing from businesses and we met with a group of community bankers we meet with, what we are hearing is there are a lot of small businesses at risk of going out of business during this winter, which could be a tough few months. at the same time we are getting this news about the vaccines,
which are more effective and come sooner. there really is in the medium-term upside risk here. the other thing i will say is the fact that the economy was in very good shape at the beginning of the pandemic, that may be one of the reasons why it has recovered faster than we thought and continued to defy expectations or problems. i do think there is a those are real risks. the risks of small businesses going out of business, the risk of people at the lower end of the income spectrum where at the bottom quartile, these are not people with a lot of savings or resources or opportunities right now. so i think there are parts of the economy that really will need help or might need help to get that last span of the bridge in place to get to the other side of the pandemic. i think one of the points you are making is the impact of this crisis
economically is not shared equally. there are groups that are impoverished now and on the edge or even -- of even worst disasters unless we act. and if we don't, then we will have two separate but unequal groups of americans and that's to movecipe for a way forward. thank you very much. sen. crapo: before we moved to senator scott, i will indicate we are moving a few minutes into a series of votes on the senate floor. i am going to leave right now to vote early on the first vote and then return as quickly as i can and i've asked senator tillis to chair for me while i'm gone. senator scott. sen. scott: thank you mr. chairman and before you leave i would like to say to you thank you for your leadership on our committee. you have done a fantastic job. you've led in a bipartisan a nation desperate
to see their congress and senate working well and working together. disagreeing is part of what we signed up for. looking for opportunities to bring the committee together and bring this nation together, you have been a shining example of that and i want to say thank you for your leadership to chairman powell and secretary mnuchin, you've done a pretty good job under incredibly negative circumstances. the situation continues to change. thank you chairman powell for your leadership under these challenging times. sec. new shin, you've stepped up to the plate and provided programs and resources in a way -- secretary mnuchin, you've stepped up to the plate and provided programs and resources. one of the things i've noticed as we worked our way through this pandemic, small businesses have been struggling and frankly
as a former small business owner myself, i understand the pain and the misery of being a small business owner. remember the thrill of victory more than the agony of defeat. i remember the blessing of employment. wheres of my neighborhood i grew up and having folks joined the team as customers and seen the revenues increase and the opportunities for my employees. one of the things that's often missing when we are talking to small business owners is the important ingredient that for most of us, our small business employees are an extension of our family and so when you start talking about small business environment and the small businesses being decimated by this pandemic, you are actually talking about the fragile nature of small business and the absolute implosion of the foundation for so many employees around the country. i think we sometimes miss the
fact that when we are talking about small business, you are talking about employees who work at the small businesses more than you are the small business owner. to that end secretary mnuchin, you have watched as i have that 20 plus percent of all small business is- small for sale. hispanic businesses are in the 30's and that's devastating for the community and the small businesses who no longer have a job to go to. for the afghan american community, that numbers in the 40's. the question is minority owned businesses have been the hardest hit in this covid-19 economic slowdown. do you agree with the assessment that direct assistance, tailored assistance for those in similar situations -- similar situated businesses would have a wide rippling benefit to the economy?
sec. mnuchin: i do senator, absolutely. and i would say despite the success of project warp speed and the fact we will have a vaccine distributed in large mass. the problem is now. these small businesses cannot wait two or three months. so i would urge congress again to reallocate unused money and more money to ppp. do a set-aside as we did last time particularly for underserved areas. u.n. senator warner and others have worked on a possibility of $10 billion to be invested into cdf eyes -- cdfis which could lend into underserved communities. there's a lot that should be done very quickly. say, intt: i would addition to what we've already done and what we can do, what you are referring to is the paycheck protection program
still has unused resources sitting there, over $100 billion that could be available for small businesses right now if congress would get their act together and make those funds , thatble to the market could have a positive impact on the employees of the small businesses cannot find a way forward. opportunity we have before us is to look at the paycheck protection program forgiveness, making it simple and it may take congressional action for us to simple find the process. from thee any ability administration's perspective to streamline and simplify the process for banks and therefore making it easier for small it tougherto find knowing their small business loans will actually become a grant?
-- loans will become a grant? sec. mnuchin: we have created three separate forms. congress to make changes to the legislation to allow for simpler and again, i would urge congress to reallocate the $140 million sitting there that can have enormous milk -- business -- enormous impact immediately. sen. scott: that can be done today. we can do that today if we decide to do so. i'm supportive of that concept. thank you very much. >> senator menendez. sen. menendez: at least 3.3 million small businesses have are black owned small businesses and 650 7000
which are latino owned businesses. one point one million state and local employees have lost their jobs according to the bureau of labor statistics. you don't dispute those, is that fair to say? sec. mnuchin: i have no reason to dispute them. moremenendez: so how many small businesses do you project will permanently shut her after you and the cares act lending facilities? how anymore state and local employees will be laid off? sec. mnuchin: let me be clear, my decision is a legal decision, not an economic decision. congress can reauthorize this money if you want to extend it. i think they need grants, not loan. -- not loans. they can qualify for main street and they need ppp money. sen. menendez: let me just say you cited earlier in response to the early -- the chairman's
questions section 4029 of the cares act as the reason you had to close down these facilities. what is wrong with that recitation is that this provision applied to treasury newority to invest in facilities and not the ability of those facilities to make loans to companies in the real economy. in the interim we need to use every tool we have. after will be better off you and the cares act facilities. as we enter a third wave of ending thesek facilities is not mandated by law. it is important as an economic backstop and will have real and harmful consequences on our recovery, on our businesses and american workers.
during your previous appearances before the committee, not a single member, we went through the records, even suggested you should close the facilities. most of us on both sides of the have been urging you to make changes to the facilities so that they could provide more to businesses and state and local governments. as a matter of fact in october in response to questions on the congressional oversight commission, you did not say the cares act legally required you to end the facilities, you just said you did not think they were needed. so mr. chairman, i asked the treasury department's responses to congressional oversight commission dated october 16 be entered into the record. >> without objection. sen. menendez: so there is a choice here. and unfortunately the choice you
are making is consequential to businesses, to people who are recovering. tuesday a treasury department spokesperson said you planned to put the $429 billion you are withdrawing from the fed lending facilities into the treasury's general fund. is that a correct statement? sec. mnuchin: let me first comment on the first part. i don't agree with your reading. i believe that the section applied to direct and indirect and had you thought it applied otherwise, there would be a loophole and there would be no point of having the data. i was never asked about the december 31 eight and i always assumed of congress want to extend that, they can. with regards to the proceeds, let me direct you to section 4003 which talks about the deposit of proceeds. it's my intent to complete the follow in the law requires the amounts transferred to go to the financing account and then to repay any money that went to
treasury. we will complete the follow the law. this is not discretionary. if you want to extend this, bring back legislation would authorize you to do it. sen. menendez: you can keep putting the onus on congress when in fact you have the ability -- let me read section 4027 of the cares act that provides treasury with the onpropriation response " january 1, 2026, any funds described the remaining shall then be transferred to the general fund of the treasury. laters not say buy or no than january 1, 2026. so these funds being moved ultimately undermines. i hope chairman powell that you will convict -- commit to not return any funds to the treasury until we are sure that congress and the public, that those funds will remain in the exchange fund
as required by the cares act. sec. mnuchin: just for the record they don't go back into the exchange stabilization fund. >> senator kotten. sen. cotton: i want to join our colleagues for thanking the chairman for leading that he's not going anywhere, he will still be the senator and sharing the finance committee. but we've appreciated his leadership. the economy is recovering more strongly than i think anybody predicted in march and i think that's important because the response of the cares act at first and the way the trumpet administration in particular the department of the treasury and federal reserve has directed it. i want to commend both of you on your stewardship over these last nine months. the economy could continue to recover more strongly and especially for those people for those struggling the most. , thoseate instructors
who work in the fields and industries that have lots of in person close continual contact. there's two things we can do to help solve that problem immediately. one is one is to tell these democratic governors and mayors to stop with their irrational lockdowns. -- one of the world's most expensive restaurants. second, for congress to pass a new coronavirus relief bill. we all have bipartisan agreement to support those people who are still in need, yet chuck schumer and nancy pelosi will not relent on their $3.5 trillion wishlist. they want to hold up funding for small businesses and four restaurants and for industries -- and for restaurants and for industries like airlines.
want things like welfare checks for illegal immigrants, where they can override state voting laws, or let violent felons out of prison, things that have nothing to do with coronavirus. those of the two most important things we can help with coronavirus. what will not help, what was not designed to help, where the 13.3 programs that are so much the point of discussion in this conversation today. the 13.3 facilities have achieved their purpose. the reason we wrote it and the reason members of this committee crafted that language in mark was to stabilize -- in march was describe -- in march was to stabilize the markets. it was not to subsidize unsound or failing businesses that were not going to be able to succeed
before china unleashed this plague on the world. it was not to bailout fiscally responsible, mostly democratically led, states and cities who had mismanaged their finances for years or decades. it was to stabilize credit markets. appears atto say, it the time there was some bipartisan concern that these funds could be misused. i will quote from a few people, what they said at the time, about our treasury secretary. joe biden referred to these facilities as a $500 billion slush fund and a blank check. brown, givenenator the fact that he accused secretary mnuchin today of sabotaging the recovery or intending to drive the economy in a ditch, said at the time, the money, $425 billion, the secretary of the treasury can decide is a slush fund. senator warren said we are at a
450 billion dollars slush fund that would go to the secretary treasury to do what he wants. a 425 billionhas slush fund with which the secretary of treasury can say i like you, you get this. i don't like you, you get nothing, senator menendez said. the shoe may be on the other foot now. it seems like the democrats, with the hope of having a new secretary of the treasury and administration, would like a 450 billion dollars slush fund to reward politically favored organizations, like abortion providers or marijuana dispensaries or maybe to bailout their partisan allies in states and cities that have mismanaged their finances for years, but that is not what is the law -- but that is not what the law says, and that is the point secretary mnuchin has been making all along, if i am not
mistaken. this is not an economic decision, this is a legal decision. this law was designed from the beginning to stabilize credit markets at the height of the uncertainty of this pandemic in the spring and that is exactly what it did. secretary mnuchin does not have legal authority to keep these programs in place. he took the right action, and if our democratic colleagues want this money to be available, then they need to work with us to pass new legislation. thank you. crapo: senator tester. sen. tester: thank you, chairman .illis i also want to thank chairman ,rapo for his evenhandedness willing to work with both sides of the aisle, and, quite frankly, unlike the last senator, actually bring people
together and not divide them. so i appreciate senator crapo in that regard. we are had the feeling at a fulcrum here, where the economy still is in a difficult condition, and what senator toomey did say was not correct six months ago. chairman powell, i have the feeling that if we just, you know, fold up our hands and walk away, that this economy not only might, it will slip backwards over the next few months. that might be by design by some that serve in the united states senate or the administration, but it certainly is not my goal, and so i would like chairman powell to highlight the importance of additional fiscal support for the success of the economy moving forward. you talked about, chairman
powell, the folks out there who continue to hurt and i will tell you that i think it is bigger than just the ppp program extension. i think our health care system is, quite frankly, stressed to the max. in my town, i am not sure there are any beds available right now. they are all full. and i can tell you i think that is the way it is in many parts of the state. we are talking about not locking down, bearing our hands in the burying our heads in the sand. my wife has undergone treatment for cancer. covid, its this am not sure she will survive. we need to wake up in the senate as to who is locking down what and the reasons for it. say,aside, i would just
chairman powell, can you talk about the importance of addressing our health care business, our hospitality businesses, our working families that, as you said, are in tough shape, local governments? and by the way, mismanaged local governments? give me a break. the senate and some of the best economic times ever borrowed $1 trillion a year and you accuse local government of mismanagement? holy mackerel. it is hard for me not to cuss. chairman powell, can you talk about what is really needed out there? do you see it the same way i do? chair powell: thank you, senator. i would put it in context. you know, we have done a lot. and we really appreciate the working relationship we have had with treasury on the facilities and thank them for the
productive work we have been able to do together. -- our thinking is that we would have left facilities in place to be backstops. we don't question the secretary's decision about the cares act money because that is entirely his decision to make, but i think central bank's generally would have done that. -- central banks generally would have done that. in terms of what would be needed, we are hearing a lot with discussions with people throughout the federal reserve system about small businesses that may struggle during the winter it the spread of the virus by. -- with the spread of the virus high. it is those people in public facing jobs in vulnerable industries. they may see the light at the end of the tunnel as vaccines come out, but they may need more
help to get to that place. so that is the way we are looking at it. we will continue to use our tools to their fullest extent, and that will include 13.3 facilities if appropriate -- if appropriate -- and if they meet the legal requirements, but it may also include direct help to businesses that don't need to borrow anymore. as the secretary was noting, some of these businesses, what they need is fiscal policy, a grant to get them through this last bit of the pandemic rather than, you know, borrowing more through a federal reserve facility. sen. tester: i think we all agree with that. donee end, if nothing is -- and i don't think anybody on tos committee wents nothing be done -- want nothing to be think we goi don't to a job and do it half-assed
either. there are folks hurting big-time . there are people looking for a job for so long they are off the unemployment rolls. small businesses, whether we want to pad our chest or not -- to pound our chest or not, local governments, educational units, because there are many schools that are doing distance-learning and in person need additional dollars. do you see us sliding backwards if we do nothing? economy beingthe stagnant for an extended period of time? chair powell: i think there is a risk. i would characterize it as risks. the economy has continued to perform better than expected, the more resilient than we have expected. at the same time, this is a large outbreak and there is a
real risk of small businesses and people who are on unemployment for extended periods, and i think those are real risks that should be taken into account. thankester: i want to both chairman powell and secretary mnuchin for being here today. sen. crapo: thank you. senator rounds. sen. rounds: thank you, mr. chairman. mr. chairman, i would like to thank you for your leadership on the committee and i appreciate the fact we have been able to do some things on a bipartisan basis that have a lot to do with your hard work. i would also like to thank both of our guests here today. chairman powell and secretary mnuchin, i think you have done very good work under trying circumstances. i would like to begin my questioning today with secretary mnuchin. housing has been one of the bright spots of our economy
during the pandemic. i want to make sure that we continue providing the necessary support. one of the potential threats i see is ending the 's.servatorship of the gse in a perfect world, it should have been ended sometime ago. i am concerned that if recent conversations come to fruition and fanny and fed -- and fannie prematurelyare released from control, the housing sector could be called into question. what are your views with respect to the timeline when conservatorship can be unwound? sec. mnuchin: i don't think they should be let out from conservatorship without appropriate capital. there is obviously different opportunities to accumulate capital and raise capital. this is one of the areas that i will continue to try to work
with this committee and others. i think there should be housing reform. i think that the appropriate scenario is for them to have real capital and ultimately to be released. >> chairman powell, follow-up. thefederal reserve is largest investor in mortgage securities. would you share your thoughts on the impact on the market if the conservatorship were to end prior to the time when pandemic impact has been eased? chair powell: i would echo the secretary's point that i would certainly like to see the gse's return to private hands over time and the housing finance sector and system standing on its own feet with a lot of private capital behind it. that think it is something time needs to be taken on and i
would applaud the new capital standards that have been put in place, but that capital has to be raised still, and i do think it is something to do carefully. i know that is consistent with what the secretary is thinking. sen. rounds: thank you. i appreciate also the flexibility given financial institutions that want to work with businesses experiencing covid related hardships. unfortunately, not many of us have thought the pandemic would last as long as it has, and several sectors of the economy all still face challenges. to be doing to support the financial institutions who want to continue working with customers in these hard-hit industries? and i know we talk about targeted and specific assistance, but financial institutions have been right in the middle of this whole thing, the expectation has been that we
have allowed them flexibility. i think it would be helpful to hear each of you, your thoughts on this particular issue, and in this case, i would ask chairman powell to go first. chair powell: the most important thing is, as the economy recovers, companies are recovering. and the more they recover and the faster they recover, the smaller the losses will be. i also think we will continue to encourage banks to work with their borrowers and continue to keep in place the very targeted relief we have provided, which does not undermine safety and soundness in any way, but it allows banks the room to do what they want to do, which is to serve their customers. so we would not want supervision undermine the to process of working with customers where it does not implicate safety and soundness. >> secretary mnuchin?
sec. mnuchin: i would echo the chair's comments. i think they have done a great job in writing flex ability. sen. rounds: thank you. mr. chairman, it will yield back my final 15 seconds. sen. crapo: thank you. deeply appreciated. senator warner. echowarner: let me also what my colleagues have said. thank you for your leadership on this committee and in particular, secretary mnuchin, plan to help on your help black and latino businesses hit by covid. you may know this morning about partisan -- morning bipartisan group of senators announced an emergency relief framework. i don't think the stakes could be higher. seen the foode
lines across our country. we know that small businesses are on their last legs. we know that many front-line workers are to be laid off. and literally, people are out of their homes as early as january. i think that is unacceptable and my hope is that members of the administration, members of the congress, will sit down and figure out a framework that can be that bridge to get it done before the holidays. this bridge, and it is not a .ong-term plan it is not what president biden will want to do, but this package, which weighs in at $908 billion, takes care of health, student loan assistance, small broadband, food insecurity, and i am going to
make sure i ask both of you whether, without knowing the details, you think generally this is a direction we ought to head. let me take one more minute because this is something senator crapo, senator scott, senator tillis on our side, have come together on. this package of $12 million for capital investment for financial institutions. we know black and latino businesses have been particularly hard-hit by covid. thousands of black-owned businesses have shut their doors, generations of accumulation that has closed down. we know 40% of latino owned businesses have closed their doors. i heard a constituent of mine who, five years ago, opened up a diabetic center and a low income neighborhood. covid-19 hit her business hard
and she said, i treat folks. the they walked through door, they want to receive the compassion they deserve. that is what they do. that business is on the brink of shutting down. article,sk about the to be turned into the record. sen. crapo: without objection. sen. warner:. -- sen. warner: i would ask two questions. the details of the bipartisan plan put out this morning, without knowing them, do you think, directionally, this kind of bridge emergency relief is needed at this point? chairman powell, would you go first? chair powell: i would defer to you and to the secretary who have authority in this area on the particulars, but it sounds -- hittinge heading
a lot of the areas that definitely could benefit from are and some of the areas going to be experiencing a iallenging winter, so -- but cannot really speak to the particulars of the bill. sen. warner: appreciate that. secretary mnuchin, i know you weren't negotiating on many of these things. -- you were negotiating on many of these things. directionally, do you think this effort is needed? sec. mnuchin: i did comment earlier to senator scott and i applaud the work you have done whetherdfi program, so it is 10 billion or 12 billion, i support that. that could could create -- that could create $100 billion of lending quickly. i do think more physical response is needed. i think what is more important is what we can pass quickly on a bipartisan basis to target the most difficult parts of the
economy. and hopefully that will be needed and done quickly. i look forward to following up with you. sen. warner: i understand. i promise we will share that with you immediately. effort at a best framework. i hope everyone will give it a reasonable review. again, appreciate your leadership on this committee. sen. crapo: most of our members are voting right now, but i understand senator warren is with us. sen. warren: i am. thank you, mr. chairman. today, more people are getting sick from coronavirus than any other time during the pandemic. on top of that, many people, the help that many people have relied on is about to disappear. the day after christmas, 12 million workers will lose unappointed benefits.
that same week, secretary mnuchin will be shutting down the federal reserve programs designed to help the economy. chair powell, you have been clear about the need for more physical support to help families and businesses get through this crisis. let me ask you specifically about health to individuals that puts more money in their pockets during an economic crisis. this is economic stimulus 101. if individuals have a bit more cash to spend every month, that helps them, but it also helps the economy, right? chair powell: yes. sec. mnuchin: yes. sen. warren: so there are two ways to get more money in people's pockets. the first is providing payments like stimulus checks or unemployment insurance, which i strongly support. the second is by canceling the debts that people owe so they can spend that money elsewhere. the largest category of household debt other than
mortgages is student loans, most owed to the federal government. right now, those payments are caused, but the clock is running out. soon, the median borrower will have to start paying more than 200 dollars a month to the federal government at a time when they need to spend more money, not less. chairman, you testified before congress that you think rising student debt is, when looking at the overall picture, rising fast and is now large. there is increasing evidence that shows that students who cannot pay that debt have difficulty having normal economic lives and buying homes and things like that. mr. chairman, would you agree that high levels of student debt will have a negative impact on our economic recovery if millions of households have to
reduce spending to make debt payments? chair powell: others and i have been calling out the rising student debt for some years now, particularly we have singled out for not being able to be forgiven in insolvency among all different kinds of debt. that is a longer-term problem. in terms of what appropriate relief would be appropriate in the current situation, i would have to defer to those who have authority to make that decision. sen. warren:. -- sen. warren: i not asking you about what congress should do. i am asking about what it does to the economy if people who, instead of spending that money in the economy, are spending that money by sending money back to the federal government on their student loan payments? that is a problem for the economy, is it not? chair powell: certainly people who are weighed down by debt in the situation like this, where they may be unemployed, where unemployment is very high among low-wage workers, that can weigh on economic activity, yes.
in. warren: fair enough, but think we started with economic stimulus 101. $200 is $200 that could be spent in the economy. mr. chairman, you also noted that student loan debt has another impact on the struggling economy, and that is that student loan debt makes it harder for people to qualify for mortgages, to buy homes, to art small businesses. you notice those things drag our economy down. do you still feel that way? chair powell: data are showing that over longer periods of time, people who take on student debt in order to make their lives better and brighter, and if it does not work out that way, they dragged that debt down through their economic lives, and it can get in the way of their credit history and their ability to own a home and their economic life for years. sen. warren: and that has an overall impact on the economy in
terms of home sales and business startups, is that right? chair powell: yes, those people are unable to participate in the economy to the full extent they might be able to, which would weigh on the economy. sen. warren: i know you have said you do not know how you could be clear on pushing congress to act on more fiscal stimulus, but most types of stimulus are pretty much impossible when republicans in congress refused to take action. a -- aid to state and local governments, unemployment, but student loan debt is different. president-elect biden will have the ability to administer something that will cancel billions of student loan debt using the authority congress has given to the secretary of education. this is the single most effective economic stimulus available through executive action. and as you have noted in the
past, research shows that canceling student loan debt would boost gdp, create jobs, reduce unemployment, jumpstart small business formation, support the housing market, promote jobs, and economic and geopolitical mobility, and increase the annual income to borrowers by about $4000. so it would also help close the racial wealth gap. it is time to act. thank you very much. thank you, mr. chairman. chair crapo thank you. --ir crapo sen. schatz: thank you. thank you for your extraordinary efforts during this difficult time. the first is for secretary mnuchin. where are we with negotiations? you have been lead negotiator on behalf of the negotiation when we were successful and you negotiated we were not successful.
i just want to get a sense for the public and for the whole congress so that we are not just reading this on politico where we are with respect to , the ideas relief that we will pass a standalone package or on the omnibus and your priorities? sec. mnuchin: i had a conversation yesterday and this morning with mitch mcconnell, kevin mccarthy, myself, and mark meadows. i spoke to the president this morning and updated him. we all believe that there should be targeted fiscal response. i would say that my motivation in the fed facilities was not political, as i said. it was purely legal, but those funds can be reallocated. the ppp money can be reallocated. i would say things like ppp and unemployment are running out are high on the list. i will be speaking to speaker
pelosi this afternoon about the government funding. we obviously did not intend for there to be another cr. we signed the two year deal. we wanted to get funding done and i'm sure i will speak to her about cares funding as well. we support targeted, quick relief. sen. schatz: i will just editorialize for 30 seconds here. the election is over. and lame ducks are for doing necessary things. that is what a lame duck is for, and especially during a pandemic, that is what a lame duck is for, so we all need to put our weapons down, and i applaud the efforts of senators warren and collins and others because we really need to deliver relief, and especially because we need to recognize that if we cannot get something done during a lame-duck during ap dimmick, that says -- during a pandemic, that says something
about all of us and our unwillingness to find a middle ground. a separate topic for chair powell. i am encouraged to see the fed discuss climate risks and their annual report on financial stability. you and i have had several exchanges in the past few years about the financial system's vulnerability to climate shocks, and i am pleased to see the fed address this issue head on. the report calls for increased transparency through improved measurement and disclosure and to improve the pricing of climate risks. the question i have for you is what specifically should companies be disclosing to enable the accurate pricing of climate risks? know,powell: you corporate disclosure is something that we don't have responsibility for. i think what we are talking about is sort of a general idea. at this stage, it is an early stage in trying to understand the implications of climate
change for financial stability, and thank you for calling out our box. i thought the box we put in our financials to build a report did a good job of ling at the connections we do see -- of laying out the connections we do see, but we are a long way from understanding what that means. the public will find out what are the implications for financial stability of climate change. some will be through disclosure and some of it will be through other channels. sen. schatz: the fed's staff is conducting research in climate related financial risk. what kind of tools are you developing and what kind of data do you need to measure that risk? chair powell: it is early to be talking about -- really, as you pointed out, there is research going on in the economics community. and we have probably the largest economics staff in the united states, one of the largest in the world, and there are people working on climate change and
the implications for the economy and financial stability. exactlys early to say what those tools will do. i guess i would start by saying that the broad response to climate change on the part of to bey really needs backed by elected representatives. --see applications implications of climate change with the job you have given us. the question is for representatives. sen. schatz: we see this risk, i agree. you are charged with measuring the risk in the financial system. you are not charged with solving climate change. that is the policy making part of the government, but it is important that you fulfill your steps to make sure that risk is measured accurately. one final thought here. i am not sure if it is so much that it is early. i think it is more that this
stuff is hard. i can see that this stuff is difficult and we want to develop common platforms, common tools and data sets so we do this intelligently and responsibly, but this is not early. it is just that this is difficult to do. we want to give you the space to do it right, but we cannot take several years to develop these tools and data sets. thank you. crapo: senator kennedy. sen. kennedy: thank you. chairman powell, has the federal deserved on a state-by-state analysis of how much money state governments have received from congress? to bolster their economy, and how much of that money they have left to spend? senator, i am confident somewhere in the federal reserve system that information does exist. i do not have a close to hand, though.
sen. kennedy: what does the information show? chair powell: honestly, i would not be able -- i would have to get the information in front of you to answer that. sen. kennedy: then how do you know state governments need more money? well, i did not say that today, that they did need more money, but i would say we do know that at the aggregate level -- i can give you some data that i believe is true, and that is that states that have particularly high sort of their economyt of are feeling this significantly and they have much lower tax revenue. states that don't really have exposure to travel and leisure may not have had much of an effect at all, so it does var
y quite a bit. florida, for example, has lost something like 11% of its revenue overall. i cannot fact-check that in real time, but that is a statistic i saw. i think it varies a lot state to state. 16, kennedy: on november the wall street journal reported recentlyfornia reported that its tax revenue for this fiscal year is running 19% above projections. do you disagree with that? chair powell: i don't have any reason to, no. sen. kennedy: in the same analysis, the journal reported that personal income tax revenue in october in california was $1 billion or 16% higher than the previous october and sales taxes
were up 9.2%. is that consistent with the fed's information? chair powell: i honestly haven't seen any information at the fed. as i mentioned, i think the bigger fact is that state and local government revenues, tax revenues, have been less affected so far than we thought we would. there is a lot of research on why that might be. nonetheless, state and local governments have laid off more than one million people, and some states are feeling this, the ones that are more exposed to travel and leisure. the travel and leisure industry are really feeling that pinch. sen. kennedy: the federal reserve -- excuse me, the wall street journal, on november 16 also reported that, in new york tax revenue was up 4.3% in september compared to september 2019.
a large part of the reason for that is that new york state taxes unemployment benefits. do you have any reason to disagree with that? chair powell: no, sir. sen. kennedy: ok. the journal also reported that personal income tax revenue in connecticut increased 2.9% in september from the previous year, and in the fiscal year that started in july, income tax receipts in connecticut are running .3% ahead of last year and sales tax revenue is up 5.3%. do you know if that is accurate or not? chair powell: i don't. sen. kennedy: ok. congresslieve that should appropriate money to
states and allow those states to support their to pension systems? chair powell: i think that's a question for you, sir. sen. kennedy: well, i am asking you, mr. chairman. you have been pretty vocal about -- and i am not being critical. i appreciate the advice -- but about the need to pass another coronavirus bill. do you think we should allow states to use money to shore up there retirement systems? -- their retirement systems? chair powell: i think they provide critical services, some have had significant hits to revenue. they are big employers, one of the largest in the economy. it is an area where i think it is worth looking, an area -- don't,nnedy: don't,
don't you think -- i am sure you would agree -- don't you think, though, that before we appropriate more money, we should base the decision on empirical data, like how much we have given to each state, how much of the states spent, how much of that money did they still have just sitting there? don't we think we ought to approach it as opposed to just using anecdotal evidence? chair powell: certainly i would not recommend you use anecdotal evidence, but really these questions are way off my range. express have views, views, on specific fiscal questions. we try to stay on a high level. sen. kennedy:. thank you -- sen. kennedy: thank you. sen. crapo: senator van hollen. sen. van hollen: thank you, mr. chairman. powell,u chair
secretary mnuchin, for your testimony. there is clearly agreement that we need more fiscal relief. mr. chairman, you said on october 6 that "too little support would lead to a week a weak recovery for households in businesses." more recently, as the cases from the pandemic have accelerated, you have said there has not been a bigger need for it in a long time, meaning fiscal leaf. -- relief. and president trump in october tweeted out "go big or go home" to congress. just picking up on senator schatz's comments and others, we need to get this done. we cannot go home before the end of this month without addressing the paint needs and
that american households and small businesses are facing. chairman powell, first to you. i assume you agree today with the statements you have a previously about the urgent need for substantial fiscal relief. -- whenwell: let me say i said this is the most urgent need it, i was talking about the whole pandemic, the need for the cares act. i was not trying to speak about the need for another full cares act at that point in time. that is what i believe i was referring to. it was a couple months ago. but yes, my view hasn't changed. ithink the risk of overdoing is less than the risk of under doing it. that is the record of pandemics and crises. you always think -- people are worried about doing too much, and you look back in hindsight and say, we might have done more and little sooner. i think we tried to live with
that lesson this time with the cares act and things the fed and other parts of government have done. we did act aggressively. we have come a long way. the cares act did a tremendous amount of good. we see what may be the light at the end of the tunnel with the vaccines. we at the fed will keep at it until we are really done. i think some fiscal support now would help move the economy along as well, at least to guard against those downside risks we have been talking about, smaller businesses, households, and others who are directly affected. >> i agree, and with respect to state and local governments, i was listening to your discussion with senator kennedy and would say one million people who have lost their jobs is not anecdotal. that is real, as you pointed out. those are people who no longer have an income and therefore are relying on a safety net until we get everybody back to work. secretary mnuchin, again i
quoted president trump back in october saying that congress go big or go home. just recently, he tweeted again, go big. and the focus, make it big in focus. do you share the president's view that we continue to need to go big on fiscal relief? sec. mnuchin: i do believe we need more fiscal relief and there is more work to be done, as i said in my testimony. fortunately, the cares act has worked and the numbers are better than they were two months ago, but i would urge congress to pass something quickly to make sure we get something done in this session. sen. van hollen: i could not agree more. i know you are engaged for a period of time with speaker pelosi and others. what was the trump administration prepared to do in terms of its topline number at that time? the chief of staff was quoted as
saying somewhere between $1.2 trillion or more. is that accurate? sec. mnuchin: i think, as you know, we have made lots of proposals along the way. there were different proposals and different components. and as i said earlier, i spoke to leader mcconnell and mccarthy and meadows this morning and the president, and we will continue to work with congress to try to get something done quickly. sen. van hollen: mr. secretary, you would agree it would be a mistake to allow the emergency pandemic unemployment insurance to expire at the end of the month? sec. mnuchin: i do believe that is one of the areas. i think there need to be technical fixes, but i support extending it. i also absolutely support using the unspent money in the ppp, being authorized to be used immediately. sen. van hollen: and you also supported money for state and local government relief.
i can tell you i had a conversation this morning with the general manager of the washington metro transit system. you can read on the front page of the metro section of the washington post today that they will lay off 1200 people in december and their budget for next year, if they don't get anymore relief, contemplates over 2000 people. recognizewe will all that we have got to do something. there seems to be a lot of running room between the two positions that have been outlined, and i just think it would be shameful if the congress goes home, the administration -- if we are not able to do this before the end of the month. so thank you, mr. chairman. sen. crapo: thank you. center jones. sen. jones: thank you, mr. chairman. thank you to both of our witnesses for your service. secretary mnuchin, i have not had as much personal interaction, but i want to tell
you how much i appreciate your service in some difficult times over the past two or three years. chairman powell, thank you very much for allowing me to get to know you. i so much appreciated the fact that even though your nomination -- you still made a point to visit me when i got sworn in in january of 2018 to get to know me and understand the office and my work on the banking committee. thank you for that. i would like to revisit something i have talked about on many occasions, and that is the racial inequalities we have witnessed in this country. kind of grapples with the racial inequality we have seen, the federal reserve's recent survey caught my eye. how much long-standing substantial wealth is within families of different racial and
ethnic groups. the typical white family has eight times the wealth of the typical black family and five times the wealth of a typical hispanic family. rafael bostic of the federal reserve bank of atlanta published a paper arguing that the country's racial economic gaps were cemented over centuries and called on the fed to reduce racial inequalities and bring about a more inclusive economy. let me say very quickly that i know coming from a state of the old confederacy that most people think that some of this is just based on the jim crow laws of years past, but in fact, we all know that this is not just a southern problem and it is not just a jim crow problem. cementedicies had been by the federal government, laws passed by this congress, may be giving some accommodation to white southern segregationists
in the house and senate at the time. housing, health care, even the g.i. bill really kind of submitted the inequalities that have lasted now for decades. value --u, chairman so, to you, chairman powell, and i want tod, look forward because as we come out of this pandemic we have opportunities to address these inequalities in so many areas, so what can the fed do? as we come out of this economy, what strategies would you recommend to address the inequality we have seen in this economy, whether businesses or individuals? chair powell: these are long-standing inequalities over a very long period of time. and there is a real concern we have at the fed that the pandemic will make that worse because, of course, minorities are much overrepresented in
these service industry jobs that were so heavily affected by the pandemic. so there is a concern that things will get worse. and the last couple of years were very encouraging because, as the longest expansion in our recorded history continued, we saw the racial unemployment cap ministering to the lowest level since we began measuring it. so it was disappointing to see that. what we can do going forward? the most important thing we can do is to take seriously the job of achieving maximum employment. and we have now changed our operating framework to acknowledge that maximum employment is a broad and inclusive goal, and by that we mean we will look at various different measures of labor market conditions, including minority unemployment rates, quite frankly, and minority participation, labor force participation rate, and wages.
we will look at all of that as we try to achieve our maximum employment goal. we also enforce fair lending laws in our division of consumer and community affairs. we need to continue to do that rigorously. ultimately, though, we will continue to do whatever we can with our tools, but really it will take a broader attack on these problems than just a federal loan can mount. sen. jones: thank you, mr. chairman. mnuchin, any advice you would give to the incoming administration and congress about how to address this from an economic standpoint? sec. mnuchin: as i mentioned earlier, i think the cdfi investments are something that can be done quickly to help minority and underserved communities. sen. jones: mr. chairman, if you would bear with me for a couple seconds. express mye to
appreciation to you and the ranking member and all the members on the committee for the work we have had the last three years. it has been remarkable to work with you. but also the work i have done with members of the committee on both sides of the aisle. it has been echo honor and a privilege to work with the entire committee. i hope, mr. chairman, that as you move to a different chairman orhat as the member toomey, case may be -- thank you very much. sen. crapo: thank you, senator jones. senator tillis. sen. tillis: thank you mr. chairman. i want to thank both senator mcsally and senator jones for their service on this committee. they were serious legislators and i had the opportunity to
work with both of them. i want to thank you for your leadership. you will leave it in good hands, but i will miss you as our chair. thank you for being here, gentlemen. i had to go vote. i am sorry i was not here for the whole of the hearing, but i remember vividly back in march when we were negotiating with secretary mnuchin and members of the senate working together, we had an underlying set of assumptions. some proved to be true, some did not. we knew we had to do something big, bold, and fast. we came up with the cares act. i think ppp saved a lot of jobs and the main street lindy facility was necessary, even though very few of us thought it would be fully subscribed, and that has proven to be true. we also made certain assumptions about how long this virus would impact the economic base.
there were people thinking 90 days, six months on the outside, maybe the end of the year, which was the basis for the date that secretary mnuchin mentioned. things have changed. i for one think that we do have to provide a bridge to what should be a trending positive environment may be sometime in the second half of next year if we make certain assumptions about the manufacturing and distribution of a vaccine that could be valid with the historic approval of two vaccines in less than a year. but secretary mnuchin, i have to remind everybody about what you have said. say these dates are important but in the same breath have said that we need hundreds of billions of dollars in the a tech -- in the paycheck protection program to provide that bridge, that stabilization. is that your basis for that, that we have to cover that window of opportunity? sec. mnuchin: correct. maybe the first or second quarter.
sen. tillis: and, chairman powell, i think you feel the same way. i do not think we are necessarily talking about something on the scale of the first cares act or the heroes act, but something that does provide some of the fundamentals for the businesses. and i think they do need to be grants, not loans. but do you agree with that window that we need to provide the bridge, based on the information we have today? chair powell: i think the bridge is the right way to think about it. i don't have a view on exactly how much that needs to be, but we can see the end. we just need to make sure we can get there. sen. tillis: one thing, and, chairman powell, this may be for you. of the 10 million jobs still outstanding, has there been any analysis on the length of time that they are likely -- we have got, north carolina, about 19,000 restaurants. 4000 a.
-- 4000 have closed permanently. so there is a structural element of unemployment. so do we have any analysis on the amount of unemployment that, if we provide additional stabilization funds, if we see this trending in the right direction with the vaccine, what is our structural deficit for that remaining unemployment? how much of that is structural, long-term, versus likely to bounce back as the economy does because the businesses are there as the economy reopens and expands? chair powell: that is the big question we have been asking ourselves and you have to make a lot of assumptions to answer. the question is what does the economy look like after the pandemic? we get there, the smaller the number of people structurally unemployed will be. we are happy to share some
numbers. sen. tillis: i want to thank you for your extraordinary leadership and the banking industry for being a partner that helped us make the ppp success. we need to look at the first and, last out industries. -- first in, last out industries. there is a lot of work that needs to be done, but i don't think anyone can rightfully criticize or suggest that the cares act has not been anything short of the mvp for stabilizing the economy when we had the crisis. you guys were two people on the team that made it successful. i don't believe we should be asking secretary mnuchin to do congress's job. if congress is serious about funding paycheck protection, serious about -- protection, they can get serious about passing a follow-up to the cares act.
thank you, mr. chairman. sen. crapo: senator cortez masto. smith. sen. smith: thank you. hello, everyone. it does my heart good to see my colleague, senator doug jones, and i want to thank you so much for your service. we are going to miss you. and thanks also of course to center make sally. -- senator mcsally. i know the chair is not here, but i want to thank chair crapo for his leadership. we don't always agree, i feel like there is a way for us to work together, which is so important. i want to add my voice to the many on this committee today who have said that it is important that we get something done to help families and small businesses that have been
struggling through this pandemic. we have got to get something done. and i also agree that we should not make perfect be the enemy of the good. that is what i am hearing in minnesota. i have to say i have never worked any place where i have talk loudlyeople about the need for action without action happening. i have not had the chance to see what our colleague's bipartisan group has put together, but i hope that will take us somewhere. ask my republican colleagues to bring this up with senator mcconnell when you have lunch together, because there is a great need for action here. i want to pivot to something and have a little bit of a dialogue with you, chair powell, about this. you have used, appropriately, this metaphor of how we need to build a bridge to a post pandemic recovery. you point out that our economy has been responding better than we expected, but we still have a
really, really long way to go. you know, we also know that we are seeing long-term trends in any quality, which make it harder and harder to generate the economic activity, the spending, that will drive growth long-term. that is what we see because of raising long-term trends in any quality holding back spending minorityies of color, businesses of color. chair powell, could you talk a little bit about this? i am especially interested in, using your bridge analogy, you know, what are the risks of not building this bridge? what happens if we don't take this action right now? and the long-term impacts of this growing inequality on our economy post pandemic? thank you, senator smith.
these disparate economic outcomes across racial and other lines are a long-standing feature of our economy. they have been with us for a very long time. there is a great risk that the pandemic is making them worse because the people who are most affected by the job losses were people in relatively low-paying that happens to skew more toward minority and women. there is a concern that if we don't act as quickly as possible to support those people, get them back to work, get the economy up and running as much as possible, that we will leave behind a more unequal situation -- which is tragic because we actually have been making good progress on these issues for the last few years. as a longest expansion in our history went on, we started to see the gains go to more the lower end of the spectrum. we sell racial income gaps
declining in labor force participation, unemployment declining. we saw some constructive things. waiting for the eighth or ninth year of an expansion is done a perfect strategy. tore is an issue of wanting do as much as we can to avoid exacerbating the long-standing differences and get back to a strong economy where we can start making progress again, which is what we were doing in february. sen. smith: as the fed chair and the fed, you have the low unemployment and managing inflation. -- spur jobfed growth and we see there hasn't been a big worry about inflation -- what if the fed were to lower its target for employment to even under 3%? what impact might that have on addressing long-term needs for addressing inequality? changepowell: we made a
that i think addresses that directly. while we will have an estimate of the natural rate of unemployment, we are not going to have -- act on that even if unemployment goes below that unless we see inflation or some other problematic thing that seems to be linked to where our rates are. we're not going to preemptively raise rates until we see actual inflation now as a consequence of low unemployment. i think that is a lesson we learned during the last expansion will we saw very low, 50 year lows in unemployment with really no and very high participation, strong labor market as we have seen in my lifetime, without inflation acting in a way that was concerning. also want to extend my thanks to secretary mnuchin for his service. thank you very much, everyone. >> senator cramer? you to the: thank two witnesses for being here. congratulations
to chairman crapo on a wonderful two years as chairman. has been great to me in the whole committee and really appreciate your approach. and also thank you to senator mcsally and senator jones. we will miss you both. we are very grateful for your service. it should not surprise anybody the issue on my mind and one i pretty much wake up thinking about every day and wonder how the caresckle it is act, ppp forgiveness. secretary mnuchin, you know that senator menendez and i along with senator tellis and about 28 of our closest friends and allies from both political parties have introduced 4117.eness bill senate
those $150,000 make up 85% of the total loans but only 26% of the dollar amount. and mr. chairman powell menu should have said during this hearing what businesses need are not loans but they need grants. well, forgiveness was a major component of our bill. once again in my view, congress did what it often does and does not prescribe enough of a solution -- which i fear more than the devil himself lately -- to come up with own rules and regulations, always aimed at cya , no understanding of how a business of rates or keeps employees. but when we passed ppp, designed largely to be forgiven, designed to make -- people onto payroll,
we encouraged, almost forced small lenders to use the program. i talked to literally hundreds multiple times, consumer banks, credit unions, services about ppp and white needs to be utilized. and here we are still waiting for another package from my hope, desire, conviction to work my tail off to prescribe a solution to this. but in the meantime, mr. secretary, i have been very disappointed in the response. discretion to the advantage of the government, not the small business. let me give you some specific examples as i have heard from my constituents. typicalbusiness, pretty , and what they wrote to me. "senator cramer, please help.
with congress not passing a new stimulus, it leaves many small businesses in a bind. we go to the bank and ask for an operating loan, they tellis not until you get your ppp forgiveness." why haven't they gotten it? receive says until notice from sba the original ppb loan has been forgiven, they're not going to give us money. abouts a loan of right at $100,000. thathave moved so slow they need to pressure from us so we apply the pressure. it took nine weeks -- nine weeks, mr. secretary, to forgive a $100,000 loan where the program was designed for it to be forgiven. this is a small motel/hotel operation in bismarck. nine weeks. it took nine weeks and one day
because the day we made the call to inquire, they finally forget the loan. out of just one example hundreds, maybe even thousands. here's one from a lender before i let you answer. outtter says "just reaching as fyi, sba has requested additional documentation on 5% of the loans ranging from $3700 to $134,000. it is a waste of time." does withcracy always the bureaucracy is going to do. mr. secretary, this is very disappointing to people who did not -- they could have laid all of these people off and gotten generous unemployment extension program but they pressed to us and sba did what the preop proceeds going to do, extended the time, asked for more documentation, put more demands on them. the cost to comply is now $2000
per borrower. obviously, my time is up. i would have lots more to say about it. we have got to do better than this, mr. secretary. sec. mnuchin: i agree we need to do better and we support legislation to help forgiveness. sen. cramer: use the agency has until the bureaucracy to stopping such a bureaucracy. a big deck -- disconnect. we need small businesses to thrive. >> thank you senator. . >> gentlemen, thank you. let me jump into it. as you know, i talked to you about this all the time, i come from nevada, the hospitality and leisure industry has been so hard-hit. nevada's unemployment rate is now more than 12%. we know more than 175,000 people continue to claim unemployment
insurance. just the statistics from the american hotel and lodging association, nearly 70% of hotels may close by the end of this year if they do not receive additional government funding. i will tell you in las vegas and reno, employment and our hospitality and leisure sector is down nearly 25% and 14% respectively. let me start there with both of you. secretary mnuchin, what is the administration and -- or what are you advocating for that we should do to address really the impact we are seeing on her leisure and hospitality industry? sec. mnuchin: well, specifically, and i agree with you this industry has been devastated. i believe the ppp could immediately help people. i believe the airlines have also been devastated so we support additional relief for the airlines.
businesses,small entertainment -- all of these companies could access the ppp. sen. cortez masto: i'm talking about restaurants live events. loanre not looking for a step i think you said earlier. it is not the loans that have come it is the grants. shouldn't we be looking at providing the more opportunities for grants and loans that have to pay back? usedmnuchin: the ppp, if correctly, is a grant. it is a loan that should get forgiven without the bureaucracy. yes, the ppp is effectively a grant that is what they need, not more loans. sen. cortez masto: but there are challenges with it. i think the confusion even for these businesses is whether that will turn from a loan into a grant still questionable for many. that is why we are seeing the concern we see percent many not
even applying. let me ask chairman powell, i know you and i have had this conversation, do you believe the hospitality and leisure industry needs another stimulus package like a comprehensive package for relief to sustain this industry? chair. powell: i would agree the industry has been devastated and the two things it needs is for the pandemic to be over -- which we really can't do -- and it needs grants -- which we also can do. our loan programs are really not -- you can overgeneralize, but for most people, most businesses need physical support. masto: let me jump into another conversation i've heard. gentlemen, reassure, states and local government need an additional relief. my state does in nevada for the very reasons i'm talking about. not just nevada, all of the
states. there is bipartisan support i have seen. most recently as of september of this year from the national governors association, bipartisan support for additional relief for state and local governments for the very reasons we are talking about. are reda that there states and blue states or states don't needed, they will misuse it, i think is a misnomer. it is getting in the way of the need we have across this country in a bipartisan way. let me reassure you, governors from republican and democratic -- they are asking for additional relief. we needed for the very reasons i have just talked about. let me just ask you this, secretary mnuchin, jumping back appropriatedillion to the federal reserve's exchange stabilization fund, is it your position that by the end
of this year congress doesn't make changes or change yourlation that not only authority stops, but you will actually transfer those additional funds back to the state treasury? i have commented on this several times and i will repeat it again. my actions are not economic. it is purely by interpretation of the law. i think the section was pretty clear. i cited in early. i would be happy to follow-up with you or anybody else on this. as regards to when the money comes back, it is fully in the law would happen said the money so there is no discretion. masto: i absolutely agree with you. it is very specific in the law your authority but it is also specific on where that money is supposed to stay and that you do not have the authority to
transfer it under this law. i just wanted clarification for that. if your attorneys are telling you something differently, i would like to know that. the way i read it, you don't have the authority to transfer this money back to the fed under at least the cares act authority. so please share that with me. i know my time is running out. i will submit the rest of my questions for the record. let me say, secretary mnuchin, thank you for your service. it is not easy to do in this atmosphere where there is so much partisanship. we did not always agree, but i appreciate your service. i also want to thank my colleagues senator mcsally and jones. i have appreciated working with them and their contributions to this committee, as it has helped me to understand as well numerous issues that impact this country in our financial sector. thank you all for your service. and our final senator who will be by telephone is senator
sinema. sen. sinema: thank you for being here today. arizonans are struggling to make ends meet during this pandemic and i regularly hear from families and small businesses at home that are concerned they won't make it through the winter, especially since coronavirus cases are spiking across the country. the cares act and authorizing the treasury department backing -- lending facilities, businesses alike projecting as we find the coronavirus. with cases on the rise, [indiscernible] that is why i am disappointed by the treasury's decision to withdraw financial support for the lending facilities particularly the main street lending facilities. it moves us in the wrong direction. mnuchin, and u.s. businesses need direct relief as
well as access to credit, do you believe businesses, particularly local restaurants, retail businesses, and those in the hospitality industry, how would they need right now to survive the winter? mnuchin: i do not. unspent ppppend the money to give them. second, loans will turn into grants and save lots of jobs. sen. sinema: this is an area we agree. i also think the dollars should be released and used by businesses around the country. i do hear from business leaders across the state that we need to expand and approve not retreat the lending facilities. i'm hearing from folks at home that many small and midsize businesses in arizona won't make it without additional relief. direct can't get t relief -- this is about the small business owners and workers and households.
there is a lot at stake here. families, jobs, and their homes hang in the balance. don'tzona, most people think washington cares very much about what happens to them. my concern is the decision it ain't -- in the mainstream facility, where things are getting caught up in partisanship and procedure and people are losing the side of the end result, it makes me think folks in arizona might be right to have given up on washington. secretary mnuchin, if you could briefly respond to my question about the main street lending facility. we agree on funding for ppp, but i would like to hear your thoughts on the main street lending facility and why you think this should be eliminated or ended from midsize businesses in arizona and throughout the country. sec. mnuchin: again, my reason is because there is a december undermination date the law. i have cited the section. i won't go through it again.
i would be happy to send it to you. congress can extend it. i personally think i loans out of the sba are more effective. one of the problems with the main street facility was that a lot of those small companies are doing well, had access to banks, and the companies that did not fit the program -- again, it was not a judgment on my part. it was merely following what the law prescribes. knowsinema: secretary, i cortez masto asked to see the reasoning for your decision to end. i would like to see that as well. we have known about some concerns around the main street lending facility for months. in her last time together, i limited the fact i believe treasury and fed jointly -- stringently and many businesses and arizona were unable to take advantage. i would like to read rate that i believe the program should be continued and expanded for the facility and the term sheets
should be changed so can help or businesses. chairman powell, i've seen your take on this and i know you and secretary mnuchin don't agree on the extension of the main street lending facility. do you think households and businesses will risk having lower in hiring costs because of the end of the main street lending facility? chair. powell: actually, it is little more complicated than that. congress gave the secretary sole authority over the cares act funding. we played no role in that. that is a distinction to the facility which we designed together because we both have to approve. the secretary made that -- read the law as he sat in his voice is the authoritative one on that and we accept that reading of the law. our point really was that the central banks and any central banker would tell you it is premature to be pulling back support for the economy. the secretary did indicate in
his letter, and it is true, we can either reestablish facilities or institute new facilities and we can even have stabilization fund backing for that provided the legal requirements are met. i hope that is responsive to your question. sen. sinema: it is. thank you. i see my time has expired. i do have further questions but i will submit those for the record. thank you. >> thank you. that concludes the questions. senator brown has asked for a little time for closing remarks. senator brown? sen. brown: thank you for your service in this committee. the only thing we set out to do today will stabilize the markets, and we have achieved those goals so we can end support for the facilities. look around us. that is not the reality we are facing. people are dying in larger numbers than ever before from this virus.
collectively told me yesterday it is worse than it was in february, march, and april. people are increasingly worried about the virus. people are still working jobs, working at unsafe jobs -- people are still losing jobs, working at unsafe jobs. thank you, mr. chairman. >> thank you. that concludes the question from today's hearing. for senators who wish to cement questions, those are due by december 8. teach our witnesses, we ask you respond to those questions as promptly as you can. i want to thank you for joining the committee today and for your service in this hearing is adjourned.
>> on wednesday, treasury secretary steven mnuchin and jerome powell testified before the house financial services committee about the federal response to the coronavirus. that's live at 10:00 a.m. eastern on c-span. at 2:00 p.m. the houses back for legislative work on a bill requiring the securities and exchange commission to prohibit and delist any foreign company's public accounting firm does not adhere to u.s. auditing standards. on c-span2, the senate is back at 10:00 a.m. eastern to consider executive nominations. on c-span three, at 9:15 a.m., a senate armed services subcommittee here is from navy and marine corps leaders about military readiness. that's followed in the afternoon by a senate subcommittee hearing on the government's response to cyber threats during the coronavirus pandemic.
exploring the people and evens that tell the american story, every weekend. coming up, saturday at 10:00 p.m. eastern on reel america. as health officials prepared to roll out a vaccine against the coronavirus, we take you back in time with five archival films about vaccines and the fight against disease. 6:00nday -- on sunday at p.m. eastern, tour new york city's lower east side museum, with new constructed dwellings that show how immigrant families coped with crowded conditions in the 19th and earliest -- early 20th century. a look at presidential leadership during the cold war with storing william hitchcock. .lso the author and i neglect p.m., a u.s. constitutional debate hosted by the colonial