Massive local tax increases. Anyone of those alone threatens to make this economic crisis even worse and the combination of all three is almost unthinkable. The bureau of labor statistics just reported that state and local governments laid off nearly one million workers in april. That is almost one million firefighters, police officers, teachers, Emergency Personnel that should be on the front lines of the Public Health crisis but are sidelined instead. Chairman powell, let me start by asking, do you agree that our economy will get worse if state and local governments are forced to lay off even more firefighters, teachers, any and Emergency Personnel . Let me say what we are doing. We have a liquidity facility that is there to address the shortterm liquidity needs that these entities have because of their loss of revenue due to the effects of the pandemic. That is really the tool that we have. I appreciate that. That is not my question. States,ion is if counties, and municipalities continue on the path to layoff, we have one million laid off even more, just from an Economic Situation, doesnt that make the economic recovery even worse . Essentially, yes. We have the evidence of the Global Financial crisis in the years afterward where state and local government layoffs and lack of hiring did not weigh on economic growth. One of the tools we have to alleviate the problem is by using the money that was provided in the cares act to bring down borrowing cost for state and local governments so they can set the stage for strong recovery. I would want to see the Federal Reserve support local governments through the lending facility, but i dont think it is enough. And others that i sent to you and secretary mnuchin last week, we called on the fed to another facility to purchase medium and longterm Municipal Bonds both directly from issuers as well as on the secondary market and ensuring state and local governments can continue to finance Key Public Services and invest in infrastructure and other areas to jumpstart our economy and get americans back to work. Will you commit to work on that proposal . Yes, we will look at that, senator. I will say that what we are trying to do is address liquidity. Notwithstanding that, we are taking a look. I appreciate that. In a speech last week, you said additional fiscal support could be costly, worth it if it helps avoid longterm economic damage and leaves us with a stronger recovery. The tradeoff is elected representatives. And i agree. He hit to our states and counties is tremendous and not just in my state of new jersey. Projections released reveal that every state in the nation is already or will soon face historic budget shortfalls. A few examples, they found that ohio and arizona are each facing a fiscal shock totaling 20 of their entire state budget. For some states, the numbers are worse like West Virginia which is facing a 40 fiscal shock. The fed cannot be expected to solve all of our problems. Yesterday i introduced smart act, a bipartisan, three republicans and three democrats who provide money in direct support to state and local governments. It is the first bipartisan bill of its kind. I think when we have colleagues from mississippi, louisiana, and maine on the republican side, it is not a partisan issue. Would that be the type of solution that can get us back in terms of the states until fiscal covering . Recovery . Senator, we have done what we can with the Municipal Liquidity facility. This, a lotose on of the businesses are not getting access to the Paycheck Protection Program as we intended. I know the secretary has been receptive. I hope you will be as well for allowing Community Development institutions and minority Development Institutions get greater access to these programs and to the lending facilities set up in the cares act so these funds can reach businesses in low income areas of the country. It is still not happening and i urge, the secretary has been rather receptive, i urge you, mr. Chairman, to be receptive as well. Thank you. We will move to senator sasse will be with us by telephone. You have 30 seconds left of your 5 minutes. You can proceed. Thank you, chairman. And gentlemen, thank you for being here. I am in the hallway of a judiciary committee. Thankful for for your time and responsiveness. I wanted to start by asking about the act. We have seen an increase in themes directed at Financial Institutions that have been active with the corona response and i am curious if you have any updates for us on the cybersecurity attacks we have seen in this space. Comment on that we have a department within treasury that is actively working on all of these issues and coordinates to make sure the infrastructure. I will give a pitch toward the secret service bill of moving period, back during the i think they can help on the cyber related issues. I can assure you, we have all of the resources working on this and take it very seriously. Institutions that do not have the scale to have huge cyber defenses on their own. That obviously critical we view this as a whole society problem. Thank you for your pledge to keep looking at that. Chairman powell, the fed has done a series of announcements over the last two months about 133 lending facilities. Of peoplecements rights, the fed announced that it would be expanded to include commercial Mortgage Backed securities as well as loans. The wall street journal described that expansion as the fed will be buying the worst shopping malls and some of the worst and dead companies. Can you give your perspective on the wall street journals characterization of this expansion and the risk levels for some of the commercial properties as america goes through this experience of corona time, lots of people are not just doing telecommu ting. Lots of companies are planning to migrate as a longterm strategy and i am sure that is what we will see for commercial property across america. The taxpayers should not be on the hook for flooding into that space. Wouldu explain how you respond to the wall street journal . In supporting Asset Backed Securities broadly, that is consumers, car loans, credit card loans and things like that. We are only buying the aaa rated piece and we are only buying it with a goodsized haircut so the credit risk is actually very low on this. That is helpful. Thank you, chairman. Secretary mnuchin, i want to go back to some china ip issues we discussed before. The Chinese Government has been stealing American Intellectual property for decades to fuel its economic rise. Ignited companies for espionage for theft of property, we have really seen any sanctions for these crimes. For instance, they built the business side of the organization by stealing ip. This is hooked into military intelligence. Why do we treat them as if they are really private Sector Companies. Its a matter of policy. I dont comment on future sanctions or do i comment on specific sanctions on specific happenings. Huawei, werelated to do coordinate. Ive worked very closely with the ambassador on the china agreements. Major a issue were going to combat. Officials of both administrations for two decades talk about agreements that are going to have teeth. They almost never do. That has been a bit of a pit bull on this. Same ast really the pushing to help huawei and their statebased actors understand this has real consequences. Im glad its a top discussion. I know i met time. The Intelligence Community in theht committee anislature, this is increasingly bipartisan issue that republicans and democrats believe is important to hold them to these private Sector Companies to more account and not just say eventually we will, the stairs. Worth, the article one perspective is serious. Thank you. I want to thank both secretary mnuchin and chairman powell for being on the call. We see was transferred over the last couple of months. My question is quite simple. Can i get both of your that you would provide any information to them . Good. How from youre perspective how active is the Oversight Commission . Ive seen thehin recent report. I cant comment on what theyve done on that. Assume. Ld secretary mnuchin i see no reason why we wouldnt. I value that and i appreciate it. The president has a different opinion. Said aboutby what he the values of the inspector general. You think is right to remove Public Servants at their job as independents holding the government accountable . Secretary mnuchin if you are referring to the removal of the know that ive heard the president say. Even if they are doing their job . Secretary mnuchin again, thats an appointed position. He has the right to withdraw. I have a different perspective on that. He could remove yourself. If you are doing your job in clearase, i think its a misunderstanding of the three branches of government. I talked to you about reporting to the igs. Half of the dollars and allocated have either been spent. , we need more transparency in these programs. I think you would agree with that. More information about who is getting the dollars . 5 we negotiated this deal. Secretary mnuchin we have an transfer precedented unprecedented transparency. I dont do why you have seen that. Everything is posted on our website. We take great pride in the transparency at that weve agreed to. Youre saying the information about who is getting the dollars and who is getting the money is already posted on your website . Ivetary mnuchin what said is every said goal commitment weve made is listed on the website. Every dollar that is gone it has been posted on the website . Secretary mnuchin within the cares act with the fed, we review individual transactions through them. They are listed. I look forward to seeing that list. I am going to search it. See as youbear and said is with this program, as a member of the banking committee, im not seeing any of it. I see general numbers. We will deal with that the later date. 3 trillion has been put out. Can you give me an idea how many dollars with the levering the fed does has been used . Senator, thell big facilities to which the equity has been committed are really just coming online. Its all out of this. We will be taking some time to set these facilities up so the amount that has gone out so far is in the context of the economy. We have made commitments to disclose all the borrowers and the amounts. Appreciate that. There is 200 billion that would be leveraged to 2. 3 trillion. Chairman powell potentially. We leverage their equity at that. Thank you very much. The look forward to find information online. Take care. Thank you, mr. Chairman. Thank you both for being here. I want to speak about the primary and secondary facilities. Those facilities are available to companies that have public ratings. Expensivee an process. Some people dont want to go through the rigmarole of getting those ratings. Privately owned, sometimes family owned. Arkansas thatn are employing thousands of workers. Maybe all 50 states have companies that are in this category. Oftentimes they sell loans directly to the Insurance Companies like life insurers that are rated by the National Association of insurance commissioners. Those ratings are highquality. What is the possibility of opening up those facilities to companies that are selling these kinds of loans with those Credit Ratings from the naic . Secretary mnuchin i appreciate the opportunity that you brought this to our attention. Suggested, im working with the fed closely to see if we can accommodate using those ratings. Need, there is some private rating that can be done on a level that is not to the companies. We are committed to make sure they can use these facilities as well. Can i get your perspective . Chairman powell if i understood your description of the company, it sounds more like main street companies than primary or secondary credit markets. If i misunderstood, im sorry. Limitation is the employee cap. It would be similar. I would echoll what secondary secretary mnuchin said. Any thoughts on when that decision might be made . There might be a brandnew facility . Secretary mnuchin i will commit to try to get back to you within the next week. That theremake sure are companies that slipped through these two facilities, we will Work Together to make sure we deal with those issues. Thank you both for that. Thank you for your work. Especially the last couple weeks. ,he Paycheck Protection Program its a very specific question. I suspect many have the same question. The note we received said we are ppp versions of fda forms for the guidance and format of the report. Where reaching a critical point in time. That can be timeconsuming and tedious. We ask for a little more detail. Extract the data points from the software system. This will require programming in inspectired formats to for accuracy. This will take many days to produce. Tuesday, theis is deadline is friday, was a prospect of getting more guidance as soon as possible or push the deadline back . I believemnuchin weve already pushed that date back. I will check on that and confirm that. If there is a specific institution of has a problem, please let me know the name and we will figure out how to accommodate that. We want to get the information. There are small banks that have issues and we are trying to figure how to accommodate them. For youryou again willingness to work with all of us these last two months to iron as thise wrinkles applies to so me different situations. I yield back my time. Thank you. Can you hear me . Great. Thank you. I want to start with chairman powell, some the comments youve made that i want to reinforce. We understand that losing a job at any point in your lifetime is an enormous challenge. Losing it in the midst of a recession or depression could be devastating. A survey the fed put out said americans makeow less than 40,000. They had their jobs disappear between february and march. We know 36 million americans were unemployed. I think the statistics have shown losing your job during a timesion could incur long income losses up to 19 over the coming decade. Minute toou to take a devastation, of would this report disproportionally hitting low income americans, can you speak to us about the result and the longterm scars this presents if we dont take aggressive action . Chairman powell i would be glad to. There is clear evidence that we have a situation where people are unemployed for long periods of time, it can weigh on their careers and their ability to go back to work and way of the economy for years, equally with Small Businesses. That is the jobs machine of our greatest comic. If we allow unavoidable solvencys after a disaster, that will discourage families. It will weigh on the economy. Those are things to keep in mind. This is the biggest response by congress ever. This is the biggest shock. Air,uestion looms in the historically, governments tend to under shoot. We have 36 million americans without work and 40 of people losing their work. One of the reasons i want to turn it to you secretary, we discussed this with a number of colleagues on both sides. We did some aggressive things for people in the airline industry. Market at the main street facility, i have concern that we need to be very aggressive with that. You outlined some of the ideas. Earlier thation you were willing to have some of that money at risk in this facility. Can you speak to that a little if youe, especially build out the baseline of this facility, how much risk and capital did you expect to lose . Can the fed chairman echo if he will look at some of the penalty that are not legislatively mandated. Secretary mnuchin first of all, i want to thank you for the time you spent with us during the legislative process and helping to craft these different pieces and your availability since then. We appreciate your thoughts and we will continue to work with you. Riskinglates to capital, almost by definition anytime the fed thinks its a risk to us, we have different scenarios. Theave continued to adapt program to let more and more companies into it. We refer to it as one program, it has three subprograms. Scenarios where we could lose all of our capital. We are prepared to do that. Make a small amount of money. Secretaryfferent than paulson during the tarp time. Intend toion is we sake some losses on these facilities. That is our best case scenario. You want to discuss the penalty rate . Chairman powell what we are doing with these programs is where making loans where markets are not working. The purpose of central banks. What rate should we charge . We charge the rate that is a little bit higher than the muchl rate, in most cases less than what the market provides. Need credit. E who if markets are functioning well, we dont want to replace them. We want to be a backstop to the markets. These are extraordinary times. I hope you will lean into this as much as possible. Thank you. Thank you, to chairman. I appreciate the work you have as wellmaking this work as it has in a short amount of time. I would ask first of all to our localmnuchin, lenders have a number of questions coming in. Sections two different where we asked these local loans be divvied out and accepted within 10 days of the time of approval. A junes that relate to 30 date of completion . I dont find where there is a date. 0 and date end can you talk a little bit about your options or the flexibility you have with regard to the ppp that so mene 30 date people have concerns about . Secretary mnuchin let me comment. The concern people have is bigger. There is the 10 days to disperse it, we give the bank and other 10 days to set back the documents. Issues notre having necessarily with being able to use it. They dont want more money. They want flexibility that they can use it in longer than eight weeks. We are happy to follow up with your staff to talk about where that fits into the bill. Powell, they recommend Congress Give regulatory discretion described by the plan. That . Share what measures do you think congress and the fed should pursue . Chairman powell i do share that. Unu