Banking systems, the impact of covid19, and communities of color. This runs an hour and 45 minutes. Today we welcome the regulators, the comptroller of the currency, brian brooks. The federal deposit insurance corporation, jelena rodney hood. Since the passage of the coronavirus aid relief and Economic Security act or cares act of your agencies have taken many meaningful steps to mitigate the meaningful impact of the pandemic and provide conditions that will lead to a forceful recovery. On october 30, the Federal Reserve announced changes to its main Street Lending facility including decreasing the minimum loan size for priority loan facilities from 250,000 to 100,000, and allowing borrowers loan for theirpp outstanding debt. Your agency should continue to carefully review the regulatory and supervisory frameworks, adjusting where necessary to bolster Financial Institutions to support economic recovery, which, by the way, has shown positive signs over the past several months. On october 29, the u. S. Gdp surged in the Third Quarter as the economy started to reopen. The on employment rate fell to 6. 9 in october. Cbo projectedhe we will be at 5. 9 by 2021. Since april, we have recovered more than half of the jobs lost due to the government enforced shutdowns. Over the last few months, i have sent several letters to the regulators on a number of important issues. Letter to, i sent a each of the agencies, urging the use of existing discretion to extend use provided under title iv of the cares act, and including extending the Community Bank leverage ratio, the federal debt restructuring thel january 1, 2022, and current expected credit losses methodology to january 1, 2023, while clarifying and minimizing unintended effects of midyear adoption. On october 8, sent a letter about the burden due to the rapid due to the rapid implementation of the paycheck ppp. Ction program, or many banks or Credit Unions inadvertently experienced Balance Sheet growth, which is expected to decline once they meet the terms. Instituted an interim final rule to alleviate the part or insurance requirements, participation in the Federal Reserve 133 facilities and other stimulus efforts. It is important that banks and Credit Unions are not inadvertently distant set of iced from continuing to play inadvertently this incentivized from continuing to play a key role. I urge each of you to continue to use your discretion to alleviate burdens with a variety of thresholds on both banks and Credit Unions who are currently experiencing growth from participation in recovery oriented programs. Turning to the lcc. On october 19, the senate rejected a review act of the congressional act issued. According to the lcc, the final rule improves Community Relations by clarifying what qualifies for consideration, updating how banks define the acceptance areas, evaluating performance more aggressively, and making the entire process more transparent and timelier. The framework will increase support Small Businesses and small familyowned farms, indian country, and other areas. Materially not been modified since 1995. I commend this important step. As we continue to whether this pandemic, i stress to each of you and your agencies the importance of our Financial Institutions providing access to credit and Financial Services for businesses in legal industries. It is vitally important that our countrys Financial Institutions not deny credit financing based on political preferences related to firearms, oil, gas, and others. Lending decisions should be based on credit worthiness and creditnot target industries. Forll continue to fight services in all of our legal industries. I appreciate each one of you joining us today to share your plans, including the tireless work from you and your staffs in response to covid19. You are on now. American people sent a clear message, they rejected an administration where wall street incorporations run the economy. People want a government that is on their side. The past four years, financial left everyone else in the market at the mercy of the supposed freemarket. The people watched a president ignore a pandemic, refused to even try and put in place any kind of plan to put the virus under control, and to reject any effort to support families and get our economy running smoothly. Whatever the majority leader may say, whatever damage he and colleagues are doing to their democracy with our lives and attacks on nonpartisan and hardworking poll workers and election officials, the facts are clear that 5 million more people voted for joe biden then donald trump, a decisive majority rejected what they have seen over the past four years in voted for new leadership. People are ready to turn the page, for new leadership that will give them their freedom and lives back. The work we do here in the banking and Housing Committee can be a big part of that. Ofwe as Committee Members both parties come together and choose to do so. We have the power to tackle issues that actually matter to peoples lives. Paychecks, housing, transportation, and the communities they live in. We can put Small Businesses back on their feet. We can lift up brown and black communities hit the hardest by this pandemic. We can keep people in their homes, make their homes more affordable. We can bring down energy bills. We can lead the world and the fight against Climate Change. We can seize every opportunity to create good paying jobs. We can free people from the stress of debt collectors and the downward spiral of payday loans. To do all of that, we have to take on wall street power. We know shift jobs overseas. We know who jackson drug prices. We know who busts unions. It is not our neighbors who may have a different political sign in their yard or a different Bumper Sticker on their car. It is the largest corporations of the unaccountable ceos from we spoke to well from facebook to wells fargo and their allies in washington. Wall street is all too happy to populists cause people to turn on each other as long as they can continue to play by different rules. The last four years, we have had an administration trying to blame americans who may not look like them instead of blaming a they lay off workers while they buyback stocks and cut their pay. More wealth to the already wealthy and funneling more power to the already powerful. But it did not work this time. Last week, a record 80 million americans rejected that, the largest vote in our nations history. Now we have to take on big oil and other corporate polluters who spent billions of dollars trying to convince people that Climate Changes an unsolvable problem instead of a tremendous opportunity. We have to end the corporate Business Model who treats workers as expendable in a system that perpetuates systemic racism. We have to break up the biggest banks and give that power to everyone else who has been denied a voice in our economy. Our Financial System should be a public good. Andlready is for big banks it should be for everyone else. When work has dignity, hard work pays off for everyone. When work has dignity, everyone can afford housing and transportation and they have theirover their lives and money. We know that we have great challenges, we are in a Public Health crisis, economic crisis. It calls for us to aim higher, think bigger. Mr. Chairman, i look forward to coming together with both sides of the island this new administration to get to work. Crapo we will now proceed to our witnesses. You mayirman quarles, proceed. Quarles thank you, chairman. Thank you, Ranking Member brown. The numbers of the committee, thank you for the opportunity to testify today on the Federal Reserve supervising activity. My last appearance in may followed the emergence of covid19 and the measures taken in response added a deep strain of uncertainty to the financial market. Riskier more volatile asset classes, a retreat to say for cash. The retreat demanded an the Federal Reserves intervention, a wide range of intermediaries and markets, strengthened by a decade of improvements in management, including the refinements of the past few years, an important shelter from financial stress. Thatoal is to make sure our banks could respond to the emergency. The report accompanying my ,estimony to capitaldjustments reserve measures. Importantly, they clarify beyond doubt that there are no impediments to working constructively with borrowers and others. Monetary and fiscal acts, the recovery has begun much sooner than expected. This speaks to the countrys tenacity, ingenuity, and spirit. Is challenge we face now formidable and complex. The covid event is gone, replaced by a clearer view of consequences, the burden facing households and businesses are understood but they are no less significant and not evenly born. We will Work Together to help those most hardhit and make sure that economic wounds do not become scars. A strong, resilient banking global, unexpected shock, and help customers rebuild and adapt. This can ensure that the countrys banks can continue to meet that standard. The guidance encouraging banks to work with their borrowers. An important step toward this goal. Since then, working with colleagues and other regulatory agencies, we have taken several others including credit accommodation to a clear statement on reinvestment act. Steps that make it easier for banks to participate in emergency lending programs. It also includes flexibility in our stress testing apparatus. As our reports show, that strength is still intact. Liquidity and capital remain high and have increased over the course of the covid event. They have sharply increased reserves, setting aside resources today for possible losses tomorrow. Recognizing how things might have been different, this ifndation would not exist not for a decade of work by , and to make banking officials more transparent. Ethic andesent an , even more critical during a crisis. Covid19, they work also affirms the values and priorities that remain the same. Those that will continue to guide us and support the Financial System, the economy, and the country long after the covid pandemic has passed. Thank you. Acting comptroller brian brooks. Mr. Brooks i look forward to updating you on how banks remain sources of strength for their communities. Senator, i would like to congratulate you on your tenure chairing this committee and your leadership. I look forward to working with your successor. The the past eight months, sec has supported the function of our Banking System. Historic high levels of capital and liquidity. The economy has enjoyed the longest expansion on record. Then, Economic Activity was suspended. Regulators collaborated to provide banks the flexibility necessary to use that strength, support their customers, and sustain Economic Activity. My testimony today will provide details on the action taken on that front. Onay, we monitor the effects reopening the economy. While the fundamentals are sound, we see issues ahead with assets. Banks, especially with concentration in those assets, must take a sober view of their risks and work with customers to the largest extent possible. Perspectiveal risk highlights the Compliance Risk in the system. Risk management today can avoid the need for further loss mitigation tomorrow. We also do see reasons for cautious optimism about the future based on strong gdp growth, strong consumer and Small Business sentiment, and better than expected news about the nearterm availability of betterthanexpected covid19 vaccines. Though the economy faces uncertain due to the length and depth of the covid19 pandemics trough during the social unrest that followed the killing of george floyd this summer, it became clear that the protesters were angry that too Many Americans were left out of our for too Wealth Creation long. A program to promote full, fair, and equal participation in our national economy. It is working to eliminate obstacles to credit for the americans with no workable credit score. To reinvigorate minority banks that serve often neglected communities. We have now kicked off Regional Reach efforts, including one serving the Greater Los Angeles area recently, and we have posted access to Capital Events in south carolina. I have been humbled about the community was civil rights advocates, and our staff. Project reach has become a movement to tear down barriers so that all can pursue their american dreams. Another reason for optimism comes with innovators themselves who are excited about consumers, businesses, and communities. Muchntinue to look for more efficient ways of operating. This will benefit consumers and businesses and they will have greater choice and more autonomy. We believe that consumers, businesses, and the economy can occur within the Banking System and the system is allowed to evolve as Consumer Preference evolves. We think this for several reasons. The Banking System is among our most closely regulated industries. Maye who fear innovation harm consumers should consider the possibility that innovation may be safer in a supervised environment than it is in a largely unsupervised environment. Same is true for prudential risk. Has migratedessing from commercial banks into less regulated shadow banks. Of course, we should not underestimate the risk of a status quo in which incumbents seek protection from a petition competition and delay Financial Services already available in other parts of the world. We remain committed to encouraging responsible efforts to deliver more choice, more economic actors economic opportunities, and safe, sound, and fairways within the Banking System. Thank you again for the opportunity to testify today. I look forward to your questions. Next, fdics chair Jelena Mcwilliams . Mcwilliams when i testified before this Committee Six months ago, we were confronting great uncertainty and volatility due to the covid19 pandemic and shutdown. Many parts of the economy work experiencing unprecedented declines. Also, there remains considerable uncertainty about the path of the economy. We know from two quarters of reporting that the Banking System has served as a source of strength. Banks of all sizes have supported their customers and communities, included by originating nearly 500 billion accommodatingnd 2 trillion in new deposits over two quarters. This reflects the industrys Strong Capital and liquidity position. In the Second Quarter of 2020, Equity Capital increased to more than an average Equity Capital ratio of 13. 4 . Both an aggregate and percentage basis, these capital levels were slightly higher than the quarter immediately preceding the pandemic. See see the fbi the fdic has taken meaningful actions. Today, i will provide an update on five areas that have made significant progress. Responding to Economic Risks related to covid19, solution readiness, communities in need, encouraging innovation, and finally outstanding rulemaking. Greater detail is provided in each of these areas but i would like to briefly touch on each of them started with the response to economic risk with covid19. Starting in early march, the fdic and regulators undertook a period of action to maintain stability in financial markets. In addition to providing flexibility, we made many targeted, temporary, regulatory changes to facilitate lending and other financial mediations. Over the past six months, we have taken additional regulatory and supervisory action in support of these objectives and the economy. We continue to monitor feedback and we will continue considering Additional Guidance as appropriate. Responded to the Immediate Impact of the pandemic, we also focused on improving our readiness in several ways. We recognize that the absence of failures could not last forever, even before the pandemic. Team improved a new approach to Bank Activities to help protect the health of our employees should banks fail during the pandemic, coordinating with our counterparts on crossborder, facilitating capability testing with select firms on an as needed basis, regularly reviewing data to prepare for potential surge activity if necessary. Finally, resolutionrelated activities. We have been mindful of all the communities of need at this time in particular. As the pandemic continues to disrupt the lives of all americans, we know that minority communities have suffered most specifically. Community banks including minority deposit institutions, the fdic plays an Important Role in helping these institutions meet the needs of their customers. Shaped by experiences and guided ,y a commitment for inclusion the chairman has been extending our engagement and c