Transcripts For CSPAN House Hearing On Role Of Financial Reg

Continue to will investigate each and every instance of illegal voting. Double voting, phelan voting, people voting outofstate. Outofstate. I want to remind members of a few matters, some of them required by the regulations accompanying House Resolution 965, which established the framework for Remote Committee proceedings. First, members are reminded to on atheir video functions all times, even when they are not recognized by the chair. Members are also reminded that they are responsible for muting and unmuting themselves and to mute themselves after they have finished speaking. Staff have been instructed not to mute members except when a member is not being recognized and there is inadvertent background noise. Members are further reminded that they may only attend one remote hearing at a time. If you are participating today, please remain with us during the hearing. Members should try to avoid coming in and out of the hearings. Particularly during the questions. If during the hearing members wish to be recognized, the chair recommends members identify as tolves by name so facilitate recognition. I also ask that members be proceeds, the chair given the nature of the Online Platform that the committee is using. Finally, members are reminded that all house rules relating to order and decorum applied to this remote hearing. This hearing is entitled oversight of financial regulators, ensuring the safety, soundness, diversity and accountability of depository institutions during the pandemic. I will now recognize myself for four minutes to give an opening statement. November 3, america decisively rejected President Trump, his harmful policies, and dangerous rhetoric. The American People have given president elect biden a mandate to govern and reverse the harmful policies of the Trump Administration, including the many actions that several of our witnesses have taken to deregulate wall street. This mandate is entirely consistent with the recent state referendum in which voters in red states embraced progressive economic policies, for example in nebraska where voters and approving a statewide Interest Rate cap of 36 . In florida voters approved a 15 per hour minimum wage. Wantsclear that america an Economic System that works for them and not against them. Ofas inspired by the words president elect biden on how he wants to unify the country. As ever, i stand ready to work with members on both sides of the aisle and to Incoming Biden Administration on reforming our Financial System so that consumers and investors have the protections they need. President elect biden has already begun the work of building a future for our nation. Monday, we established a Coronavirus Task force showing how fiercely he is working on this virus. Make no mistake, the pandemic continues to take a terrible toll. There have been over 10. 2 million u. S. Cases and over 239,000 people have lost their lives to the virus. We are now seeing over 100,000 new u. S. Cases per day. But at the beginning of this pandemic, i encouraged to halt rulemaking unrelated to addressing the crisis. Im very concerned that regulators have nonetheless issued numerous regulatory rules in the midst of the ongoing pandemic. For example, the occ issued a harmful rule that badly undermines the Community Reinvestment act. Regulators also moved to weaken the volker rule, preventing banks from gambling with taxpayer money. There have been a number of troubling rules to weaken capital and other requirements for the nations largest banks. The last thing the nation needs in this crisis are actions from regulators that harm communities and make our Financial System less secure and stable. I am putting witnesses on notice that i will be working with the Biden Administration to rollback these rules. These financial regulations and the approach to diversity and inclusion in this country, they are going to change for the better. With the historic election of this countrys first woman and person of color to serve as Vice President , it is already changing for the better and under my leadership the committee has led the way on diversity and inclusion. Happily chaired by representative beatty, under president bidens leadership financial regulators will and must be diverse. We are emerging from the dark days of the Trump Administration into the dawn of a new progressive america. We are proconsumer and pro investor on the agenda. The chair now recognizes the Ranking Member of the committee, the gentleman from north carolina, mr. Mchenry for four minutes for an opening statement. I want toso much, thank the regulators for being here and i want to note for the chair that i dont see the election outcome as a vote for the woke left policy outcome agenda for the progressives. Anything but that, we have more republicans in the next congress because frankly the farleft went so far. Hade you have, you may have some successes in the election, i dont think its a wide endorsement of a farleft policy agenda, as the chair noted. What i would note is that in the middle of this pandemic, instead of taking political potshots we should be having a serious concerted effort to have a serious conversation in this Committee Like we have not had in the midst of this pandemic and i think its a very sad thing that we have not been more focused on Financial Stability and the important work of these. Egulators with that, i would like to thank our witnesses for being here today and i want to commend them for the work they have put into address the effects of the pandemic on our Financial System. They have done a fantastic job. A wonderful, fantastic job and they should all be commended for the work they have put in. They did so decisively at the start of this crisis to provide the necessary certainty and clarity needed by the Financial System. Your quick implementation of the provisions of the cares act provided Financial Institutions and consumers the flexibility to accommodate their daily challenges that they faced in the midst of this pandemic. You to also encourage continue examining the regulations in your purview to ensure stability in the Banking System. As i have said previously and will repeat again today, the focus must be on increasing testing, opening schools safely and getting people back to work. Last week unemployment dropped to just under 7 . A rapid turnaround from the april high. This is a good start, our economy is rebounding. But tomorrow can be done. I have progrowth regulations and policies that are the key to sustained success. Modernizing and rightsizing regulations will unleash the economy and allow consumers to flourish. Thats what you are doing and i appreciate the work that you are about. A big part of that is right is regulatory clarity. I want to thank the active comptroller and chair mcwilliams for their work and helping to bring certainty to the legal status of loans made through banking partnerships. Much of the innovation and Financial Services right now happens in the context of work done between banks and tech firms and your efforts have helped to bring greater definition to the regulatory and supervisory models for these partnerships. We should also continue to example examine the importance of did novo partnerships in rural banking, its a necessary aspect of maintaining our work on this important issue. More than ever technology is going to play a central role in our financial future and as new policies are considered we should make sure that government is not standing in the way of private sector creativity and helping the people. I will end where i started. The tone of this hearing does not bode well for the next congress. We have the ability to find a Bipartisan Solutions for a successful system that is inclusive and addresses the needs of the American People, but my colleagues continue to choose divisiveness over bipartisanship and that is disappointing. I want to thank all witnesses for being here today and for your solid, good work in the midst of this pandemic. Thanks so much. We recognize mr. Meeks for one women one minute. At the end of the 116th congress, it is important to consider these accomplishments. We would congratulate the chairwoman and the members of chair, iittee and as set out to focus my work on issues of discrimination, inequality, and the under banked. I spent the bulk of my time working for Community Development Financial Institutions, thinking that relative stability a decade into the expansion in this leadership was the perfect opportunity to tackle these issues. Andcovid19 pandemic protests against Police Brutality and Racial Injustice have laid bare this structural inequality and discrimination across the system. I would argue that the agenda set by this committee was persistent and made laid the foundation for the urgent priorities that we grapple with today and it is an Inflection Point and therefore i thank you, madam chair, again, for tackling these issues. Thank you. The chair now recognizes the Ranking Member of the subcommittee for one minute. You, madam chair, and to all regulators here today for being here at this critical time for our nations economy. Hasou know, the pandemic caused the blanket shutdowns across the country. The strength of our american businesses, they have responded to the 33 percent increase of gdp in the Third Quarter with americans undergoing a heroic effort to adapt to the strain and pressure of the pandemic. With recent news of a vaccine, economic recovery is the same. The good news is that Congress Congress o the contrary, enhanced abilities to work with consumers and businesses at the end of the pandemic. The visions of cares act on the pdr provision, set to expire at the end of the year, im interested to hear what you, regulators, will allow institutions to do to keep customers afloat during this time. With that, i look forward to discussing this. Thank you very much. Today i would like to welcome todays distinguished panel. Thehonorable rodney hood is chairman of the National Credit union administration. The honorable Joanna Mcwilliams is chair of the federal depository insurance corporation. Honorable randall corns is vice chair of supervision of the board of governors of the Federal Reserve system and mr. Brian brooks is the acting at the office of the comptroller of the currency. And, so, without objection, all of your witness statements will remain a part of the record. Each of you will have five minutes to summarize your testimony. You should be able to see a timer on your screen that will indicate how much time you have left. The timer will go off at the end of your time. I would ask you to be mindful of the timer and quickly wrap up your testimony so that we can be respectful of both witnesses and Committee Member time. Chairman hood, you are now recognized for five minutes to present your oral testimony. Chairwoman waters, Ranking Members, members of the committee, thank you for the opportunity to provide an update on the safety, soundness, and security of federal Credit Unions during this ongoing emergency. Our system was wellcapitalized at the start of the pandemic and remains so today, with high levels of net worth and ample liquidity, allowing Credit Unions to adapt to the challenges resulting from the pandemic. Assets insured a rise of 15 per year, in the Second Quarter of 2020 to 1. 7 5 trillion. Credit union share deposits rose by nearly 17 to 1. 4 9 trillion and since midmarch we have worked diligently to provide Credit Unions with regulatory relief and the much needed flexibility to safely serve member owners and we have adjusted our Examination Program to protect our staff as we all continue to work remotely and effectively. Theontinue to examine compliance of the Bank Secrecy Act and compliance risk, ensuring that the union Credit System is resilient, issuing 11 resiliency statements to date, helping Credit Unions judge emerging risk and implement regulatory and statutory changes made in response to the pandemic. Over 3. 7rovided Million Dollars in Technical Assistance to small, low income, and minority Credit Unions revolving allocation that went directly to covid19 assistance. The Credit Union Systems network increased 6. 8 over the year to 182 point 9 billion with an adequate network for the system standing at 10. 46 , well above the 7 statutory requirement. The Insurance Fund is also strong and the equity ratio remains well within the statutory range under the federal Credit Union Act accordingly. We believe there is no need to assess a premium at this time. Credit unions have proved continue to provide needed Credit Services with an alltime high of 1. 5 trillion on all major loan categories and Credit Unionsof x credit collectively extended loans with an average level of 4. 9 billion at like cap a, liquidity is the pillar of strength upon which the safety and soundness of the Credit Union System rests. The decision of congress to increase the flexibility of essential liquidity in the cares act has contributed greatly to bolstering the availability of liquidity in the Credit Union System. Since it was signed into law, we have successfully encouraged natural corporate Credit Unions to join. Today the facility capacity has exceeded 32 billion dollars and provides access to nearly 80 of all Credit Unions. I am indeed grateful that congress provided this muchneeded authority in the cares act, however i respectfully request that these changes be extended through the duration of the pandemic for the Credit Union System to respond effectively should the need for emergency liquidity arise. One important lesson for 2020 is the need for greater Financial Inclusion. Lamentably recent events have shown in equity in society, not the least of which is that the pandemic has had a more deleterious impact on communities of color. Here we are proud of the fact that diversity is part of the inclusion around who we are and how we do business. Section 340 two has been a catalyst for growth and change and we have made tremendous progress in this area over the last decade in terms of recruitment, retention, and procurement. Since becoming the 11th chairman, i have made financial inclusivity a priority. I recently reinforced that commitment for banks in tomunities for support refresh and modernize regulations, policies, and programs that support greater Financial Inclusion in the agency and the Credit Union System and will address spiff it the specific needs of Diverse Communities and i look forward to working in the partnership of the members of this committee on this worthy endeavor. In closing thank you again for the opportunity to testify before you and i look forward to answering your questions. Thank you. [indiscernible] thank you. Chair mcwilliams, you are now recognized for five minutes to present your oral testimony. Thank you. Thank you for the opportunity to testify today. I hope that you and your families are staying healthy. Six months ago when i was before you we were facing greater volatility and uncertainty. Many industries were experiencing unprecedented declines and the shock was reverberating throughout the Financial System. Though there remains considerable uncertainty over the path of the economy, the Banking System has served as a source of strength throughout this time. Banks of all sizes have supported customers and communities by originating 500 2lion in ppp loans with trillion in new deposits. Today i will provide an update on five areas in which we have made significant progress. Responding to Economic Risks related to covid19, enhancing resolutions, supporting communities in need, prompting inclusion at the fbi see, and fostering technology resolutions. My statement to provide greater details in each area but i would like to grip but i would like to touch on each, starting with how we responded to the risk related to pandemic. In early march the fbi see and fellow regulators undertook a series of actions that helped to maintain stability in House Resolution<\/a> 965, which established the framework for Remote Committee<\/a> proceedings. First, members are reminded to on atheir video functions all times, even when they are not recognized by the chair. Members are also reminded that they are responsible for muting and unmuting themselves and to mute themselves after they have finished speaking. Staff have been instructed not to mute members except when a member is not being recognized and there is inadvertent background noise. Members are further reminded that they may only attend one remote hearing at a time. If you are participating today, please remain with us during the hearing. Members should try to avoid coming in and out of the hearings. Particularly during the questions. If during the hearing members wish to be recognized, the chair recommends members identify as tolves by name so facilitate recognition. I also ask that members be proceeds, the chair given the nature of the Online Platform<\/a> that the committee is using. Finally, members are reminded that all house rules relating to order and decorum applied to this remote hearing. This hearing is entitled oversight of financial regulators, ensuring the safety, soundness, diversity and accountability of depository institutions during the pandemic. I will now recognize myself for four minutes to give an opening statement. November 3, america decisively rejected President Trump<\/a>, his harmful policies, and dangerous rhetoric. The American People<\/a> have given president elect biden a mandate to govern and reverse the harmful policies of the Trump Administration<\/a>, including the many actions that several of our witnesses have taken to deregulate wall street. This mandate is entirely consistent with the recent state referendum in which voters in red states embraced progressive economic policies, for example in nebraska where voters and approving a statewide Interest Rate<\/a> cap of 36 . In florida voters approved a 15 per hour minimum wage. Wantsclear that america an Economic System<\/a> that works for them and not against them. Ofas inspired by the words president elect biden on how he wants to unify the country. As ever, i stand ready to work with members on both sides of the aisle and to Incoming Biden Administration<\/a> on reforming our Financial System<\/a> so that consumers and investors have the protections they need. President elect biden has already begun the work of building a future for our nation. Monday, we established a Coronavirus Task<\/a> force showing how fiercely he is working on this virus. Make no mistake, the pandemic continues to take a terrible toll. There have been over 10. 2 million u. S. Cases and over 239,000 people have lost their lives to the virus. We are now seeing over 100,000 new u. S. Cases per day. But at the beginning of this pandemic, i encouraged to halt rulemaking unrelated to addressing the crisis. Im very concerned that regulators have nonetheless issued numerous regulatory rules in the midst of the ongoing pandemic. For example, the occ issued a harmful rule that badly undermines the Community Reinvestment<\/a> act. Regulators also moved to weaken the volker rule, preventing banks from gambling with taxpayer money. There have been a number of troubling rules to weaken capital and other requirements for the nations largest banks. The last thing the nation needs in this crisis are actions from regulators that harm communities and make our Financial System<\/a> less secure and stable. I am putting witnesses on notice that i will be working with the Biden Administration<\/a> to rollback these rules. These financial regulations and the approach to diversity and inclusion in this country, they are going to change for the better. With the historic election of this countrys first woman and person of color to serve as Vice President<\/a> , it is already changing for the better and under my leadership the committee has led the way on diversity and inclusion. Happily chaired by representative beatty, under president bidens leadership financial regulators will and must be diverse. We are emerging from the dark days of the Trump Administration<\/a> into the dawn of a new progressive america. We are proconsumer and pro investor on the agenda. The chair now recognizes the Ranking Member<\/a> of the committee, the gentleman from north carolina, mr. Mchenry for four minutes for an opening statement. I want toso much, thank the regulators for being here and i want to note for the chair that i dont see the election outcome as a vote for the woke left policy outcome agenda for the progressives. Anything but that, we have more republicans in the next congress because frankly the farleft went so far. Hade you have, you may have some successes in the election, i dont think its a wide endorsement of a farleft policy agenda, as the chair noted. What i would note is that in the middle of this pandemic, instead of taking political potshots we should be having a serious concerted effort to have a serious conversation in this Committee Like<\/a> we have not had in the midst of this pandemic and i think its a very sad thing that we have not been more focused on Financial Stability<\/a> and the important work of these. Egulators with that, i would like to thank our witnesses for being here today and i want to commend them for the work they have put into address the effects of the pandemic on our Financial System<\/a>. They have done a fantastic job. A wonderful, fantastic job and they should all be commended for the work they have put in. They did so decisively at the start of this crisis to provide the necessary certainty and clarity needed by the Financial System<\/a>. Your quick implementation of the provisions of the cares act provided Financial Institutions<\/a> and consumers the flexibility to accommodate their daily challenges that they faced in the midst of this pandemic. You to also encourage continue examining the regulations in your purview to ensure stability in the Banking System<\/a>. As i have said previously and will repeat again today, the focus must be on increasing testing, opening schools safely and getting people back to work. Last week unemployment dropped to just under 7 . A rapid turnaround from the april high. This is a good start, our economy is rebounding. But tomorrow can be done. I have progrowth regulations and policies that are the key to sustained success. Modernizing and rightsizing regulations will unleash the economy and allow consumers to flourish. Thats what you are doing and i appreciate the work that you are about. A big part of that is right is regulatory clarity. I want to thank the active comptroller and chair mcwilliams for their work and helping to bring certainty to the legal status of loans made through banking partnerships. Much of the innovation and Financial Services<\/a> right now happens in the context of work done between banks and tech firms and your efforts have helped to bring greater definition to the regulatory and supervisory models for these partnerships. We should also continue to example examine the importance of did novo partnerships in rural banking, its a necessary aspect of maintaining our work on this important issue. More than ever technology is going to play a central role in our financial future and as new policies are considered we should make sure that government is not standing in the way of private sector creativity and helping the people. I will end where i started. The tone of this hearing does not bode well for the next congress. We have the ability to find a Bipartisan Solutions<\/a> for a successful system that is inclusive and addresses the needs of the American People<\/a>, but my colleagues continue to choose divisiveness over bipartisanship and that is disappointing. I want to thank all witnesses for being here today and for your solid, good work in the midst of this pandemic. Thanks so much. We recognize mr. Meeks for one women one minute. At the end of the 116th congress, it is important to consider these accomplishments. We would congratulate the chairwoman and the members of chair, iittee and as set out to focus my work on issues of discrimination, inequality, and the under banked. I spent the bulk of my time working for Community Development<\/a> Financial Institutions<\/a>, thinking that relative stability a decade into the expansion in this leadership was the perfect opportunity to tackle these issues. Andcovid19 pandemic protests against Police Brutality<\/a> and Racial Injustice<\/a> have laid bare this structural inequality and discrimination across the system. I would argue that the agenda set by this committee was persistent and made laid the foundation for the urgent priorities that we grapple with today and it is an Inflection Point<\/a> and therefore i thank you, madam chair, again, for tackling these issues. Thank you. The chair now recognizes the Ranking Member<\/a> of the subcommittee for one minute. You, madam chair, and to all regulators here today for being here at this critical time for our nations economy. Hasou know, the pandemic caused the blanket shutdowns across the country. The strength of our american businesses, they have responded to the 33 percent increase of gdp in the Third Quarter<\/a> with americans undergoing a heroic effort to adapt to the strain and pressure of the pandemic. With recent news of a vaccine, economic recovery is the same. The good news is that Congress Congress<\/a> o the contrary, enhanced abilities to work with consumers and businesses at the end of the pandemic. The visions of cares act on the pdr provision, set to expire at the end of the year, im interested to hear what you, regulators, will allow institutions to do to keep customers afloat during this time. With that, i look forward to discussing this. Thank you very much. Today i would like to welcome todays distinguished panel. Thehonorable rodney hood is chairman of the National Credit<\/a> union administration. The honorable Joanna Mcwilliams<\/a> is chair of the federal depository insurance corporation. Honorable randall corns is vice chair of supervision of the board of governors of the Federal Reserve<\/a> system and mr. Brian brooks is the acting at the office of the comptroller of the currency. And, so, without objection, all of your witness statements will remain a part of the record. Each of you will have five minutes to summarize your testimony. You should be able to see a timer on your screen that will indicate how much time you have left. The timer will go off at the end of your time. I would ask you to be mindful of the timer and quickly wrap up your testimony so that we can be respectful of both witnesses and Committee Member<\/a> time. Chairman hood, you are now recognized for five minutes to present your oral testimony. Chairwoman waters, Ranking Member<\/a>s, members of the committee, thank you for the opportunity to provide an update on the safety, soundness, and security of federal Credit Unions<\/a> during this ongoing emergency. Our system was wellcapitalized at the start of the pandemic and remains so today, with high levels of net worth and ample liquidity, allowing Credit Unions<\/a> to adapt to the challenges resulting from the pandemic. Assets insured a rise of 15 per year, in the Second Quarter<\/a> of 2020 to 1. 7 5 trillion. Credit union share deposits rose by nearly 17 to 1. 4 9 trillion and since midmarch we have worked diligently to provide Credit Unions<\/a> with regulatory relief and the much needed flexibility to safely serve member owners and we have adjusted our Examination Program<\/a> to protect our staff as we all continue to work remotely and effectively. Theontinue to examine compliance of the Bank Secrecy Act<\/a> and compliance risk, ensuring that the union Credit System<\/a> is resilient, issuing 11 resiliency statements to date, helping Credit Unions<\/a> judge emerging risk and implement regulatory and statutory changes made in response to the pandemic. Over 3. 7rovided Million Dollars<\/a> in Technical Assistance<\/a> to small, low income, and minority Credit Unions<\/a> revolving allocation that went directly to covid19 assistance. The Credit Union Systems<\/a> network increased 6. 8 over the year to 182 point 9 billion with an adequate network for the system standing at 10. 46 , well above the 7 statutory requirement. The Insurance Fund<\/a> is also strong and the equity ratio remains well within the statutory range under the federal Credit Union Act<\/a> accordingly. We believe there is no need to assess a premium at this time. Credit unions have proved continue to provide needed Credit Services<\/a> with an alltime high of 1. 5 trillion on all major loan categories and Credit Unions<\/a>of x credit collectively extended loans with an average level of 4. 9 billion at like cap a, liquidity is the pillar of strength upon which the safety and soundness of the Credit Union System<\/a> rests. The decision of congress to increase the flexibility of essential liquidity in the cares act has contributed greatly to bolstering the availability of liquidity in the Credit Union System<\/a>. Since it was signed into law, we have successfully encouraged natural corporate Credit Unions<\/a> to join. Today the facility capacity has exceeded 32 billion dollars and provides access to nearly 80 of all Credit Unions<\/a>. I am indeed grateful that congress provided this muchneeded authority in the cares act, however i respectfully request that these changes be extended through the duration of the pandemic for the Credit Union System<\/a> to respond effectively should the need for emergency liquidity arise. One important lesson for 2020 is the need for greater Financial Inclusion<\/a>. Lamentably recent events have shown in equity in society, not the least of which is that the pandemic has had a more deleterious impact on communities of color. Here we are proud of the fact that diversity is part of the inclusion around who we are and how we do business. Section 340 two has been a catalyst for growth and change and we have made tremendous progress in this area over the last decade in terms of recruitment, retention, and procurement. Since becoming the 11th chairman, i have made financial inclusivity a priority. I recently reinforced that commitment for banks in tomunities for support refresh and modernize regulations, policies, and programs that support greater Financial Inclusion<\/a> in the agency and the Credit Union System<\/a> and will address spiff it the specific needs of Diverse Communities<\/a> and i look forward to working in the partnership of the members of this committee on this worthy endeavor. In closing thank you again for the opportunity to testify before you and i look forward to answering your questions. Thank you. [indiscernible] thank you. Chair mcwilliams, you are now recognized for five minutes to present your oral testimony. Thank you. Thank you for the opportunity to testify today. I hope that you and your families are staying healthy. Six months ago when i was before you we were facing greater volatility and uncertainty. Many industries were experiencing unprecedented declines and the shock was reverberating throughout the Financial System<\/a>. Though there remains considerable uncertainty over the path of the economy, the Banking System<\/a> has served as a source of strength throughout this time. Banks of all sizes have supported customers and communities by originating 500 2lion in ppp loans with trillion in new deposits. Today i will provide an update on five areas in which we have made significant progress. Responding to Economic Risks<\/a> related to covid19, enhancing resolutions, supporting communities in need, prompting inclusion at the fbi see, and fostering technology resolutions. My statement to provide greater details in each area but i would like to grip but i would like to touch on each, starting with how we responded to the risk related to pandemic. In early march the fbi see and fellow regulators undertook a series of actions that helped to maintain stability in Financial Markets<\/a> and in addition to providing flexibility for banks to work with borrowers, we made many targeted regulatory changes to facilitate intermediation and we continue to monitor conditions and receive feedback and we will consider Additional Guidance<\/a> as appropriate. As we responded to the Immediate Impact<\/a> of the pandemic, we focused on enhancing resolutions in several ways. There we entered the pandemic with a historically low number of bank failures, the absence of failure could not last forever and accordingly we improved our resolutions through other actions that centralized supervision and stabilization around ankle loss and activities to protect the health of employees during the pandemic, carrying off targeted engagement with select firms on an asneeded basis. We are particularly mindful that to lowority and moderate income communities have suffered disproportionately during the pandemic. Shaped by member experiences and guided by the traditions of inclusion, one of my priorities as chairman has been to expand engagement and cooperation in support of institutions. One of the options we are exploring is a framework for cdf i with investors interested in challenges and opportunities that face these institutions and communities. We are in the process of creating a vehicle in which investors can make investments csis. Is and cd sis. We are deeply committed to promoting a diverse workplace and environment and although we are not yet satisfied with our progress or the pace of change, we have taken meaningful steps in front of the goal and we will not stop. Diversity around the workforce continues to steadily increase and at the end of 2019 minorities represented 30 of the permanent workforce and 35 . Accounted for also increasing diversity across our leadership with Minorities Holding<\/a> 22 of Management Level<\/a> positions and Women Holding<\/a> 39 between 16 and 30 respectively with the Senior Leadership<\/a> team comprising a diverse set of individuals. We know that more needs to be done and we are fully committed to doing it. Risksconsider additional to the Banking System<\/a> we must recognize the benefit that can be delivered to consumers. We can see that individuals are increasingly moving towards Digital Banking<\/a> and to enable the evolution we established an office of innovation and began working on innovations with feedback around this groundbreaking approach to partnerships between banks to thece the costs and uncertainty around institutions. Thank you for the opportunity to testify today and i look forward to your questions. Thank you. Thank you, chairwoman waters, Ranking Member<\/a>s of the committee , for the opportunity to testify today. My last appearance before the committee in may followed a period of financial stress. Responseres taken in to covid19 added a deep strain and uncertainty, prompting sharp global flight from global asset and retreat to the safety of restoring ofediate with a wide range of byermediaries strengthened the recalibration of the last three years, banking organizations became a shelter from distress. Thanks to the response to the emergency and address of Consumer Needs<\/a> without jeopardizing their own safety or soundness, the report accompanying my testimony with these actions in detail, and we have extended several as events continue, include temporary adjustments, appliance requirements, offsite ,xamination activities clarifying beyond doubt that safety and soundness are no impediment to working safely with borrowers and other customers in times of strength. Together with monetary financial regulatory measures, they calm the waters. The recovery has begun. [no audio] [indiscernible] greatest [indiscernible] now is distinct, formidable, and complex. The surprises gone, replaced by a clearer view of consequences. Burdens are more well understood , but they are no less significant and not evenly born. I am confident that we will work through them together and ensure that economic wounds do not become scars and we remain committed to using our full tools to support the economy as long as this strong Banking System<\/a> remains an element of support with banks lending gainsly and confronting and losses honestly to help customers build and adapt. As supervisors we are temping to ensure that we meet the exacting standards. The latest guidance was an important step towards this goal and since then, working with colleagues and other Financial Institutions<\/a> and regulatory agencies, with credit related accommodations moving towards reinvestment on belated activities, the test should make it easier for banks to participate in emergency lending programs and allows for flexibility to better understand the shock on the behalf of organizations. As reports show, the strength is still intact. Liquidity and capital remain high and have increased over the course of the event. Firms have sharply increased reserves, setting aside shortages today against losses tomorrow and banks are wellpositioned to serviceable work. Its worth recognizing how things might have been different if not for a decade of work by officials and the banks themselves to make the banks stronger and more stable, making things more efficient and transparent. The values are not contingent on only an economic room, it represents a commitment for addressing the most supervisory issues in a crisis and as they could steer this Federal Reserve<\/a> that guides us through the recovery, covid19 changed many aspects of the work of the Federal Reserve<\/a> but affirmed the values and priorities that remain the same, those double continue to guide us in our support for the Financial System<\/a>, the economy, and the country long after the event has passed. Thank you for your time and i thank you for your time and i look forward to answering your questions. Chairperson waters the vice chairman says you are recognized for five minutes for your testimony. Ranking member mckendry and members of the committee and staff, thank you for the opportunity to update you today on the occ work ensuring the federal banks operate in a safe, sound and fair manner and remain sources of strength for their committed to. In the past eight months, the occ has supported the orderly function of our Banking System<\/a> through next ordinary time. Fortunately, banks and savings associations entered this time with near historic high levels of capital quality and the economy had enjoyed the longest expansion on record. As part of the National Response<\/a> to covid19, Economic Committee<\/a> was suspended. Regulators at this table collaborated to provide banks the possibility necessary for them to use that strength to support their customers and sustain economic activity. My testimony today will provide detail on the actions the agency has taken on this front. Today, we continue to monitor the effects of shutting down the economy. While banks remain sound, we see potential for troubled assets ahead in commercial and residential real estate, Small Business<\/a> and consumer lending, and travel and hospitality sectors. Those banks with concentration of assets must take a sober view of the wrist and work with customers to the maximum amount possible. Risk perspective offers a compliance which will focus our supervisory efforts in the months ahead. Risk management today can avoid the need for more extreme loss mitigation tomorrow. Having said that, we also see reasons for cautious optimism about the future based on strong thirdquarter gdp growth, continuing reduction in unemployment, strong consumer and Small Business<\/a> sentiment, and betterthanexpected news that the nearterm availability of an effective covid19 vaccine. While the economy and banks face uncertainty, i also want to highlight what gives me optimism for the future banking and frankly for the future of the country. During the social unrest that followed the killing of george floyd the summer, it became clear that the protesters were angry because too Many Americans<\/a> had been left out of our National Wealth<\/a> creation engine for far too long. The occ founded project reach for just this purpose, to give bankers, civil rights leaders, innovators and Business People<\/a> to promote equal participation in our economy. Its working to illuminate obstacles to credit for 45 Million People<\/a> with no useful credit score, to expand a portable housing for those who cannot afford high dome payment requirement and reinvigorate minority banks in the eclectic communities. We have now kicked off Regional Reach<\/a> efforts with including one serving los angeles. On access tonts capital and credit in places ranging from South Carolina<\/a> to colorado. I have been humbled by the momentum among the industry, community and civil rights advocates, and our staff. Project reach has become a movement to tear down barriers so all may pursue their american dreams. Another reason for my optimism comes from innovators within banks and elsewhere who are excited about improving banking and Financial Services<\/a> to consumers, businesses and communities. We are seeing new products and better ways. The progress will benefit consumers and businesses. People will have greater choice and more autonomy over their financial wellbeing. At the occ, we believe the consumers, businesses and the economy are better served when this can occur within the Banking System<\/a> in the system is allowed to evolve. We think this for several reasons. The Banking System<\/a> is among our most strictly regulated and most closely supervised industries. Those who fear innovation may harm consumers may consider the possibility that innovation might be safer in a supervised environment than it is on the currently largely unsupervised one. The same is true for those focused on prudential risk. Over the last decade, its clear that large market shares of lending and payments have migrated from the commercial banks into less regulated shadow banks. This trend reduces our ability to spot and manage issues early on. We should not under raised there is ate where delay of Innovative Services<\/a> already available in other parts of the world. The occ has been a leader in this area since coining the phrase, responsible innovation in 2015. We remade committed to deliver more choice and more Economic Opportunities<\/a> in safe, sound and fairways within the federal Banking System<\/a> to benefit consumers and businesses across the country. Thank you again for this opportunity. Im proud to have served as acting comptroller of the currency and support the agencys important mission. I look forward to your questions. Chairperson waters thank you very much. I will now recognize myself for five minutes for questions. You about theh of deregulatory efforts you have made during this pandemic despite the fact that this committee specifically asked you not to do that. I wont go into all of the deregulation but simply ask each commit tould you freezing these deregulatory actions lets go right down the role on this and ask each of you if you would agree to freeze the deregulatory actions you have taken . Thank you for the question. I dont perceive what we have done at the occ as to regulatory. Lendersderegulated true by Holding Banks<\/a> accountable. We have provided lists of Community Reinvestment<\/a> activities to make clear which things will count. Record find banks numbers of dollars and find individual banking executives in ways that have never been done before. Chairperson waters all right, no, you dont feel you have done anything thats deregulatory. I hear that. Afraid you dont want us to stop because some of the things we have done have actually ensured the growth in consumers especially allowing moderate income people to stay in their homes. We have done on a number of through the cares act or ensure that a regulated entities provide an opportunity to work with the most vulnerable and not have a repeat chairperson waters all right, so you say no also, you dont feel what you have done is deregulatory. Yes, the changes we have made a been designed to ensure that the right incentives are in place to ensure we have a resilient Financial System<\/a> and if we consider the resilience of the Financial System<\/a>, we should be willing to do its necessary to keep us safe. Chairperson waters thank you. All of our efforts have been to provide regulatory relief and flexibly so Credit Unions<\/a> can serve their members during the time of the pandemic. Every action ive taken is to provide. Credit unions have made over 1. 7 million loans in the amount of 50 5 billion. Chairperson waters thank you, you dont feel you have done anything that the deregulatory, is that right . Credit union member owners. Chairperson waters thank you very much. Chair to go to mcwilliams. We talk about diversity and inclusion and i am very interested in what is happening with small banks, some committed banks. Is it true that we have banks that are basically closing down, they are leaving banking, or is that just a rumor . Save banks closing down chairperson Waters Community<\/a> banks. There has been a great consolidation trend for years now. We probably lose about 220 Community Banks<\/a> with mergers every year. Have you hadaters the opportunity to interact with blacks or latinx about Bank Ownership<\/a> and acquisitions of banks that are being merged . Yes, we have. One of the key components of air mdi, in per server in pursuit anper sue them would provide entity that is being sold chairperson waters have you been involved in any latinxtions mdi or bankers . They are in constant decisions discussions. Chairperson waters have you been successful at any acquisitions that have been made by mdis or latinx bankers . Yes. Chairperson waters can you tell me which ones they are. I would be happy to provide that information but i dont have it in front of me. Im in active discussions with a number of mdi banks to make sure they have an opportunity to acquire chairperson waters if you have been successful, i want to know about it. We are talking about wealth building. We are talking about opening up opportunities that have not been available in the Financial System<\/a>s i want to know more about this and whether or not you actually have a program by which you will be outreaching to ensure that these opportunities are opening up to mdi. I want to thank you very much call onnt to go now to a Ranking Member<\/a> for questions. You have five minutes. Thank you, madam chair. I would like to first say to , thisroup of regulators committee has followed very closely your actions. Since this unprecedented pandemic has hit this country and the world. Great confidence that the actions you have taken have made a very challenging situation, a Challenging Health<\/a> situation that has become a challenging economic situation, that because of your actions, we have been able to prevent a financial crisis. And without your concerted action, until the final moment you are in receipts, the American People<\/a> will be in a tougher position than they are currently at. What i want to ask you to do and commit to do is to the fullness of your terms of office, that you do the business you set out to do to ensure the safety and soundness of institutions so the American People<\/a> can have confidence there regulators are on the job, watching out for them and taking every action necessary to prevent bad outcomes. Actionnd you for that but i also urge you to continue this good work. To that end, the work of the Federal Reserve<\/a> has been foremost in this discussion. Commend you for the actions of the Federal Reserve<\/a> since march especially. We also need to know this process Going Forward<\/a>. , weve mentioned before want a clear understanding of the path forward. This is an important rate, the financial a number of products, looking it over 200 trillion initial value for contracts. Libor is ending at the end us someso can you give assurance about your process moving forward . Yes, the issue you have raised i think is an important one from a stability point of view. There are a lot of legacy contracts that currently rely on define at we need to path forward them at the end of 2021. The transition for new contracts is going pretty smoothly. The legacy contract is the big issue there. Way to allow those legacy contracts to continue for at least some period, to allow the bulk of the legacy contracts to mature on their existing terms without a significant change would probably be the best way forward. And we are working on a method to do that. There are a variety of different ways one can do that but i would expect over the next couple of months to be able to publicly define a way forward to address that. Thank you. Do you have a legislative request or a need for legislative action by the congress . Think that the ultimate transition will ultimately require some legislative element. But at this point, i think the answer would be no because i think what we want to try to do to allow these contracts to mature before we have a legislative solution. Thank you. Chairman mcwilliams, i want to commend you for your actions at the fbi see to focus on financial innovation at the fdic to focus on financial innovation and keep our Financial Institution<\/a> safe and secure. I want to commend your action at to providemaking certainty and clarity on those partnerships that are very important for our current economy. Describe how that rule will work in practice and why its a good thing . Thanks for the question. First of all, the purpose of the rule is to regress what happened in light of the madden route which reduce the availability of credit to low and moderate income americans by as much as 64 . That allows thanks to leverage their Balance Sheets<\/a> to solve that. We also make clear that banks the due partnerships are accountable for all consumer compliance obligations. Thanks for your testimony and thank you all for being here. Or being wherever you are, thank you so much. Chairperson waters thank you very much. Congressperson maloney, you are recognized for five minutes. Congratulations on your reelection. Due to the covid crisis, its a threat to our economy and wont go away until we have a vaccine. We should be using every tool at our disposal to guarantee the safety of our Banking System<\/a>. During the great depression, over 400 banks failed in one of the most important lessons we learned from that time was the need for banks to shore up sufficient capital to withstand severe economic downturns. Chairwoman williams, given the positive correlation between economic downturns and bank failures, are you expecting an bank payers at this time . , we entered the pandemic and related financial , the bank is very well capitalized with the highest liquidity levels. Had far this year, weve for banks fail. Historically, during good times, we have about five banks fail per year so we are on trend for a normal year thus far. It shows the resilience of the Financial System<\/a> as highlighted in the Opening Statements<\/a>. The banksreciating and their capital balances in their liquidity during the could times and we are monitoring conditions on the ground to make sure they can do what they need to do. I also want to highlight that i am not sure we will be in as good of a place as we are now if we did not take a number of regulatory actions over the past two months to make sure banks can stay in the business of banking. And loans that were modified for the purpose of the pandemic, would not constitute troubled debt restructuring. The thehe 2008 crisis, reason the banks were not eager to modify loans upfront is because they were not sure how the regulators would treat those loans and they didnt want to have a nonperforming loan and debt on their books. It was up to us to act quickly and probably to make sure we have good banks so people can stay in their homes and the fdic doesnt have to jump into action. Some countries have productivity have prohibited Dividend Payments<\/a>. Do you believe that prohibiting Dividend Payments<\/a> to shield banks from failure can help them hold onto more of their capital . Sure, with respect to small banks, committed to banks, those banks are privately held. They are just their investors are friends and family and they are local farmers and they are on the boards of those banks. Have a blunt instrument across cutting awith dividend, that would probably hurt the communities and the investors and Community Banks<\/a>. We have supervisory tools that weird that we can manage dividend sales if we are concerned about the banks Capital Position<\/a> and we have utilize those tools in the past as appropriate. I have the time, during the latest stress test, several banks could be at risk of reaching minimum capital levels. As a result, the fed banned stock buybacks but only limited Dividend Payments<\/a> by the largest bank to safeguard their solvency. Uncertaintyntinued of the crisis with covid, do you think the fed should have prohibited Dividend Payments<\/a> entirely . Given thethis period, measures we put in place, the Capital Position<\/a>s of the largest banks have actually increased even while they have been taking record levels of provisions. We are running stress tests currently in light of the events of the spring. Determine ater to the granular bank level what we the potential losses might be. I think we have been a good position. I think events have demonstrated that the measures we have taken i believe my time is expired and i yield back, thank you. Chairperson waters thank you very much, i now recognize mr. Lucas for five minutes. Mr. Lucas, you are recognized. Is mr. Lucas available . If not, i will go to mr. Posey for five minutes. Thank you very much. Of stress for our Financial Institutions<\/a> and markets, we have the obligation to temper safety and soundness so that all potential fears over an event like this pandemic would not go does into adopting provincialent standards that we exacerbate the stress. The same concerns for the troubled debt restructuring and the accounting standard during a recovery from the financial crisis. You and i could have sponsored a bill to address these concerns during the recovery from the financial crisis. As you know, the bill has commonsense parameters around putting Loan Modifications<\/a>, often called troubled debt restructures t orrd into nonaccrual status. That status netted negatively impacts farmers and makes it difficult to work with customers. I was please this committee worked together in a bipartisan on troubledtigate debt restructuring in the cares act. We need to extend that relief for a lot longer though i have about tying the expansion to sweeping extension of consumer forbearance for cards and credit student loans. Forbearance in the chain of Financial Transactions<\/a> could put us in another financial liquidity crisis and we have other bills here today that i believe have merit. Quarrels, there is legislation before the committee to extend the pandemicrelated relaxation of accounting standards associated with troubled debt restructuring. This provision is included in the cares act. The language allows banks and Credit Unions<\/a> temporarily removes the burdensome trouble debt restructuring. Financial institutions that take advantage of this would be required to provide forbearance to consumers for a wide variety of loans including installment debt and credit cards. Small businesses would be afforded a wide array of loans. How the would impose loan balances could be repaid. I am interested in your candid evaluation. What would be the feds concerns about such provisions if any . You, thanks for the question. But current forbearance for business, as you know, will changes to be for the banklength that and borrower would agree so the forbearance does not end at the end of this year, is the ability to make payments at the end of this year. General, it is good for us to possible toptly as regular where the challenges that are facing banks, given the position of their borrowers, are at least recognized. Now,ast what we see right theanks begin to understand forbearance that is available under the law, it doesnt end of the end of the year but simply they must make their decisions by the end of the year. We are not getting a lot of pressure at the Federal Reserve<\/a> for that provision but ultimately, that might be a decision for congress. Thank you. I have a couple of more question so i yield the balance of my time. [no audio] chairperson waters . You are recognized for five minutes if miss velasquez is not available, we will go on to mr. Luca meyer for five minutes. Thank you, madam chair. I would be willing to mr. Lucas who was above me in rank but because he hit his mute button, he can take the spot and i will followup up in a moment. Chairperson waters mr. Lucas is recognized for five minutes. Mr. Lucas . I dont know, apparently he hasnt found the mute button yet. Chairperson waters we will let him continue to look. You can go on. Thank you very much. Before i begin, i would like to applaud all of you for proposing to codify the 2018 interagency statement on guidance and place a binding rule on the agencies of supervisory guidance that does not have the effect of law. This is been something we have worked on in congress and look forward to continue working with you all to draw a clear line between rule and guidance and what is enforceable and what is not. I appreciate your attention to that and i look forward to continuing to work with you. To followup with mr. Poseys conversation with regards to troubled debt restructuring, i have a bill out there to do this as well. I am very concerned at the end of the year when we have run out funds, that regulators will have minimal toions with nothing to point legislatively. To say they can take a different approach, discussing this with the Banking Industry<\/a> folks, and the trade union folks, that they about relying on guidance, having to rely on Something Like<\/a> that to make these decisions and give forbearance to the customers whether it be home loans, current loans or their business loans. Thisnd i have talked about but i just want to get you on record. Where are you and what are your plans with guidance and how you would work with the set of regulators and the people who regulate which are the banks and their customers that have been affected by those decisions . Thank you for that question. As your discussions, know, i was concerned about loans not being met a fight and banks having debt. The loans ones modified were treated differently. They are still performing now 10 or 20 years later. That, we have worked with Financial Accounting<\/a> to make sure our banks can modify loans that were performing prior to the pandemic and not have pprs on the books in congress and acted similar provisions in the cares act. Thats probably one of the main reasons you have seen homeowners stay in their home and Small Business<\/a>es have accepted credit during these to mulch with months of march and april. We are open to considering what additional actions may come up themke sure we can enable to banks to work with their borrowers. I can assure you that the institutions desperately need to have these programs. If they are not able to get it from the regulators, it will be difficult for them to give it to their customers. We thank you for that. Hood, you had an article last week in your credit union with regards to cecil. I appreciate the position you took. It indicated that cecil was going to be detrimental to the credit union folks or at least two being done away with. It will be procyclical. About thisave talked as well. We are three quarters into the year now with cecil data and the bigger banks at the beginning of the year rolled over another 35 and the reserves declines of stress out the income. Would you like to comment on that a little bit . Sorry, the mute button. Know, immediately as a result of the covid event by extending the transition period , they will benks insulated from the capital effects from cecil for two years and then a three year phasein begins. I think that gives us the to understand what has happened and what the implications of cecil are, particular kelly as we see it operating with larger banks and we can then make any permanent adjustments we think are necessary. My time is up, thank you very much and i appreciate your position on this. I yield back. I nowerson waters recognize mr. Sherman for five minutes. Thank you, a couple of comments Ranking Member<\/a> luca meyer said in his statement that our economy grew at 30 3 at 33 . The more accurate way to say that is we grew at 8 during the Third Quarter<\/a>. I dont know if you can extrapolate that. That was only a halfway bounce back from a terrible Second Quarter<\/a>. This crisis continues. Makes this crisis, it sense to have limits on the dividendsacks and the paid by large banks. Youq,why i wrote mr. Uar backl in early marche that you prohibits, dividends and stock repurchases by banks by megan vance during this crisis. Death by megabanks during his crisis. You have taken some action particularly on the start buybacks i hope we can count on you to continue to limit stock buybacks and dividends as well until this crisis is over so ort we are not confronted that we asserted the bail out on huge Financial Institutions<\/a>. We have talked about the troubled debt restructuring relief. Banks to restructure their debt to consumers and Small Business<\/a>es without being penalized. This cares act provision expires at the end of this year though we have heard testimony that it could be applied next year to forbearance agreed to this year. There may be forbearance agreed to next year. Youuld ask mr. Brooks, do have the authority to extend this loan mod a k modification flexibility or the test for the Loan Modifications<\/a> made during the 2021 part of this covid crisis and if you do, do you plan to exercise that authority . Thank you for the question. Aspects ofertain this for without an extension of the cares act, we would have statutory inability to do certain things because we are statutorily required to held to hold banks accountable. On the other hand, we have significant like sibley to protect banks from the impact of treatment under various categories. These include things like determining whattdr impact is immaterial and then is then excluded from the packed and it includes things like making of remaking a file report so there are a bunch of things we can do. Much that we pass additional legislation. Even before we passed legislation, you had a regulation project which means you had the the authority were we acted and hopefully you will have that authority after our actions are no longer needed unless we can extend them. Perhaps arrive at the United States<\/a> senate, anything is possible. Weve got 2 trillion of legacy libor. Most of those interest instruments do not provide a replacement rate to be used in calculating the amount of interest payable once libor is no longer published at the end of next year. Some of those instruments provide that the lender gets to pick the rate which would be an outrage if you are the borrower. You dont want additional charges attributed to you. I know there is some discussion as to whether legislation is necessary. I clearly think it is and i dont know how, if the instrument does not indicate how interest is to be calculated, anything other than legislation could solve that problem. I put forward a discussion draft. The suggestions of the alternative reference rate committee. What would be the consequence of simply not having any regulatory or legislative solution. Would this result in class action lawsuits . If there were no solutions at all, yes, when libor stops, there would be a significant disruption. , as ik there is a way indicated by answer, that we can existingurrent contracts to mature on their existing terms and then say and theyd save legislation for after we have had time to think about it. I yield back. Chairperson waters thank you, i will now recognize mr. Meeks for five minutes. I want to thank you, madam chair as well as ranking number member mckenzie for your active engagement on bills i drafted that were some of the most impactful bills for minority banks and minority Financial Institutions<\/a>. Thank with respect that there is constructive input on these bills. We havent always agreed. We have had some deep disagreements. But i believe with conviction that these bills matter and that collaborative approach is critical. Structuraladdress discrimination and systemic inequality that holds back too many families across the country. There are sensitive pillars to tackle the problems we seek to solve. To chairwoman mcwilliams. Eyes you agree that in the , they address the issues of any quality of dissemination in our Banking System<\/a> . The themit to legislation . Banks are committed institutions are serving their committed tease and there communities happened to be low and moderate income and people of color. They are not just pillars of the community but in many cases, they are the only vehicle to give Financial Services<\/a>. We are working hard to make sure those banks can sustain themselves. If we do what the we can to make sure they have regulatory responsibility and the creation of what i discussed in my Opening Statements<\/a> would hopefully help with additional capital. They really need capital. We thought we could do a number of things on the regulatory side. They seem to be getting some assists on the technical side some assistance on the technical side but i bit but they need capital. They need others to invest. I couldnt agree with you more. With your initiative which supports minorities and md is is to stretch the capacity require we are going past the disappearance from the garden path. I see that minority banks and to thers are being sold most sounding markets of failing institutions. Can you elaborate more on expanding the number of local minority banks and support them in expanding and achieving because we see the numbers dwindling and even if they merge, they dwindle more so that there will be less communities or less banks then available throughout the United States<\/a> of america. What can we do to expand that more in the eyes of creative . What can we do to make sure mdi soily banks go to those committed tease can be run by minority deposit institutions. Before but weime had change the way that mdis can bid and get Technical Assistance<\/a> so that they have additional an additional two extra weeks. They opened the banks only to s havend while nonmdi to wait, we gave them time to analyze their bids which is going to resolve the situation where they are partially celebrated their businesses. I couldnt agree more with you, we need more of what it takes us its these small committees in particular. There just arent enough of them. We have done a number of things to ensure that we have changed the way we process and approve applications for deposit insurance or there is an increased ability in the utility investors and the organizers to have their banks. Im happy to give you more information but thank you for the question. Thank you for following up. Chairperson waters mr. Lucas . Lets try one more time. Can you hear my voice . Chairperson waters mr. Lucas, are you available for five minutes . Yes, if you can hear me. Thank you, madam chair. Ppp is an Important Program<\/a> in my neighborhood and its important to all businesses across the country. In a pandemic, the Banking System<\/a> has served as a source of strength and many clients are struggling across the country. Those banks it played a Critical Role<\/a> in supporting small ,usinesses through that distributing more than half 1 billion. What do you have to ensure that banks do not phase regulatory burdens as a result of doing participating in ppp . Thank you. Thanks for that question. We have been looking at that issue. I think you are exactly right, the various thresholds for the imposition of various regulatory or on what are intended to be a sort of durable and permanent changes in the status of a bank. Also temporary expansion of their traditions, particularly in a time of stress when they support their customers. I i think they need to look out to address that. We have the ability to provide temporary exemptions for most of them and we are considering doing that. I would just add to that that c has soleent the fdi authority, we have already acted and will continue to act. This shows the Financial System<\/a> has served as a source of strength. The fact that over 1 trillion of new deposits had come in per month through the end of the year. As soon as we have the deal completed, we will analyze it and read and release it to the public. Is exempt fromne the deposit assessment, any assets that have come to banks. Continue to work with our fellow regulators to continue to do so. Absolutely, comptroller . Thank you for that question. The other example i would add to whats already been said is we made changes in the way the supplemental leverage ratio was calculated to make it easier for banks to not have capital impact on these kind of things. There is also ongoing interagency work to make sure regulatory burdens that dont tripped very is there to get a grip on these assets of banks below 10 billion dont find themselves in a harder regulatory climate. We will roll that out probably by the end of the year. Can you speak to the effect of the ppp loans on the Balance Sheets<\/a> . The loans receive a 0 risk rating and calculate the net worth. Only assesswe can premiums based on credit union insureds shares and not assets. Therefore, they dont have an impact on the Balance Sheets<\/a>. In addition, Credit Unions<\/a> a grid supported many loans. Thank you, chairman and i want to thank chairwoman for her indulgence and the efforts. To all mythought collie, be healthy, be safe. While some of my children may think i was around for the 1930 election, on election night, the republicans had 218 seats, a majority. By the Time Congress<\/a> organized in march, the democrats had a 200 19 seat majority. If a podcast of a nonpartisan news sources correct that i listen to this morning then the difference will be three seats. We are in that kind of environment. Is 1930 all over again. I yield back. Chairperson waters thank you very much. You are now recognized for five minutes. Thank you, madam chair. Ago issay that 80 years myittle while, or 90 years first question is for vice chair lwa, with coronavirus cases surging this fall, our economy still in a precarious position. Moodys is asking the default rate for corporations could rise to as much as 15 next quarter, state and cities are facing estimated budget shortfalls of 1 trillion. Itsyork city recently saw debt downgraded. Creates the possibility that our Financial Markets<\/a> need to be are very volatile and we may see return to the disruption we saw in the bond market in march. Will all of this in mind, do you think it would be appropriate to eliminate the Municipal Liquidity<\/a> facility at the end of this year . The data you provided are clearly correct and i agree with that. Onare not out of the woods the economy. The economy had been coming back more quickly than we expected. Unappointed rate is still high and there are burdens on Small Business<\/a>es so we are looking very closely at what the position should be with respect to all the facilities at the end of this year. We havent come to a decision yet. The situation continues to evolve. Decisionake that toward the end of the year. Facte very mindful of the you cited. What about main Street Lending<\/a> programs . Is that in the same precarious position . Facilities will expire at the end of this year. We are looking at the question of whether they should be extended or not and very mindful of different environments. Are Small Business<\/a>es out of the woods yet or we do or do we still have concerns . Think there is certainly reason to be concerned about the pressures on Small Business<\/a>es. The stimulus that was provided in the spring from the fed and the treasury has been longerlasting than expected but obviously its not going to last forever. I think households are probably in better shape to solve this if you look at begin on reform currently. Those are issues we are looking at. Thank you for your response. Mr. Hood, will you tell us what your agency is doing, this is a followup to the chairpersons question, what are you doing to encourage your Credit Unions<\/a> to do all they can to help consumers and Small Business<\/a> owners that need forbearance on their obligations . Credit unions have a long history of helping their members and we encourage the our Credit Unions<\/a> to do just that and we are proud of the fact that banks have already been able to provide 1. 7 million forbearances up to 55 billion. In addition to our encouragement to help minority owners, they would not have anything to sell. It gives the credit union certainty knowing they will not be penalized for taking a pragmatic approach to help their member voters survived this challenging environment. Thank you for that. Fdic doing anything to encourage your institution to help Small Business<\/a> owners and family with their forbearance . We had done a number of things to encourage our Financial Institutions<\/a> to work with their voters and we instructed our examiners to show utmost flexibility when theyre looking at the books of these banks. We have done a number of things loans getre the ppp through and we issued a statement on data which should help Small Business<\/a>es that have trouble getting traditional credit reporting metrics will set we are happy to provide you with Additional Information<\/a> at the time. Expired and i think the witnesses. Chairperson waters thank you very much, mr. Carr, you are recognized for five minutes. Good to see all of my colleagues and i look forward to seeing all of you next week. Question is to chair mcwilliams. According to a recent study from f citizens andd role communities are more likely thani people in urban areasc, to visit Bank Branches<\/a> for their financial needs. Unfortunately, those branches are becoming scarce and rule in Rural Communities<\/a>. Over 700 Rural Communities<\/a> lost bankbined one million wraps over the next nine years so i worry that this decline has only accelerated. While more and more people nationwide are turning to Online Banking<\/a> and mobile banking, this trend is slower among the rural population because of a diminishing number of not only bank branchs but also the lack of adequate broadband internet. Bills totroduced combat both these issues but the problems are exacerbated by the pandemic. Given this data, how has the pandemic affected rural populationsaccess to Banking Service<\/a> compared to their urban and suburban counterparts and what can congress do to ensure rural populations are not cut off from the Banking System<\/a> . Its an excellent question. We have struggled with this. We think there is rural depopulation is more of the younger folks are believed to go into other areas. I want to make sure i understand whats going on in those communities. We dont have good metrics yet on the effect of the pandemic on the rural big branches and Banking Service<\/a>s. Say i have heard people iny that particular have been hardship. The economic shutdown has suffered has been suffered by certain neighborhoods. Fewer people are able to get the benefit of being able to visit and get paid. Anything the public can do to help the communities in this time of need would be welcome. The would be welcome in Banking Sector<\/a> in particular. About how think Technology Innovation<\/a> can serve those communities especially in areas where there is a single bank branch were no branch at all. To focus on these issues. With broadband issues, we have highlighted that there should be ara credits given to the expansion in the community. Thats a great idea. Chairmanmeeksinterest about charter issues i want to work with him in a bipartisan way to stop maybe we can look at impetus. I look forward to welcoming you to kentucky next move next month to talk with lenders and lenders my district. Occs effort since the pandemic including the toated cra, attempted mitigate the negative impacts of covid on Rural Communities<\/a> . A twotime kentucky colonel, i am excited to be there. Can dore two things we to make an impact quickly. One of the main points of ra more of a financial proposition for banks. We allowed banks to count loans made in small family farming communities toward their cra obligations regardless of whether they were in their geographic assessment areas. We have used Regulatory Power<\/a> to make those loans more theomically attractive in communities we have neglected too long. It has simply taken too long to bankve any kind of situation over the last 10 years. The things we did inside the occ is to develop a new process designed to cut the timeline for getting Bank Charters<\/a> in half or an average of about 18 months to an average of nine months. Once we can do that, you will find the organizers of banks in smalltown kentucky will have an easier time seeing a beginning and ending and getting it across the line. My time is expired i look forward to seeing you in kentucky next month, i yield back. Iairperson waters thank you, now recognize mr. Green for five minutes. Thank you, madam chair and thanks to the Ranking Member<\/a>. You have your project reach. That cause a group to have ache credit scoring initiative . Indicated that you had that this factor like the other people in your ecosystem. Im serious as to how this will aid a person in paying bills. And you give me a response . Project is nothing in reach remotely about that. I have been asked about the way that Artificial Intelligence<\/a> of the future can beused to assesst worthiness. There are factors that might be predictive. Product reach has nothing to do with that. What we are looking for is the inclusion of payments and bank cash flow data as a way to include people in the Credit System<\/a> and the wealth Building System<\/a> where they have been excluded for years. Of the millions of americans who dont have a credit score, blacks are more likely than whites to not have a credit score. We think finding a way to predict credit worthiness for africanamericans is are the most important things we do today. Thank you i am pleased to have you clarify. Sometimes, people do make mistakes in reporting. I have had this happen to me. You mentioned rental payments. Would you also include light bills, gas bills, phone bills if they are paid timely would be indicative of a persons ability to not only be responsible but also to meet their obligations . Absolutely. I have been working on this issue for 25 years and it is a travesty that it has taken us this long to realize that [indiscernible] personictive of a ability to pay their mortgage. Will gete is that you this repaired as quickly as possible. You seem to have a good sense of what its all about and i appreciate that greatly. , turned itslation data alternative data pilot program. I would like to get this to you for your perusal. I am interested in your input. Would you allow me to do so and i will see if i can get the appropriate person on your team to get this to you . I wish you would and i with up to talk to you about that personally. I promise you we will have that conversation and it means a lot to me. The depository institutions. I make it my business to try to understand what is happening. Aboutof what is happening the lack of capital is true. In to do whatomes you normally do in terms of [indiscernible] it takes up a lot of the time that they have. How can we streamline this process so that it doesnt take up all of the time of the few people that have who have had an experience with making the loans so they can stay in business while you are there doing what you do as a regulator . This is a conundrum and there are two or three prongs to the solution. Lets talk about the small staff. Veilis one reason that the at a higher rate than normal thanks. Fail at a higher rate than normal banks. Banks to fundbig capital and also do management rotations and Exchange Programs<\/a> so the big banks can work inside of the mdis so they can provide boots on the ground in a way that they dont have today. That is a critical component of success. It is far too hard for small banks to on Board Technology<\/a> solutions to outsource the functions that they now do manually. We have seen this as an issue. We will make that easier as well. My time is up. Thank you for your time i yelled back. Cleaver,on waters mr. You are recognized for five minutes. Mr. Hill is recognized for five minutes. Chair. K you, madam my best wishes to my colleagues i look forward to being with you next week and thank you for this excellent panel on a timely set of topics. Lets talk about centralbank digital carted currency. Its very important to Financial Services<\/a> and the regulated side of our sector as well as our economy and american competitiveness. Wrote chairmani powell and 2019 about considering a digital dollar and we got a note back from him a month later saying not really. Since that time, others have become very active in thinking through the idea of a digital dollar and your colleagues around the world are heavily focused on this. Could you give us an update on what changed . Why is the fed focused on a digital dollar . It would be accurate to say that understanding the implications of the central bank as a currency is something we have always been focused on. It is fair to say that that focus has increased over the course of last year and internationally. We have seen with some of the proposals from a variety of for different types of Payment Systems<\/a>. Some regulatory and supervisory issues internationally. Tendingput a premium on to our own payment system. Currencybank digital could be a part of that solution. We are actively engaged in understanding this. I still think it would be that we believe this is a solution that the United States<\/a> would need to implement. We are doing a lot of research, weighing the pros and cons. Have pilot projects in place. The International Study<\/a> this is picking up, this is still in the early stages. It is a very important issue. Haveld not say that we changed our stance and we now believe it is something that the United States<\/a> needs right away. I certainly agree it is not eminent, but it is a matter of National Security<\/a> as the worlds reserve currency that we consider it. I commend you to do the work your team is doing with m. I. T. I think that research is important. I believe this is a critical element for american competitiveness in the years ahead and i want to urge on the work of the feds team. Let me switch gears to my friend line ofrom missouris questioning about the facilities and the use of the treasury stabilization fund. I heard your answer, but i want to be clear. Governors and of the treasury secretary ask congress by some date in the passfew days to legislative authority to extend stabilizationthat funding . That weis not something have decided yet, but we are considering. Do you think that those and thees, that the fed treasury have adequate resources since the economy is reopening and there has been very little significant uptake since the height of the crisis in march on those facilities, you think you have the sufficient resources under existing powers and the fed with their existing noncares Exchange Stabilization<\/a> fund, could that be sufficient as you look at 2021 . Newe dont need Congressional Authority<\/a> to extend the facilities. It is an existing law that we can extend them. I am sure you are all aware that there are significant unused resources currently the facilities they have served a useful purpose, but principally as a backstop to activity. A decisionould be for congress whether those amounts should be supplemented. Thank you for your time. I appreciate the panel. Chairperson waters thank you. Now, mr. Cleaver is recognized for five minutes. Thank you. I would like to say how pleased be the chair will of this committee for another 10 years. On and follow through that wereestions spoken of earlier. You for your willingness to serve our country, first and foremost. One of you will be going 20th in your positions, there is some overlap, and you are one. Before i left my apartment here in washington this morning, we looked at the cases of covid around the country. I looked at the midwest where i missouri. Nsas city, missouri and kansas are both flood red in terms of the new cases. It is frightening. I just met with our hospitals to try to figure out if we need to prepare for field hospitals in my city. We had big issue and over 7000 people file for unemployment 700,000 people file for unemployment. I understand that unemployment declines may represent people completely dropping out of the workforce. When you consider all of these aings and how we need to have strong fight against covid and trying to also recover the economy, are you involved in any way at this point in some kind the Joe Bidenwith<\/a> Transition Team<\/a> so the ftse can play its role to continue without any disruption . Thank you for your kind words and i am grateful for your service as well. I will say that we have abided by all the requirements of Government Agencies<\/a> that are imposed on us. We will certainly engage to the extent that that is feasible and possible with planning etc. For the new administration starting in january. Noty understanding, i have had any discussions with the biden Transition Team<\/a>. I am troubled by the fact that we need to have a seamless. Ove the fbi see is a critically important institution. Preparing for a transition in terms of being the new insent registration with information that would allow for a seamless transmission transition. I believe all americans would like to see that. It want you to ignore am a little frustrated because i am not sure i understood what you just said. Are you preparing for the transition, let me ask you that . Any can assure you that transition to the new administration is going to be seamless. None of our critical functions are going to be affected. We are ready to work with whoever is in the white house in january and you have my commitment that i will work with whoever is on my board. Yes, ok. Let me move on. Quarles, let me follow up on something that my longterm lacy clay,colleague with the issues that he raised expanding the lending programs for the Federal Reserve<\/a> and treasury. I am a former mayor. Oh my goodness. I guess my time is up, i am sorry. Thank you. I believe my time expired. I heard a beep. Yes, yourn waters time has expired thank you very much. [indiscernible] you are now recognized for five minutes. Is mr. Amer available . If not, we will go to the gentleman from georgia. [indiscernible] your recognized. Is mr. Latimer on the platform . Mooney we will go to mr. For five minutes. If not, we will go to mr. Davidson for five minutes. Thank you, madam chairwoman. Guests for your work in this tough field. In a time that has seen some important steps by the people represented here today. Without spending much time, i want to get to his many as i can. Acting comptroller brooks, i want to thank you for the work you have done particular within the Digital Assets<\/a> based. I am encouraged by the july interpretive letter related to the banks being able to provide Custody Services<\/a> for Digital Assets<\/a>. Especially focused on holding unique cryptographic keys. I appreciate the approach. It it echoes language in my built the taxonomy act. Action by the occ was much needed especially as estates such as wyoming have already provided legal clarity for example with a special purpose charter for tracking financial. My main concern is that we do not have sufficient clarity and regulatory clarity that will enable agile assets to truly be adopted and to provide the safeguards that markets and consumers and investors need. Digitalelieve that assets could benefit from the certainty that comes from legislation signed into law in particular, do you address this with respect to the custody issue . Thank you for the question. I have always appreciated your engagement going back many years. Side, i think that clarity around what constitutes a qualified custodian would be a good thing. As you noted in your taxonomy act, some legislation has recognized there is a lack of Securities Law<\/a> clarity that needs legislation. What we have concluded at occ and this is work that began before i got here is that Digital Assets<\/a> are analogous to other types of assets over the years and the Banking System<\/a> has normally been the vessel for transmitting that across the system. Picking up on a conversation a few minutes ago, our view is block chains are private payment networks. There are others like the ach system. It is only open to banks. Block chains are Payment Systems<\/a> that anyone can join. They are open for anyone. A are free and equal to anyone. That may be superior to existing networks. That is what our work in this space is about. That recognition that crypto is about changing the way people deal with each other in finance and the way that people interact with each other on the internet for information. Think the occ has a fair amount of existing authority to clarify the banks role in that overall part of the Financial System<\/a>. I agree with your viewpoint and thank you for clarifying what you are doing and how you view it. There really is underlying support for this that is not partisan and i am encouraged by the recent hearings we have had in the task force. I hope we can continue that progress and maybe codify some of this into law. There iss law, certainty that is desperately needed there and sometimes, i feel like the fcc is wandering off course. Hopefully, you will continue to be voice of reason. I do have to move on to a couple other topics. The soundaunched money caucus with some colleagues and we are at a time when we are printing money. We are not borrowing it truly. We owe it, it is borrowed in that sense that it counts as debt. But inherently, that dilutes the value of all the other money. Concernyour level of about the longterm consequences for americas debt and in a related topic, the size of the feds Balance Sheet<\/a> . How will we know what we have crossed a limit where we could undermine the essential liquidity that was able to be provided, wes provided some stability. Thats a good thing. Is there a level of debt that would be concerning for you . Think history would show that for any country, there is a level of debt that should be concerning. States is not in a special position. I do not think that is upon us soon, but that is definitely something that as we look at the Overall Economic<\/a> financial situation [indiscernible] thank you and it is hard to stay specifically, but the consequence of some of the growth of the feds balance lifeline and it will be a case study for years on the value of a central bank at a time and crisis. There are a lot of regulatory policies that are having economic distortion. I look forward to working with you and others. Thank you for your work and i wish we had more time to collaborate. I yield. I think i am up, but i have to be recognized first. Without objection. Thank you, mr. Davidson. To our panel, thank you very much for your service in this difficult moment in american history. I think that the Banking System<\/a>, the Financial System<\/a> has given itself proven itself strong. I want to state to everyone, we are not out of this. Kansas,ado just as in we have seen a terrible spike in infection. A month ago, we were less than one in an thousand 1000 had infection. At lesss ago, we were than one and 300. Madam chair, i went ahead and started if thats ok. [laughter] chairperson waters [indiscernible] we had a little technical difficulty. Thank you for Getting Started<\/a> go right ahead. Now isinfection rate less than one and 100 and colorado. Our hospitalizations are higher than they had been at any time since the beginning of this and we have had terrible hospitalization rates in march and april. Our death rate is rising again. We thought we had this in hand. This virus is a nefarious insidious thing. To my regulators and colleagues, i would say we are not out of this. Been, ig as it has think that the pandemic is not over and it will have a long tail. Panelists, madam chair of like to offer a letter from the Mortgage Bankers<\/a> association to be submitted to record. Chairperson waters without objection such as the order. Thank you. One of the things that a number of my colleagues have mentioned is that we took certain steps in the cares act to make sure that there could be flexibility from the regulators to the banks and from thethe borrowers landlords to the tenants. Flexibility is going to have to remain in place. Instance, the limited trouble debt structuring kinds of assets to six months for modified loans and overthrew the end of the year. I would ask the panelists, to any of you plan to update this guidance to allow the covid Loan Modifications<\/a> to extend beyond six months and extend well into next year . Given the state of the pandemic . Thank you for the question. We have worked hard to reach compromising with the standards board. I am willing to do what it takes to make sure that our banks can continue to be strong and resilient and that homeowners and Small Business<\/a>es can have access to credit and stay in their homes and businesses. And ins two to tango this case, it takes a village of us. You only have part of this village here on the panel. We would have to work to make sure that others are willing to accommodate the extension of what we have agreed to back in march. Thank you. Mr. Comptroller . Thank you for the question. I echo what she said and i would go further to say that accounting treatment is one part of the puzzle for banks. Much one of the most porton exposures is on the Residential Mortgage<\/a> side. Banks i have spoken to about Loan Modifications<\/a> and forbearances say that they have learned a lot from the program coming out of the financial crisis and irrespective of accounting treatment, it is better to maximize the net present value of these loans by keeping the current borrowers in the loans if they have future ability to repay. Act that weroes propose, we had some substantial Housing Assistance<\/a> pieces. Howoncern, and i would ask you look at it from a regulatory standpoint, we have forbearances or moratoriums on evictions. Then, the tenants are going to have to come up with several months worth of rent. How do you analyze that . Do you think they will be able to do that without assistance from us, the United States<\/a> . I would say rent is more complex than mortgage. The cares act, it was clear on the mortgage side that went up borrower comes out of forbearance, the loan is contractually current. The landlord is eventually going to have to pay the bank and you can have to analyze the bank. That is my point is rent is more complicated and it is worth looking at legislatively. Thank you. Chairperson waters mr. Emmer you are recognized for five me . Tes can you hear thank you for hosting. This important hearing during this uncertain time. As we close out the 116th congress, we have a lot to be thankful for because of the nonpartisan efforts to educate and inform members in the Technology Issues<\/a> on the sim tech task force. I want to thank representative lynch for his efforts to lead the task force. Over the past two years, thin tech issues are rising to higher prominence. It is my hope that the next congress can continue the nonpartisan dedication to these issues whether it be on the task force or a stronger focus on the issues through perhaps a subcommittee. One thing is for sure, the opportunities the innovations present for all americans and the entire world are not going away. Thank you to both sides of the aisle for their ongoing focus on these issues. Thank you to the chairman and vice chairman for all of your work over the past couple of years. In particular, two of you have demonstrated a strong commitment to crafting a Regulatory Environment<\/a> that encourages innovation and growth in the thin tech space. Competition, products and services in banking, the American People<\/a> are afforded with more choice, fair prices, and control over their financial future. Yourman mcwilliams, thank for dedicating resources for developing a Financial Technology<\/a> strategy that works with industry to craft smart and considerate regulations for Financial Technology<\/a> allowing more consumers to access the Banking System<\/a>. Mr. Brooks, thank you for providing the necessary certainty for banks to provide custody of cryptocurrency assets and all you have done to ensure the federal government remains supportive of new technologies and capable of adapting regulations to suit our countries continuing investments in innovation. I am hopeful that additional regulators will come on board and provide support for these technologies. Vice chairman corals, chairman thatl informed us privatesector individuals and innovations may not have a place in the feds consideration of a digital dollar and this is concerning. Private actors have been responsible for the entirety of these innovations and are convincing advancing with or without the fed. I urge the fed to take additional efforts to make their workings toward the digital dollar. Comptroller brooks, during your short impactful tenure at the occ, you made extraordinary inroads in providing guidance for occ regulated Financial Institutions<\/a> to engage with Digital Assets<\/a> such as bitcoin. What difficulties or obstacles do you encounter when giving and howlated to can that be improved . When you are done answering that, i have a couple more for you. Thank you so much for your partnership on this over the years. I appreciate your vision. On the institution side, there are few impediments. You see that shortly after we gave our guidance on crypto custody that the nations largest bank j. P. Morgan announced it is going to launch a crypto business. Thatrecognizes the fact 5060 million americans own the stuff and some of us might be excited and some not, but the point is a gigantic proportion of our society believes it is the future for various reasons. That as athing is country, we have not recognized the Important Competitive<\/a> aspect of this. When you see that china has already adopted a Digital Currency<\/a> that is now transacting en bloc chain and in this country, we are still years away from a national realtime payment system, i come to your same conclusion which is that the best solution is to win the way we always have which is to unleash the power of our private sector. We have built private stable coins in this country that already have a market cap in the tens of billions of dollars. They are transacting daily growing rapidly and used for broad martial purposes. I dont think we need to wait to build government sector solution. The private sector is on it. Im sorry for eating up your time. I look forward to continuing the conversation. Thank you, madam chair. Chairperson waters mr. Heinz, you are recognized for five minutes. And ank you, madam chair welcome back to my colleagues on the committee. Look into all of our regulators. It is good to see you also. My teeth in the Congress Starting<\/a> in 2009 when we were experiencing a brutal meltdown of another type. Front than what we have seen today. The we are seeing today, economic effects of the pandemic and shut down have therefore indicated it is not something we would have predicted. I appreciate the actions you have taken especially the Federal Reserve<\/a> working with treasuries and the authorities granted to it through the cares act. My understanding is that this is handled well. Credit where credit is due to the dodd frank act. Was it was done, it appreciated by nobody on the left or the right here we are. Was ag that didnt bark major dislocation in our Financial System<\/a> despite the dramatic dislocation to our economy. Mr. Corals, mike questions are to you. Ae crisis has uncovered number of things that are concerning and if you would , number one the dislocation in the treasury market in midmarch gave a lot of us heartburn. Number two, the number of you have mentioned concerned with the commercial credit market. Could this be something that causes a significant problem within the banks . If covid has done one thing, his uncovered disparities that exist in our society and while i have heard a lot of backandforth, i have not heard the regulators offer suggestion on how we might increase the banks population and make credit available to more americans. I know thats a tall order, but you have the remainder of my time to address those three issues. Thank you. I will be brief. I could take the remainder of the hearing on those three issues. Market, therey clearly was dysfunction in march. It was a severe dysfunction for a few days that was caused by the treasury market trading infrastructure being overwhelmed by sales orders on the parts of many different [indiscernible] you had a variety of people who were looking for cash liquidity given the severe uncertainty that there was in the middle of march. That overwhelmed the infrastructure of the systems ability to handle that. We are looking currently at a variety of factors. We are looking multilaterally with other domestic agencies. We are working internationally because this was a problem internationally, one of the significant issues were foreign sellers selling in order to get dollars for their dollar needs in this for cash. I think there are things we will need to look at above the structure of the treasury market in order to improve under stress. It would be premature to say what they would be. The commercial credit market,iven the nature of this stress an element of the solution has on thecreasing debt parts of Many Companies<\/a> that had severe revenue restrictions in the spring. Sector was already reasonably highly indebted going into this so that is something when he to look at. We are running rank stress tests currently to see how we think that can roll up into the Financial System<\/a>. Ande will be gradually run we will release the results for each bank. I think that will give us more clarity into that issue. , just to be very actions think that the we have taken at the fed to return a more rapid to Economic Health<\/a> and we arent there yet obviously, we have learned that the fed over the course of the last few years economyn we allow the and the Unemployment Rate<\/a> to fall faster and to fall farther than the fed has been comfortable allowing it in the past, that that benefits those who are most disadvantaged in society. That is something that we can do. The fed does not have a lot of distributive tools, but we see that there are distributive effects to that that are important and that is one of the reasons why we changed our framework as we did recently. Chairperson waters thank you. Your time has expired. Mr. Loudermilk, you are recognized for five minutes. I appreciate the opportunity to be online with each of you today. Thank you for aligning the feds [indiscernible] i think this rightly refocuses supervisory portfolio by recognizing substantially the reduced size of category three forms and does not change the Capital Requirements<\/a> for those not in the portfolio. On another topic, lenders loans to issuing ppp support Small Business<\/a>es and their employees, but those loans remain an asset on the Balance Sheets<\/a> until the loans are forgiven. Forgiveness is taking longer than we all expected. That means a number of Financial Institutions<\/a> are crossing a threshold because of ppp loans which are guaranteed and designed to have a zero credit risk for the lender. I recently sent a letter with 13 of my colleagues asking you all to address this issue. I also introduced a bipartisan bill that would exclude ppp loans from assetbased regulatory thresholds of 10 billion and under. Thank you for including the bill in our discussions during this hearing today. Haspreciate that the fdic the asset thresholds and i hope you can address the others. Chairman hood, thank you for addressing this issue with Credit Unions<\/a>. Brooks, iptroller understand the banking agencies are discussing how to deal with this on an interagency basis. Can you share what you were planning . Yes and thank you for the question. We are not final on this, but i can give you some parameters of what is being discussed. First of all, there is a need to identify each of the asset thresholds that trips you into a new Regulatory Regime<\/a>. 500e is a threshold at Million Dollars<\/a>, 600 million, 1 billion, 2. 5 billion, etc. For a time of one year which could be extended by the to get tout we want normal as soon as we can get to normal, for a time of one year we would exclude ppp assets from each of those thresholds up to and including the 10 billion threshold but not above that. We want to do surgery, not act with a meat cleaver. We dont want to dislocate the agencys ability to mitigate risk. Please keep us updated because there is a myriad of regulations and tripwires along the white. To addressd plan these regulatory thresholds . Yes, we are obviously engaged in active interagency discussions and i would subscribe to what comptroller brooks said and i will have something to report quickly. I appreciate that. A lot of the small banks are hanging out there. We have a bank in our district that has two branches. Thansued more ppp loans one of the largest banks in the nation did. You can see how that could negatively affect this bank that stepped up and took on a lot because they are a Community Bank<\/a> and their community was riding on the need of having the ppp loans. My final question is chairman mcwilliams, do you anticipate issue additional relief as well . Yes. We are now working with the other regulators to make sure to the extent that we dont have the authority to change thresholds, to maybe freeze the total assets as of fire date for that threshold. We are trying to be as flexible as possible to make sure the a way to proceed with helping stimulate the economy and making sure borrowers can stay in their homes. A collaborative effort between the private industry and government as well. We need to make sure that we are covering them as well. Is all the, that questions i have. It is unusual for medial back remaining time. Mi audible and visible . Thank you, madam chair and to our witnesses. Regarding Central Bank Digital<\/a> quarrels, vice chair you spoke about the dysfunction that occurred in our treasury bond markets in march and noted that the sheer volume in that market may have outpaced the ability of the private Market Infrastructure<\/a> to support stress of any sort there. Under normal circumstances, the treasury market is the most liquid fixed income market in the world. It serves as a critical benchmark for other bond markets that are essential. It allows the u. S. Dollar to operate as the worlds dominant reserve currency. That is why it is crucial that these financial pipes continue to function well. Especially as we continue to fight covid19 and we work to provide Fiscal Relief<\/a> to millions of struggling families and Small Business<\/a>es. When the fed has to step in to support the markets for treasury bonds, i view it as the financial equivalent of our military going to devcon two. It is our job and congress to see what kind of technical changes could prevent this in the future. One solution is a simple requirement that all secondary market treasury transactions subject to Central Clearing<\/a>. Today, participants in the ket transition space counterparty in less than a quarter of transactions. Because of the dodd frank act, it covers virtually 100 of the equities and the majority of the swap market transactions. Despite a fair amount of squealing at the time, i believe this is widely viewed as one of the most successful of dodd frank. Could you explain to us why requiring Central Clearing<\/a> of treasuries might be beneficial to market functioning and what are the drawbacks and tradeoffs of this approach . As we look at the lessons from the treasury market of march, we have been looking closely at this issue of Central Clearing<\/a> of treasuries. Be that thee would Central Clearing<\/a> would reduce pressure on the Balance Sheets<\/a>. The Current System<\/a> requires the dealers to take those treasuries onto their Balance Sheets<\/a> and when there isnt another side to the trade, that is obviously significant strain. Anycons are the cons of [indiscernible] complex Risk Management<\/a> problem. We want to think that through carefully for a market that is as large and as central as you have correctly identified this market as being. The pros are attractive. We are looking through this carefully with an interagency group. I would say as an additional thought, that could lead to improved market functioning generally. What we saw and march was that everyone was selling and no one for a time of a few days when there wasnt another [indiscernible]. A smoother mechanism for matching buyers and sellers probably would not have addressed the march issue because the question was that there wasnt a buyer. That doesnt mean its not a useful wakeup call for thinking about the structure of the treasury market. You anticipate for situations there is no substitute for having the Federal Reserve<\/a> have a pathway to support things . Is there a merit if we have to go down that road to have a legislative clarity on the circumstances and making sure the taxpayers never on the hook in that sort of intervention . That, letss like like thatsituations are is rare as this one was which is a century if not longer. I think the fed has the authority to do what we need here. In that i dont know our strong and reasonable expectation is that Something Like<\/a> this not be repeated in our lifetime. My goal is to die before we ever have a crisis like we have been going through. Thank you and my time is up. I yield back. Chairperson waters thank you very much. Mr. Mooney, you are recognized for five minutes. Thank you. Saying thet by insurance is usually state run. The oversight of the Financial Stability<\/a> board, they have adopted a holistic framework to identify and proactively address the risk in the Global Insurance<\/a> market. Can you explain how the u. S. Insurance Regulatory Regime<\/a> has performed in minimizing Systemic Risk<\/a> and more specifically, how this performance compares to other regulatory systems for insurance around the world . Think we have seen in the current stress which has been severe with the Insurance Industry<\/a> which is regulated by the states and the United States<\/a> and has been [indiscernible] the Insurance Industry<\/a> has performed quite well. General, over the history of our industry compared to industries abroad and other forms of regulation, i think that that regulatory system has stood up well. It has passed the practical test of what works. As we look at insurance Regulatory Reform<\/a> more broadly which is being considered in the team in thes, the u. S. Which is the fed and the [indiscernible] and the treasury. Beenworked to ensure and successful in ensuring that there is scope in that process for the u. S. System to be recognized internationally and i expect [indiscernible] it comes to completion several years from now. I agree with you first off that it has worked well and the state is regulating it and we have worked well better comparable to other countries. Given that our u. S. Insurance regulatory system produces comparable results to foreign frameworks, how is the fed preparing to make the case that the u. S. Is outcome equivalent the i ais insurance capital standard . There is a monitoring process going on at the i ais. Their proposed global standard, we have created space and that standard for the u. S. Framework to be viewed as equivalent as a solution that works within the i ais project. Process has ag fairways to run yet. It will be important, it will be incumbent on us in the United States<\/a> to put forward a well aticulated framework for how Global Consolidated<\/a> insurance Regulatory Framework<\/a> could work. The fred the fed has done its peace with respect to the Building Block<\/a> approach with how Insurance Companies<\/a> include institution to be regulated. The naic is working hard on its Group Capital<\/a> approach and i am pretty confident that as we put those forward in the International Discussion<\/a> it will be viewed positively. Quickie thank you. Has been regulated primarily at the state level for over a century. If it aint broke, dont fix it. We have a system that works well here. The needs of West Virginia<\/a> are different than massachusetts and california. You cant have a onesizefitsall standard in this country. Capital with adopt a european set of rules [indiscernible] chairperson waters the gentlemens time has expired. Asked y, you are recognized for five minutes. All madamou first of chair. Let me start by thanking you for your stellar leadership. For all of the work we have gotten done during this difficult time. A difficult time in this nation and difficult as we have been confronted with covid19. All of the work that we did in helping with what we have gone through with their economic programs and ppp and housing. I think it is very important for me to recognize your work. With that said to our witnesses, thank you for being here today. Many of my colleagues have talked about where we are and related it to the problems we have had or the successes we have had with pp. We have also talked about the greater financial portfolio. We have talked about capital and liquidity and certainly access to capital. As i look to the title of this Committee Virtual<\/a> hearing, we talk about oversight and we talk about it as it relates to the department that our witnesses oversee. We talk about it as we should in ensuring safety and soundness of diversity. You all know as chair of the subcommittee on diversity, i would like to devote much of my time to that because i think it is most appropriate when we talk about the economic downturns, we talk about the covid19 crisis and we talk about social justice. Because when we look at the disparities in how africanamericans and others are disproportionately affected, it is a sound about that is in the Financial Services<\/a> area. Mr. Brooks, i will start with you quickly. Other witnesses have been asked this question. I take great honor that i have had the opportunity to be in the forefront so i dont want to break my tradition by not asking is, do you know what ennui and have you met with your ennui director into is your director . Bemy director i continue to a close friend and mentor. We have met once per week. Thank you very much. She has done a great job on that. Let me go to my next question on that. I have been very disturbed when on september the 22nd, the president issued an executive halt which seeks to certain forms of diversity and inclusion training and contracting with programs in the federal government. To each one of you, yes or no, are you familiar with this and the second question yes or no, have you ceased your diversity training in your department . Thank you. I am somewhat familiar with it, although that order does not apply to the Federal Reserve<\/a> given the nature of the agency and we have not changed our practice. Thank you. While independent agencies dont necessarily have to comply with the executive order, we also know that many of you have been known to voluntarily comply with the order. Yes, we have not changed our practices. Next. Mr. Brooks . I am familiar with the order. We are obviously a unit of the treasury department. There is a review process for our verse to the programs we continue to provide diversity programs that do not run into the problems in that order. Otherwise, we go through a review process as required by the order. Like the fed,that we are an independent agency and we generally comply with executive orders. We have been able to convey to continue our diversity training as we have in the past. We often strive to comply with the spirit of executive orders. This is been turned to our general counsel for review. We continue to have outreach opportunities. 20ave spoken at over diversity and Equity Inclusion<\/a> events. It has been my responsibility to make sure we are a safe place to talk and hear from me directly during this challenging time. Madam chair, i yield back my remaining five seconds. Thank you. The gentleladys time has expired. Just to clarify, i heard a something earlier about president elect biden. None of the states have certified their results and there is no president elect, so we ask these same courtesies extended to Vice President<\/a> gore be extended to President Trump<\/a> in 2020. As you are aware, democrats lost seats in this body and that is evidence enough that the American People<\/a> recognize the failure of the far left socialist policies. This gives me concern regarding the next congress but we have had several opportunities to seek more Bipartisan Solutions<\/a> and reject the extreme. So i want to thank the panel here and as we continue to whether this pandemic, i appreciate you and all your agencies have worked with our banks and Credit Unions<\/a> to theyde flexibility so that can provide access to credit and Financial Services<\/a> to credit worthy consumers and businesses. You extend your ability to work with our banks and Credit Unions<\/a> but its now time for congress to help out those consumers in that same business as well. That is why i am pleased to be an original cosponsor on the Paycheck Protection Program<\/a> Small Business<\/a> act. Would nottisan bill only help millions of Small Business<\/a>es by forgiving all loans under 150,000 with a simple onepage forgiveness form, but it would also free up countless hours and resources for our banks and credit union, allowing them to focus on the core of banking, providing individuals and businesses. As a result, some banks are thating asset thresholds are Greater Regulatory<\/a> burdens. What are you all doing to ensure these Financial Institutions<\/a> are not faced with potentially costly regulatory burdens just because they help with implementing a Relief Program<\/a> . Comments inmade relation to that, so i will start with you. Number ofdoing a things to make sure this threshold does not provide a disincentive for banks or individual consumers are Small Business<\/a>es. We are going through an interagency process to ascertain what we need to do to address those thresholds and make sure banks do what we want them to do which is to continue to stimulate the economy and be there for consumers and customers. At the fbi see, weve done a number of things, including a change in what counts for the exposing ppps and haves for banks that engaged in extensive ppp lending. I will stop with comptroller books comptroller brooks. I would endorse that we are part of the process on that but one other thing i would comment on is like other agencies, we excluded ppp outcomes from our assessments and adopted a supplemental leverage ratio with the two other banking agencies to make sure banks could exclude a pandemic related deposit and messing around with their leverage ratios. I think all of those things create a safe place for banks. During your testimony earlier this week on the senate side, you were asked about the feds plan to extend the exclusion made for the supplement terry lending ratio and a surcharge to ensure capital is not increased at the end of this year. Response to this im looking for clarification because as i understand it, the fed has discussed the likelihood of a Capital Increase<\/a> with the banks themselves. Im sure you are aware along with every republican member of this committee, we sent a letter requesting action on this so we have been hearing from the banks that increasing the scores could impact their ability to support the economy where we need it most. Any comments on that . Yes. The way that calculation works i did not get into this with the senate but it is good youve given me the time to do it here. The way it calculates the work is its not an immediate requirement for a firm moving out of the bucket in the framework. Instead, that consequence would take place after a year and the framework is designed temporaryly so that changes would not have the effect you and we are concerned about here. Tos will give us the chance consider whether there should be adjustments made over the course of time. What i was saying was there is not an immediate capital consequence and we have time to think this through should we. Iscover the effect the gentlemans time has expired for some mr. Vargas of california is recognized. Rep. Vargas i want to thank all the witnesses. Its a very difficult time and i think they are working very hard on behalf of the American People<\/a>. I have to say at the beginning of this hearing, we democrats were lectured on the issue of divisiveness and we were just lectured on the notion of who one. I think we won, not only at president level but also at the congressional level so i find it ins interesting is though ones who are saying they are the winners are the ones rejected by the American People<\/a> when we won and i will remind people that four years ago that when mr. Trump was running for president and mr. Trump one about the same amount of electoral votes now as Vice President<\/a> biden has, we didnt like it, but we acknowledged it and had a transition. Now to hear we are in the same situation we are not supposed to acknowledge Vice President<\/a> biden has one is really rather ridiculous, just to be frank. I was on this committee for four years and the previous chairman, all i heard was divisiveness, mostly around the issue of dodd frank and other things, but especially dodd frank was demonized in particular. I heard today from the witnesses d. W well dodd frank has worke did i miss here or did i hear correctly that dodd frank was beneficial during this time . Chair,t i have the vice why dont you respond to that . Has it been helpful, dodd frank . I think the increases in capital and liquidity put into place after the crisis have been very helpful. Anyone else disagree with that . Acting comptroller mr. Brooks . I would echo the vice chairmans comments. Thisen i first got on committee, it was a farleft bill and they told me how help how unhelpful it was going to be and i believe most of you were appointed by President Trump<\/a>. Again, what becomes demonized and far on the left becomes very helpful in the middle and i hope we can Work Together<\/a> and get away from this divisive miss and namecalling. I dont think it works and i think we have a lot of work to do together and we should Work Together<\/a>. I do have some concerns about covid19 and where we are today. Covid19 is a virus and this viruses this virus as all viruses have seasonality. Recently, i think one of the medical group said you would see during the summer you would have a diminution of covid and in the autumn, it would come back and in the winter it would spike. Im very concerned about where we are here. I heard, very recently, from jerome powell, the fed chair as well as christina gard, the head of the European Central<\/a> bank, that they are concerned about this. I have great concern this is roaring back and we are going to be in great trouble. Dont you jump in first. Was he wrong . I think there is a great deal of uncertainty about how the situation will evolve, so we should not be complacent about that. Feds economic support as well. Mr. Brooks . Think the watchword here is uncertainty. Theres a lot of negative information, including increases in cases and hospitalizations. There is also a lot of positive news including the approval of new therapeutics and so i think a lot of it depends on our reaction to at this point. I think they took that into account. They say the uncertainty is something that worries them. Chairman mcwilliams, what do you think about that . Their statement was concerning to me. We are monitoring the conditions from the ground to understand what related business closures may be happening in different jurisdictions. Working to address appropriately the conditions certainlyi would say we are very careful about analyzing the numbers and understanding what our regulatory response should be. My time is almost expired. Lets try to Work Together<\/a>. I think it would be important. Thats get away from this divisive miss and acknowledge what happened in this race. So many others this afternoon have talked about the incredible work all of you have done, the witnesses in protecting the soundness of our Financial System<\/a> over these last eight months. I think you have given a lot of stability to people across the and to businesses that struggled initially and those individual struggles, so thank you for all of your hard work. Back in may, the occ completed and updated the Community Reinvestment<\/a> act. Obviously, these were important changes that were made. A complete regulatory overhaul. Banksthe new framework, are going to be signed a cra grade based on whether they meet certain benchmarks and Community Development<\/a>s. But when the rule was adopted, the occ did not necessarily would what the benchmarks be. As i understand it and the way i interpreted it, you wanted a separate rulemaking process for setting those benchmarks. , six months later, theocc has not started second rulemaking process. Can you talk to us about your plan and how you are going to provide banks with certainty regarding their responsibilities under the regulation . You forutely and thank that question. First, i would tell you we are just a few days away of releasing the notice of proposal of rulemaking and i expect you will see that very shortly, by next week. In terms of the work we have done, one of the things we were able to do post adopting the original rule was to bring on one of the worlds leading banking economists to lead our banking function and theyve had a significant role in thinking through what the performance assessment ought to look like. Thats one of the reasons it took a few extra weeks beyond what we would hope that we now have that level of input to make sure we get it right. You will see in the rules when it comes out in a few days is a couple of things. First, we will be moving from a highly relative standard where we basically had banks to compete with each other so it objective and relativistic and we are hoping to move toward a more objective standard so you have to get this rush holt to get an outstanding in this threshold to get satisfactory, etc. Thats a significant change. We want to see cra more like a map than an english test. Satisfactory should not be in the eye of the beholder. We will be Holding Banks<\/a> accountable for meeting or exceeding their previous levels of contributions, so one of the concerns in the original rule was somehow our new framework was going to result in a reduction of cra activity. We are confident it will not and it will speak to that issue in terms of who gets past and who does not. Thank you very much. If i can, some discussion aboutr, questioning global banks and i think we are all concerned we are not seeing global banksof over the last 10 years like we did prior to 2008. Stage, what are to primary factors that led lack of creation and what can we do ask congress to facilitate those things . I think the primary factor is more of a question of mindset leading up to this 2008, 2009 crisis. There has been a significant spate of banks approved, particularly in some jurisdictions. And of those banks failed that has resulted in a caution over the course of the last of ae about the approval novo bank. Myself, i think that is a matter [indiscernible] we wont do it again but it wont sit on a cold stove either, to do things to improve and streamline regulatory banks. The gentlemans is expired. Thank you very much, mr. Chairman and i would like to thank the panel for this discussion today. Been a lot ofave things occurring with this pandemic, so i want to ask the , the federal emergency covid19 facilities a broadated to support crosssection of the Financial Market<\/a> and economists supported the availability of credit for household, small and mediumsize businesses to maintain payroll and employees for new and expanded loans to provide credit buy suppliesble to and maintain their business operation. But it expires at the end of 2020. Do you know if the fed has created a plan to help these businesses maintain on their feet and meet payrolls as covid will still be a concern next year . Certainly the facilities we put in place in conjunction with treasury have been very helpful andestoring market function the availability of credit across a broad swath of the economy as you note. The question of whether in light of the performance of the economy since the spring they should be extended as one we are currently engaged on and while the economic progress this spring has been better than many people, including we at the fed, expected it might, we are still a long way away of from being on the others of the code event. And smallnt is high businesses are under credit pressure and we want to take all that into account. We have not made a decision and we are talking with treasury about it and obviously we need to decide that. To seell be interested what happened with your conversation with treasury because if there is a major problem, throughout traveling throughout the district, i hear more questions about that than anything else because there is still a great deal of dilemmas there. Fedeptember, 2020, the managed stocks buybacks and to safeguard wealth against covid19. Is it safe to say federal officials dont want to repeat the history of using Government Funds<\/a> and capitalizing banks rights, so why do they prohibit activity given the until the end of the pandemic is over . Thank you for that. As you note, we did constrain dividends. We prevented them from being increased and most importantly, we prohibited share repurchases, which is for our largest banks, 70 of how their capital distributions are made. So the bulk have been suspended and the result of that is during this covid event, even while the banks have been taking very large revisions, particularly in the Second Quarter<\/a> for expected credit losses, capital at these institutions has actually increased. It increased in the Second Quarter<\/a> and it increased in the Third Quarter<\/a> and we are running detailed stress test with different scenarios given the uncertainty of how the world might evolve and we will release publicly the results of those stress tests by the end of the year, which will give us more insight into the banks resilience in light of the economic circumstances we are facing and we will make a decision as to whether we should extend, modify in any way the constraints we have. Thank you. And with that, i yelled back. Ismr. Hollingsworth recognized for five minutes. Rep. Hollingsworth that afternoon. I should be off mute now. Can you hear me. The panelists as well for being here today. The first question goes to mr. Quarles. I know this was touched on a bit earlier but i want to put a finer point on it. I was admittedly a Little Diomede<\/a> to your answer to senator rounds yesterday when he asked about the g6 surcharge and some of the effects our largest institution because of an increase in deposits are seeing moving into the next category aresaid in response that we not hearing from the large firms that changes in their Balance Sheets<\/a> over the covid event might lead them to be pushed up into a higher bucket. To confirm to you that i am hearing from those institutions that this will be a challenge and they are telling their investors this would be a challenge and recently the j. P. Morgan cfo said in the absence of recalibration in which we remain hopeful about, managing that back down into a lower category surcharge will certainly be challenging. Certainly something she is already thinking about, something j. P. Morgan is planning on and i recognize you have sufficient time to make moves on this but those capital allocations are already being made and i and every other republican member on this committee sent a letter a couple weeks ago asking about the same thing. I just want to hear your confirmation that this is an important issue, this is something you are hearing about and others at the fed are hearing about and will at least begin to think about. Absolutely. Apple bucketto the as opposed to the surcharge explained, wei have a year timeframe to see what the consequences are. You are absolutely right that if what are not sure accommodations will be made or how they see their Balance Sheets<\/a> evolving organically that they will need to take steps well before a year from now to manage their position. To think have time that question through because of the framework structure. I understand and i dont want you to not think it through. But we all recognize collectively this is a real issue and is going to have real impact on our large institutions a year from now. Unquestionably. Mcwilliams, ian wanted to ask about your fbi rule modernizing the Regulatory Framework<\/a> for brokered deposits. You said earlier today or perhaps yesterday that this should be finalized before the end of the year. Is that correct . That is correct. I sent a letter along with many others about how we can work through the facilitating portion of that rule. I know i expressed some real concern that the restrictive nature of how you defined facilitating might lead to an adverse effect. As a part of finalizing that rule, do you expect there to be changes to the facilitating definition enabling them to use thirdparty services for their Critical Technology<\/a> and infrastructure . I cannot engage in specifics on what the final rule will look like but the reason we have the process is the feedback you and others have provided so they can make it become finalized. I appreciate that. Please note from my perspective and so Many Community<\/a> institutions all the way across our district and the country that this is something that really concerns them. They utilize these thirdparty vendors to compete with larger institutions that have those capabilities inhouse and they dont want to see themselves be deprived of those infrastructure pieces so they can compete for more opportunities. So from our standpoint, that is an important thing to tweet and with that, i shall yelled back. Now the gentlewoman, ms. Tilly biz recognized for five minutes. Thank you for being with us. Report, the board acknowledged that Climate Change<\/a> is a Financial Stability<\/a> risk. As i represent wayne county, which has one of the poorest air qualities in michigan and has not met the Clean Air Act<\/a> standard in over a decade, i want to talk about Marathon Petroleum<\/a> refinery, which is in my district and had repeatedly had a number of violations recognized by the state of michigan and continue the residence the residents that live near that refinery continue to have a number of concerns and issues they bring to my Office Almost<\/a> daily. Bonds are owned by the fed, basically the public. 15 million worth of bonds that we own right now and you all know i wrote a letter to the board where i highlighted nearly 20 of the feds secondary Market Portfolio<\/a> is bonds for the energy and utility company. So, i would like to ask the vice chair what do i tell my constituents about this . When they see this and see the various headlines and find out the publics resources and our money and the risk on us, it is not investment into state and local government but instead invested in the very companies in the communities that are responsible for bad air quality in their community. Thank you for that. We do have [indiscernible] i am getting that information now because i want to respond precisely. , the principal function is to restore the capacity of private markets and many markets have healed across the board, but for those facilities to do their job, we at the fend at the fed cannot be involved in credit allocation. We establish broad parameters and the allocated decisions as opposed to i do want to get very center the report came from you, the report that acknowledges the risk of Climate Change<\/a> and how it it how it poses instability in our economy. What are the boards plans to change the accountable risk . Are we just ignoring them . I dont want an answer to how many cities you all helped. There were three purchases. But the facility operates through its effect on the broad market. We arespect to climate, looking at that from a broad, systemic point of view. Isnt Holding Millions<\/a> of dollars in marathon bond refinery its like you are trying to create stability but your own report says Climate Change<\/a> is posing financial instability, so why arent we saying we are going to move away from that and focus on local and state governments . Not the conclusion of the report at all. A wasnt it saying there was Climate Change<\/a> issue . Climatethink theres a change issue but we certainly have not concluded the mechanism to address Climate Change<\/a> is credit allocation. That should not come from the Federal Reserve<\/a>. If there is a decision to be made, that is that should come from congress. I am working on that, as you probably know. Why arent we helping local and state governments more . We only have one or two states what cities benefited from the program so far . Pandemic. A they were in survival mode and they are literally the front line communities. The front line communities are stopping the spread of covid and you dont even know how many cities. The gentleladys time has expired. We will accept the answer in the record. I have been told by the chairwoman that at 3 30 we have a hard stop and im to get as many persons in as possible between now and 3 30. This said, mr. Gonzalez is recognized for five minutes. Chair and thank you to our panel for being here. Thent to go back to conversation a bit and put some fine points on your earlier comments. How has sofer stood up from a suitabilitys endpoint during sustainability standpoint during the pandemic . It stood up quite well. Is there any reason to believe sofer would not be a suitable replacement for libor Going Forward<\/a> . Know, particular for Capital Markets<\/a> and derivatives transaction, the bulk of the transactions that use libor. Can you clarify what you meant when you said the plan is to allow the existing contracts to mature on the libor rate without needing a congressional solution given so many of the contracts would expire after libor goes away . The issue that we have had is expansions of libor, which there have been a couple of over the course of the last decade after it became clear it would be resulted in the writing of new contracts, so the problem perpetuates itself. The best solution would be a allowedk in which we existing contracts, we created this environment in which they would mature on a current basis and without a change to the rates but new contracts would not be written and over a relatively short time, the bulk of existing contracts would run off. , there is a hard tale of contracts that would require a longer time and legislation could be useful to help with those. Clearer once the what the nature of that hard tale was and we had more time to think through potential legislative responses, the allowing the bulk of the existing contracts to mature, over the next year or year and a half to take about to think about the legislative solution would be the best. That hardspect to tale, how soon would you expect we need to act, congressionally or otherwise before we would see implications in the broader economy . The real economy . My mute seems to be on a hair trigger. We are still working through that issue currently. Its not a long time. Probably a year or year and half. This is something we should be engaged with. You ande to work with your office on that. I think we need back up sooner than that but im sure we can shift that out i want to to chairman mcwilliams and one of the things we talked about is the difficulty of adopting seenology and the fbi mentioned fostering creation of a standardsetting organization to protect model seeking to work with Community Banks<\/a> and how they need to be able to adopt to third parties and they need to assure compliance. Can you talk a bit what your vision for the program is . You have a minute so i have to get all of this in a minute. I realized early in my tenure is one thing is to engage with providers that can help deliver products,ducts, more especially in rural areas and i reached out to several firms and i messaged them and i asked what can be done to help partner up with these banks . The Third Party Service<\/a> arrangement, they were able to provide feedback to us and they said would you approach the bank and would go they have to go through the same Due Diligence<\/a> response. Simple andke it very renew the certification and ease the burden of the banks. The gentlemens time has expired. Porter. R recognizes ms. Not hearing from ms. Porter, i ms. Claxtonognize weston . To talk about where i feel like there is a ticking time bomb and that is in the [indiscernible] they have had high concentrations in portfolios and its one of the primary concerns we had in the last crisis as well. Fdics [indiscernible] sounds right. It may be slightly outdated. What do you mean by concentrated when you say concentrated . Number. Nt have a magic we dont tell them x percentage has exposure and it is heavily concentrated in these markets. You meancentrated do they are exceeding the regulatory criteria or a recommended proportion of the portfolio made up of commercial real estate . We do not have a clearcut number. Dont need that kind of blood cut instrument. We look at their Risk Management<\/a>, profile level, do growthow how to manage through the crisis and how did they fare . I would say we have more of an. Ndividual, ad hoc approach say these areto these could fail if they go bad in large numbers . I would say it would be one of the factors that will lead to failure with experience in how to deal with that. Of the warninge signs we are seeing now that could give you cause for concern . We are looking at a number of buildings. Folks are subletting their so we are working with our banks to make sure this is not a snapshot or time exposure. Some of these cases are multiyear or multidecades and bankst to make sure small have the ability to manage these theunderstand where companies that own these in their Economic Cycle<\/a> and also reaching out to both regulator [crosstalk] [indiscernible] the question broke up can you repeat that . For theses a while losses to materialize instead of the [indiscernible] wont just bet contained to the Banking Sector<\/a> there because there is exposure to Pension Funds<\/a> and can you tell us what that would mean. It totally is an ecosystem. The reason they are unable to make their payments is commercial activity has subsided, which is the final economic downturn and that is something we have tried to prevent. Suddenly the ecosystem does not stop with the borrower and the lender. Exposure here as well, to the extent these commercial real estate loans get securitized, we have exposure in the secondary market, so it is not a simple formula. Other than banks increasing their reserves, what else should we be doing to head off this situation . Perspective, we are working with individual banks that have high concentrations in the affected industries, including commercial real estate throughout the country. I cant think of any recommendations right off the bat. It is regulatory discretion in how we can work with these but the best thing we can do do you think you have the it beyondto extend six months or do you need statutory authorization to do that . [indiscernible] the gentleladys time has expired. The chair recognizes ms. Porter for five minutes. Thank you. Is largely responsible for dispensing the 500 billion congress provided as a bailout for corporate america, the biggest bailout in our countrys history, potentially. Using backpay taxpayer dollars to buy bank debt was never part of the plan. The Federal Reserve<\/a> stated explicitly in this document that it would not be purchasing bank debt. What happened . Couldnt quite tell i i could not see what the document was. It was the Federal Reserve<\/a>s the corporatet credit facility. What it says is what bonds will be included. It says those issued by an issuer that is not an insured depository Institution Holding Company<\/a> or subsidiary, in other words, a bank. The secondary market liquidity facility, the Corporate Credit<\/a> facility said they were not going to be buying bank debt. Why is the fed bailing out the big banks . I understand the question. We have not bought bank debt in those facilities. Has the fed as part of coronavirus bailout purchased bank debt . No. What is an Exchange Traded<\/a> fund . We have purchased exchange theed funds to jumpstart economy and we have stopped purchasing them several months ago. Just baskets of stocks issued by a variety of companies and is it not correct that the fed bought 1. 3 billion in etfs . That number sounds right. 1. 3 billion dollars in Exchange Traded<\/a> funds. Is how muchfor you of that was bank debt . In those Exchange Traded<\/a> fund . I can get that information for you. I dont have the numbers in front of me. It was a lot. This is Companies Like<\/a> j. P. , it is a big problem that you did this. 15 of allaper shows that etfs purchase was for big banks and ultimately, to the tune of more than 2 billion in taxpayer money. This is a headline from bloomberg, despite stated exclusion the fed is buying bank debt. Would you like to revise your statement about your earlier answer when i asked you whether the fed had purchased bank debt as far as Coronavirus Relief<\/a> . My answer was entirely accurate. Do the etfs contain bank debts . The etfs contain a portion of bank debt. It was important to buy the etfs to jumpstart the process of restoring the economy which has benefited everyone. So what happened here as you said you would not by bank debt, then you crafted a loophole so the fed could buy bank debt. A loophole buried on the feds website and it accent it essentially swallowed up 2 billion in taxpayer money to bail out banks even as you told the public money could not go to any banks. We did not purchase any bank debt. If we did not purchase the etfs, we would have had a credit market implosion that would have been devastating to the economy and no one would have wanted that. As soon as that was no longer necessary reclaiming my time. Who is the Worlds Largest<\/a> issuer of etfs . The top ofknow off my head. Blackrock. I think you do. Who is larry fink . The ceo of blackrock. Hire him to buy Blackrock Etfs<\/a> . Hashe gentleladys time expired. The question has been submitted for the record. May i cement these documents for the record. It will be placed in the record without objection. Thank you chairwoman waters and thank you to our witnesses for being here today. Like many of my colleagues, also i want to say thank you to the great work done in the pandemic. Your work to accommodate regulatory and supervisory policies were very important and moving forward i urge you to be flexible to ensure a strong economic recovery. Of the automated teller machines in the United States<\/a> are independent, nonbank terminals. It is those atms typically found in low income communities and thinly populated rural areas in which there are few if any bank offices or bank owned a tms. The widespread closures and denials of anchor counts to his this is within the independent nonbank atm industry present a serious threat to the Financial Stability<\/a> not only of consumers who live in the area served almost exclusively by independent nonbank atms but the tens of thousands of retail and Service Businesses<\/a> serving these consumers on a daily basis. In a Financial Services<\/a> hearing on february 15, 2018, the national atm councils tim baxter testified about the widespread and severe consequences that in recent years have resulted from Financial Institutions<\/a> practice of derisking. I might add the president ial treatment that was a direct result of federal regulators implementation of operation chokepoint in 2013. Foroted it is impossible atm operators to do business without having a bank account. The end of the operation chokepoint initiative, independent atm providers were being notified by their banks without explanation that their deposit accounts were to be closed or, in some cases, already had been closed. My question for you, chairman mcwilliams, vice chair and acting comptroller brooks, could each of you describe what the regulators are doing to address the ongoing fallout from operation chokepoint and its effect on atm owners and the operators still having their accounts closed . Chair mcwilliams, you might begin. I expected the question is coming my way so i reached out for the pronouncement we had. I would say made, very concentrated and concerted effort to make sure our institutions understand and offer services to the businesses and their communities, including the businesses that might have byn ostracized in the past operation chokepoint. I have a Statement Issued<\/a> in november of 2018 telling our colleagues at the fbi see to make sure we are clear in arc mutation. We have resolved the losses in regard tobi see operation chokepoint, even in anythat operation case, we issued that statement saying Financial Institutions<\/a> should have the ability to assess the risk profile of individual a quote requirements and do so in accordance with their Risk Appetite<\/a> and management. 2015, we said the fbi see encourages institutions to take a risk assaults assessing without regard to a risk presented by the banks risk. Y to present the i dont know what else to say to make sure that it resonates down to the individual Institution Level<\/a> that they should not shut out the entire industry or type of business or that they should manage it based on their Risk Appetite<\/a> and Management Experience<\/a> in handling the risk and they could maybe turn it up. Is about to time expire. I recently wrote a bipartisan letter to you and i would encourage you, the three of you to respond to that in a timely manner and thank you for your answer, chair mcwilliams, and with that i yield back the balance of my time. The gel and has expired. Mr. Taylor is recognized for five minutes. Thank you, mr. Chairman. I think this is important. I want to dig in on forbearance with our banking institutions. The march 13 guidance that came out on forbearance for banks my question is at what point are you going to start telling thanks that you have for baird long enough and it is time you start looking at foreclosure for assets . This are our cannot pay. How are you thinking about the end of forbearance . Forbearance is extremely important. You have loans that do not have a forbearance mechanism in them that some point, flexibility ends. Where do you think it will end . And reallya great important point. One of the lessons we learned in the financial crisis is two things in a downturn like this are equally important. One is making sure you provide loss mitigation guidance and forbearance for everyone who can during a crisis. The other is unwinding all of that as soon as the crisis abates. The reason that is so important as the data in the financial crisis shows those states that extended long eviction moratoriums or long foreclosure programs long after the immediate crisis was there had the most sustained real estate downturns, the longest term unemployment and most sustained decline in real estate prices relative to states that came back to normal faster. It was important to put forbearance structures in place right away but it will be equally important to go back to normal with not one moment to spare less we repeat the mistakes post financial crisis. So the way we look at things is basically this banks learned in the financial crisis that it is in their interest to make positive Loan Modifications<\/a>. They get that and every ceo i talk about is every one who can pay should be kept in the property until they are able to start doing that. There will come a time where there will be some term some longterm economic damage here and we are not doing anyone a favor pretending those assets are still assets on the Balance Sheet<\/a> of a property. The reason mortgages and secured loans are a lot cheaper than credit card loans and unsecured loans is because they are secured by collateral and at some point, the safety and soundness requires the safety and soundness occur. I dont think we are there yet. We are still in the midst of the late stages of the pandemic, but i would be surprised if in one or two quarters, given the vaccine and therapeutics, at some point the data will suggest a return to normal is required and at that point, we will need to go back to a normal treatment of collateral. That is helpful. You are saying one or two quarters. Go and do your inspections, when it is clear to this company is in bankruptcy or theres just no way, they are not coming back any time in the near future, are you pushing those institutions to start to foreclose and move with the collateral or are you saying just keep it on your books, lets just keep your Balance Sheet<\/a> strong, even though it is not strong . I would say just the opposite. Ive been speaking to trade associations about this for the last six to eight weeks. We are not blaming any banks whose credit went south in the pandemic. What we are focused on is making sure the banks are classifying loans as it becomes clear day are not going to repay so we can assess that risk and they can prepare to do foreclosures on the backend. Having said that, there is good news in the system and this picks up on the other point made a couple of hours ago. There is still some amount of dry powder from the ppp program so we can see in bank and deposit accounts that there is enough runway for some Small Business<\/a>es not currently doing business to continue to make payments out of the proceeds of those loans. That obviously will expire and when it does and theres no reasonable prospect of those customers going back into business, there will be foreclosures. My time has expired. I yield back. The gentlemans time has expired and i must announce at kasten will be the last person to ask questions. You are now recognized for five minutes. Mr. Chairman and thank you for being here. Im here in congress because im definitely concerned about Climate Change<\/a>. It affects every aspect of our lives, our health, our National Security<\/a>, Financial System<\/a> and the effects of Climate Change<\/a>, while they are nonlinear, but our human brains think in linear patterns, which is making is prone to a massive under sheet which we have done in the last couple of years. I was pleased to see the fed listed Climate Change<\/a> as a risk in its report and what is happening is the fed is going to reverse its earlier position. I want to start with a quick yes or no across the panel do you believe Climate Change<\/a> causes a significant financial risk . I believe it certainly poses a risk we need to understand. I should state we did not reverse our position, we have always been talking about joining. Do you believe Climate Change<\/a> poses a significant risk . I believe it is a risk worth understanding more so we can really try to mitigate it. We have askedk our banks to take into account when writing loans and considering Risk Management<\/a> in general. Comptroller book comptroller brooks . The comments of my colleagues. Im a little trouble that you all seem to be hedging. The fed has previously said they would stay on the sidelines, but this week announced would request membership. There was no change in the approach. We have been talking about joining them for some time. They have indicated that that would not be possible. I am glad you joined. Ago, chairman powell said we have a contribution to make. He said it follows from our assigned legal mandate that we do this work. Haveu believe we currently an appropriate assessment of that risk . There is a significant risk with Climate Change<\/a>. If you were to agree with me, there is a significant risk to Financial System<\/a>s do you believe you have the obligation to stress test Financial Institutions<\/a> for those potential risks . We will stress test all the model. Hat we can we do do that. I hope you appreciate my question. Loss onhuge amounts of coastal properties, from forest fires across the country. We will be getting hurricanes into the hebrew alphabet if we are not careful. I dont know if that follows the greek alphabet. If what it takes is ,ongressional direction to act then this is necessary. Hope that you are willing and able to do that beforehand. These risks are massive. Do welln brains do not with nonlinear change. The most amazing thing ever invented was compound interest. Thank you. The gentlemans time has expired. Chairwoman, ihe would like to thank our distinguished witnesses for their testimony today. Have fives will legislative days to submit additional russian. I asked our witnesses to please respond as actively as you are able. All members will have five legislative days to send materials to the chair for inclusion in the record. This meeting is now adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National<\/a> cable satellite corp. 2019] you are watching cspan, your unfiltered view of government. Created by americas Cable Television<\/a> company as a Public Service<\/a> and brought to you today by your television provider. The Federalist Society<\/a> is hosting a discussion this afternoon with former Justice Department<\/a> officials on the presidency and the rule of law. Watch live coverage at 4 15 eastern. Sunday night, a university of texas sociology professor talks about the use of big data and new Surveillance Technology<\/a> by law enforcement. Beene police have long collecting their own data and information. What is happening now in the digital age is the police are increasingly collecting information on all of these folks who have noted criminal justice contacts. Do with thishas to variety component of big data. They are increasingly purchasing information from privately collected companies. They are using tools like automated license plate readers. You dont have to be pulled over by the police to have your data put in their system. Sunday night at 8 00 eastern. Up next, an update from georgia on the president ial vote count. Joe biden currently leads by about 14,000 votes. 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