Transcripts For CSPAN2 Treasury Secretary Small Business Ad

Washington journal program. Go through our social media feed. Cspan, created by americas Cable Television companies as a Public Service and brought to you today by your television provider. Cherry treasury secretary Stephen Mnuchin and carranza testified on the implementation of the cares act corona virus relief law. The Small Business Committee Members asked about the rollout and the effectiveness of the Paycheck Protection Program referred to as ppp. [inaudible] todays hearing on this committee on Small Business and entrepreneurship will come to order and i want to thank everyone for joining us here today and welcome both secretary mnuchin and administrator carranza. Thank you for being here so far away and all the members for being here today. This is our first opportunity to hear from both of you about the enactment of the cares act as it applies to Small Business. The cares act as landmark legislation and less than two Weeks Congress passed the largest Economic Relief ka package in our nations history and now after the passage of two further reforms the Paycheck Protection Program is the largest component of the Economic Relief and acted by the cares act and on that point i want to say a couple of things. First of all it was the extraordinary work of many people, staff of course worked tirelessly to make this possible. The partnership we had from both the sba andtreasury was extraordinary. Members on this committee, every single one participated. The leadership of the Ranking Member, senator cardin, senator shaheen and senator collins is not a member of the committee but was part of our task force and was invaluable in helping craft a lot of this and i want the record to reflect that with the consent of the Ranking Member we have invited senator collins to sit with the committee and participate and rightfully so because of her extraordinary contribution as in many ways the foundation of many of the ideas that became law. So i thought it was important to make that point that for those who have lost faith in our ability of government to respond in a time of crisis and a time of national unity, i hope we will take hope in the fact that that happened when it came to this, it would have been impossible without. After we did that was up to the administration, particularly secretary mnuchin who has been accessible as every member whos been involved in can say. Administrator carranza had an incredible amount ofwork to do to execute and administer the Paycheck Protection Program. And there were books along the road, no one would say there wasnt but overall the Paycheck Protection Program has been in my opinion an extraordinary success. It is by far in my view no disrespect towardsanyone else , by far the most effective and most impactful portion of the cares act today. I think in history will look back at it as an example of what government can do in a time of crisis to be helpful ntto our country and if theres any dispute about that i want everyone to ask themselves what would our economy look like today. Had there not been a Paycheck Protection Program. It saved millions of jobs in Small Businesses during the single most uncertain Economic Situation that existed in the lifetime of anyone in this room. And since the Great Depression. It took a new approach, the cares act as it was being negotiated businesses if you remember that time were faced with the prospect of laying off workers not because of the weakness in their Business Model or a cyclical downturn in the economy but because the government told them you cant operate. You cant open your door and you cant take customers, you cant do business. It is in some respects the equivalent of the taking in which government and the Public Interest intervened and denied people the right to do something. And we viewed the ppp as what government does when it uses its power to do that and that is to help compensate those large damaged by it. With no work available to be done here economic logic told these people in Small Business the most inefficient thing for them to do was to lay off workers until more normal conditions were restored but we knew that the most efficient economic outcome was not the best outcome for the common good and in fact would have been catastrophic for our country. And so during the negotiation. Of the cares act, i for example learned about an entire family, a family that ive known for many years that within a 72 hour period the father was laid off and the mother was laid off in two adult kids were laid off and then their spouses of those two adult kids werelaid off and in 72 hours , a massive calamity for that family. You can imagine it was just the uncertainty around all this was devastating and its not something that temporarily replacement of income consult the situation was also bad for Small Business. Workers are not disposable that can be discarded during tough times, they are integral members of all businesses but especially on Small Business and i personally have heard as im sure many members have from countless Small Businesses of the anguish, the personal m having to lay off employees, many of whom have worked for them for decades. These were people they knew. They knew their families, knew their children and watch those children grow up and knew how much theydepended on these jobs to make ends meet. What Small Business needed was not cheaper desks. They could take out against intheir future earnings, they needed a lifeline and what the economy needed was not just only government checks but they needed to lessen the pain of the layoffs. They needed to reduce the layoffs altogether and they needed i think as much as anything else to preserve the connective tissue of a well running economy which at its core is being attached to dignified work and thats why we did this program area instead of a traditional loan program would have instead of a traditional loan all businesses would have whatever cost expense for a given as long as they kept the workers on payroll. As a nationwide lockdown shut down the economy we worked on this every member of this committee and those outside of it had two mainpriorities. The size of it, we wanted to make sure it reached enough s businesses and people and we needed to fast this was not something we had weeks or months to work on and im proud that all of those goals were met. But the scope of the lockdown meant we needed sizable really initially the appropriated funds are now at 670 billion. It is a lot of money, larger than any other program enacted by the cares act, larger than the 2008 stimulus bill and by some estimates is the Largest Program since the new deal. But the speed of the lockdown ultimately we needed to get funds to Small Businesses quickly. Caradoc to walk everybody through this was signed into law march 27. Exactly 7 days later, thanks to extraordinarily and tireless work which is easy to criticize for some watching from the outside but were talking about people that were thereovernight , four, five, six, seven in the morning every time you get home and change their close thanks to the tireless work of people working under secretary mnuchin and the secretary himself, people working under administrator carranza and herself, the Paycheck Protection Program began approving loans seven days after Congress Passed it and the president signed it. Small businesses receive ppp funds before, millions of americans receive tax funds for people started receiving unemployment checks. And other lending programs run through the Federal Reserve are only just now beginning to operate, not a criticism of things , not just to describe the extra effort it took to stand up a program that didnt exist in just seven days. When this Program Began april 3 no one on planet earth had ever made a ppp loan, ever clue approved alone, had ever o processed alone or had applied for one. And in seven days, i began. The achievement of these priorities came at the expense of others, some companies should not have received alone receive them. We read all about it. It shouldnt have happened. They represent a minuscule percentage of the program and most have since returned them. Computer systems werestrained under unprecedented levels of activity. That is release to solve problems created unanticipated problems again i want to be clear, the bump in the road were and are the price we pay. Unfortunately for the programs that in hindsight we now know are among the most Successful Programs that government has ever done to rescue an economy. Economists and financial forecasters predicted last month that made 20 20 would be the worst month for job losses during the duration of the pandemic. It was expected, this is what everyone expected, it million americans would lose their jobs in may it. It predicted unemployment would be 20 percent, some speculated it might end up surpassing the Great Depression at 24 percent rate but what would that look like and mark what would that have looked like getting Everything Else going on in the world in ourcountry . I can tell you on an economic point it would have bankrupted the central promise of Economic Opportunity in our nation. Without ppps temporary lifeline 10 of millions of americans would have been permanently separated on their livelihood. And strips for long period of time from the opportunity of dignified work. Many would quickly be condemned to poverty, some over generations. Parents would be enabled unable to provide for their families definitely to government assistance without ppp, we would have faced the extension of Small Business as we know it, countless lots of urban and suburban america would have been hollowed out. Fast expenses of empty lots with brickandmortar stores once sustains communities. Its tough out there. Theres still a lot of suffering economic pain and of course the pain related to this terrible disease. But the most catastrophic vision did not come to pass and instead forecasters to the surprise of forecasters and everyone lastmonth , 2. 5 million americans got their jobs. The over 500 billion in Paycheck Protection Program funds dispersed through april and may and able businesses to keep or to quickly rehire workers as conditions allowed. Today, 4 and a half million american businesses have received loans equal toover 500 billion. And this will know more when the forgiveness begins to come in, but this is equal to 50 million jobs. The average loan size is now down to 112 thousand dollars, and not based on Eligibility Criteria means that the average business receiving a ppp loan would be one with 10 employees. A recent survey on the National Federation of independent businesses noted that 77 percent of surveyed Small Business owners had applied for a ppp loan and about 77 percent , 93 percent had received funding. As of june 6 there are currently 424 Community Development Financial Institutions and minority depository institutions now in the program. They orhave accounted for more than 190,000 loans valued at 15. 8 billion. And sca and treasury apples as aside 10 billion in ppp funds to continue to land. This is the record of a Successful Program and i want to thank everyone, the secretary, the administrator, all the members of the senate and our members in the house and of course the president or not just passing this but working to implement it. I want to comment on the Economic Injury disaster loan program, the sca for the first time in history implemented a Disaster Grant Program through an expanded version of this eidl Program Offering grants to entities suffering injuries due to the pandemic. To date the sba as approved 1. 13 million owns, emergency loans totaling 79 almost 80 billion and 3. 1 million emergency idle advances totaling 10. 2 billion. The program has realized numerous challenges both previously responded regional disasters in the course under this current one and i raise concerns for the deficiencies of the existing program as a whole which only accounts for roughly 2 percent of the disaster loans by sba and in particular i was concerned it would be challenging for the agency to handle a disaster of this extraordinary magnitude. As such the concept of using traditional lenders instead of direct government loans to ensure capital is reaching the hands of Small Businesses as fast as possible was one of the reasons that gave rise to pd. I commend the agency for standing up idle program nationwide to respond to an unprecedented volume of applications within a short period of time. Today unfortunately we see similar and new idle challenges for borrowers including processing and disbursement timelines and medication issues. As many businesses are also relying on assistance to rebuild after the economic disruption caused by the pandemic, we look forward to the agency addressing the currentidle challenges and how congress , how we on the side can work to support agency and making improvements to this program. Today is an oversight hearing. There are many issues that myself and members of this committee would like to raise to help keep this Program Running smoothly especially as some businesses approach filing for loan forgiveness. As early as this month but we should begin by putting these issues in perspective and recognizing the choices congress and the administration had to make in order to make this program exceed. With that i now recognize the Ranking Member senator carty for his opening statements. First thank you for conveying this hearing but more importantly thank you for your leadership in the role that this committee has played in a a nonpartisan manner. In order to help the Small Businesses of america. This has been a proud moment of our tenant careers and working together to develop three very important programs that help Small Businesses amduring covid19. We did that in a way that with the interest of our nation first and interest the Small Business and their workers. Secretary mnuchin, welcome to the committee and i want to thank foyou for your availability. You have been always available to talk with us and work out how this program could be administered in a seamless way and i thank you for your personal leadership to make these programs work as effectively as we can through the administration been working with congress as you need for legislative changes. Administrator carranza, please accept our appreciation or the incredible work of your agency. Senator, rubio pointed out , used up for programs, literally overnight that has provided 4. 5 million loans over 510 billion. An incredible effort and we thank you very much for the chhard work of the members of your agency. This committee helped craft and i was proud to be part of a drafting committee consisting of 4 senators, senator rubio, senator collins, senator shaheen and myself to put together and listen to all the members of this community and the senate and set up programs, a ppp program has received the most of the attention but also the idle Grant Program as well as loan forgiveness program. When we initially created the eight week long ppp program in march we thought our economy would be performing at a more normal level and it is today. So we period for Small Businesses to send their loans seems reasonable. As committees began the process of reopening is now clear many Small Businesses will not be up and running at the end of the week period which for many as chairman rubio has pointed out will occur this month. I was proud to see the senate act responsibly last week passing partisan legislation gives businesses with existing and new ppp loans the discretion to use those loans over a 24 week period rather than week. Ppp is working for many employers. And the may monthly job report released by the Labor Department last friday is proof of the 2. 5 million jobs added back to the American Economy last month. More than 1. 4 million were jobs of employers in the food service industry, many of whom secured loans through our programs. However, the depth of the economic challenges facing this country, the National Bureau of Economic Research announced this week that the United States economy is in a recession. And that the Unemployment Rate remains a historic high