Transcripts For CSPAN3 Federal Reserve Chair Powell And Trea

CSPAN3 Federal Reserve Chair Powell And Treasury Sec. Mnuchin Address Testify... July 12, 2024

When the time comes, after the crisis has passed, we will put these emergency tools back in the tool box. I would stress that these are lending powers, not spending powers. I will also note that we design our facilities to work for broad ranges of businesses and municipalities. We do not target particular firms or industries. Elected officials make decisions about where to direct such target relief. The cares act and other legislation provide direct help to people, businesses, and communities. This direct support is making a critical difference. Not just in helping families and businesses, but also in limiting long lasting damage to our economy. Public faith in our operations depends on transparency. If the fed were committed to that, particularly in deploying our emergency powers. Thank you. I look forward to our questions. Thank you very much, chairman powell. I now recognize myself for five minutes for questions. As i mentioned in my opening, the pandemic is strengthening and so, too, must our response. Two weeks ago, when i asked you about the need for more congressional action to protect our communities, you said, and i quote, there are Something Like 25 Million People who are still dislodged from their job in full or in part due to the pandemic. End quote. Unfortunately, tomorrow, this is exactly what will happen if the senate does not pass the heroes act. Tomorrow, the ppp program stops. Taking new loan applications. The ppp should be extended immediately so that the rema remandireman remanding 135 billion in funding can support Small Businesses. Also happening tomorrow, millions of fam l lys will be unable to pay their rent and mortgages. In june, onethird of renters couldnt pay rents. Homeowners are in fore borns berns because theyre unable to pay their mortgage and evictions have started in many states where local moritoriums have expired. While they should be extended, it is not conscionable to simply delay an eviction and foreclosure crisis. Congress and the Administration Must provide support to low income families to cover their rent and utility payments. So chairman powell, millions of families are at risk of being stripped of their home. Do you think congress should provide Financial Assistance to ensure people stay in their homes . Thank you, madame chairwoman. So, i tried to keep my fiscal comments at a high level and i, that actually, that comment you referred to was referring to the Unemployment Insurance that expires at the end of july. And i think for the specifics of what you need to be doing, i think we have the treasury secretary here and i would defer to the treasury secretary on fiscal matters here. Okay. So you put it off on mr. Mnuchin, so while you make some changes to broaden the Municipal Liquidity facility, many jurisdictions are still locked out. You mentioned it was difficult but said this was a way they be eligible. Did you find way to take a serious look at that and determine whether or not something could happen . Yes, we are taking a serious look at that. The territories themselves are not Investment Graded and they were not before the pandemic set in. And thats the minimum standard for access to the Municipal Liquidity facility. Of course, businesses in the territories would be eligible for the main street facility. Some of the revenue based facilities that guam has, are Investment Grade rated, but below the minimum and were review uing our credit standards in the facility at the moment to determine if theres a way to adjust the facility in a way that would make eligible some credit worthy issuers without sort of violating the spirit or letter of section 13. 3. Thank you. Secretary mnuchin. With critical unemployment support expiring next month and today marking the last day that treasury and sba claim that new ppp loans can be approved, does the Administration Support extending these programs as proposed in the heroes act . Well, we do support additional legislation and we look forward to working with the house and the senate on that as it relates to the ppp. Ive already had conversations with the spa committee and the senate about repurposing that 135 billion and think that should be done and look forward to working with both the house and the senate so that we can pass legislation by the end of july. Thank you very much. I now yield to the gentleman from north carolina. Now recognized for five minutes. Thank you, thank you for your testimony. Secretary mnuchin, i think theres a wide agreement that your engagement in ppp Program Means largely better. Right . The treasury expertise in making sure that spa could deliver in this really seminal program of the cares act. Its proven out because you have 4. 5 million Small Businesses that have benefitted from it. The average loan size is quite modest in the context for the economy, but effect is pretty wide scale. So what would you say regard in the additional funds that are purposed for ppp . What should be our focus as policymakers on repurposing that 134 billion . How can we best do that . Is it the 7a program . How do you see this fitting in given the actions of main street and other facilities who stood up therough the fed . Thank you, and i appreciate your comments. I think at the time when we passed the last cares act, the economy was in very difficult shape and we needed to get money quickly. As id said before, programs that took three or four months were not the focus. I think that theres, there appears to be bipartisan support in the senate to repurpose the 130 billion for ppp extending it to businesses that are most hard hit. That have a requirement that their revenues have dropped significantly. Things like restaurants and hotels and others, where it is critical to get people back to work. Okay. And so that seems like a reasonable step in the right direction. Chairman powell, the reputation youve garnered this year in particular is that your actions have been predictable. And that you signal what youre going to do and you follow through on it. Transparent in that you lay out the metrics for action. You therefore follow those metrics. Incredible. One example is that at announcement, you said youre going to support corporate bonds. And by saying youre going to support corporate bonds, the market acted as if the fed had the program up and running. To the point where once you were up and running, people asked why you followed through on that program. Now, i think thats important to note. That transparency, that guidance, that communication has been effective and is openin th opening stage in setting up these responses. So along those lines, the fed took what i would call strong medicine in terms of action on the stress test. To restrict dividends. And buybacks and restraint on these large Financial Institutions. I would call that quite strong medicine. I think what we want to understand are the metrics that the fed is going to use in order to make these judgments and assessments sort of in this next phase. Over the next couple of months for these large financials. So, i think you have to start with the sort of two major facts here. One is that the Banking System is very strong. Has been a source of strength. The banks have been taking on a wave of deposits. Theyve been engaging in forberns, making loans. The theyre a source of strength in this unlike the last crisis, where they were a source of weakness. Its also aing fact that things are highly uncertain. So to preserve that strength, weve stopped all share repurposes and increases in dividend so were preserving the level of capital in the system. So to address the level of certainty and looking forward, we did run these three Sensitivity Analysis and they were really to address the overall strength of the system in the face of these downside cases. We found that the majority of firms were still adequately capitalized, sufficiently capitalized in all of those scenarios. No with standing thnot with sta we said for the first time in this history of these tests, we said were going to ask the banks to resubmit their plans and look at the results again as we learn more about the path of the crisis. In terms of the precise metrics, well provide more clarity about that Going Forward. Based off that, youre asserting as a regulator, that you will actively review this to ensure we dont have a financial crisis as a result of this health crisis. Yes, were going to, going to keep monitoring this, were learning so much every quarter and the path of the economy is highly uncertain. In our system, dividends are declared every quarter. Weve stop ped the whoever wheming majority of distributions so we think thats the right place to be. Thank you. Thanks for your leadership and effectiveness and thank you as well, secretary mnuchin, for your effectiveness and leadership. Yield back. Thank you. I now recognize the gentlewoman from new york, miss maloney, for five minutes. Thank you and welcome. Secretary mnuchin, id like to ask you about a very troubling oversight issue. As you know, im the chair now of the Oversight Committee and i take these matters very seriously and i hope that you do, too. In the cares act, we create d te Pandemic Response accountability committee, or prac. A committee of independent inspectors generals that is charged with overseeing all of the money spent in the cares act and identifying waste, fraud and abuse. Last month, the general counsels office in treasury issued a legal opinion that questions pracs authority to oversee trillions of dollars of cares act spending. To put it bluntly, this legal analysis is so bad that it borders on bad faith. The opinion claims that no evidence that congress did not intend for the prac to have oversight, authority over anything in the first half of the cares act. Including the ppp program and any of the feds lending, facilities or the 150 billion in funding for states and local governments. So i would say, secretary mnuchin, that this interpretation is wrong. That a it is just plain wrong. Senator gary peters and i proposed an authored this section of the law, the prac act, and i was heavily involved in negotiating those provisions in the cares act, and im telling you that congresss intent was for the prac to oversee all of the spending in the cares act. Not just onehalf of the cares act, but all of it. That was our intent and that was what the bill said explicitly. The interpretation from your general counsels office is already causing problems because its hindering the pracs ability to monitor how the states are spending their cares act money. So now secretary mnuchin, i would stay that we have worked protectively together and in good faith negotiations on the ownership bill and others before congress. So i hope that youll take my concerns about this erroneous legal opinion seriously. And so this is what i would like to ask today. Id like you to commit to interpreting this section of the cares act as congress intended. With the pracs oversight authorities applying to all of the cares act spending. I think this is a small step, but a very important one that you could take to show that youre serious about the oversight of the trillions of dollars in the cares act. Well, thank you, and i appreciate your comments and i assure you, we are very much committed to working with the Oversight Committees on transparency. Now as it relates to this, i can assure you, it was not bad faith. Im happy to have our office follow up with you. It has to do with a technical issue of recipients reporting. As it relates to the issue of monitoring state spending, im more than happy to put the prac in touch with our inspector general, who has primary oversight, and make sure whatever information the prac wants on the states, that we accommodate. I would say thats not what im asking. What im asking is that will you commit to interpreting the pracs oversight authorities as applying to all of the cares act spending . That was our intent. I wrote that section of the law. That was what congress wanted. Theres no problem with the ininterpreteration. Its clear and explicit. Will you commit to allowing the oversight that was in the bill . I appreciate you wrote that portion. I appreciate i had very direct discussions with people in the senate about various different oversight. Thats why we agreed to a new Oversight Committee with full transparency. We agreed to provide information that was not required under 13. 3. So we have full transparency and again, im happy to follow up with you on the specific concerns as to which different entities should perceive what information. I think its important that there is not bureaucratic overlap, but again, let me emphasize if the prac needs certain information, we will try to do what we can to accommodate it. Well im very disappointed with that answer and i guess well have to pursue a legislative solution. It was very treasury and the Federal Reserve system have shown their ability to both effectively and rapidly respond to the economic crisis caused by covid19 by providing trillions of dollars to stabilize our economy. Chairman powell and secretary mnuchin, lender registration for the main Street Lending program went live on june 15th, i believe. Do either of you know how many lenders have registered so far and do you know the average size of the lending, lenders participating . If not, when do you think this information might be made available . Toss it to either. Sure. So, in the range of 300 banks and it may be higher than that. That number is a few days old. Have entered the registration process. It takes a few days, so i cant tell you exactly how many, but thats how many will come out of the pipeline. Average size of lenders . Dont know. The size ranges from you know, the large to the very small. And very small are particularly well represented, but it does range across the full spectrum. And you will be providing this information to us on a regular basis . Were working with the borrowers to figure out the right way to you know, connect lenders and borrowers and lenders so they can get in touch. So were working with, sorry, with the lenders, to put something together that will make that happen in the most efficient way. Thank you. Chairman powell, in your efforts to create broadbased program, do you think that the main street facility will need to expand any further to meet the needs of our businesses . Let me say were as youve seen, weve been, the secretary and i, weve worked very closely on this and weve been very willing to learn from experience and from what were hearing from different parts of the economy. Certainly did with the ppp program, so i would hope we would approach this the same way. Were in the early stages of opening up a nonprofit main street facility and well be watching as regular main street fully comes online and continuing to look to see whether there are ways to see if we can improve it. Thank you. Chairman powell, last weeks release of the Federal Reserves c car outcome and more importantly, the results of their covid19 Sensitivity Analysis, underscores the resilience, i think, of the Banking System. While we can all agree that the level of uncertainty in the economy continues to be high given the progression of the covid19 pandemic, i believe the Federal Reserve subjected c car filers to extraordinary asupgs sumgss regarding unemployment and gdp contraction. Despite these assumptions, the 33 largest banks remained above minimum Tier One Capital one requirements. Given that, im wondering why the Federal Reserve has indicated firms will need to resubmit capital plans and in addition, there will be an off cycle supervisory stress test in the quote, latter part of the year. The Federal Reserve already concluded firms Capital Planning management processes i think approaches and assumptions passed the toughest test. So could you explain that, please . Sure. What the 33 institutions all passed was the regular way severe ly adverse scenario we wrote before the pandemic arrived. Thats what controlled the outcome at this time. We also though, remember, the pandemic arrived right in the middle of the stress test period, so we quickly devised, without going through our usual thorough vetting process, three alternative Sensitivity Analysis. One of which was a v shaped recovery, one a u shape and one a serious double dip, and these are serious downside cases. We didnt use them to evaluate individual institutions, but rather the broad range of institutions. Im running out of time. You know, why lock up Additional Capital now i guess . This is, this has the potential to have i think a Chilling Effect on the economy at exactly the point where banks need to provide credit and liquidity to households and businesses to facilitate economic recovery and support financial intermediation in the Capital Markets. So i leave you with that. We didnt do that. Were not looking to raise capital standards during a crisis. Thats not whats going on here. Thank you for that and i yield back. Thank you. The gentlewoman from new york, miss velazquez, is now recognized for five minutes. Thank you, madame chair and Ranking Member. Mr. Secretary, at any time, have you been blocked by President Trump or anyone else of the white house from providing us information requested by congress or an oversight body . No. Have you ever been prevented, have you ever prevented anyone within the Treasury Department or the administration more broadly, from providing information requested by congress or an oversight body . I well, if youre referring to an oversight body, not that im aware of, no. Okay. So, here you are, sir, tonight, the ppp program expi

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