Maxine Waters it ready to play whiffle ball with Mnuchin and Powell as the quarterly “testimony” is now underway!
Half Dollar‘s Note: Yes, Maxine Waters did in fact say: “WHITE HOUSEHOLDS HAVE GAINED THE WEALTH THEY LOST” from the 2008 Financial Crisis.
From the Financial Services Committee
On Tuesday, June 30, 2020, from 12:30 p.m. (ET)
Witnesses for this one-panel hearing will be:
• The Honorable Steven Mnuchin, Secretary, U.S. Department of the Treasury
• The Honorable Jerome Powell, Chair, Board of Governors of the Federal Reserve System
The Coronavirus Disease 2019 (COVID-19) pandemic has had profound health, economic and financial impacts globally and in the United States. According to the Centers for Disease Control and Prevention (CDC), as of June 25, there have been more than 2.3 million cases and 121,000 deaths in the United States. On June 5, the U.S. Bureau of Labor Statistics (BLS) reported that the unemployment rate in May was 13.3 percent, 9.7 percent higher than in May 2019.
In response to the pandemic, Congress has enacted a series of laws, including the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law on March 27, 2020. The CARES Act directs the U.S. Department of the Treasury (Treasury) and the Board of Governors of the Federal Reserve System (Federal Reserve or Fed) to take a series of actions to assist those affected by the economic impact of COVID-19, including consumers, businesses, non-profit organizations, states, territories, and municipalities. The law requires the Treasury Secretary and Federal Reserve Chair to testify quarterly before the Committee regarding, “the obligations of the Department of the Treasury and the Federal Reserve System, and transactions entered into, under this [CARES] Act.” This hearing satisfies the statutory requirement. Below is background on the various funds and authorities Congress charged Treasury and the Federal Reserve to administer.
Emergency Relief for Businesses, Nonprofits, States, Territories, & Municipalities
Congress appropriated $500 billion to the Treasury’s Economic Stabilization Fund to provide loans, loan guarantees or other investments, either directly or through programs and facilities administered by the Federal Reserve, to eligible businesses, nonprofits, states, territories, and municipalities as provided under Title IV of the CARES Act.
Treasury Emergency Lending Programs for Certain Industries
Of the $500 billion, Treasury can make up to $25 billion available to passenger airlines, up to $4 billion to cargo airlines, and up to $17 billion to businesses critical to maintaining national security. Treasury can make the remainder—$454 billion plus whatever is not used to assist the specified industries—available to support Federal Reserve lending facilities. The authority to enter into new transactions terminates on December 31, 2020. Recipients are legally required to repay assistance with interest. Separate from the $500 billion, Title IV of the CARES Act provides up to $32 billion to continue payment of employee wages, salaries, and benefits at airline-related industries. As of May 12, Treasury has approved over $25 billion in Payroll Support Program assistance to 352 applicants, including the major passenger air carriers, more than 260 smaller passenger air carriers, and a number of cargo air carriers and contractors. Pursuant to section 4117 of the CARES Act, Treasury determined that eligible recipients that receive a certain amount of support are required to provide financial instruments as taxpayer compensation.
Federal Reserve Emergency Lending Programs and Facilities
During the 2008 financial crisis, the Federal Reserve used “emergency lending” authorities granted to it under Section 13(3) of the Federal Reserve Act to rescue AIG and finance JP Morgan’s purchase of Bear Stearns, among other things. Through the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), Congress restricted the use of this authority to ensure emergency lending facilities are, among other things, broadly available to institutions, which the Fed interprets to be available to at least 5 institutions. The Federal Reserve also has broad flexibility to impose various terms and conditions for loans it provides. Pursuant to Dodd-Frank, the consent of the Secretary of the Treasury is required to establish any 13(3) facility, and the Federal Reserve must provide frequent reports to Congress on these activities. Beginning on March 17, the Fed began setting up a wide range of facilities aimed at addressing severe liquidity constraints in financial markets. For a full overview of these facilities, see the House Financial Services Committee memo for the June 17 hearing on “Monetary Policy and the State of the Economy…”
Hearing page: https://financialservices.house.gov/c…