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WASHINGTON – Today, in a House of Financial Services Committee hearing, Congresswoman Ayanna Pressley (MA-07), pressed Federal Reserve Chairman Jerome Powell on the Fed’s failure to use every authority and tool at its disposal to support the economic well-being of workers and families amid the COVID-19 crisis.

Specifically, Congresswoman Pressley condemned Chair Powell for acquiescing to Treasury Secretary Steven Mnuchin’s arbitrary demand to shutter the Fed’s emergency lending facilities by the end of the year and move funding to the Treasury’s general fund, a violation of the CARES Act. These facilities empower the Fed to provide critical liquidity and financial relief to cities, states and small businesses impacted by the pandemic.

A full transcript of her question line and exchange with Chair Powell is below.

Transcript: Rep. Pressley Questions Federal Reserve Chair Jerome Powell in House Financial Services Committee Hearing

House Committee on Oversight and Reform

December 2, 2020

REP. PRESSLEY: Thank you, Madam Chair. Chairman Powell, you have consistently and publicly called for greater fiscal aid.

You testified quote “the risk of overdoing it is less than the risk of underdoing it.” I agree with you here, Chairman Powell, but this is not a question of either/or. We absolutely need further stimulus, but Congress has also provided the Fed with over 450 billion dollars to support lending to cities, states and small businesses.

Now in fact, in your March 23^rd press release announcing these emergency lending facilities, you state three times that the Fed is quote “committed to using its full range of tools and authorities.” Yet, in less than 24 hours you gave up any resistance to Secretary Mnuchin’s arbitrary demand to shutter these facilities by the end of the year, including the Municipal Liquidity and Main Street Lending Facilities.

So I want to build on my colleague, Representative Axne’s line to further enumerate and unpack the sobering landscape likely before us. So yes or no, please, with the ongoing pandemic, do you expect the number of cities and states facing historic budget shortfalls to continue to rise?

CHAIRMAN POWELL: I don’t really have a strong expectation on that, but that may be right.

REP. PRESSLEY: I’ll take that as a yes. Do you expect further state and municipal credit downgrades, making it more difficult for state and local governments to borrow? There have been 337 downgrades so far. Do you expect that to happen to more, yes or no?

CHAIRMAN POWELL: I think that’s probable.

REP. PRESSLEY: Okay, I’ll take that as a yes. Are we facing an unprecedented wave of small business closures, yes or no?

CHAIRMAN POWELL: I think that’s uncertain. Unprecedented wave – I don’t think that we know that.

REP. PRESSLEY: Okay. Is the rescue of small businesses essential to any long-term economic recovery, yes or no?

CHAIRMAN POWELL: Yes, it’s important.

REP. PRESSLEY: And would failure to provide relief to cities, states and small businesses further widen existing inequalities—including but not limited to the racial and gender wealth gaps, yes or no?

CHAIRMAN POWELL: Look I think –

REP. PRESSLEY: Yes or no?

CHAIRMAN POWELL: I’m sorry, yes or no questions for these questions – I’m just gonna answer you, which is that I think it is important that these groups get additional fiscal support.

REP. PRESSLEY: Reclaiming my time. Please, I don’t want you to filibuster here because these issues are of great import and part of your job is forecasting, so I’m leaning in on your expertise. So again, yes or no, will this exacerbate racial and gender wealth gaps – failure to provide relief to cities and states and small businesses?

CHAIRMAN POWELL: I think there’s a risk of that, yes.

REP. PRESSLEY: Chairman, the Federal Reserve lends at a ratio of 10 to 1. So if Congress set aside 400 billion dollars to cover any potential losses, you can lend up to how much through these facilities? What’s that amount?

CHAIRMAN POWELL: Well whatever ten times the amount of equity that’s been pledged, so it would have been several multiple trillion, four trillion or so. Of course, that borrowing happened, that borrowing happened, it just didn’t happen in the facility.

REP. PRESSLEY: So over four trillion dollars. You have a responsibility to support maximum employment, yet in the midst of a global pandemic, you have been complicit in eliminating over four trillion dollars in potential relief to cities, states and small businesses.

Adding insult to injury, the Secretary wants to move this money to Treasury’s general fund, conveniently out of reach of the incoming administration and in direct violation of the CARES Act. I know there’s been this sort of jedi mind trick going on here, but we know what our intentions are, we can read, and the funds are supposed to be available for up to five years, so I’m not even sure why we’ve been going back and forth on that.

Since the beginning of the COVID-19 crisis, Congresswoman Pressley has repeatedly called on the Federal Reserve to use every tool at its disposal to support individuals, workers, and families. In March, she called on House leadership to ensure any coronavirus relief belief bill included a mandate requiring the Fed to provide relief for the secondary market and purchase new state and municipal debt issuances. In September, she called on the Fed to expand its Municipal Liquidity Facility to support municipalities facing financial distress as a result of the COVID-19 crisis. Last month, Rep. Pressley and Congressional Oversight Commissioner Bharat Ramamurti urged the Fed and the Treasury Department to take several steps to make the emergency lending facilities more equitable.

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