THIS WEEK IN WASHINGTON
July 9, 2020
Welcome to the Georgia edition of This Week in Washington . Thank you for your interest in politics and policy from the Peach State to the Potomac.
 
The Department of Labor announced last week that America added 4.8 million jobs in June, which means that more than 7.5 million jobs have been created in the past two months. Just today, the Department of Labor announced that last week’s new unemployment claims fell to 1.3 million, thus showing the number of people seeking aid has been on a slow decline since the initial spike in unemployment when the pandemic hit the economy in March. Also, last week the Senate and House of Representatives passed, and the President signed, a bill extending the Paycheck Protection Program until August 8th. This very popular program has $130 billion still available.
 
A good portion of the United States is experiencing another influx of COVID-19 cases. Great sectors of the United States are working to recover from the effects of the economic shutdown. Congress, the Administration, and the Federal Reserve have moved mountains to help people and companies that have been impacted, but the ultimate solution to our economic problem is the development of a vaccine that will solve our health crisis.
 
The Senate is working in-state, and the House is in pro-forma session. The Senate and the House of Representatives will return to Washington on July 20, and among the things they will work on is the next stimulus program, dubbed CARES 2. Heard on the Hill will return next time.  For this edition of TWIW we have prepared two special articles.
 
Sean Callinicos is a policy expert and government relations expert in health care, but he has a special focus in the vaccine industry. He was Assistant Vice President for Federal Government Affairs for Sanofi Pasteur during the avian and swine flu crises, and his work helped open the door for the development of America’s vaccine industry. Steve Gordon and Ramona Lessen interviewed Sean to learn about his experiences at Sanofi Pasteur and to discuss the current state of our vaccine industry.
 
The House of Representatives Financial Services Committee held an oversight hearing last week on the Treasury Department and the Federal Reserve’s response to the pandemic. The invited guests were Secretary of the Treasury Steven Mnuchin and Chairman of the Federal Reserve Jerome Powell. John McKechnie , Total Spectrum’s Senior Partner and financial services expert, provided a summary and overview, and Ramona Lessen monitored the entire hearing.
 
As usual, Jesse Weathington gives us a look at how the Georgia General Assembly finished up and the latest in Georgia with his Gold Dome Report .
 
As always, make sure to check out the Infographs for an in-depth look at current hot topics.
 
Stay safe, healthy AND sane…

Todd Smith
Chairman, Georgia Group
Jesse Weathington
Director, Georgia Group
Partner and
Georgia Group Chairman

Partner and
Georgia Group Director

Partner

Partner
INFOGRAPHS
Click image to download
Blue state pandemic
turns red
U.S. Covid-19 hospitalizations and ICU admissions are climbing
Group testing for infectious diseases
What you need to know about
Surprise Bills
What you need to know about
Fannie Mae and
Freddie Mac
Gold Dome Report
  
Friday, June 26 saw the conclusion of what many, many Capitol veterans have characterized as the strangest session of the General Assembly in living memory. Not since Rep. Demark Groover held the clock hand back to keep it from striking midnight in the 1964 session, causing it to crash to the House floor, has such a surreal atmosphere permeated the Gold Dome. Nor perhaps has the end of a session been so eagerly anticipated.

Any one of the unusual features of the 2020 session would be sufficient to make it stand out: a pandemic, a recession, an abrupt intermission, a special session, the closure of large swathes of the Capitol to the public, raging protests, face masks, and remote voting. Taken together it was an experience no one who lived through it will ever forget. Indeed, pictures of House members debating and voting from the gallery will likely enter political lore akin to the famous photo of Groover trying to hold back time.

Many observers (including this one) anticipated a quick and relatively light agenda for the remaining legislative days. As it happened, the Assembly finished all the “must-do”s and added many more bills to the stack awaiting Governor Brian Kemp’s signature. Far from finishing early, the session concluded in a somewhat typical fashion with lots of measures making it over the finish line in a flurry of activity in the final few days.

Georgia’s leadership rose to the occasion and passed a sweeping Anti-Hate Crimes Act after an eleventh-hour compromise cleared a path for a bipartisan bill which was signed into law by Gov. Kemp on June 26. Five years of deadlock was broken to address “surprise” bills in medical emergencies. Sweeping COVID-19 liability protection for businesses was swiftly adopted. Home delivery of alcohol (hitherto taboo but revealed to be a necessity in times of pandemic) will be permitted.

Critically, the state’s financial position remains dire as revenues suffer and expenses increase due to the pandemic. However, a revised revenue estimate and the decisive deployment of $250 million in reserves allowed the legislature to adopt a budget that avoided employee furloughs and left many critical services intact for the fiscal year that began on July 1.

Now the focus of the political world will turn to the campaign trail and the coming election. Free again to raise money for electioneering, every member of the General Assembly will face the voters in November in the most febrile climate any has experienced. Polls show that Georgia really is in play for the Presidential election, and the effect down-ticket will determine the partisan balance going into the critical reapportionment year of 2021. It is a scant four months until the election and six until the next General Assembly convenes in Atlanta.
America’s Vaccine Industry: An interview with Sean Callinicos
By Steve Gordon , Managing Partner; and
Ramona Lessen , Executive Director, Washington Office
 
Sean Callinicos is a government relations and policy expert on health care, with a special focus on the vaccine industry. He was a Phi Beta Kappa and graduated with distinction from the University of North Carolina at Chapel Hill, then earned his law degree with High Honors and was a B.S. Womble Scholar at the Duke University School of Law.
 
Sean clerked for a federal judge after law school and then practiced law at a law firm. He began his D.C. career as general counsel to U.S. Senator Lauch Faircloth (R-NC) and as a subcommittee staff director at the Senate Environment & Public Works Committee. In 2004, he became Assistant Vice President of Federal Government Affairs for Sanofi Pasteur, the world’s largest human vaccine company. During the avian and swine flu crises of that decade, Pasteur was the only domestic producer of flu vaccine. In 2010, Sean was promoted to Associate Vice President of Federal Government Affairs for Sanofi US (Pasteur’s parent company), where he directed public policy functions for vaccines, biodefense, international policy issues, and intellectual property. He left Sanofi in 2016 to become the Senior Vice President of Global Government Affairs & Public Policy for Cardinal Health, and in 2020 Sean became an independent consultant. 
 
Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, has publicly said that the vaccine for the zika virus was developed in one-and-a-half years, but the average time it takes to develop a vaccine is seven years. Congress and the Administration are betting that ‘Operation Warp Speed’ will help develop several vaccines in a year and one half or less – and that they will be safe, effective, and available.
 
Ramona Lessen and Steve Gordon visited with Sean Callinicos on June 24.
 
SG: Sean, it is great to visit with you and thanks for sharing your thoughts with us. You have a vast array of experience and knowledge working in health care, particularly in the very specialized world of vaccines. I would like to focus our discussion on your experiences with Sanofi Pasteur and with Sanofi US.
 
SC: I am very happy to visit with both of you. I can especially talk about the public policy challenges of rolling out a new vaccine and how a vaccine for COVID-19 would be allocated, because that was a core focus of what I did at Sanofi. It is probably also fair to talk a little about the anti-vaccine movement and “vaccine hesitancy” – people who are fearful of the adverse side effects of vaccines.
 
SG: Thanks Sean. Perhaps start by giving people a sense of what your role was at Sanofi.
 
SC: I was with Sanofi from 2004 to 2016. Sanofi had a separate arm for the vaccine unit named Sanofi Pasteur. Sanofi was the world’s largest human vaccine company and had around 12,000 employees (the larger company had a total of over 100,000 employees). At that time, the U.S. had an exceedingly small footprint for vaccines. In fact, when I started, the only domestic facility producing flu vaccine was Pasteur’s facility in rural Pennsylvania. It was a giant facility in a very rural area, with challenging logistics and infrastructure. When the 2009 swine flu pandemic hit, that plant was still the only domestic production facility producing flu vaccine.
 
In the Pasteur D.C. government relations office, we focused on three main policy priorities. First, we worked with other vaccine companies to successfully advocate for more vaccine infrastructure in the U.S. The company felt it was in the national interest to develop a diversity of supply. Now we are reaping the benefits of that push. There are now so many more companies making vaccines, and the CARES Act is prepared to invest money in the hard and urgent work to get a vaccine for COVID-19.
 
The second thing we did was to start in 2005 preparing for the possibility of a future pandemic. We needed two legislative changes to make this possible -- liability and antitrust protections.
 
Liability: Vaccine companies in a pandemic situation would essentially be getting the “recipe” for the vaccine from the World Health Organization and the Centers for Disease Control and Prevention. They would also be developing a vaccine at the federal government’s request to sell to the federal government. It is analogous to producing military weapons for the U.S. military, where manufacturers enjoy significant liability protections. Companies might refuse to produce vaccines without the liability protection and the U.S. would lack a domestic supply of vaccine.
 
Senate Majority Leader Bill Frist (R-TN) was a very strong advocate for liability protection, and it also had bipartisan support in Congress and support from then President George W. Bush. The Act which passed in late 2005 is known as The Public Readiness and Emergency Preparedness Act (PREP Act). It authorizes the Secretary of HHS to issue a declaration that provides immunity from liability (except for willful misconduct) for claims of loss caused, arising out of, relating to, or resulting from administration or use of countermeasures to diseases, threats, and conditions determined by the Secretary to constitute a present or credible risk of a future public health emergency to entities and individuals involved in the development, manufacture, testing, distribution, administration, and use of such countermeasures.
 
This provision was conceptually modeled, in part, after the 1980’s Vaccine Injury Compensation Program. That program allows for people to sue HHS if they are injured by a vaccine rather than sue the company that produced it. There is a separate court system for suits of this nature, which provides for expedited justice and lower burdens of proof. Individuals who are injured by a vaccine approved by the FDA are fully compensated, but it also protects the vaccine industry, allowing a robust domestic manufacturing base for vaccines.
 
President Obama did invoke the PREP ACT during the 2009 swine flu epidemic. The vaccines were produced, and it was a mild pandemic.
 
We worked hard to get the liability provisions passed so that the vaccine industry could grow and help protect Americans in a time of national crisis. Getting the necessary liability protection for the industry was far from easy, but I am pleased that we succeeded.
 
Antitrust: The antitrust exemption allows companies to share data and production facilities. This was important so that vaccine companies could partner with other companies to help with a mass production situation like we have today. This effort was vital but not controversial and was spearheaded by Senator Richard Burr (R-NC).
 
The third thing we did was promote vaccine safety, by helping to counter the myths surrounding the safety of vaccines. Emotions versus science is a difficult struggle, and we found that sometimes the best counterweight to the anti-vaccine movement is education from doctors and government officials instead of education from vaccine companies –most of which are small companies with limited resources to get their messages out.
 
The anti-vaccine movement has evolved. In 1998, British physician Andrew Wakefield published a case series that suggested that the measles, mumps, and rubella vaccine (MMR) may predispose children to behavioral regression and pervasive developmental disorders. The study was seriously flawed, but parents became concerned about the risk of autism after vaccination, and vaccination rates dropped. Additional studies were immediately done, and Wakefield’s study was totally discredited and removed from the medical journal in which it was published. Andrew Wakefield is now an ex-physician, having had his medical license revoked. The movement has moved on to other theories and vaccines, from advocating that parents space out vaccine shots for their children at time periods of their own choosing, to choosing which vaccine is necessary, or allegations about certain vaccine ingredients.
 
Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Senator Lamar Alexander (R-TN) had a very successful hearing a few years back on the anti-vaccine movement and the emphasis on good science. I am sure we will hear much of the same discussion when we get a vaccine or vaccines for COVID-19. The CDC and state health departments are repeatedly making it very clear that no company is cutting corners in its research and development. It is in absolutely no one’s interest to produce an unsafe vaccine.
 
SG: Clearly the U.S. vaccine industry has grown significantly.
 
SC:  A lot has changed. The vaccine industry not all that long ago was a low dollar, high liability business and nobody wanted in. But there was a desire starting in the early part of this century to boost the domestic industry. Some vaccines, like the shingles vaccine, became quite profitable. Then the Gates Foundation and other non-governmental organizations started investing large amounts of money into the research and development of vaccines, oftentimes ones against neglected tropical diseases.
 
Some vaccine companies are owned by large companies, like Sanofi, Eli Lilly, GLAXO, ASTRAZENECA, and Johnson & Johnson. There are also smaller companies – like NOVAVAX in Maryland and Moderna in Cambridge, MA – and these smaller companies can be very innovative. Internationally, there are vaccine companies owned by governments, and there is also strong collaboration by companies with world-class universities, such as the ASTRAZENECA COVID-19 partnership with Oxford University. Everyone, it seems, is partnering with someone to create a COVID-19 vaccine.
 
We should remember that in a crisis some government spending will not be successful given the need for speed. Many of the U.S. weapons programs in World War II, for example, did not work, and this did lead to political ramifications and extensive Congressional hearings. Similarly, not all the studies by all the companies will produce a workable vaccine, which is why we need multiple options. Those companies that produce a workable vaccine will probably license it internationally. Then will come the difficult question of how to allocate the vaccine. First responders and physicians will get the initial doses. There will also be the politically challenging question of how to allocate vaccines between countries, especially since a majority of the vaccine facilities are located in North America and Europe.
 
SG: I presume that the Food and Drug Administration and other government agencies have extensive dialogue with each company during the testing and development process.
 
SC: You are right. The FDA and other government agencies get data from various vaccine producing companies. FDA is the only one who knows everything that is going on, since antitrust restrictions make communication between companies challenging, even in a pandemic situation where companies have antitrust protection to some degree.
 
The company that first produces a successful vaccine first will presumably get an ‘emergency use’ declaration for a limited number of doses which will be used for first responders and physicians. Emergency use declarations are used infrequently; for example, when domestic supply of a critical vaccine is impeded by a company shutdown or other issue.
 
SG: Thanks Sean. I am sure we will continue to reach out to you for your thoughts and comments. We are grateful for your perspective as we live though this pandemic.

Hearing Report:
House Financial Services Committee
Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response
June 30, 2020
 
Invited guests:
Secretary of the Treasury Steven Mnuchin
Chairman of the Federal Reserve Jerome Powell
 
Overview and summary of the hearing by John McKechnie , Senior Partner
Monitoring of the hearing by Ramona Lessen , Executive Director, Washington Office
 
Ramona’s summary of the questions and the answers from Secretary Mnuchin and Chairman Powell has been shortened for focus and clarity. This is not meant to be an official transcript, but rather a fair representation of pertinent sections of the hearing.
 
At a House Financial Services Committee hearing held June 30, both Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin promised to consider more economic relief.
 
Secretary Mnuchin said that he wants further aid to be "targeted to certain industries that have been especially hard hit by the pandemic."  Chairman Powell said that some economic measures have rebounded more quickly than expected, such as spending and hiring, but that the increase in business activity that leads to more human interaction "presents new challenges" such as "the need to keep the virus in check." Committee Democrats especially expressed concern and skepticism about the functioning of the Paycheck Protection Program (PPP), saying that minority and women-owned businesses were being “disadvantaged” by poor administration of the program. 
 
CARES 2.0 will most likely be written and passed by the end of July.
 
____________
 
Chairwoman Maxine Waters (D-CA-43) gaveled the hearing open at 12:30 PM and delivered a short opening statement as did Ranking Member Patrick McHenry (R-NC-10).  This hearing was held under the House rule that allows members to participate in person or virtually.
 
Chairwoman Waters: The pandemic has had a terrible impact. Unemployment is at 13%; communities have been affected disproportionately by both the virus and the economic impact. Half of all black adults are not working. We cannot endure another unequal crisis and unequal recovery. History cannot repeat itself. I want to thank both of you for your efforts thus far and for working with me to strengthen the CARES Act. The CARES Act has provided relief to everyone.
 
Ranking Member Patrick McHenry (R-NC-10): This is not a crisis caused by anyone; the economic shutdown was done to save lives. You have worked very quickly to make programs work to return us back to our roaring economy. We need to understand what we have done and what we need to do going forward. Every aspect of the economy has been affected, and policy makers have ideas for new programs. Members of this Committee will have questions about fiscal policy and monetary policy, and we need to understand both at the beginning of the hearing. Our role is to assess the effectiveness of these programs. We need to access and understand key programmatic data. I commend Secretary Mnuchin for the loan level data and his ability to provide it to Congress in a transparent way. You have done a terrific job working with the Committee. Thank you, Secretary Mnuchin, for the Paycheck Protection Program. It was not perfect, but it saved many lives. Chairman Powell, thank you for your leadership and the Federal Reserve’s great work.
 
Secretary Mnuchin: We remain committed to be sure all Americans get back to work as soon as possible. The jobs report for May vastly exceeded expectations. While the unemployment rate is historically high, we see signs that improvement will happen in the third and fourth quarters of this year. The U.S. Chamber reported that 79% of small business are significantly open and half of the remaining are opening soon. Investors in business have high cash reserves, and capital is available once everything is back and open. The Paycheck Protection Program is keeping employees connected to their jobs. We are monitoring economic conditions closely. Construction is doing well. Treasury has been hard at work implementing the CARES Act, and economic impact payments were made in record time. We have approved over $27 billion in loans to airline and aviation companies.  The CARES Act granted Treasury the authority to support Federal Reserve lending programs and we have committed $200 billion to supporting these programs. We have over $250 billion remaining to create or expand programs as needed. We look forward to working in July on any further legislation necessary. We are monitoring results and see improvement. Additional relief will be targeted to certain industries severely hurt. We are pleased that the Federal Reserve will put loan information on its website.
 
Chairman Powell: We meet as the pandemic is still with us, and it is a global public health crisis. As our economy reopens, resumption of economic activity is seen. The economy’s bounce back is welcome, but we need to keep the virus in check. We are keeping in mind that more than 20 million Americans have lost their jobs. Women, people of color, Hispanics and people with low income have been most impacted. The path forward will depend on policy actions. The Federal Reserve will use our tools for as long as we can to assure that the recovery will move forward, and our economy is solidly on the road to recovery. Then we will put the tools back in the toolbox. The Federal Reserve has lending powers, not spending powers. The CARES Act provides direct help. This direct support is critical and limits long lasting problems.
 
Chairwoman Waters:  Should Congress respond so people can stay home? Does the Administration support the extension of the Paycheck Protection Program?
 
Secretary Mnuchin: We want to work with Congress so that it can pass legislation by the end of July.
 
Ranking Member McHenry: Secretary Mnuchin, your engagement in the Paycheck Protection Program made things better. It is proven that small businesses have benefited. What would you say regarding the additional funds for that program?
 
Secretary Mnuchin: When Congress passed the CARES Act, the economy was in bad shape. There appears to be bipartisan support to now focus additional aid to the businesses that have been hit the hardest – for example, restaurants and hotels.
 
Ranking Member McHenry: Seems reasonable. Your actions have been predictable – you signal a process and follow through. At announcement, you said you would support corporate bonds, and the market acted as if the Fed had the program up and running. That kind of transparency and communication has been effective in setting up these responses. The Fed gave out some strong medicine on the stress test to restrict dividends and buybacks on large financial institutions. 
 
Chairman Powell: The banking system is very strong and has been a source of strength. Banks have been taking on a wave of deposits. The fact is that things continue to be highly uncertain. We have stopped all share repurposes. We are preserving capital in the system. We did run these and provided sensitivity analysis to oversee the strength of the system. 
 
Congresswoman Ann Wagner (R-MO-2): I want to commend you both for your leadership during this unprecedented time. Both the Treasury Department and the Federal Reserve have effectively and rapidly responded by providing trillions of dollars to the economy. Do either of you know how many lenders have registered so far and the average size?
 
Chairman Powell: Three hundred banks have entered the registration process. I do not know the average size. It ranges from the largest to the very small bank. We are working with borrowers to figure out the right way to connect lenders and borrowers.
 
Congresswoman Nydia Velazquez (D-NY-7): You are saying that we need to take care of the most hard-hit businesses in this next move on the CARES Act. We need to know if the existing programs are working. What about the millions of minority- and women-owned businesses that were not able to access the Paycheck Protection Program? No one should get a second loan unless we know that most businesses will get a chance to get a loan. I am the Chair of the House Small Business Committee. What impact would failures of millions of small businesses have, especially those that are either women- or minority-owned?
 
Chairman Powell: Small Businesses generate most of the jobs. It would have a large impact.
 
Congressman Frank Lucas (R-OK-3): How are we working with China on the Phase 1 agreement, especially regarding farm products?
 
Secretary Mnuchin: We have serious concerns about China’s transparency, but we feel that China will go forward with the Phase 1 agreement. 
 
Congressman Bill Posey (R-FL-8): Secretary Mnuchin, I commend your efforts in working with Congress to put relief in place. Both the Stimulus and the Paycheck Protection Program have been hugely successful. Chairman Powell, I commend you for keeping the financial situation stable. Our hotels in Florida have a major problem –occupancy has plummeted 80%.  Regarding asset-based businesses, and R&D organizations falls into this group, how can we provide access for businesses like that?
 
Secretary Mnuchin: We have and continue to look at asset-based funding. 
 
Chairman Powell: Agreed.
 
Congressman William Clay (D-MO-1): I am troubled by banks who serve as debt collectors when families need resources most. When will Treasury act on this practice?
 
Secretary Mnuchin: I agree that this is wrong. We have had calls about garnishment. That is something we need to address if we do additional payments. 
 
Congressman Clay: Is it possible to lower the minimum loan of $250,000 under the Main Street Program?
 
Chairman Powell: We can look at lowering it, but you then get into a different kind of lending. We could look at it, but only once we get the Main Street Program up and running.
 
Congressman David Scott (D-GA-13): The COVID-19 recession has severely impacted employment among women and African Americans. Is this imbalance correctable?
 
Chairman Powell: We have tried to accommodate financial conditions so that when the economy reopens that expansion can be vigorous and strong. It is just now beginning. The job growth in May is a result.
 
Congressman Scott: We have a great opportunity to do both of these things with our housing and homeowner’s tranche that we are putting forward. This goes right into the belly of the economic wheelhouse. When 25 million people lose their jobs, how will they pay their rent, mortgage, and utilities? How will banks and financial institutions get their payments to keep our financial system healthy? Please make sure that you start talking about these things that we are putting forward. Secretary Mnuchin, none of the lending institutions have been targeting our agriculture industry. Food shortages are coming. Farmers are the forgotten ones. Are they qualifiable as a small business? They are sort of out there drifting along. What are you doing for farmers? The food chain is falling apart. 
 
(Answer inaudible)
 
Congressman Blaine Luetkemeyer (R-MO-3): You have been very responsive and cooperative. Leaders make tough decisions in tough times. We have talked to you in the past about Charitable Risk Transfer (CRT).
 
Secretary Mnuchin: Yes – they should receive relief. The Federal Stability Oversight Council is beginning to review these issues.
 
Chairman Powell: We are in the middle of a review of the whole capital proposal.
 
Congressman Luetkemeyer: Should we create an interim rule on the accounting construct Current Expected Credit Loss (CECL)? Should we delay CECL and should Treasury analyze what we have gone through?
 
Secretary Mnuchin: I agree. Chairman Powell also agrees.
 
Congressman Bill Huizenga (R-MI-2): The word ‘unprecedented’ is banned in my home. We know from looking at history that we need to get the economy moving again. Manufacturers are having a difficult time getting workers in for a full shift, and the $600 additional kicker has influenced that. I am proposing a Patriot Bonus. Any company could give an hourly, weekly or one-time bonus to incentivize employees to come back to work. Many people have most of their small investments in the markets. What assurances can you provide them about the economy?
 
Secretary Mnuchin: We are doing whatever we can do to get people back to work. I am optimistic about a vaccine going forward.
 
Congressman Gregory Meeks (D-NY-5): Do you agree that structural discrimination exists in the economy today?
 
Chairman Powell: I agree.
 
Secretary Mnuchin: We need a level playing ground.
 
Congressman Meeks: We need sizeable economic investments – pulling together capital from private and government -- to invest in our communities. Massive amounts of equity; debt alone cannot solve the problem.
 
Secretary Mnuchin: Look forward to working with you on your issues.
 
Congressman Steve Stivers (R-OH-15): Banks are targeted by litigation on how agent fees are to be processed. Banks do not have precise answers on where fees are to come from. Is this an issue you are aware of? Agent fees and when they are due?
 
Secretary Mnuchin: I recently have become aware of this issue. Banks could pay agent fees out of fees they receive. 
 
Congressman Stivers:  You have both been bold in your leadership. Thank you for your incredible leadership. I appreciate everything you have done and hope you will consider continuing to help small and medium businesses.
 
Congressman Al Green (D-TX-9): I believe there is discrimination in lending as related to people of color. Adjusting for credit score, education, do you believe that this discrimination in lending exists? Do you believe that this issue can be addressed by legislation? Can we craft legislation to fix this issue? 
 
Secretary Mnuchin: We have legislation, but it is more than legislation.
 
Congressman Green: Can legislation be a part of the remedy?
 
Secretary Mnuchin: Yes.
 
Congressman Andy Barr (R-KY-6): Both the Federal Reserve and the Treasury through emergency lending really have made a difference making a bad situation less bad given the circumstances. Secretary Mnuchin, thank you for responding to a letter that Representative Hill and I sent to you about streamlining, cutting the red tape; you were very responsive to that. Commercial real estate is a problem we have not yet addressed. Hotels, shopping center owners, retail have not recovered. We will see a wave of foreclosures. The issue is debt because they do not have revenue. 
 
Secretary Mnuchin: There are structural problems. These companies need support, not debt. 
 
Chairman Powell: I have been very focused on this. I sent you a letter. More debt may not be the answer. This is a serious problem and we are wracking our brains to come up with a good answer.
 
Congressman Barr: I look forward to working with you. The terms of the Main Street Program may discourage people from applying. What has been the response from the lender community?
 
Chairman Powell: We have had 300 turn up. We will continue to make adjustments going forward.
 
Congressman Emanuel Cleaver (D-MO-5): Along with Black and brown business owners, I am frustrated. What is your philosophy, what do you have to say as to why minority businesses are not equally supported? What do you think happened?
 
Secretary Mnuchin: We all need to do a better job communicating that we have sources of funds for those businesses. We worked with a lot of different people across the board, but we can do a better job.
 
Congressman Cleaver: Do you have a specific idea on what we can do better?
 
Secretary Mnuchin: We have been working with Robert Smith and external people using CDFI working to get more access to capital. There are multiple solutions.
 
Chairman Powell: We are working with MDFI and CDFI; we have a meeting tomorrow with the National Bankers Association.
 
Congressman Cleaver: I was hoping that the Secretary will understand the pressure these businesses are under. As their Representatives, we have tremendous pressure. The next generation will be asking us, Grandpa, what were you doing during those times when things were going off the rails.
Congressman Scott Tipton (R-CO-3):  Small businesses create 7 of 10 jobs, and many of these are in rural America. Providing access to credit is important. We will need to wipe credit slates clean after the pandemic. 
 
Secretary Mnuchin: Yes, I agree. Very important.
 
Congressman Ed Perlmutter (D-CO-7): The pandemic dealt a blow to the economy, and we are not out of this thing. We know that at the end of July, the unemployment plus-up ends. The eight weeks provided under the Paycheck Protection Program, for the initial takers, starts to run out. I see a brick wall at the end of July. Secretary Mnuchin, the House of Representatives passed the HEROES Act so policemen, health care workers, and other public service workers do not get laid off. I asked Chairman Powell a question on state and local government assistance. He said that state, local governments employ 13 million people. If we do not do something, state and local governments will have to lay off people to meet their budgets. Where are you on assisting state and local districts to fix lost revenue?
 
Secretary Mnuchin: We issued guidance that was as flexible as possible. I am committed to working with both Democrats and Republicans in July. We have a lot of important features that come to an end in July. 
 
Congressman Perlmutter: We passed the HEROES Act and the Senate is sitting on it. I would ask you to really push on that one or there will be a lot of people laid off at the worst time that will interrupt essential services. We need to focus on going forward or there will be a lot of trouble at the end of the summer.
 
Chairwoman Waters: Hearing is adjourned.
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