Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell testify before the Senate Banking Committee on CARES Act progress.
- Senator McSally.
MARTHA MCSALLY: Thank you, Mr. Chairman, Chairman Powell. Secretary Mnuchin, good to see you virtually. I want to talk about China. As we know, they unleashed this virus on America and the world with their classic communist cover up, deception, continued propaganda campaign, costing now over 90,000 American lives, 35 million Americans losing jobs so far.
We don't know who patient zero is. They destroyed samples. They silenced doctors. They kicked out journalists, impacted travel-- international travel to see this. And their reckless behavior continues to be the root of all this. As you know, this is why we're here today. We're talking about the economy, which is very strong, now, really struggling. People all over Arizona are really struggling, because of the calamity that's come from this virus.
I don't think anybody-- I should say-- actually, let me just ask. I don't think either of you think there's any reason that we should be rewarding China or Chinese state-owned enterprises or individuals or entities that want China to prosper as we implement these massive initiatives to support the American economy. Is it fair to say neither of you want that to happen?
STEVEN MNUCHIN: That's correct.
MARTHA MCSALLY: Chairman Powell?
JEROME POWELL: Senator McSally, that's really not a question for me. We're at the economic response to this.
MARTHA MCSALLY: I know. But none of us as Americans want to see China or Chinese-owned enterprises prospering. So I want to talk about a company called BlackRock. On March 24, the Federal Reserve Bank of New York retained BlackRock as the financial agent to operationalize and transacted primary dealers in the primary market corporate credit facility and the secondary market corporate credit facility.
As you know, these facilities serve as markets for companies to sell bonds and obtain loans during the situation's downturn. Typically there's a competition, a competitive bidding process. But BlackRock was selected for this one. As you probably know, BlackRock is one of the leading investment banks in Chinese funds, including helping Chinese companies list and go public on American stock exchanges.
Chinese companies listed on American exchanges are prohibited or prohibit the Public Company Accounting Oversight Board or the PCAOB from reviewing their audit reports. On BlackRock's website, they have a page titled, "Five Myths and Realities about Investing in China." According to Blackrock, one of the biggest myths about China is that Chinese state-owned enterprises don't control their economy.
BlackRock even tries to back it up with data. I won't go into all of it, but it's ridiculous. BlackRock's owed to China doesn't mention anything about human rights abuses, military responses, the Hong Kong democracy protests, or even if the country is ruled by a communist party. Ironic that one of the world's largest investment banks and allegedly a staple of free markets neglects to mention the fact that communists actually run China and all while refusing to invest in a number of legitimate and legal industries here in America. But that's a separate issue.
So my question is, how and why did BlackRock get selected as a financial agent for these facilities? How much money do they stand to make as the agent? And what if anything will prevent BlackRock from taking their profits that they earn to invest in their interest in China and Chinese state-owned enterprises?
JEROME POWELL: So I guess I'll take that. We hired BlackRock for their expertise in these markets. They're actually an asset manager. They are a very large asset, which is active in the markets that we're concerned with the primary market and secondary market credit facilities.
It was done very quickly due to the urgency and the need for their expertise. We will rebid the contract as we would in practice do going forward. And so that's where that is. The fees are a matter of public record, and we'll be happy to supply those to you.
MARTHA MCSALLY: But what, if anything, can we do to prevent any of their profits from this to actually benefiting China and Chinese state-owned companies, which they're severely invested in?
JEROME POWELL: I would just say that's all large asset managers buy Chinese securities. These are global asset managers. It's in no way-- I'm not here to defend or criticize them for that. It's just-- it's not really relevant to the work we want them to do. What we're trying to do is create conditions in which US workers can keep their jobs or return to them. And that's what our sole focus is.
We're not reach out for other public policy objectives or deviate from that. We have really a laser focus on that. And we would conclude that this company was the right one to be our fiscal agent in this place. Their views on anything else are really not-- what's important is that we do everything we can to support what we can in the United States.
MARTHA MCSALLY: Well, let me just say, it's important to all of us, and thank you for your leadership on this to support our economy, to support jobs, to get our economy back on track. But it's also important that we wake up as Americans and that we hold China accountable and that they don't-- they're not allowed to profit because of these investments tax payers made.
So I'm going to follow up with you on these issues. I really think BlackRock and others need to also wake up and do their patriotic duty, see what's going on here. China-- communist China should not be profiting off of unleashing this calamity on the world. And that should be something that should unite all Americans, even if they work at BlackRock.