This challenge varies widely across the nation.

During the hearing last week, I highlighted the number of COVID cases per state does not correlate with how an individual state’s economy is actually fairing. 

For example, Arkansas and New York are ranked very similarly in the number of COVID-19 cases per capita, but sales tax revenue in my home state of Arkansas was up substantially while down in New York. 

I will discuss this in more detail. 

Ultimately, we need to ensure that our communities can reopen in a safe and secure manner and rebuild our great economy that we experienced at the beginning of this fateful year.

Thank you, Madame Chair, I yield back. 


Rep. Hill questions Kent Hiteshew, Deputy Associate Director of the Division of Financial Stability, Board of Governors of the Federal Reserve System: 

Rep. Hill: "I do want to talk about another challenge to smaller states and that’s the use of entities to issue debt to participate in the MLF and then support lower subdivisions in their state.

In my home state, we have the Arkansas Development Finance Authority, ADFA, is the exclusive issuer of bonds for state agencies, and therefore they’re typically acted as a conduit.

Is it the Fed’s intention to let these sorts of conduit issuers have access to the program?"

Hiteshew: "Congressman, I'm familiar with ADFA, I used worked with them a little bit when I was an investment banker. The program is designed initially to deal with state and local governments and their instrumentalities -- generally essential service public providers. We broadened the definition, as you noted, to allow governors to select up to two revenue bond issuers. The only limitation on the revenue bond issuer is that it has to be financing governmentally-owned assets so it’s consistent with state and local government and consistent with MLF objectives.

So, for example, ADFA probably issues private activity bonds. Those would not be eligible. But to the extent that ADFA issues bonds for governmentally-owned entities and they have a credit-worthy revenue stream, they may be eligible for the program. We’d be glad to talk to you about the specifics that you have in mind to determine whether in fact that entity would have direct access. I think it depends on what that entity is financing.”

Rep Hill: "I think that’s a point of education in our states where you have a facility such as an arena that does not have business now due to the tourism impact and, in some states, government shutdowns, and therefore they are a public facility sometimes operated by a county, sometimes operated by a facilities board, but they’re not typically a bond issuer, and that’s why I raise it. Is that something you think might work under a conduit like an ADFA bond issuer?”

Hiteshew: "It may be able to. And also, of course, the state or Little Rock for example, could borrow on behalf of one of these arenas or entities pursuant to the downstreaming provisions of the original MLF design."

Background on the Congressional Oversight Commission and Today's Hearing: 

The Congressional Oversight Commission is a five-person panel that was established by the CARES Act. The Commission is focused specifically on the economic stabilization efforts of the Treasury Department and the Federal Reserve. The members of the commission are Senator Pat Toomey (R-Pa.), Congresswoman Donna Shalala (D-Fla.), Congressman French Hill (R-Ark.), and Bharat Ramamurti. The Commission's chairperson has not been appointed yet. The Commission has released three reports, all of which are available for review at the Congressional Oversight Commission’s website.

During the hearing, the Commissioners and heard testimony regarding the Municipal Liquidity Facility established by the Treasury Department and Federal Reserve, pursuant to the CARES Act.

During the hearing, the Congressional Oversight Commission heard from two panels.  

• Panel 1: 
• Kent Hiteshew, Deputy Associate Director of the Division of Financial Stability, Board of Governors of the Federal Reserve System
• Panel 2: 
• Chris Edwards, Director of Tax Policy Studies, Cato Institute
• Marion Gee, President of the Government Finance Officers Association, and Finance Director of the Metropolitan St. Louis Sewer District
• Patrick McCoy, Director of Finance, Metropolitan Transit Authority
• Dr. Mark Zandi, Chief Economist, Moody’s Analytics

Archived video is available via the Congressional Oversight Commission’s website. Witness testimony is available on the website.