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Senate moves to delist Chinese companies from U.S. stock exchanges

Maryland Senator Chris Van Hollen joins Yahoo Finance’s Seana Smith to discuss the Senate passing a bill by unanimous consent on Wednesday to take on Chinese companies listed on U.S. The lawmaker also weighs in on the Fed's activity in the junk bond market and the recent stimulus package negotiations.

Video Transcript

SEANA SMITH: Welcome back to "The Ticker" here on Yahoo Finance. I'm Seana Smith. Fed Chair Jerome Powell and Treasury Secretary Steven Mnuchin faced questions from senators yesterday, with many arguing for the need to move faster to help American businesses suffering from the coronavirus pandemic.

So for more on this, and joining us now, we have Senator Chris Van Hollen of Maryland. And Senator Van Hollen, it's great to have you on the show. Thanks so much for taking the time to join us this afternoon.

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CHRIS VAN HOLLEN: Seana, it's great to be with you.

SEANA SMITH: Senator, I first want to start with the testimony yesterday and some of the questions that you asked during the testimony. You voiced some skepticism of the Fed's policy, and specifically its decision to get involved in the junk bond market. I just want to get your thoughts on why you think that's a questionable move or a risky move, I guess, from the Fed.

CHRIS VAN HOLLEN: Well, as I indicated yesterday, I believe, overall, the actions the Federal Reserve has taken are appropriate and necessary. But I do have big concerns with some of the things they are doing in the secondary market, especially with respect to junk bonds. I think that puts US taxpayers at unnecessary risks.

And I also think it may bail out a bunch of companies that had this junk debt long before the coronavirus hit. And it has unfortunate effects of rewarding certain kinds of risk taking in the market that the taxpayer shouldn't be on the hook for. So I'm looking forward to following up with the chairman. I have questions about whether or not that action is within their authority as well.

SEANA SMITH: So, Senator, it sounds like-- do you think more needs to be done in order to make sure that these stimulus programs actually benefit the workers? Does more need to be done on this front?

CHRIS VAN HOLLEN: Well, right. I mean, that's-- in addition to taking unnecessary risk, if we're going to be putting dollars on the line, we should be putting dollars toward American workers and those who are really hurting. Our focus needs to be on Main Street, not the financial markets, in this case.

Obviously, you have to do some things to stabilize the financial markets. But I think that this went too far. So my focus, and I think the focus of the Congress, will be on trying to make sure we address the Main Street economy, make improvements to the Paycheck Protection Program.

In fact, I've proposed something called the Rebuilding Main Street Program, along with two of my Senate colleagues. So there are lots of things we need to be doing to help Americans and working people and small businesses weather the storm. And buying up junk bonds is not one of them.

SEANA SMITH: And Senator, I wanted to ask you about that, because we had a restaurant owner on the show yesterday. And she was urging-- she was talking about the fact that the Paycheck Protection Program-- there needs to be some changes made for that. And she was specifically talking about the deadline to rehire workers-- how that needs to be extended.

And I know you just mentioned that you're pushing even for additional changes to be made. So I wanted to ask you about that-- just what exactly-- what legislative fixes you're calling for at this point to address the needs of so many small businesses.

CHRIS VAN HOLLEN: Right. Now, one change that could be made immediately without legislation is this limit on 25% of fixed costs. They cap 25% of fixed cost in terms of forgiveness. That was not in the underlying legislation. That was unilaterally imposed by regulations at the Department of Treasury.

I've both written to Secretary Mnuchin and spoken to him about this. And the Inspector General at the SBA has flagged the fact that that regulation is inconsistent with the underlying legislation. So that's an unnecessary condition and burden on small businesses.

The other major issue does need to be fixed legislatively. And that's this 60-day period, ending on June 30, does not align with the market realities that small businesses are facing. Right now, you need to have your payroll back up to 100% by that date in order to qualify for full forgiveness. Well, I can tell you, in Maryland, our restaurants are not going to have 100% of their customers coming back in the door by the end of June.

So we need to change this. We need to change this on an expedited basis. The House Bill, the HEROES Act, does make the necessary changes to the PPP program.

SEANA SMITH: Yeah, Senator, where do things stand in the negotiations for the HEROES Act? Because we know it passed the House, but obviously, it was almost dead on arrival in the Senate. So what negotiations or what concessions, I guess, are the Democrats willing to make in order to reach a deal in a timely fashion?

CHRIS VAN HOLLEN: Well, right now, I'm sorry to report that there just are no discussions at all. This is the moment where you would expect the Trump administration and Senate Republicans to say, OK, you know, we don't like the HEROES Act, or here's what we like in the HEROES Act, here's what we don't like.

We have urged them to act quickly. I mean, we've been on the Senate floor saying that instead of voting on more judges, we should be focused on addressing the pandemic, both the health aspects as well as the economic fallout. So we're very disappointed that they really haven't come to the table to even tell us what they want to do right now.

The PPP program will again run out of money in the coming weeks. A lot of the other programs need extensions. We need new efforts as well. I mentioned the Rebuilding Main Street initiative. This is something that has broad support among small businesses.

And it would work very well with the work share programs. These are the unemployment compensation plans that are set up in about 25 states that say that an employer-- let's say that they want to put their employees on 50% time, because they don't have customers coming in the door, they can't wrap ramp up. They pay their employees 50% time.

The employees then get the-- go into the unemployment system, get unemployment for the lost wages-- a reduced amount. They also get the $600 a week. It's a win-win for everybody. It's a win for the workers, and it also ensures that everybody is better off if those workers come back to the job when they get that offer.

SEANA SMITH: But, Senator, critics of that initiative say that people are now making more on unemployment. There's no incentive for them in order to return to work. And maybe that additional $600 a week should be lowered by a significant amount. We had Douglas Holtz-Eagan on the show last week. And he was talking about, maybe that should be lowered down to an additional $100 a week. What is your response to that?

CHRIS VAN HOLLEN: So the reality is that, if somebody has a job offer, they cannot qualify for the additional $600 a week. And their certification would be inaccurate and false and misleading. So that's the first point to make.

But the real answer is this proposal I'm talking about-- the Rebuilding Main Street Act, because that way, everybody is better off. And they don't lose the $600. But they also get the benefit of some payments through their-- their small business employer.

Let's say it's a restaurant. Let's say they now work 50% time at the restaurant. They get what they would normally qualify for in their state unemployment system for that lost 50% of time, but they also get the benefit of the additional $600. So it's closer to their full wage replacement income.

And everybody is better off. They have an incentive to come back to work. I think most people want to get back to work anyway, because they want to make sure they have the certainty of a job at the end of the day. But really, that's the answer. That's a win-win for everybody.

SEANA SMITH: And, Senator, before we let you go, I want to ask you about the Senate today approving new legislation. You co-sponsored this bill. And it could ultimately bar many Chinese companies from listing shares on US exchanges. I just want to get your thoughts on this bill-- just why you thought it was unnecessary to push this through now. And also, is it an effort, really, to get China to play fairly at this point?

CHRIS VAN HOLLEN: Well, it is. And this is something that Senator John Kennedy and I were pushing for for a very long time over the last year. And it's designed to protect American investors-- mostly mom and pop investors. And we just want Chinese companies to play by the same rules as everybody else.

Right now, to be on the exchange, you have to open your books to an inspection by the Public Company Accounting Oversight Board, PCAOB. China has refused to allow its companies to be scrutinized the way companies around the rest of the world are scrutinized. And that exposes American investors to unnecessary risk.

In fact, back a number of years ago, American investors took about a $40 billion hit because of misleading information from some of these companies. So this is an important step forward for transparency.

SEANA SMITH: Senator Chris Van Hollen, we really appreciate you taking the time to join us on the show. We know you're extremely busy. Thanks so much.

CHRIS VAN HOLLEN: And thanks for having me.