variety of different viewpoints? and really encouraged by the fed chair powell:chair powell: i do back in the day, but i get the -- chair powell: i do. board of governors has made its i am strongly inclined to think decision. here's my question for you. a number of constituents have that you need to hear all sides of a case. expressed the concern that we are going to end up with two when i was a private equity systems that are not fully investor, i used to speak against my own deals just to interoperable. employers andthat force people to defend them so i would really get a sense that i financial institutions and other per dispense would be plugged in believe in things. it is critical to have diverse two different systems, if they perspectives. are not fully interoperable, if you think about it, the there's a real concern that that reserve bank system guarantees is going to come at a minimum, from an institutional standpoint that we will always have diverse perspectives on monetary policy. diminish the ability to innovate on regulation, where we get it going forward. i am wondering if you could is from the comments, and from ofefly address the question the disparate group of people on the board. a number of us have primarily rather it is the priority of the systemensure that the private sector backgrounds, and we bring that to the table. will be fully interoperable with the clearinghouse system. sen. rounds: pretty fair to say chair powell: full interoperability is the goal. that you can have people from varying points of view that can it will be challenging to reach it, but it is high on our ensureies to have very lively discussions, and yet, at the end of the day, be part of a very strong team. interoperability. absolutely.: it is high up in the design stage. sen. toomey: the system is i feel that way, and we have had committed to not having flat plenty of dissent at the fed over the years. sen. rounds: one last question. fees, provided that the system when the board voted on its rule does not provide those kinds of discounts. can the fed commit and it have for resolution plans last fall, uniform pricing on this vice chair quarles gave a statement essentially saying platform? there is more that could be done chair powell: we haven't made when it comes to tailoring some that commitment, and it is not of the -- tailoring from a clear the banks who wanted to supervisory standpoint. can you elaborate on how the fed banks- not clear that the plans to be forward on this? chair powell: vice chair quarles who wanted us to do this are gave a speech on that and laid looking for. sen. toomey: the private system of aspects onmber might discriminate on the base of price, so i think it is that. important that the clearinghouse system is volunteered. ideas, not quite at clearly, they are happy to be regulated if need be to ensure the stage of b proposals yet -- that this would occur. it would be really ironic and a of being proposals yet, but we shame if it turns out that the will be looking at those. sen. rounds: will they come out as rulemaking or guidance? fed makes it more expensive for chair powell: some will be small banks to participate. let me move on to -- rulemaking. some of it will be guidance. some of it will be changes to guidance. as we've discussed, one of the i think the key thing is he challenges of her placing libor highlights the tension between is that libor has an embedded the right to due process and credit risk element. .t is an interbank rate clarity that we depend upon from our government, but also, with the mismatch could conceivably apervision, there's also especially problems, role for discretion and confidentiality, so i thick it is a thoughtful process of to the extent that banks are looking at that -- so i think it finding themselves in an interbank market subject to is a thoughtful process of spreads that may not reflect, so looking at that. a mismatch could become supervision has to be firm, but fair. problematic. sen. rounds: thank you. sen. crapo: senator warner. i think yesterday, you may have, sen. warner: thank you. and i didn't see the transcript, so correct me if i am wrong, but you may have suggested that i want to make a couple of quick there's a thought of trying to comments echoing what senator rounds, senator reed, and others introduce a credit component, said. some kind of credit spread or risk component, as either a i think there's a lot of our institutions whose independence compliment or alternative or somehow integrate that with so is under assault these days. i share some of the concerns of -- integrate that senator brown about independence with sofr. at the justice department. i try on a regular basis to make did you think about that at all? chair powell: libor itself, we sure the intelligence community can maintain their independence. can't assume it will be published past the end of 2021. with yousk and plea ofr is going to be the rate the that if you see efforts made to undermine the fed's rate that a lot of derivatives go to and many others across the independence, that you keep this committee fully abreast. broad system will go to, but a think the fed independence is number of banks have come more important than ever at this point. forward and said they want to i would also follow-up on work on a separate rate which senator sasse's comments about would not replace sofr, but equifax. would be credit sensitive. belief ofth you the they are doing that now, and we are working with them to support the challenge that china poses, that process. we are open to that, but it but i also think in the case of doesn't mean that the transition equifax and credit rating agencies broadly, none of us chooses to be in equifax customer, or any credit rating agency. will stop. that cyberattack was due to will stop. it has to go forward. sen. toomey: ok. last thing i want to list here, the glitch in the repo market, sloppy behavior by equifax, and as you and i discussed briefly, the fact that we have not put in my concern is when banks choose enhanced rules of to earn less than 2% on access reserves when they could be liability around these credit earning up to 10%, at least reporting agencies is something i hope -- i know i have talked with the chairman at times -- briefly, and the repo market that we would come back to. while we have to be on guard, if suggests that there is something going on here. we don't have at least the they could have put their money minimum standards, and they can into the repo market. make this kind of obscene break i'm not aware of an explicit into the cost of business, i rule that required that during the episodes when these rates don't think that is good for anyone. i hope we will come back to spiked, but nevertheless, it happened. that. i'm a little concerned that i do have a bunch of questions for you, chairman powell. there might be some kind of unspoken pressure on the part of ,esterday in your testimony regulators to favor cash on deposit with the fed over the liquidity in the form of repo talked about this movement towards digital currency, something i am very interested transactions that goes beyond in. possibleated it is what is actually in the rules, and i am wondering if you share that there might be united that concern, what you think states backed digital currency. about it. i know the fed response has been but i question is, would that be to provide liquidity, and that works in a given moment, but if desirable? there is an underlying problem aroundhe component parts that hasn't been fixed, then isn't there the risk that the a digital currency might provide spike in repo rates could recur, and you have to provide convenience and potentially even liquidity again? chair powell: there isn't a lower friction cost in terms of credit to consumers, but how do preference for reserves over we weigh in privacy and cyber treasuries in the lcr, but there concerns? is in the internal liquidity deal with our stress test in the sense that it retail banking system? takes one day to turn the do you think the fed has the capacity to do this without congressional approval? treasury into liquidity. i thing the idea of putting treasuries and reserves on equal footing in terms of their treatment so that they can and one last question about achieve liquidity is a good goal china's role in this, but talk to me first about the domestic because we don't want to tilt and locations. chair powell: -- domestic banks in the direction of having to have more reserves than they implications. really need. chair powell: you listed the as long as the overall level of cost and benefits. the benefits would include the quoted he is at the appropriate level, we don't want potential greater financial inclusion at all of those to tilt them in that direction. things. the risks would include cyber you may have seen vice chair quarrels give a speech on this risk and fraud risk and privacy -- vice chair quarles give a risk, and things like that. i think there's a lot to work on speech on this. one of the ways is to ensure there. every major central bank in the that the discount window is world right now is doing a deep available in the stress test. dive on digital currencies. i do think there's things to do there. ,he reason is, as you mentioned we think it is our responsibility to be at the forefront of knowledge and thinking about a central bank with liquidity, it wasn't liquid. question is why not. digital currency. sen. warner: would you take a positive action on that without sen. toomey: thank you. congressional input? sen. crapo: senator reid. do you feel like you have that authority? chair powell: it would depend a sen. reed: thank you, mr. lot on the design choices. it is a good question, one that chairman. we are working on. thank you, mr. powell, for your we are working very broadly, leadership. including with other central thank you for joining us on this banks around the world, on this. evening -- joining us in there's just a lot of thinking providence on that wonderful evening. without an independent federal and experimentation and understanding that we are gaining. reserve, our national ,olicymaking is, in my view if there is aif there is a neede conclude we need more authority severely --, so keep it up. and that this is something appropriate to do, then we will we've expanded the economy ask for the authority. sen. warner: one of the things i'mmentioned yesterday, and ,or seven years -- for 11 years sure senator sasse and a number of us on the intel committee are concerned about the rise of eight years under president obama, and three years under china in a series of areas, and president trump. but there are still some issues we should address. i think it is clear that china may move quicker than us on a digital currency. a survey in january indicated byt the share of wealth held you said you've got some visibility into what china might be doing on digital currency. middle income families has been falling for roughly 20 years. do you think they will use their influence, their belt and road i would like you to comment whether it continues to fall investment strategy in a number despite the expanding economy. in addition, they point out that of countries that have bought into that system, that they income equality in the u.s. has increased since 1980. might also be buying into that chinese digital currency? if it is stillg, what would that do in terms of please comment on that. peer greater than in cross-border, in terms of dollar supremacy? any further guidance you might have on your insight into china's actions in this space countries, countries similar to would be helpful. chair powell: i would just say us. we have to assume that -- we if we are seeing trichet of wealth in the middle class and income inequality, those trends have to ask what that would mean are not sustainable over time. if a china digital currency had they go to the fabric of the fairly wide adoption, including country. are those trends continuing? two other countries. we've also got to ask what if a what policy can we adopt come private sector entity, a large both -- adopt, fiscal and company with a large network of monetary? chair powell: those are users, has a digital currency. sen. warner: that has already popped out, and attic we had long-term trends i think are driven by important underlying factors, many of them global. concerns from that one. chair powell: that is why we are i would assume that the data doing all of this. will continue to move in that direction. i think what this shows is that lit a bit of a income has been moving up across the income spectrum, fire. we have been focused on digital particularly if you look at benefits and after-tax effect. currencies for decades, but it has lit a fire around the world. but it has been a particularly sen. warner: my time is up. good time to be at the top end i just want to say i would urge, of the income spectrum. keyuld point to two having seen china's ability to move aggressively in a series of areas, that you start forging problems. one is low mobility. that coalition of the willing another central banks sooner we have lower mobility from the rather than later. bottom quintile for the middle thank you, mr. chairman. sen. crapo: senator purdue. or top quintile than many other advanced economies. sen. perdue: thank you. this is something we need to address. good to see you. the other is that the relative i have one quick question, in stagnation of those incomes in light of the time. end, wedle and low we have two dynamics driving the economy. want prosperity to be broadly , and it comes down to labor is now a limiting factor, in terms of we got roughly 7 million job openings and about 5 really education and training and things that enable people to million people looking for work, so it is a phenomenon right now to do well in the modern that is limiting. economy, a globalized economy that is less about manufacturing we have low energy costs, and since 2007, we have doubled our , any manufacturing jobs are more technical than they were, now, wef oil such that so we need a workforce that can benefit from technology and globalization. are a net exporter of oil and gas. those are the policies the fed energy, 15%onomy is doesn't have our hands on. sen. reed: but if we just sit back, those trends will continue of our capex is going to that , and because even further today. we produce 15% more barrels of oil a day than saudi arabia, and divergence between the vast majority of americans and a very small group. about 18% of the world's output. it is incumbent upon congress, are we in a low energy price the executives to start taking assumption, and what steps. that -- the executive to start do you make over the next decade taking steps. is that fair? on what impact that will have on chair powell: if you talk to inflation, deflation? business leaders, they see the you have talked about workforce and the need for deflationary concerns in the past. where are we today in that big widely -- we want prosperity to factor in our economy, energy? chair powell: it has been be widely shared as possible. you hear that all the time from transformational if you think, business leaders, and government leaders, as well. i do think it is an important back when we were in college, if national priority. energy spiked, inflation went sen. reed: switching gears, the up, people got out of work, community reinvestment act is there were long lines at the gas pump. being massaged by the currency we now have a large domestic energy industry which amounts to a shock absorber. and the fdic's, and there have been some comments critical of when that happens, u.s. drilling their efforts, not just by goes up, puts people back to work, controls prices, controls affordable housing advocates, inflation. we are in a situation where that but by some banking institutions, that they are not particular mechanic for doing a proper cost-benefit analysis, that their proposal inflation going up is just not unintentionally could discourage happening anymore because the revitalization of neighborhoods supply response from the u.s. industry is quick and large. that need it most. so you won't see that having can you let us know what role you might play, and how you can sustained effects on inflation, help get it right? chair powell: sure. and also, you won't see it having sustained negative effects on growth because it roughly offsets the effect of first of all, we are not going to comment on their proposal. i think all of us, including the lower energy prices at the pump that will slow the economy down fdic's and occ, are looking a bit, but the new supply that forward to seeing those comments and learning more. comes on will put people to work. i think we share the goal of modernizing cra. overall, it is a different and better place to be. sen. perdue: are you concerned about the work participation rate? demographics have workforce participation has really changed the nature of banking services. recently bumped up a little bit, but hasn't moved as much as one that hasn't been done in 20 might have thought. chair powell: it has greatly years. i think we agree on the goal. we want them to be more surprised to the upside, which effective, and it would help if is a great thing, but the it were more transparent or prediction, basically, what the objective. i think we share the objectives with those agencies, and we work labor force participation should closely with them to try to get drop by 0.25% a year, it has complete we on the same page. we developed our own approach, been flat since 2013. which was a bit different. we think there's more upside. we weren't able to get together labor is tight everywhere, but in the end. but i think we should look at it there is a supply response from the public, which is a positive as an ongoing process, where we thing. will continue to learn. we never thought we would see that's going to be our approach. sen. reed: thank you, and i will 63.4% labor participation again. nobody had that in their model seven years ago. stress independence one last but that is what we have, it is time. sen. crapo: senator sasse. sen. sasse: thank you for being a very positive thing. sen. perdue: thank you, mr. chairman. i yield back. here. sen. crapo: thank you. we are grateful for your work. you have been consistently senator schatz. raising warning bells about what sen. thank you for being you call the greatest threat to the financial system. you talk to many of us in here. first question, how does income inequality impact economic private about cyber issues, and you said yesterday on the growth? housing side. there's a lot of talk on the i don't think it is breaking policy meeting side on the through. can you tell us why you are impact on families. worried about financial attacks in your analysis, and on our financial system -- about what can be done on your side of cyberattacks on our financial the shop? chair powell: well, obviously, system if you look at -- financial system? people at the bottom end of the chair powell: if you look at income spectrum whose incomes aren't growing, their what happened during the financial crisis, i won't say it is perfect or anything like that, but we have a plan that is consumption will be constrained, meant to address those kinds of things. what is new in the threat and their marginal propensity to consume new dollars will be high the ongoing level to the extent that gains are going to the people at the top. will propensity to consume of cyber threat and the increasing sophistication of it, be low, so it won't be hitting so that is what we worry about. gdp. but those are effects that will show up quite gradually over the treasury department has time. inequality is a gradually moving really been taking the lead on that. phenomenon. we are very focused on it. sen. schatz: talk to me about we are focused on making sure the relationship between that the financial institutions productivity and unemployment. we supervise are doing the best relationship that that they can to stay state-of-the-art. good cyber hygiene, it turns a is emerging? lot of these things are just is there any new thinking along those lines? people failing to implement, the traditional analysis is productivity goes up, that is updating their software and things like that. that's where a lot of breaches basically good for the economy, happen. so it is an intense focus by but it seems to me that, at least the way people perceive supervisors and financial institutions, also by it, those two things are nonfinancial institutions, decoupled. companies and all kinds of productivity goes up, that businesses having this now. doesn't mean wages go up. i wonder if that is a change or it is an enormous focus. it never feels like we have done more of a political overlay to say things don't look good, but enough, but it is just something we are still on the bottom eating scraps. we keep trying to get better and i wonder if it is more than better at. lots of resources on it in all that, and there is actually a of the agencies and all of the change in the way you analyze companies. sen. sasse: and if you could this. chair powell: we are always someetize for us, give us learning, and we have seen ways you think this attack could relatively low productivity in the wake of the financial have spillover effects. crisis. how do the dominoes work, it appears to be persistent, and without giving somebody a template or roadmap? that is going to be lower wages. you've talked in private a few times about ways this could ultimately, you need rising cause bigger consequences than productivity to create rising 2008 and 2009. standards of living. it has to be that we. chair powell: without wanting to it doesn't mean in any given year, you'll see that, but you get too much into it, confidence see pretty tight connection. in the financial system is really important. if you add in benefits, not just the public has to have wages, but look at the full cost confidence in the financial of employment, i won't call it system. so a successful cyber attack on a payment utility, for example, tight, but you see a connection between -- sen. schatz: i guess the would be challenging. we could address that. we could isolate it. question is they are no less we could fix it. correlated than they used to be? you would want to avoid broader chair powell: i wouldn't say blows to confidence because when that. if you look at the moment, if confidence weakens, people will you think of wages at being take their money out. right about 3%, it has just they will stop acting, things like that. recently moved up. it is the enemy of economic activity and growth. sen. sasse: i think we need to inflation is 2%. also recognize that many sen. schatz: the other thing is different conversations we have with the chinese government tend if you are doing total compensation, if most of the to have a benign medic flavor. increase in total comp is just i think we should underscore -- that the employer absorbed a 7% benign diplomatic flavor. i think we should underscore increase in health care costs, what has happened this week with that is not really an increase the equifax hack avenue in wages in the traditional headlines. the 2017 hack which copper musty sense. i get that from the employer standpoint, it feels like an personal financial records of more than -- which compromised increase in wages, but if you are trying to maximize compensation, it means nothing the personal financial records 30% of americans to a regular person who says, i guess i got no more money, but it cost my employer more, so i should be happy about that. let me move on to climate. i have a couple of questions. what is the fed doing in regard originated in china. this isn't an accident. to climate related financial this is the same party that disclosures? hacked the opium records and has moved on to equifax. can you clarify where the i would like you to talk about that. think, like: i chinese communist party was hacking into the financial system? system?owell: other central banks, we are at the beginning of the process of understanding how climate change affects our work. chair powell: we need to be resilient against all cyber threats, and state actors are a big part of that. we are well aware of those, and we have help from the one way we know it will affect our work is that the public will intelligence agencies and others count on us to make sure that in the government in keeping our eyes out for that. sen. sasse: shifting gears a financial institutions that we will be robust to the little bit, the president's budget came out this last weekend, and some of us are going to be in the finance committee later today discussing risks that come from climate change. the larger budget. we have headlines that tend to we are at the beginning of understanding exactly what all focus on whatever the that means. discretionary programs are that in terms of disclosure, it is tend to be more hot button and current in the news, but you really an fdic issue. have talked consistently about health entitlement and its i think they have been doing some work on this lately. ,hallenge, maybe more broadly sen. schatz: you had an exchange with a memory of the house, i the inefficiencies of our health care delivery system. think it was yesterday, and the for a developed nation, we have mediocre health outcomes and ridiculously high price tags. question was whether we ought to be stress testing for climate can you talk about the risks. consequences of u.s. health on you said you are watching the our larger economy? chair powell: i should start by bank of england. i wonder if you could expand on saying we don't do fiscal policy that. chair powell: they are doing and don't give you advice on fiscal policy, but since you stress tests which are not at all connected to the one that issue of our, the relates to the amount of federal budget is it is health dividends, distributions that a company can have. care spending, and it is not this is more just exploratory. that our benefits are too generous. it's that we deliver them in a they are exploratory scenarios, and we are closely monitoring way that is measured by the outcomes. that. we have good relationships with the outcomes are perfectly average for a first world nation all of the major central banks, , but we spent 6% or 7% of gdp especially the bank of england. so we will be looking at that. more than other countries do. it is something we we thinking about -- something we will be it is about delivery. that is a lot of money every thinking about. year you are effectively it is early days. we are doing a fair amount of spending and getting nothing. work all through the federal i will leave it with you there. reserve system on understanding it is not for us or me to prescribe fixes, but i think this emerging risk. sen. schatz: thank you. that is really what it is about. the discretionary things, of sen. crapo: senator kennedy. course, are very high-profile and get a lot of reporting, but sen. kennedy: thank you, mr. chairman. ultimately, that is what is driving it. it is not that these benefits our labor force participation rate is much better, but are fabulously generous. they are what people get in compared to other oecd countries western economies. we deliver them at the cost of , we lag. 17% or 18% of gdp, and others do why? chair powell: it's a great it at 11%. sen. sasse: thank you. question. sen. crapo: senator tester. sen. tester: thank you. it is a combination of things, no doubt. i want to thank you for your work. it is that educational attainment in the united states, i didn't hear all of senator which was once the highest, has ifl itquestions, but really fallen relative to our among and particularly has to do with independence of the fed, count me on that, too. lower and middle income people, i applaud you on your efforts the level of educational thus far. attainment has really plateaued. rates andrough lower that is the key thing for keeping in deliver market -- sen. kennedy: what else? congress through increased chair powell: i would say the spending and debt have been taking actions to boost the economy during a long stretch of opioid crisis isn't helping. growth. i am concerned that if we it, bothink about approach a downturn, and there globalization and technology are are a number of indicators out there that are concerning to me, bubbly advantage people of relatively higher education -- that our options to address a and technology probably downturn are limited. i want to hear your perspective advantage people of relatively on what the fed has as higher education. using about what has happened to the manufacturing base in many ability to react to economic downturn. countries -- you think about chair powell: our tradition or what has happened to the many tool -- our traditional tool is factoring base in many countries. interest rates. the manufacturing we have now is lower interest rates are a fact very efficient and doesn't use of reality, so we will have less room to cut. many people. sen. kennedy: does trade make an that means it is much more impact? trade tariffs? likely that we will have to turn to the tools we used in the chair powell: through this financial crisis when we hit the lower bound. sen. tester: which is? chair powell: which is forward period, we really haven't had guidance, which says we will keep rates low, and it is also declining tariffs since world war ii, and we have had increasing trade per large-scale asset purchases of dissipation. sen. kennedy: does the richness longer-term securities to drive longer-term rates down and of our social programs play a support the economy. part? we will use those tools. chair powell: it is very hard to make that connection. i believe we will use them if you look in real terms aggressively should the need arise. there is no need to do that now. adjusted for inflation at the but we will use those benefits people get, they have aggressively. actually declined during this we areiew decline of labor force undertaking of our strategy, participation. so it isn't better or more tools, and communications, and comfortable to be poor and on which we will announce conclusions on midyear, we are public benefits now. looking to make sure that in it is actually worse than it was. this low rate environment, sen. kennedy: all right. difficult environment for central banks and for those we work for, that we are using our it seems to me, and there is tools as best we can, that we going to be a question in here have explored every possible way to find every scrap of policy -- i know sometimes you never get one -- but it seems to me space to be able to support the economy. finally, i would stress that it that any fair-minded person is important fiscal policy be in would have to conclude that our economy is better. a position, as it has always i am biased, of course, but i been, to support the economy in a downturn. think the tax cuts and jobs act debt is at $23e worked. trillion right now. is that about right? something like that. and we have seen wage increases, at what point in time are you including, but not limited to, concerned? i think the budget just puts out the bottom quartile. another $1 trillion to the debt and we have seen unemployment go -- budget just put out adds down. another $1 trillion to the debt. chair powell: really, the rate but we still have a problem in what we need to america, and a lot of anger, and i think the root -- this is one do is have the debt grow slower than the economy is growing. if the economy is growing faster persons opinion -- but the root ,han the debt, then effectively of a lot of that anger is that we still have too many people in leverages going down, so debt to this country who aren't gdp -- what is happening is debt to gdp is going up, and coming participating in the great wealth of this country. not economically, not socially, up fairly quickly as these things move. have managed to not culturally. sanders supporters and get to high levels. what it means is that 20 years from now, we will be spending trump supporters have more in common than they realize. those tax dollars. our children will be spending becomerican dream has those tax dollars on servicing the debt rather than things we the american game to them, and they think it is fixed. really need. we are sitting on those bills. fine, but i doing sen. tester: and the debt am talking about ordinary doesn't go down if the economy people. goes down? chair powell: no, quite the role do you think opposite. sen. tester: exactly. the fed should play in helping from your position, what do you us adjust that? chair powell: first of all, i see the challenging -- the housing challenge as an impact think there's a lot in what you said. the single most important thing on the economy? chair powell: housing is we can do is take seriously your generally facing difficulties in order to us to achieve maximum affordability. the housing industry is doing employment. that is what the law says, and better and building more houses that is what we are doing. that are profitable, and housing we are using our tools to keep an eye on maximum employment, starts are going up, but from the standpoint of the public, and i think there's no reason you have a squeeze going on to do with difficulty in why the current situation of low and employment rising wages, supply-side constraints which high job creation, there is no are keeping the quantity of housing down. lack of skilled labor, ,eason -- of low unemployment kind, ands of various kind, rising wages, high job creation, there is no reason why it can't continue. we do other things that are in what you see many places, not the nature of convening. just in big cities, you see housing affordability challenges, and it is a fairly widescale problem. sen. tester: i just want to ask we do a lot of research in your , the federalers this quickly because there's been debate for a number of reserve bank have an operation years, much of it started by the where they are trying to convene senator to my left, on gse resources around issues of reform. does gse reform or lack of gse education and poverty and things like that in poor communities, reform have any effect? but we don't have the ability to spend money on it. we get community people are chair powell: i think it is around a table and try to important that gse reform happen. organize things that help the that is a big unfinished piece community. of business from the financial crisis. it is not something we can do a it is not ideal to have the lot about other than research, entire housing finance system and do our jobs on monetary policy. sen. crapo: senator kennedy, writing on the federal government in the long run -- system riding on the federal figure -- sen. kennedy: if i could have government in the long run. sen. tester: thank you for your another 10 seconds, mr. work. chairman, i was distracted some of the questions on because you were talking. agriculture, we will put them stay independent. for the record, but the key for your service. i think you are doing a good sen. crapo: senator rounds. job, and all of us in politics sen. rounds: welcome. are going to give you plenty of advice, but call them like you see them. thank you. sen. crapo: senator cortez i just want to echo what some of masta. my colleagues have said about the independence of the fed. on both sides of the aisle, you you.cortez masto: thank will find strong support for an independent fed. i would like to begin by asking you about a rule i recently let me follow-up on this line of maximum employment. filed a comment letter on, and i so appreciate the that is the fed building block conversation. you keep talking about the level of educational attainment that approach. as i mentioned in my letter, it is so important. education? define as doesn't seem to make sense for the fed to resurrect the original calculation of when you talk about that, what does that mean? dodd-frank. chair powell: anything that i understand this particular calculation unintentionally could include internships, the imposed bank centric capital kind of training people are getting now to go out of high rules on savings-and-loan school into a program. it is not meant to be limited to holding companies. differentotally college, as such, or getting a liberal arts degree. business model. it is really the acquisition of skills in society. sen. cortez masto: do you think its intent was for banks to be regulated like banks and for we have changed in society, that insurance companies to be regulated insurance companies. given the clearance out of it is very difficult now to just congress, why has the fed chosen graduate from high school and get a job that pays a decent to revisit section 171? wage for your family without how does the fed intend to move getting some sort of additional education? chair powell: yes, it is. forward? chair powell: thank you for your comment. we got a number of comments on i think you see that very much. that issue. for people with high school of course, we have looked at the degrees, their income has law change. stagnated badly for a long time. the question we are asking is whether -- what is the nature of what happens with technological the change made in the law, and wants highert it does it apply here? we will be reviewing those and higher levels of skill, and comments, and considering them if society provides those people in getting to a view on that. those skills, inequality can go sen. rounds: one of the reasons down. for having these open that was the american story for discussions is to bring a long time. sen. cortez masto: sure, but i attention to it, and the fact that i think it is a serious am curious your thoughts on that issue that needs the full , part of this also has to do attention of the fed. with the wages and the increase in wages, and the level of wage hopefully, you will get it resolved as soon as possible to you are paying. resolve any questions that may are you saying just because you be lingering. i also want to talk about vice graduate from high school and chair quarles, recently remarked you want whatever that job is that you are able to do, it should be a minimum level of wage that should never increase, that business fixed investment continues to be weak, having even with gains in productivity we have seen over the year? chair powell: i am not saying declined over the course of that at all. 2019. sen. cortez masto: good, because do you think it is fair to say that the large part of to see i think there are also people in this country, and i am so pleased with the high unemployment rate -- with the high employment rate, but there are also people that are working two jobs because the wages are so low. i think there is a disparity that we have to do a better job of understanding. i was looking through the monetary report you gave, and i am curious, do you identify those individuals who are working two jobs? chair powell: those are identified in the data collected by the bureau of labor statistics. sen. cortez masto: and that is what you utilize here? can i give us a better understanding of how many americans across this country are working two jobs? chair powell: it is at a very high level right now. sen. cortez masto: i think that would be helpful for us if we work with you moving forward. one final question because i know the votes have been called. you note in your opening remarks that there are troubling labor market disparities across racial and ethnic groups, and across regions of the country. can you go into more specifics with that statement? chair powell: we actually had a box in our monetary policy report a year ago about the rural and urban disparities which are getting wider and wider, and it talked about what might be causing that >> -- what might be causing that. you really have a long-term trend here that is challenging for people in rural areas. in terms of racial and ethnic disparities, the african-american unemployment rate is roughly twice that of the overall unemployment rate. so see different groups -- it is troubling that these things would persist in the weigh -- in this way. we don't have any way to act on that other than trying to maintain maximum employment. sen. cortez masto: what can you point to in the racial disparity that you just talked about? chair powell: i think it is tied into history, to our history. there are higher levels of poverty in the african-american community, as you know. that is because of our history. but we would like to see those gaps declining more than they are. those are not tools that we have. sen. cortez masto: what i am looking for is the data. there's no data points you are collecting that helps us identify that racial disparity, why it is occurring, and how we can address it? chair powell: there's lots of research on that. sen. cortez masto: that you have access to? chair powell: yes. sen. cortez masto: perfect. thank you. sen. crapo: senator tillis. sen. tillis: thank you. welcome back. thank you for a lot of good work that you are doing in your lane. i do have a couple of questions. the first when i want to talk about, we have seen, particularly in the fdic's, a real stepped-up effort toake a look at guidance and other orion to rethink and revise rescind. can you give me an idea of how that is going in the fed? chair powell: we have forthrightly said that guidance is not a rule. guidance is not binding. fors not the basis enforcement actions or anything like that, and we have made that very clear. you may have seen vice chair quarles' speech where he addressed some of these issues, so we are working on that as well. sen. tillis: if we drill down, i know you are aware of the gao --ing on i happen to agree with the discussion that you need to remain independent, but there is some thing that concerns me that came out after he received word from the gao or omb, and it relates back to a letter your general counsel wrote back in june of last year. i have it in front of me now. it says that you are continuing to assess the scope of the federal reserve obligation to send supervisory guidance documents to congress under the cra. this that mean you are exempt from that oversight? chair powell: the question is whether we are required to send guidance? we do send some guidance up, and this is another one that vice chair quarles -- sen. tillis: so what is the current position on the lsc consultation from the gao? chair powell: what we are going to do with lsc is articulate clear standards for what firms should be in lsc. in fact, vice chair quarles already laid out on the approach which i think makes a lot of sense, which is lsc should be for the u.s. g sifts, and try to apply that more to the tailoring categories that we set up. now to the other cra, the community reinvestment act. one question, rumors swirl around this building troubling the way they do in the fed and the halls of government. the question i have as it plans for the fed's either joining with the fdic and occ on rulemaking, some have said that without governor brainard's support, you would not join into that. if that just a rumor, or an assurance you have given chair waters? chair powell: that is not how we are looking at. we developed our own thinking on cra reform, as did the occ. they took a lot of our ideas, but in the end, we were not able to get on the same page. i am very comfortable with where we are now. there are going to be two standards under the fdic's/occ proposal. proponentsf their will be able to opt out. there will be the new standard, assuming they go forward. there will be two systems. if we don't do anything, they will likely be 70% of the institutions they supervise. sen. tillis: is vice chair quarles on point for this? reinvestmentunity -- would the community reinvestment act be in his lane? chair powell: it is broadly within all of our lanes on the board. this has always been handled by a different group, which is dcc a, which governor brainard chaired, and i asked her to take the lead on this. i am very comfortable with where we are on this. sen. tillis: thank you. i was going to ask some questions similar to senator toomey's. i won't. but i will submit some questions for the record that are just basically about the mechanics of the fed implementation. thank you. sen. crapo: thank you. senator jones. sen. jones: chairman powell, thank you for being here. that me echo other colleagues on both sides of the isle regarding the independence of the fed. industrially it is -- it is extremely important that we maintain that independence. let me ask you about homeownership. it kinda follows up on what senator kennedy was talking about, wealth gaps between 70 americans. nationwide -- between 70 americans. nationwide homeownership -- between so many americans. nationwide homeownership is stable, but african-american homeownership rates fell to a low in 2017, about 30 points below white homeownership. the hispanic rate is just 48%, far below the white average homeownership rate. millennials are less likely to own a home by age 34 than their parents or grandparents. i am concerned that if trends continue, and to some extent, we've got relatively -- wages are rising. they have not been rising as fast as we would like. homeownership costs are increasing at a greater rate. i am concerned that if these trends continue, and growing number of americans are just going to get locked out of homeownership. what are the economic consequences in terms of wealth building for minorities and the broader disparity in homeownership unaddressed? do you have suggestions on how we were the fed can address homeownership -- how we or the fed can address homeownership? chair powell: i agree that there are pressures on affordability which are very widespread that are to do with difficulty in getting land zoned and difficulty in acquiring workers, and just regulatory costs, material costs that are putting pressure on house prices. upward pressure. it is quite widespread around the country. in terms of the level of , we don't want to be back in a situation where we push the idea of homeownership passed what is financially sustainable for people, and we did that in the precrisis era. what has happened is credit is much less available now for people without spotless credit records. that is a lot of what is behind some of the data you cited. i think it is a good question. did we move too far? i don't have a view that we did, but it is a good question to be asking, to be making sure that people who should have access to credit and can handle borrowing of that size get it. sen. jones: i know that senator cortez masto asked, but i would like to get some of that information on racial disparity because there is some connection with that. let me go back to the lower right of labor force participation -- lower rate of labor force part is bashan. how can we -- of labor force participation. how can we get that up, to get more folks participating in the market? chair powell: what we can do is continue to use our tools to support a strong labor market. it is very good to see participation rates rising to the levels that people, economists didn't think we would see those levels again, and it is a positive thing. that is noterm, really a strategy. we need policies