Transcripts For CSPAN Federal Reserve Chair Jerome Powell Testifies On The State Of The Economy 20240714

And the state of the economy. The committee will come to order. The chair is authorised to declare recess at any time. This hearing is called Monetary Policy and the state of the economy. I would like to start by addressing the elephant in the room. This president has made it clear that he has no understanding or respect for the independence of the Federal Reserve. Doesnt fed, have a clue. Most lled at this time difficult problem for the u. S. Hes ing to media reports discussed firing chairman powell just as hes fired others he with. Not agree lets be clear. It is essential that the federal maintain its executive e from the branch. So i urge chairman powell and other Federal Reserve board overnors not to submit to the High Pressure tactics of this president who continues to push economic nd harmful and social policies. Another issue i hope chairman powell will address is facebooks recently announced with 27 other crip toe to develop a currency and digital wallet. And others have raised concerns that facebooks planned products may ultimately be intended to establish a parallel and Monetary Policy system to rival the dollar. Letter last week, we asked acebook to address to a moratorium on any Movement Forward on its plans to credit a cryptocurrency or digital wallet. I believe that facebook is planning what they are raises serious privacy trading, ational security, and Monetary Policy concerns for consumers, investors, the u. S. Economy, and the Global Economy. Facebooks for ray into this field should signal to all of us our Current System of regulation lacks adequate and ination, safeguards attention to cryptocurrency. Chairman powell, fed should be a on this issue, and should not take a wait and see approach to examining a Financial System involving 2. 4 billion people so i look forward on earing your views facebooks plans to create a cryptocurrency today. Another issue i would like to discuss is bank view regulation. About tb oncerned Federal Reserves actions to weaken safeguards that congress nd chairman powells predecessors put into place following the financial crisis, pecifically, in the two years that the fed may be polling the trump administrations weaken the plan to capital and liquidity buffers of banks. F the largest as i said before i believe this is illadvised particularly when economists, including economists at the Federal Reserve believe that current levels are on the low end of what would be necessary to withstand another financial crisis. Forward to your testimony discussing these matters with you today. The gentleman from north cry, four r. M minutes for an opening statement. I thank the chairwoman for yielding. I would like as well, welcome hairman powell back to the committee. Chairman powell has reached out to congress and members of this greatly benefitted from hearing his thoughts in individual d in meetings since then. Markets are interested in your testimony but are st. Licymakers, too, patricks day in your testimony. The economy of the last 2 1 2 witnessed Remarkable Growth and unemployment has reached lows that many believed were impossible. Tax relief and millionsy reform, with of americans benefitting from our policies. Were seeing this in wage growth seeing this in continued job growth, and ere all americans are benefiting from this. These benefits continue to five months since your last testimony, and in the most fomc statement, the fed concluded that the labor markets and Economic Activity is rising. Job gains have been solid and Unemployment Rate remains low. But we cant take our foot off the pedal. February, we discussed how the fed was undertaking gathered making to allow Financial Institutions to operate efficiently. In the communities that they globally as mpete well. I hope that you, chairman powell, will continue to work to with a e these efforts sense of urgency, especially in the rule making category. Chairman powell to maintain his transparency and proactive communication with apitol hill, especially when the fed is considering changes to its policies and operations. For r last hearing, instance, chairman noted that the fed continues to support its current inflation target. Know, there are numerous proposals that would affect how the fed might pursue that target. I hope that the fed will approach such proposals with an ppropriate level of prudence given the limitations of central anks tool kits at this point in our economic cycle. We fullyand also until understand how those limitations ave emerged and how they can reliably be overcome, so reiterate my e concerns. Concerns shared by the fed itself, that Global Economic headtainty could result in winds here at home. Prior to our february hearing fed made it clear that the fed would continue to monitor and where appropriate work to mitigate. I hope we can touch on those things today. Let me highlight china in particular. When the chairman last period before our committee he noted runchinese economy is state but that beijing has also attempted to make certain market reforms. These reformsthat may not be deep enough. When the worlds second Largest Party state one without the rule of law, without transparent decisionmaking, Monetary Policy and allocation of capital bends to cronyism, where one million citizens can be locked up in camps while another to the streets to defends their freedoms, then, we on that to focus country and its regime, as a of risk to the global stability. And Global Growth. Would encourage the chairman to work with his colleagues both abroad so we have a sufficient understanding of a sufficient as set of tools within Central Banks, if something were to go wrong. And again, thank you, chairman powell, for returning today. Thank you for your responsiveness, your candor is welcomed, and encouraged. For attempting to speak like a normal human even amitts very complex Financial Markets and complex ecisionmaking within our independence Monetary Policy group called the Federal Reserve. Thank you. Chair now race as their, mr. Cleveland for one minute. Thank you, were pleased to again, i wanted to this trade impact of war, over 500 days on this trade cant hardly move there because the number one im having is that this administration is very publicly to force Financial Markets and the Federal Reserve to lower Interest Rates to what i think to be an poor onal trade war and the issue cies, and for me is that, in january, i will have been on this committee for 15 years and i have never president meddle in the Federal Reserve as this president has and its deeply is urbing, and the problem that it seems to be working because, were moving in a hes been hat gnoring and hopefully you can address some of this when we get into the q a period. Thank you, madam chair. Chair now recognizes the member, tee ranking mr. For one minute. To the me back committee. Because of the tax cut weve seen eforms, unprecedented low unemployment and stable prices and since the you were here weve seen a mostly stable economy 3. 7 and ployment at Consumer Prices only edging up. 1 but ive heard anecdotal evidence of price increases. I want to thank you for your steady hand on Monetary Policy. An important part of our economic success and while acknowledging the recent success know recent meetings have pointed to uncertainty in Economic Outlook meaning that your data may be telling you the that i have been hearing. I do agree with chair waters hear about your perspective on facebooks cryptocurrency. Attempting to e undermine the dollar as the currency. Im also interested in hearing your views of where we are in the Business Cycle and what we support you on fiscal and other policies. I yield back the balance of my time. Thank you very much. I want to welcome to the committee our distinguished witness jerome powell, chairman governors of the Federal Reserve system. He served on the board of as its s since 2012 and chair since 2017. Mr. Powell has testified before and i believe he not need any further introduction. Without objection your written statement will be made part of the record. Youre now recognized to present your oral testimony. Thank you and good morning. Ranking n waters, member mchenry and other members of the committee im pleased to the Federal Reserves semi annual monetary report to economy performed reasonably well over the first half of 2019. The current expansion is in its 11th year. Inflation has been running though the symmetric to present objective. Crosscurrents are just pretensions and Global Growth the labor market remains healthy. This is from january through june. This number is lower than the average of 223,000 jobs per month last year. Consequently, the Unemployment Rate moved down from 3. 9 to 3. 7 in june. Close to the lowest level in 50 years. Remain plentiful and employers are increasingly willing to hire workers with fewer skills. The benefits of a job market have been widely shared. When she has have been higher wage gains have been higher for low skilled workers. Employment for africanamerican and hispanics remains well above that for whites and asians. This gap has widened over the past decade. A box in the july Monetary Policy report compares employment and wage gains over. He current expansion ratencreased at an annual of 3. 1 in the First Quarter of 2019, similar to last year plus pace. Was driven byader net exports and inventories. Components that are not generally reliable indicators. More reliable drivers of growth in the economy are Consumer Spending and business investment. The muslimconsumer was weak, incoming data shows it has been back. Bounced back. Overall growth in the second quarter. Have moderated. The slowdown in business fixed investment verified concerns about trade tensions and Slower Growth in the economy. In addition, Housing Investment and manufacturing output declined and appeared to have decreased again in the second order. After running close to our 2 objective over much of last changed for pce inflation declined this year. It stood at 1. 5 in may. Food and Energy Prices tend to be a better indicator of future inflation. It has come down this year. It was 1. 6 in may. Our baseline outlet outlook looks for labor markets to stay strong. Uncertainties about the outlook have increased in recent months. Economic momentum appears to have slowed in some major foreign economies. That weakness could affect the u. S. Economy. Moreover, a number of government policy issues have yet to be resolved. Including trade development, the andral debt ceiling development. There is a risk that we can inflation could be even more persistent than we currently anticipate. We are monitoring these development and we will assess the implications for the u. S. Economic outlook and inflation. Also continues to confront longrun challenges. Labor force participation i those in their prime working lower in the United States than those with comparable economies. There are troubling labor market disparities across different demographic and across the country. A relative stagnation of lower and middle incomes and low levels of upward mobility for low income families. They are ongoing concerns. Finding ways to boost productivity growth, that leads to rising wages and Living Standards over the longer term, that should remain a High National priority. Restrain private investment and in turn reduce productivity and Economic Growth. The longer run by kelly benefit from efforts to address these issues. Against this backdrop, the fmla the fomc maintained at 2. 5 this year. We stated we would be patient as we determine what future adjustments might be appropriate to support her goals of maximum employment and price stability. At the time of our main meeting, we were mindful of the ongoing crosscurrents. There was tentative evidence that these crosscurrents were moderated. China weredata from encouraging. Our continued patient stands seemed appropriate. The committee saw no case for adjusting or policy rate. Since our main meeting, these crosscurrents have reemerged. Trade turnedess on to greater uncertainty. This heightened concerns over trade development. Growth indicators from around the world have disappointed on the rating concerns of witness in the Global Economy that are affecting the u. S. Economy. At our june meeting, we indicated that in light of increased uncertainties about the Economic Outlook and muted inflation pressures, we would closely monitor the incoming information for the Economic Outlook and would act as appropriate to sustain expansion. Many participants saw the case for a somewhat more accommodative budgetary policy stands at strengthened. Data, itincoming appears that uncertainties around trade tensions and concerns about the strength of the Global Economy continued to weigh on the u. S. Economic outlook. Inflation pressures remain muted. Osc fomc have made great decisions this year. We decided to continue to monetary implement Monetary Policy and emphasize that we are prepared to adjust any of the details for completed Balance Sheet normalization in light of economic and financial developments. Intentionsated our starting in may. The decline in the aggregate Security Problems that could end the reduction in these holdings in september. The july Monetary Policy report has details on these decisions. The report includes an update on Monetary Policy rules. The fomc routinely looks at policy rules based on inflation and Unemployment Rates. I continue to find these rules careful review, thecting a first of its kind for the fomc. We are considering the current policy framework and we are trying to best position the fed for price stability. The review has started with outreach and consultation with people of broad groups. Consider this. Thank you, we will be happy to respond to your questions. I recognize myself for five minutes for questions. On june 18, facebook announced libre, a new Global Cryptocurrency and a new Payment System. It will facilitate labor libra transactions. Wrote a letter in his capacity as chairman of the Financial Stability board to the g20 readers noting a wider use of new types of cryptocurrency and Crypto Assets would warrant close scrutiny by authorities. It would be to ensure that they are subject to the high standards of regulation. That global regulatory correlation of facebook will be a priority. Did the Federal Reserve speak with facebook about their libra currency . For any concerns raised . Does the Federal Reserve have any authority to regulate what could be the Worlds Largest currency . Does the Federal Reserve have any concerns about Monetary Policy with regard to libra . Meeting withe a representatives of facebook. Powell they made a broad to meetings authorities around the world. We support as possible innovation as long as the risks are identified. Lirbra raises libra raises many concerns. These are concerns that should be thoroughly and publicly addressed. That is why we have set up a working group to focus on the set of issues. We are coordinating with our colleagues in the government, the United States, regulatory agencies and treasury. We are forgetting with Central Banks around the world look into this. I would add that the process of addressing these concerns should be a patient, careful one. Not a sprint to implementation. We have our own working group. Oc has a working stock. Are they reviewing the extensive policy questions . Do you know what they are doing . Levelre was a staff meeting last week to focus on libra. Is f sock looking into Nonbank Financial Companies . To enhanceect them Regulatory Oversight . I think it is highly likely fsoc will be taking this on. From the got a call president today or tomorrow and he said i am behind you, pack up, it is time to go, what would you do russian mark do . I would not do that. I cant hear you. [applause] [laughter] my answer would be no. Because you think the president does have the authority . Is that why you would not leave . I said what i intended to say on the subject. The law gives me a fouryear term and i intend to serve it. That, i would yield to north carolina. Chairman powell, you said you would use macroEconomic Data to inform you decision about whether lower Interest Rates are required in a month or not. What data would be to you recommending a change in rates . Powell between now and the end of the month, you will have labor market data, you will have retail sales. You have a broad range of data coming out. We will be looking at all of that. I would not point to any one data point. Long timelook over frames and assess what is going on. That is what we will do with the incoming data. Representative henry there is an understanding of the market of what they will do. Is there not . Chairman powell we dont focus on any one thing. We will look at a broad range of things in the Financial Markets. Representative henry a broad range of macroEconomic Data. A motion . Chairman powell a motion . Emotion . Not on our part, we will try to. E very transparent economy, youof the speak to that. And the larger Global Economic global macroeconomic issues that are at play here. Representative henry along , does the Federal Reserve have the capacity to make independent Monetary Policy decisions under law . Chairman powell we do. Representative henry is that impeded by people saying negative things about you . Does that diminish based off of people same positive or negative things about you . Chairman powell neither, we will always focus on doing the job that you have assigned us. We will do it based on facts. Representative henry we have a significant change to libel policy. I wrote to vice chair quarrel quarle. Inre was major progress made these contracts. I remain concerned about the legacy of retail contracts as well. Has the fed undertaken analysis along those lines about legacy retail contracts . Chairman powell we have. It is very important. We have reached out to , we aretatives developing plans to deal with it. As you pointed out in your letter, a significant quantity of the contracts are mortgages and the like. That is a very important area. We did the deliberative things. Representative henry is there any estimate on the number of loans that would have to be renegotiated because of this policy change . Chairman powell i dont have a number for you. Representative henry i want to touch on project libra. You answered a number of those questions and you looked quite prepared or that. You mentioned Financial Stability as a concern. Why . Why is it a question of stability . Im talkingell about the possibility of rod adoption. Facebook has a couple billion users. Possibility of broad adoption. They spoke as couple billion users. We are focused on money laundering. It would rise to systemically important levels because of the size of the facebook network. The company has said so explicitly. Representative henry is it a problem that we dont have a Regulatory Regime that is permissive for this in the United States . Chairman powell i dont know that that is a problem. That is a question of whether we are impeding black chain. Anont know if there is answer there. Itsere could be done if benefits. Is there not . Chairman powell we wanted to take place in a safe and sound way. Representative henry thank you. Yorke gentlewoman from new is now recognized for five minutes. , thank you for your service chairman. In june, the fed decided not to cut Interest Rates and to take a wait and see approach instead. In your press conference, you said this approach was justified because we will see a lot more on all of these issues in the very near term. Got the job numbers for june. They were very strong. The employers added 224,000 jobs. Rep. Maloney did the june jobs report change your outlook of whether production or reduction in Interest Rates should be needed . Chairman powell no. I will did you contact. Give you context. The data has continued to. Isappoint that is very broad across europe and around asia. That continues to weigh. Manufacturing trade and investment are weak all around the world. We have a box that talks about that in the monetary report. In the United States, we got a job report that was positive. That is great news. We had some other reasonably good news. The u. S. Data came in as good as expected. I would say that we should go to trade. We have agreed to begin discussions with china. That is a constructive step but it does not render remotely remove the uncertainty. The uncertainties around Global Growth and trade continue. Inflation and trade continues to be muted. For the many market participants, they believe the fed should cut Interest Rates by a full 50 basis points in july. Rather than a normal cut of 25 basis points. Casenally, i dont see the for cutting rates by 50 basis points because the economy is quite strong right now. What economic factors do you believe would justify taking the unusual step of cutting rates by a full 50 basis points . Chairman powell at our meeting in three weeks, we will be looking at a full range of data. I would take you through the story i just told you. That would be what we are thinking about. Tradetension to which development and concerns over Global Growth are weighing on the outlook. Also, the performance of inflation. Those are the factors that we identified. Although the toward all of them will go toward decisionmaking. Rep. Maloney you have stressed the uncertainty about trade policy is a Major Economic headwind and is one of the factors that could lead the fed to cut rates this month. As we have seen under the president , it is unlikely we will ever get much certainty on trade policy. My question is what kind of progress in trade negotiations do you need to see in order to put your mind at ease about trade developments not being a headwind . A headwind to Economic Growth . Chairman powell no one should interpret what i am saying about trade headwinds as any criticism of trade policy. Assess trade policy. We react to anything that can affect our ability to achieve the dual mandate. Now, that is global weakness and trade developments. Those are the things that are widely thought to have that effect. That is all. I would not want to try to prescribe a specific answer. It would not be hours to do in the first place. Do in the first place. Rep. Maloney hopefully we will have some answers soon. I yelled back. Recognizeder is now for five minutes. Thank you, chairman powell for coming to testify. The Federal Reserve said it would revise its stress capital buffer proposal in the near future. Indicated thatan one option would be to look at the average of stress test results over a number of years. Are you in agreement with the vicechairman that this is something that needs to be considered . What factors might necessitate this change . Chairman powell we are in the process of evaluating how to put in effect the stress capital buffer that merges the results of the stress test with the underlying overall capital framework. It is a complicated exercise. There are many moving pieces. I would not want a single anyone as important for our consideration. Rep. Wagner taking an average of stress test results is something that is under consideration but it may be a change that youre not necessitating just yet . We are in thel process of evaluating all of those ideas. I would not want a single that one out. There were just many pieces. That is one of the pieces. Rep. Wagner you said you are in the late stages. What is your timeframe for coming up with an option in terms of the stress capital buffer . Chairman powell i would have to come back to you with a date. It would be within in the near future. Rep. Wagner at your january press conference, you are asked whether a 4 billion Balance Sheet give you firepower to handle this. Is aboute of gdp, it where the bank of japan crisis was. Today, the bank of japan has ended up with a Balance Sheet as large as the japanese economy with mixed results on inflation and limited run to handle another downturn. Japans experience affected your thinking on the appropriate size of the fed Balance Sheet . Chairman powell there is a lot of lessons there are a lot of lessons to be learned from japan over the last quartercentury. Rep. Wagner why should we feel certain that the u. S. Could avoid a similar fate . Perhaps you could elaborate. Chairman powell japan has put itself in a situation where inflation has gotten close to zero for a very long time. They have tried many things, you mentioned extensive access purchases. Asset purchases. They have not had much success. My main take away from that the European Central bank is fighting the battle. Ismain take away from that that the fed needs to stand here and try to keep inflation at 2 . We dont want to get on that road of declining it. Inflation continues to decline. That will show up in lower Interest Rates. That will give the Central Bank Even less firepower to react. We see that road is hard to get off of. I think it is important that we fight at 2 to keep inflation up to 2 and use our tools to achieve that. We are strongly committed to doing that. The most recent Monetary Policy report stated that Consumer Spending in the First Quarter was lackluster. It appears to have picked up. He talked about that in the opening statement. Can you explain the possible variables around lackluster Consumer Spending and why the recent turnaround . Chairman powell the consumer part of the economy is 70 of the economy. It is strong, it is rising wages, worker surveys show that they think jobs are plentiful. This is a good place for the consumer part of the economy. You can see that. Rep. Wagner the concerns about Workforce Development and having enough able workforce is very key. Chairman powell i think a tight labor force is lifting all sorts of communities into the labor force. It is good. The issue is more on the business side. We see confidence in business weakening we can out of it. Rep. Wagner i get back. The gentleman from rep. Wagner highyie i yield b ack. The gentleman from missouri is recognized. The st. Louis Federal Reserve noted that arise in uncertainty to havey believed effects on Macro Economic, microeconomic and Financial Market outcomes. Theoretical models suggested that rising uncertainty can affect Economic Activity and decisionmaking in various ways. The authors noted firms meant to ,ay investment in hiring households may induce spending by increasing their savings rate if they anticipate possible changes in their income or wealth. If risk premiums increase, and even if in your own testimony submitted to this committee, you noted that Consumer Spending has bounced back from a sluggish First Quarter and is chugging along. And this uncertainty is exacerbated for consumers in missouri when the president is gloating about how great the economy is, yet the Federal Reserve is considering a rate cut. How do you account for these mixed messages . Chairman powell well, i havent seen that blog post, but i would strongly agree with the sense of it. We do think that uncertainty can cause businesses to hold back on investment and hiring. In fact, we have been hearing that in our fomcbased discussions with businesses around the country. Household confidence has remained high, but over time, uncertainty can cause households to hold back as well. I think thats a pretty standard finding. What about the factor of savings . How does that play into it . Chairman powell savings . Yes. Is that good or bad . Chairman powell sorry . Is that good or bad, for families to save . Chairman powell well, the savings rate has actually been fairly high lately, and its good for people to save what they think they need to save. I think as a general thought, as a general fact, americans need to save more for retirement than they have. They are not oversaving, they are undersaving in the aggregate, so its a good thing. Could they also be saving in anticipation of a calamity, an economic calamity occurring . Chairman powell yes. Theres also its good to save, but at the same time, if there is a shock to confidence, you can see people pulling back from their regular consumption patterns, and that will show up in the demand and the economy will weaken. As far as the decisionmaking on the part of fed, are you relying on conventional Economic Data or being swayed by jaw boning of the president . Chairman powell we see the economy as being in a good place, and were committed to using our tools to keep it there. As weve discussed, the overall economy is performing reasonably well, but we see what we have called cross currents, principally trade developments and concerns over Global Growth. Many fmoc participants at the last meeting saw those as weighing on the outlook and calling for possibly for accommodating policy. Thank you very much. Chairman powell, despite data proving that Diverse Companies perform more successfully, we still find the Financial Services industry is largely white and male at its highest level. What more can you do as chair to incentivize diversity and equity within the Federal Reserve system . Chairman powell thank you for that question. We put a very high value on diversity. I strongly belief having diverse perspectives around the table leads you to better decisions, and i believe in having a culture where people are free to speak and will be heard. That goes to all different dimensions of diversity. Weve made, i think, a lot of progress at the fed. I think i would never say there isnt more to do. Theres a lot more we can do. I think were very focused on that as an organization. Most of my career was in the private sector. I saw that really successful companies, one of the things they do well is they do diversity well. Because you get better results with diverse perspectives. So were strongly committed the to that. Thank you. My time is up. Yield back. Mr. Stieger, the gentleman from ohio is now recognized for 5 minutes. Stieger thank you, madam chair. Chairman powell, i really appreciate you being here. I want to thank you for your transparency and accessibility as fed chair, and youve been available to all of us in our offices and our office and i appreciate that. This Committee Hearing is about Monetary Policy and the state of the economy, and ill stay focused on those issues and leave the regulatory issues to when the vice chair is here. And with regard to Monetary Policy, when i was in your office, i really appreciate you keeping the 100 million venezuela bolivars i gave you as you answered the question to japan. Once inflation starts rolling, its really hard to gate control of, as the venezuelans have found, so the fact that you guys have a stable price target and are sticking to it, i think, makes a huge difference. I know theres a lot of potential shocks, including tariffs and other things that can impact that, but so far you guys have done a great job on Monetary Policy. And in your question, to another question about unemployment and the tight labor markets, i think you talked about the fact that wages are starting to go up, starting to actually benefit people who actually have not benefitted from this economic expansion over the last 10 years, which is a good thing. I know some observers have been calling for a socalled hot Monetary Policy on the rim is that further tightening would drive up wages and make labor markets type. Tight. Can you comment on whether members of the fmoc have talked about those views, and what the potential risks and benefits associated with a hot Monetary Policy might be . You know, iell guess i would start by saying we dont have any, any basis, pardon me, or any basis for calling this a hot labor market. Pardon me. We have wages moving up at a little above 3 , and thats good. Thats good because it was more like 2 five years ago. 3 barely covers productivity. It doesnt even really cover productivity increases and inflation, and its certainly not a high enough end wage to put any upward pressure on inflation. We havent seen, as this long cycle has gone on, we havent seen wages moving up as sharply as they have in the past. I do think its very gratifying that, for the last two years, the greater part of wage gains have gone to people at the lower end of the wage spectrum and education spectrum. Thats a very positive thing. But 3. 7 is a low Unemployment Rate. To call something hot, you need to see some heat. We hear lots of reports of labor, of companies having a hard time finding qualified labor, but we dont see wages responding. I dont see that as a current issue. Schneide great. And, you know, if we want to see wages continue to grow, well need Economic Growth, and one of the things that this congress has in front of it is the usmca. I know a lot of questions youll get will be about the trade war with china, but can you comment about the importance of the usmca and north American Investment that a lot of companies have made in a north American Supply Chain . Chairman powell i wouldnt take a position on the details of the usmca, but i will say having it pass would remove a real bit of the uncertainty that is weighing on the outlook, and i think it will be quite a positive thing from that standpoint. The thing we all need to focus on is fighting the uncertainty, and there are things we can do with that. As policymakers, we need to come together and do that. The last question is on libra and facebook. If facebook cant sufficiently answer your questions about antimoney laundering, know your customer, what would your message be to the banks that provide banking to facebook, and what would your advice to facebook be . Chairman powell i dont think that the project can go forward there being broad satisfaction with the way the company has addressed money laundering, all of those things. The number of concerns that i list at the beginning, Data Protection, consumer privacy, all of those things will need to be addressed very thoroughly and carefully, and again, in a deliberate pro se that will not be a sprint to implementation. Rep. Stivers whale one Data Protection we all want data product action Data Protection and monitoring laws that are so important to our country. I yield back my time. Mr. Scott, the gentleman from georgia, is recognized for five minutes. Scott welcome, chairman powell. The first thing i want to say to you is be strong, be courageous. It is important for this nation and the economy of the world that the fed, Federal Reserve, remain strongly independent. The other thing i want to say to you is have no fear. The president cant fire you. We in congress, both democrats and republicans, have your back. I want to go to what i think it is and it has been mentioned a couple of times this libra business is really disturbing. It is a serious problem. Let me tell you why. First of all, i think we all know libra is the london. Nterbank offered rate very critical. It has and is the standard for the base rate for hundreds of trillions of dollars, both overnight and term loans, debt revenue. It is the standard that has been used internationally and extensively in the United States , affecting individuals, Small Businesses, large corporations. Weve got a big issue here, but of pervasive manipulation now, it is apparent that libra was going to leave, be removed within the next year or so. So this creates a big problem. I want to ask you, because the most critical part of this is parties on both sides of financial contracts should be and must be concerned in the shortterm about the potential end ofations of the and do not have a fallback position. Without a fallback language or some appropriately established safe harbor, until a new reference rate can be used, significant legal problems and challenges are likely to occur. Librath this in mind, as s scheduled end nears, and so a secured Financing Rate will apparently take its place, telus, chairman, what can be numerousccommodate the contacts that do not have fallback precisions . Chairman powell thank you, mr. Scott. I think you said it well. Contracts300 plus representing ianfi different currencies. The manipulation was revealed almost a decade ago. I think the Financial Conduct Authority which supervises the banks says it will not compel the banks to submit libor past the end of 2021. We have spent many years now looking at ways to make sure that contracts do have fallbacks, and we are working with we have worked with retail groups in particular now, for mortgages and things like that, to find a way so that if libor is not published, there will be a rate that is the fallback rate. That has to be put into contracts, one way or the other. It is a project many are working on, and working hard to meet that deadline. Rep. Scott and libor will be gone in the next year or so . Chairman powell it wont be gone, but the banks will no longer be required to submit their estimates of interbank borrowing rates. Think we away, and i are requiring people to assume that it will so they will be ready if it does. Rep. Scott when you say ready if it does chairman powell ready if it does go away. Rep. Scott so if it does go away, what will the situation be like . Chairman powell the situation we are aiming for is one of which people have either moved r orr obligations to sof some other rate, or failing that, they have another rate in their contract where if libor is no longer published, the other rate falls into place and the two parties to the contract, the consumer and the bank, lets say, they know what the rate is. Thats what we need to accomplish, and we are working hard on it. Rep. Scott thank you. The gentleman from tennessee is recognized for five minutes. Thank you, madam chairman, for convening todays hearing, and thank you, mr. Chairman, for appearing today. I would like to followup on a line of question that congressman stivers had. We are going to face the option of passing it or not passing it in this congress. What is the effect to our economy if we do in fact pass the mca, and what is the effect to the economy if we fail to pass the usmca . Chairman powell i dont have a precise evaluation for you on what the effects of passage would be. Overall, it is similar to nafta. I would imagine that the longerterm difference the differences will show up over the longer term. I think the effects of not passing it would depend on what happens to nafta. If nafta were terminated, there could be quite a lot of uncertainty. I thing there is uncertainty now about what is going to happen. I think the passage of it would remove the uncertainty, and that would be a good thing. Kristof it would also be positive for our anchor communities. Do you have information on how the passage or nonpassage of the usmca affects our leverage with china and trade negotiations . Chairman powell i dont think it would be appropriate for me to comment on those negotiations. I dont really have an answer for you on that. In the next several weeks, reportedly we are going to be voting on a proposal to wait to raise the minimum wage to 15 an hour. Report that came out in the last day or so that estimated that a raise in the minimum wage to 15 an hour could cut should cut 1. 3 million jobs, up to 3. 7 million jobs. What with the effect be to the economy of congress were to pass a minimum wage bill raising the minimum wage to 15 an hour . Chairman powell the question of the minimum wage is really one for you. There are a range of studies that have different outcomes, but like the cbo study, what they tend to show is that a number of people get higher wages and a number of people lose their jobs. Those numbers will change depending on what assumptions you make. It really is something that there is no consensus among economists. Economists are all over the place on this. It is really a question for you to look at a range of studies and not take any single one, and i would weigh that and say, are the benefits worth the likely costs . Rep. Kustoff what is the effect to the economy if 1. 3 Million People lose their jobs or 3. 7 Million People lose their jobs as a result of the rising minimum wage to 15 an hour . Chairman powell again, there would be costs and benefits. We know some people would get higher wages and presumably be better off and spend more. It is not a judgment we make on net. It is a judgment that you have , whether people who are better off by it. There will be a number of people who lose their jobs, because thats what will happen, i think, empirically. Rep. Kustoff with the Federal Reserve be conservative 3. 7 Million People lost their jobs if the minimum wage were raised to 15 an hour . Chairman powell , we have never again, we have never taken a position on the minimum wage. We would take whatever position you make as the decision that we our models. To we would not express, either support or disapproval we would not express either support or disapproval. Rep. Kustoff when i am back the tennessee, i hear economy is good, we are making more money than we have in 20 or 30 years, we cant find enough employees, employees with soft skills, employees who have the skills we need for the jobs, employees who can pass a drug test. Specifically, you have talked about this publicly, the effect of the Opioid Crisis on the workforce. What is your feeling with that, and how does the Opioid Crisis affect workforce . Chairman powell an extraordinary number of people are taking opioids in one form or another, and it weighs on ,abor force participation largely, but not exclusively, on younger males, also younger women. It is a national crisis, and the humanitarian aspect is complete the compelling, but the Economic Impact is also quite tangible. Quite substantial. Rep. Kustoff thank you, mr. Chairman. The gentleman from colorado is now recognized for five minutes. Thank you forr your testimony today. Let me start with questions mr. Scott was asking on libra. Given the uncertainties and the ability to manage this new currency, if you will, with the Federal Reserve, would you support some postponement in their implementing the libra or any kind of a moratorium until we have a better understanding of the impact on our economy and our ability to manage money . You know, iell deep,that there are important, serious questions across a range of issues that will need to be addressed, and the process of doing that is going to have to be patient and thorough, not a sprint. Thats what i would say. I do think there is a lot of work going on at the fed and at other agencies. I think it is something that does not fit neatly or easily within our regulatory scheme. It does have a systemic scale. For the reasons we have discussed, it needs a careful look. So i strongly believe we need to all be taking our time here. Rep. Perlmutter im going to take that as a guess, thank you. I have other questions. I dont know if you have the booklet in front of you, but i like. Repair because they are very informative folks to prepare because they are very informative. Graph 2 is the Unemployment Rate, and for the fact that about nine or 10 years now, there has been a steady decrease in unemployment in my district. We have enjoyed under 3 for about seven years running, which is pretty remarkable. I want to thank you in the Federal Reserve for the role you have been playing there. But one of your answers really, i think, is important to what we face as members of congress, the fact that for most americans, still they are struggling monthtomonth, yeartoyear, to get ahead to be able to deal with the costs we all face. Predictions and in what the Federal Reserve is doing, do in whatimprovement Everyday Americans are making and sort of catching up and getting ahead where they lost a ton through the recession and the years right after that . Chairman powell we are hearing this quite a lot from people who live and work in low to moderate income communities, that there really has not been a recovery for these people until recently. But now they are feeling, with this tight labor market, waiving issuesre that might be preventing people to work in the workforce. They are looking past those, recruiting people who have been outside the workforce. We have had people say to us that this is really the best deal we have had for many years, if ever. All of that, in my thinking and our thinking, says how important it is for us to continue to sustain this expansion. As you can see from that chart, the labor market has improved steadily for 10 years now, but just in the last couple of years, it started to reach communities at the edge of the workforce. It is so important for us to continue that process for a couple of years, and thats why we are so committed to using our tools to sustain expansion. Rep. Perlmutter thank you. My last question, the only graph i saw that is perplexing and problematic is on page 31 of the Monetary Policy report. That is the one on trade policy uncertainty. Is a place that i think we as members of congress are concerned, and i think both democrats and republicans, it is on trade policy. This graph, if i read it correctly, shows that it is not just members of congress that are concerned about the president s trade policy, it is the people that use survey. Can you tell me what that graph says . Chairman powell it shows trade policy is quite elevated, and i think we know that. We report discussions from around the country from all kinds of business and community folks, and i think trade policy has been elevated, particularly since may. It spiked in may with those developments. No question, its elevated. Perlmutter thank you for your testimony. Mr. Hollingsworth from indiana is now recognized for five minutes. Reppo hollingsworth i want to tell you about the. Ritten testimony around 2 i think you and your Opening Statements referred to total pce for the trailing 12 months at 1. 5 or 1. 6 . What do you mean by symmetry around 2 . What does symmetry mean to you . Ourrman powell in statement, we defined symmetry to mean that the committee would be concerned if it ran consistently above or below 2 . It is really a symmetry of concern or intention as opposed to outcome. Rep. Hollingsworth so over the last 10 years, it has run persistently below 2 . Does that imply a willingness or acceptability for inflation to ,un for eight period of time moderately or slightly above 2 , given the disinflation every pressures around the world. Disinflationary pressures around the world . Chairman powell we would look at it symmetrically and use our tools to guide it back to 2 . A central question we are asking as part of our Monetary Policy review is whether that is the right way to think about it, where in fact all of the deviations from 2 have been below. Inflation has been averaging less than 2 . Rep. Hollingsworth it is unmistakable when you look around the world, theres a lot of traps associated with very low inflation. That seems to be persistent around the world. That is a concern you have expressed, that we dont want to get mired in low inflation. We want to have stable prices, but stable around that 2 . As you think about where the economy is today, think about where inflationary pressures are today, is there a desire to ensure we dont fall into the same trap by pushing the economy faster, being more accommodating involuntary policy to push that 2 as you said, if it is symmetrical to push inflation to that 2 , through the indirect means you have available to you . I think we want inflation to be symmetrically at 1. 8 . Not at 1. 7 or lower inflation will ultimately work its way into expectations and into shortterm Interest Rates. Hat will mean we have less we really do want to have inflation symmetrically at 2 . Rep. Hollingsworth one of the things you talked about his peoples expectations for future inflation, which have been anchored by their recent history with inflation. That recent history over the past 10 years has been below 2 inflation. In order to move peoples expectations Going Forward, they need to experience slightly faster paces of inflation. I think most Research Continues to indicate that recent experience informs expectations Going Forward. I want to come back and better understand what you are saying around that symmetrical, the goal is to push inflation up to 2 or have a willingness or tolerance to run to above 2 , to bring it back down 2 . . That what you mean . I described for you where we would push back to 2 . Were looking at different ways by the way that framework seem to achieve errors on one side which is consistent with the framework. Were asking the question is that the right way to keep doing it or should we look at something that produces more symmetric outcomes. We havent made that decision. That is one of the fundamental things we are looking at as part of this. One of the dialogues weve had in the past and i want to continue publicly especially to encourage you to continue that research and develop that framework. I think its important seeing what weve seen around the world and other countries falling into this very low persistent low inflation, that we should think about how we continue to manage what were doing to Monetary Policy and reflecting those concerns so i appreciate the work youre doing. One last question. What have we learned over the past ten years about the limits of Monetary Policy and how do those limits inform what the next steps might be with regard tomorrow every policy. To Monetary Policy. If you can answer that broad question in 12 seconds. I will. Its not good the to have Monetary Policying the main game in town let alone the only game in town. Fiscal policy is very powerful and more powerful and there comes times for example after the financial crisis any fiscal policy to lift the economy. So it is not a good thing to have Monetary Policy be responsible exclusively for things and it shouldnt be. I thank you for being here and thank you for your great work. The gentleman from connecticut is now recognized for five minutes. Thank you, chairwoman and thank you mr. Chairman for being here. I have two questions, one on Monetary Policy, one on the broader Regulatory Environment around the banks. Lets start with a couple of minutes, wake up the room with a discussion on interest paid on excess reserves. The feds policy, obviously, changed dramatically in 2008. If the numbers im reading correct excess reserves today are in the neighborhood of 1. 5 trillion. I have a couple of sort intuitive at least concerns with that. That, obviously, has a pretty dramatic effect on liquidity in the system. It creates a Business Model for banks, obviously, who can essentially get risk free money from the fed in a way thats not available to my constituents. But i suppose what really terms me in terms of Monetary Policy, im sure youre aware of a report published by the minneapolis fed, the individual who wrote it. What potentially matters about high excess reserves is that they provide a means by which decisions made by banks not those made by the Monetary Authority could increase inflation inducing liquidity dramatically and quickly. My question is at a minimum if thats true that could be a significant impairment of the fmocs ability to actually control Monetary Policy. So my question is, what is the future of the policy with respect to interest paid on excess reserves . Not familiar with that from the Federal Reserve bank of minneapolis. As im sure youre aware during the financial crisis we bought a lot of assets and offsetting liability the way we paid for it is issuing reserves. At the same time we vastly increased the required liquidity that largest Financial Institutions have to hold. Vastly correct that. Many of them choose to hold reserves. Demand for reserves even after the Balance Sheet shrinks is so much higher and were trying to find what that demand is and it might be somewhere a bit below the current range that its in. But, sir, the demand is to some extent driven by the rate thats paid on those reserves. You control the demand for reserves above and beyond required reserves. To some extent we do. Banks have to hold a certain quantity. They have to hold treasuries. They like reserves because they are highly liquid. In terms of ioer, in our framework, in our chosen framework, ioer is the critical rate. Its how we manage, thats how we manage Monetary Policy. Weve been doing that for ten years now and we decided earlier this year we would remain in that system. Getting to a system where instead of using administered rate you manage the quantity of reserves on scarcity and set the price that way, which we did, would be very, very tough given the level of demand for reserves. So as you know there was a fairly dramatic policy shift in 2008. Some have said that the amount of interest paid on excess reserves was well in excess of what congress envisioned. Is the this a status quo tool . Absolutely. This is our principal tool for implementing Monetary Policy. Let me shift because time is short to a broader regulatory question. We heard from ceos of banks, we heard from the vice chairman and others that generally speaking the Banking System is safe and sound, well capitalized. When the ceos of large banks were in front of this committee a couple of months ago they identified two things with some consistency as being of concern. One is leverage lending. Most leverage loans get put into clos which are taken outside of the Banking System. They also said shadow banking. By definition you dont have control over shadow banking but given the consistency of that, given the fact that risk from leverage lending which they identified as risky, concerning not risky, how are you thinking about potential risk bubbling up in the broader shadow Banking System. Particularly on leverage lending we called out the risk. The risk is not so much located in banks its located in clos, hedge funds, Insurance Companies and all those sorts of things. Its not its not subject, those vehicles are not subject to runs in the same way that precrisis banks were and no longer are. The Systemic Risk question is not a prominence one. More a Macro Economic question. If the corporate sector gets very highly levered, then in the event of a downturn youll see companies that have to lay off workers and stop spending and that kind of thing. It could be a Macro Economic multiplier. This is a subject that the Oversight Council is working on now and the Financial Stability board globally is looking carefully at leverage lending and, you know, we think its something that requires serious monitoring. Thank you. Im out of time. Mr. Gonzalez, the gentleman from ohio is now recognized for five minutes. Thank you, madam chair, and thank you chairman powell for being here. First, i want to thank you on your transparency and all the data that you provide. I think theres a sense that some of these decisions may be made behind closed doors. When youre transparent and open what the data is youre looking at it helps me found. I want to summarize two things youre talking about, with regard to all the data youre looking at and if im understanding you correctly im hearing trade uncertainty and persistent low inflation short of our 2 target are kind of the two biggest for you, am i summarizing that correctly . Thats correct. Okay. I think we did a nice job covering importance of passing usmca to help from a certainty standpoint. You didnt weigh in on the deal itself. It makes things more certain. On the inflation side it seems to me that in a world where were still short of our target, and we have trade uncertainty, and those are the two biggest factors youre considering, that raising rates would certainly be irresponsible. I would argue for lowering them. But would it be fair to characterize based on what were seeing on those two factors specifically that a electronic case could be made for lowering and not to commit you to that but is that sort of where things seem to be headed . Yes. As i mentioned, we think that uncertainty around trade policy and also Global Growth, its not all down to trade policy. Theres something going on with growth around the world particularly around manufacturing and investment and trade. And so that uncertainty is, we think, weighing on the domestic economy. Its starting to show up a little bit we think in Business Sentiment readings which moved down and also in weaker business fixed investment. Then as you point out the other piece of it is inflation. We see the risk of a more prolonged short fall of inflation from our target. Thats not something we desire. Its something we want to avoid. A more accommodative policy. Many on the committee see that as strengthening the case for a more accommodative policy. So in january you announceed a major shirt, i thought it was a major shift in terms of how we were going manage the rate Going Forward which shift towards administered rates, pause the draw down of the Balance Sheet. Can you kind of walk me through the logic on that a little bit. My concern here is are we going to still be prepared to handle another financial crisis if that sort of thing were to happen while we have an expanded Balance Sheet, and in the long run do you see us moving more towards, back towards open market operation which historically is how we did this. Actually since the qe era began, reserves have been super abundant. We have not set Monetary Policy we took Monetary Policy to zero and count go any lower. So we never we didnt have to have scarce reserves. We only needed scarce reserves when we lifted off in 2017. We didnt. We used the administered rates. Weve been using them for a long time. What was new, having thought about it for years, we said, we decided after much deliberation that this would be our permanent framework. We think it works well. It has a lot of benefits. In terms of room for further quantitative easing, manufacturers are busy. Theres plenty of them out there. And would be no shortage of them to buy. There are questions about the efficacy and a lot of Research Going on how much quantitative easing affects Interest Rates and the economy but i dont see the size of our Balance Sheet as limiting our ability to buy more as a practical matter. Okay, thank. Then with my last sort of question, when you look at libra specifically i see it as three different things. Libra which is the currency. The wallet. Then the Libra Association itself. As were evaluating how to approach this, what are the three buckets we should look at and two what gives the biggest concern. You said lets pause it broadly. Maybe im running out of time. Well submit this in written questions. Any feedback on that would being a greatly appreciated by this committee. Thank you, i yield back. Mr. Lawson, the gentleman from florida is now recognized for five minutes. Thank you, madam chair. Mr. Powell and the committee. To could you elaborate how the top 1 of u. S. Families own 40 of the wealth in this country . How did we get to that particular point . Do you see any kind of chaepg infof change in america. Future . Ce coming in the were a very rich country compared to other countries. How did we get to the point where 1 own 40 of the wealth in this country . What ive seen and what ive mentioned in my testimony thats troubling is that a couple of things. First median incomes and lower incomes have stagnated compared to those at the high end. There was a time not so long ago when theres also a disparity between the wealthiest and the least but nowhere this large. Those people in the middle and lower end of the wage and wealth spectrum have seen their, their wealth and wages move up but much less than at the top. Thats troubling. The other thing thats troubling, sort of a separate issue is lack of mobility. So the chances of being if youre born in the bottom 25 of wealth of anything you can calculate what are the chances empirically youll move into the middle or top quintile. They are lower in the United States than similar advanced democracies. These are troubling things down. I would put them down to a combination of technology, globalization and education, really. It comes down to the Education System needs to produce people who can take advantage of advancing technology and globalization and what youve seen a stag destination in show less text 01 25 40 al lawson jr Educational Attainment in the United States relative to other countries beginning about 40 years ago. That has been, i think, the underlying force thats driving this phenomenon. Okay. Another question, as recently as june in ontario, canada minimum wage went to around 13. 25 an hour. And earlier you stated that our minimum wage at the federal level is around 7. 25. Hasnt changed since 2009 or something of this nature. In your testimony you said its up to congress to really make that happen and theres been a lot of discussion on whether, whats going to happen to businesses and so forth. The reason why i say that is, in 2020, in ontario, kadcanada they go to 15 plus per hour for the economy. Do you see and you talked before a gradual increase in the minimum wage in this country is going to affect businesses to the point that they will be closing because what you see mostly at the end of the year is a lot of these businesses have a very big surplus to invest, to pay taxes on. So what is the difference in passing those increases to their employees instead of giving it back to the federal government, giving the money to some charity . Can you weigh in on the minimum wage increase as far as stability of the economy . We dont really take a position on minimum wage and the reason is, you know, that theres a lot of research and it shows costs and benefits. Tend to show costs and benefits, depending on what you assume and how fast you make. How quickly you move up is an important indicator. When you raise the minimum wage some people lose their jobs and some people benefit they get higher wages. Can you look at a range of studies and they will come up with as many different economists that study this have different answers. You can weigh that. Thats a trade off you make. Weve never taken a position on minimum wage. Its a classic thing for a legislature to do and not for us to do. One quick question. Do you ever look at the way Credit Card Companies increase their interest and finance charges compared to the way the economy is going . Credit card companies. The way Credit Card Companies do what . Increase their finance charges compared to the way the economy is show less text 01 28 32 john w. Rose going . You know economy is stable right now but Interest Rates, i know i got to close, some of the Credit Card Companies have 28 , 29 , so forth. I might have to send you information on that. I would happy to follow up on that with you. Thank you. Mr. Rhodes, the gentleman from tennessee is now recognized for five minutes. Thank you for being with us, chairman powell. Im a vocal advocate for putting our federal government on a more sustainable fiscal path. Our federal debt now stands at 22 trillion, more than 22 trillion. Interest on that debt is a big spending item. That was approximately 8 of all federal spending. Interest on the debt is becoming the fastest rising element of our federal budget. Our net interest expense could increase substantially if and when the Interest Rates eventual eventually return to more historical levels. We may spend more on interest than on our national defense. Because we have to in order to service our debt. The president s own budget from 2018 forecasted that net interest expense will exceed defense Discretionary Spending by 2026. It looks like the federal deficit this year will exceed 1 trillion as ill will in the next several years after that based on current prediction. Its hard to see how the federal government can issue that much new debt without further driving up Interest Rates. One of your predecessors one said theres no question that as deficits go up, it does affect long term Interest Rates. He continued, a rise in the debt increases the amount of interest expenses which, in turn increases the debt still further and theres an accelerating pattern after you reach a certain point of no return. Could you talk with us today a bit about some of the potential risk to Financial Stability posed by our current fiscal path and in particular current federal spending . I think United States federal budget is on an unsustainable path in the sense that spending is growing faster than the economy, and ultimately that becomes unsustainable at some point. I think were racking up greater and greater debt. The debt is growing faster than the economy. Debt as a percentage of gdp is going up and thats unsustainable i meant to say. Its something that we need to get back to and assess and its not up to us to say how to do that. What combination of spending and taxes. Thats totally the province of the legislature. But its something thats important over the longer run. What will happen if we dont do it is well wind up spending more and more on interest and less and less on the things we need to spend money on, educating our grandchildren and all of the important things that we do, you know, for the benefit of the public with federal tax dollars. What are your views about the Federal Reserves role in monitoring financial the stability imposed by the deficits . We do have a broad role in monitoring Financial Stability. I would say, you know, the four key pillars we look at are leveraging the Financial System, leveraging away from the banks, funding risk, and asset prices. We dont really think of longer run fiscal unsustainability and a Financial Stability risk. Its more of were the worlds reserve currency. We keep being able to brother. My predecessor who predicted more debt would lead to higher Interest Rates would be surprised with the debt we have we still borrow at very low Interest Rates because were the worlds reserve currency. We havent seen higher rates. To the extent we go on raising debt to gdp, we will, well just wine up spending more and more money on interest and less on things we need. Talk about the impact of higher Interest Rates if, in fact deficits lead to higher Interest Rates on the stability of the Financial System in the aggregate. Well, i think down the road at some point, ultimately theres a price to pay. That has to be true at some point. Japan has far higher debt to gdp than we do and pay as lower Interest Rate. Its hard to say. Ultimately i think that the debt that were racking up is veal going or the current consumption. And were passing the bills on to future generation. Our generation is entitled to spend whatever money we think we need for ourselves during our lifetimes. We taught pay for it. Rather paying for it rather than passing the bills to the next generation. Finally in three seconds is there a point much no return . Somewhere way out in the future there has to be in principle. I yield back. The gentlewoman from michigan is now recognized for five minutes. Thank you. Thank you chairman for coming before our committee. As you i know represent michigan which faces strong head winds in the current climate right now in the Auto Industry is at a added disadvantage in the current trade war with china. In addition automakers have been laying off workers. Really at the core is corporate greed. What we saw in wayne county and the detroit Area Unemployment rose between april 2013 to 2018 from 4. 2 to 4. 6 . Given that the detroit area hasnt fully recovered why should we believe the Federal Reserve has the tools to prevent another deep downturn . We talk about National Level Unemployment Rates. We understand thats not true in all parts of the country, in all regions of the country, all demographics of the country. When we do this at the fmoc we always have presentations that call out those disparities. And ultimately if we were to face another your question really is do we have the tools to address another severe downturn. We dont expect a severe downturn. If we had one we would use your tools as aggressively as we needed toto do that. That would include all the tools in our toolkit, Interest Rates, Balance Sheet and whatever else we could devise. And i do think our tools would be adequate. If we had another recession and interest would be lower and then cut to zero and we flounder, should we expect it will take another ten years for unemployment to recover should the people in my district expect to wait for a decade for a job. We see this shift in certain parts not just in detroit but the Wayne Community area surrounding the city of detroit. I would think not. The rumor that the Great Recession was the most severe in a very long time and we saw unemployment go to 10 . We hadnt seen that since the early 80s. Youre starting now at 3. 7 . If you take a typical recession, a more typical recession were still at 5 in my district. What additional tools or authority do you need to prevent another downturn you talked about tools and so forth. What specifically and, again, direct us to what we can do to support making sure that our families are able to provide i think we have the tools we need. I think what we would hope for is support from fiscal policy. Which is to say support of fiscal policy that would, you know, support Monetary Policy in a downturn. In the last recession the fed stepped in to ensure the corporations borrowing in the commercial paper market would still get credit. When governments in places like detroit or puerto rico cannot issue bonds at reasonable terms that has real consequences, like the inability to provide safe water in my district, for instance, a lot of infrastructure issues. If the fed is responsible for ensuring businesses have access to credit through the commercial paper markets why isnt it equally important to ensure state and local governments have access to credit . We dont have authority, i dont believe, to lend to state and local governments. I think we that could be a tool. I dont think we want that authority. I think we want i think thats something for congress to do. We dont want to be picking winners and losers. We want to help the economy broadly to the maximum extent possible. Whats the difference we do it for corporations. Why is this a different standard. This is genuinely really curious. What you had is, you had credit markets, for example, that financed Auto Receivables and commercial paper and things like that, that were failing and breaking down and the economy was grinding to a halt. So we devised programs to support to reopen the Capital Markets in a way without regard who the borrowers were or picking a particular borrower. We had to do that and thats what got the economy back on track. We can do something similar in state and local government . We could talk about this. I know. Look i come from a city, the first i think ever to file for bankruptcy. The people that were actually directly hurt and still continue to hurt are pensioners. We havent been able to, you know, the 7. 2 miles of downtown and some of these surrounding neighborhoods havent been able to get investments but you still see a deterioration and its directly tied to unemployment. Thank you, madam speaker. Thank you. The gentleman from wisconsin, hes recognized for five minutes. Thank you very much chairwoman waters and thank you for being here chairman powell. In your opening remarks you said you supported maximum employment and overall the market is healthy. The Unemployment Rate was 3. 8 . Its 2. 8 in my home state of wisconsin. You also noted that employers are hiring lower skilled workers and training them. I view this as a quite positive step. Also in your opening remarks you identified key risks that youre tracking including brexit, trade instability and rising debt. What i did not hear you bring up is a proposed 15 National Minimum wage that some of my colleagues are advocating. As you may know the cbo analyzed this proposal to increase the minimum wage. The report found a federal minimum wage increased to 15 an hour may cause 1. 3 million americans to lose their jobs and in a worst Case Scenario 3. 7 million americans could lose their job. Thats even more than the entire civilian electrical workforce in the state of wisconsin which is 3. 1 million workers. How would the fed respond to the impact of a 15 minimum wage both on inflation and real wages as well as the precipitous fall in employment outlined in that cbo report . So, we see the question of minimum wage that is squarely in your court and not ours. There are many, many studies of minimum wages and their effects on the economy. It doesnt tend to be a consensus but they do show some degree, some people will lose their jobs and other people will benefit. So if i were sitting in your chair, i would be looking at 20 of these studies and try to get a sense of what the right tradeoff is and what youre willing to make it. , we just dont take a position on that. I imagine it would be challenging to make and i were get assessment without a point estimate on what is a highly uncertain range of possibilities. Can you discuss the 15 minimum wage that would create the type of incentive that would slow hiring . Chairman powell it is not rise to be a referee on federal minimum wage. Thatve not done that and is not something we would do. Rep. Steil let me ask you about this, chairman powell. In previous appearances, you assured us that the fed wants to negotiate an International Agreement that works with our regulatory system. As you know, we expect a final ansion to be completed at International Association of insurance supervisors meeting this november. Can you comment about what instructions you are providing to your staff who are negotiating to ensure the u. S. Regulatory approach is formula formally recognized . Chairman powell we coordinate very heavily with the office of insurance and very much with the state insurance regulators. That is where a lot of the regulation happens. I think we are all resoundingly agreed that whenever capitalist thedard, it has to work for u. S. System. Rep. Steil is the fed of prepared to oppose this for the u. S. Regulatory system . Chairman powell we are clear is adopted has to work for our system. Rep. Steil i appreciate your time today. I yield back. Wherentlewoman from is she from . Is now recognized for five minutes. I am glad and proud about iowa. A great state. Chairman, you said income inequality would be the Economy Class biggest challenge. You also said that income decreased for people in the middle and bottom end of the spectrum. Growth of the top has been very strong. That is what i hear when i talk to people in iowa. Rep. Axne to make that disparity even more clear, the fed put out its account that shows over the last 30 years, the total wealth of the top 1 has increased by over 21 trillion dollars. The total wealth at the bottom half of americans has gone down. Why this wasasked happening. I would like to expand on that and ask you if that inequality is something that should be considered when setting Monetary Policy. We tried toell inform ourselves about what is happening in the economy. This is an important factor. We dont have the tools to directly address these issues. They are more around the education and skills. The principal way we can get that this issue is to take Congress Passed order seriously that we achieve maximum employment. I assume you can see in your communities that the expansion is now reaching groups and we are pushing ahead. We are having a very long expansion with quite low unemployment. That is benefiting these people at the margins. Rep. Axne you mentioned a couple of possible solutions. You said education and training. Can you expand on that a little bit . One of the solutions do you see inequality . Ith this chairman powell my underlying model of the problem is there is no shortage in the world of good jobs. Producehave to qualified workers who can live at the standard of a wealthy country and do the work that can do. That means better education. It is easy to say, very hard to do. We need workers that can compete with the other advanced economies for the good jobs. It is manufacturing jobs and Service Economy jobs. It is not easy to go, fixing the hard. Ional system is very i spent no small matter of time on that earlier in my life. At the end of the day, the country is its educational system. The people are a product of that system. E have to get hours producing that is at the bottom of the pile. That is important. Rep. Axne lets look at regional differences. Is belowcapita income the National Average and new yorks is almost 5,000 higher. I am concerned that this focus is on the urban rural divide. I would also like to raise the issue of regional shifts in the Economic Growth, moving to the coast. Can you talk about how that income inequality you mentioned is one of our Biggest Challenges and interacts with regional and inequality . Chairman powell this post your question. They have gotten worse, the disparities after the financial crisis. There were these underlying drivers. There is no widely accepted explanation. The Younger Generation appears live into to want to cities and out of rural areas. It is bidding to leading to people who can move to cities do and that is where the jobs are in the growth is. It is a phenomenon we have been saying for some time. It has gotten worse in the last decade. Rep. Axne do you have any particular solutions we should be looking at . Chairman powell i do not, unfortunately. Unfortunately, several of us from these rural areas are working on this. Fortunately, several of us from these rural areas are working on this. This is a bit more about the regional shift. We have a lot of opportunity in states in the midwest but we dont have as much access to that opportunity that some of our coastal areas have. What are your solutions . Chairman powell i dont know that we have those tools. We have researchers who are doing a lot of good work on this. I would happy to i would be happy to connect you with them. Rep. Axne i appreciate that. Thank you chairman powell for appearing here today. We were talking earlier about fiscal policy. One of the things about the end is i could hear a lot of good things. We are talking about china to prevent a downturn. We are talking about incentivizing investment for the average american. Looking at policy, just some thoughts, is it the usmca or il that we have discussed what is a quick take on some of the policies that would help as far as Economic Growth for the . Verage american i would like your thoughts on that. Chairman powell we need policies that would support Labor Participation. Policies that will help people holdjobs and correct jobs and progress through their careers. We need a National Strategy to work on how we can raise Labor Force Participation. The other piece is productivity. Productivity is accommodation of a couple things. Is incentives for investment. This has been an underlying driver for long time frames. It is the skills and aptitudes of the workforce. That is what we have been talking about. More productive workers have more skills and training. You can break it down to Labor Force Participation and producti vity. That will determine the longerterm growth and population growth. Assuming a level of population growth is Labor Force Participation. Rep. Riggleman thank you, talked to 62. 8 of the people. I want to commend you and thank you and your colleagues at the fed for the various support you have provided to the private sector. Privatesuccessful partnership has been critical in making realtime payments are realities in the u. S. I want to commend the said for its proposal to facilitate private sector will share services. S could effectuate it effectuated. I do have concerns about the other part of your proposal. My understanding is that the fed seeks to justify this. I believe that raises several important questions. I would say, first, it is a notion that having two systems would provide resiliency. This would be connecting the private sector system and the yet to be built government run system. This is my experience in the data when you talk about what i have had to do in that military with electronic warfare. Looking at this and trying to operate systems, i think this would impose needless costs on the taxpayer and private sector. Ss the fed run system if i participate on the fed system, what guarantees can you give that Community Bank today . What is the purpose of having a second government run system . Chairman powell as i think you know, this is based on a proposal from this task force that had very small presentation. Asked for public, today. There were a lot of common letters. We are in the middle of that decisionmaking process. In terms of interoperability, it was the Community Banks who strongly push the fed before with this. In terms of operability, it is a good question. We will need to work to make that happen. At least to the level that is functional. If we not be perfect but move forward with this, we would be looking at that as a characteristic to achieve. Rep. Riggleman this goes back to resiliency for me. I think it is a concern about resiliency that i had. We had discussions about this. Could you address those concerns to the regulatory and Supervisory Authority that exists in your space . That is what i was getting to hear. We were talking about resiliency with the multiple data centers. This could be a problem with in operability. Could think resiliency help what you are doing right now . The gentlewoman from massachusetts, and especially is sley ms. Presl is recognized. Working families waited days at a time to have their checks cleared. When you are living paycheck to theheck and rent is due at first of the month, there can be no room for error. As the central bank in america, the Federal Reserve has the responsibility to clear up the process of payments. This task force called for a Payment System in the United States that is faster, ubiquitous, broadly inclusive, highly secure and efficient. Mr. Chairman, 2020 is less than six months away. Yes or no, where we have a faster Payment System by then . Chairman powell no, we are working on it. We will not be there by 2020 but we are getting there. Rep. Pressley this will help level the Playing Field and enhance Competition Among providers of faster payment services. Yes or no, do you agree this is an issue of accessibility and equality chairman powell . I agree, that is one of our principal motivating factors. Rep. Pressley would they like to see a world where americans payments . R chairman powell this is a project that has been going on for five years. Rep. Pressley what is the delay . Chairman powell it is a service that has not existed. Immediately available funds is existent for banks. We dont have authority over the Payment System that others do. We convened a group of people. We said lets work toward this. That is the report you saw. The last report we issued. We were working to implement some of the recommendations. Theust trying to understand delay, have you received any pushback on any businesses . Typically the credit card industry . We are determined to do what was he the right thing as. I do not personally know. Our business is to advocate for their own wellbeing. s do you agree our country lack of a realtime him system is being exploited by Credit Card Companies like mastercard and visa . Chairman powell i would not want to use those terms. I think people operate in the environment they have, we are trying to make payments more broadly available. I do see a faster Payment System as a public good. The lack of action here creates a real void. Increasinglyre being exploited. Facebooks libra is being touted as a solution to the unbacked. Unbanked. We should be using preexisting infrastructure to make sure that all people have the ability to safely and securely access and move their money 24 7, 365 days per year. Was not lose sight of the plot. That is the american people. We hope to see your organization be, become more reflective of this. I yield back. The gentleman from wisconsin, mr. Duffy is recognized for five minutes. Welcome. Said the colleagues president has implement it harmful economic policies. You said that the economy is doing quite well, is that correct . Chairman powell the reasonable the economy has performed reasonably well. If you take it through the middle of the year, we will probably have growth in the midtwos. That is a solid performance. Where i comell from, we like our verbal communities to grow as well as the urban communities. Sometimes they dont have enough labor. They cant get people into their shops to fill the positions that are open. There are some that will come in and they dont want to work. Me leads me to immigration. I will not go there. When there is competition for salariesnt you see rise . Rep. Duffy hourly wages rise when there is competition for labor . Chairman powell that is very interesting. We have seen wages moving up. We hear a lot of reports like what you just said. They were shortages and not being able to find qualified people. We expected wages to move up. You would want a tight labor market to produce solid wages. Rep. Duffy is this a fairly tight labor market . Chairman powell by almost every measure. The thing that does not really show is the wages. They could be higher. Rep. Duffy if someone is making 12 bucks an hour, what do you think happens if they are raised to 15 per hour question mark our . Chairman powell rep. Duffy they will leave someone and go to someone who is going to bed and 50. But if guys making 15 an hour but is really only worth 11, what happens . Fired or they might automate. The market works to pay people to tell you the services they provide a company. That happens in a tight labor market. You will make a point on 50 minimum wage. If we increase that to hide, if we have people who arent worth at a value of 15 per hour, they will lose their jobs and fall into deeper despair. That is my concern. To trade, you are not commenting on the policies of the president with regard to trade. He mentioned the debt that we will have. If we have countries that will have aur technology, you company that invests 59 in new technology and someone steals it for you, they have to pay a hacker in a basement, imagine if they come on at zero cost versus your 500 million, how do we compete in the long run with that environment . How do you deal with countries like that . But for the policies the president has pushed . Chairman powell that is for those that are responsible for trade policy. Rep. Duffy would it concern you if people were stealing our technology and cheating us . You what dorn that concern you would that concern you . Chairman powell we have to stay in our name. I try not to do things that we are not responsible for. Im going to have to say that. ,ep. Duffy with regard to this we want to see companies and responsiblyrespond and honorably. We also want them to make a profit. Do you have an objection to companies and individuals making a profit . Chairman powell we have a marketbased system. Rep. Duffy if they make too much, is that a problem for you . If so, how much is too much . Chairman powell not for us to judge. Rep. Duffy do you support a market economy . Do you think it is a good thing . Chairman powell our economy has been marketbased. I think that has served the public. Rep. Duffy probably the greatest economy on the face of the earth . Back. I yield from new yorkoman is recognized for five minutes. Ocasiocortez thank you for being here today. We want to maintain price stability and maximum employments, is that right . Chairman powell yes, yes. Rep. Duffy that is to maintain the lowest Unemployment Rate possible without inflation running away. I wanted to talk you about this relationship. In early 2014, the Federal Reserve believed that the long run employment rate was around 5. 4 , in early 2018, it was estimated this was around 4. 5 . Now the estimate is around. 2 . What is the current Unemployment Rate today . Chairman powell 3. 7 . Rep. Ocasiocortez what we previously thought of, as far back as 2014, this is around 5. 4 . We are currently experiencing 3. 7. Lower than that estimate. Unemployment has fallen three points since 2014. Inflation is no higher today than it was five years ago. These facts, do you think it is possible that the fed estimates of the lowest sustainable Unemployment Rate might have been too high . Chairman powell absolutely. Rep. Ocasiocortez so we overshot and what our longrun Unemployment Rate is. Chairman powell i think we have that is something you cant identify directly. I think we learned that it is substantially lower than we thought in the past. Rep. Ocasiocortez economists are increasingly worried that the idea of a phillips curve that leaks unemployment no longeris describing what is happening in todays economy. Have you been considering that . What are your thoughts on that . Chairman powell we spent a great deal of time on that. The connection between slack and the economy and the level of unemployment was very strong when you go back 50 years and it gets weaker and weaker to the point where it is a faint heartbeat. It is still there. I think we really have learned that the economy can sustain much lower unemployment than we thought without troubling levels of inflation. I would look at todays level of unemployment as well within the ,ange of potential estimates plausible estimates of what the natural rate of unemployment is. Rep. Ocasiocortez why do you think we are seeing this decoupling . Chairman powell one reason is that Inflation Expectations are so settled. That is what we think drives inflation. When unemployment went way up, you did not see inflation go down. You dont see inflation reacting to unemployment that way. Inflation seems to be very anchored. Rep. Ocasiocortez do you think that could have implications . In terms of policymaking . Is the room for increased tolerance . One of the argument about minimum wage or other policies cost middleclass americans is that they could drive inflation. Do you think that decoupling is something we should consider in modern policy considerations . Chairman powell i would not too get the minimum the minimum wage discussion. But we have seen is that it is stronger than we have thought. You see countries all around the world below their inflation targets. Was young, they were always above, now they are always below. Rep. Ocasiocortez one last question. Earlier, you had suggested that in the event of a recession or contraction, we would like to see more fiscal policy that supports Monetary Policy. Can you further articulate what some of those fiscal options and insiderations should be terms of specific options we should consider . Chairman powell i was referring to a severe or significant downturn. If that would happen, i would think that fiscal policy should come into play. Automatic stabilizers that happen. In addition, things were done at the beginning of the financial rises in terms of spending increases and tax cuts that help replace the demand that has been lost in private sector. Those are things i would reserve for pretty severe downturns. Rep. Ocasiocortez thank you very much. Chairman powell thank you. Barr, the gentleman from kentucky is recognized for five minutes. I appreciate my colleague from new york recognizing that the strong trump economy has not produced inflation, challenging the credibility of the phillips curve. But they say without quibbling about the details you are doing , chairmanding job powell. I appreciate the much improved medication with congress about the direction of Monetary Policy. I want to take up this issue of independence. So much has been made of ofsident trumps criticism that policy in recent months. Rep. Barr his criticism of socalled quantitative tightening. Many on the side of the aisle criticized your predecessor for overly accommodative Monetary Policy for an extended time frame. Socalled quantitative easing. What i want to say is that my view is that all this feedback from the executive branch and the legislative branch is unnecessary and constructive part of holding the fed accountable. It in no way im from isis fed independence. This could be a provision that makes you removable only for cause. Do you disagree with that . Chairman powell i would say we are completely and totally focused on carrying out our jobs and nothing will really distract us from that. Our accountability in our system really does lie with this and they committee other committee on the senate side. You have oversight over us. , that isother systems our system of government in congress. Rep. Barr criticism from congress or the president does not compromise your independence. I heard arthur say that the fed does not really set Interest Rates, it follows Interest Rates. I thought this was an interesting comment in light of longterm and the inverted yield curve. Has the case for strengthening the fed funds rates increased . Chairman powell i did not see that comment, so i cannot react to it. I would not say it quite that way. Our focus is on real economy values, in particular maximum employment and stable prices. Touse Monetary Policy tools achieve that and we know our policy works through financial conditions, so we work through a broad range of financial conditions. The median estimate is 2. 5 nominal. In september. We are stand it is estimated within fairly broad uncertainty bounds. Ainty bounds. I have been critical of previous fed positions as you communicate and forecast where fed policy is going, you talk about in your testimony that the case for a more accommodative policy that argument is strengthening. I appreciate that, because i think it is habituating the markets as opposed to surprises and i think that is important for the stability of our Financial System. You obviously cite in your testimony, uncertainties and trade development as perhaps one of the reasons why the case for a more accommodative policy has strengthened in recent months. What would passage by the congress of usmca and enactment of usmca do in terms of the overall Economic Outlook and the future trajectory of Monetary Policy . Mr. Powell mr. Powell i think it would remove uncertainty about our trade policy with mexico and canada to have that pass and i think that would be a positive thing. I would not comment on the particular merits of it. I would say the passage of it would remove uncertainty and i think that would help in the current environment. I have one final question. You had responded to my question about the surcharge and you said a proposal to simplify Capital Requirements for banking firms by integrating a banking firm supervisory test results regulatory Capital Requirements, where are we on that . Requirements, where are we on that . Mr. Powell moving forward. Hat our job with Monetary Policy is to manage the level of the dollar, stabilize the dollar price of gold. Not be looking at maximum employment or stable prices and there have been plenty of times in recent history where the price of gold has sent signals that would be quite negative for either of those goals. I dont think that is something that would be attractive. Because it is much more volatile . Linking it to gold . Or could be . Chairman powell it is because it is not corrected you have assigned us the job of real economy objectives. Maximum employment, stable prices. If you assign us to stabilize the dollar price of gold, Monetary Policy could do that, but the other things would fluctuate and we would not care if unemployment went up or down, that would not be our job. Rep. Wexton and that is not a positive mission for the fed . In much better mission for the fed is what you are doing right now . Chairman powell this is why every country in the world abandoned the Gold Standard some decades ago. Rep. Wexton ok. That reluctance or desire to not to go back to the Gold Standard is something that you have in common with the ceos of the seven of the worlds globally systemic important banks, who were before us in april and said the same thing. It is worth noting that last week the president nominated judy shelton for a seat on the fed, and she is similar to two of his other wouldbe nominees in that she does favor a return to the Gold Standard. I assume from your earlier answers that you dont share that view. Chairman powell i dont share that view, but i would never comment on the views or any particular nominee. We do not play a role in the nomination process. It is up to the president and the senate and we are completely on the sidelines. Rep. Wexton my concerns about ms. Shelton are not just are questionable views about Monetary Policy, but she also seems to be a political opportunist who thinks low rates are bad under democratic president s and good under republican president s. Concern i would caution when looking into the nomination and confirmation of this candidate. I do want to talk for a minute about debt. There have been a lot of questions about it. In particular, the debt ceiling. On monday, the bipartisan policy the government brought in far less in Corporate Tax revenues then was projected as a result of the tax cuts. Spending is only one side of the ledger. We need to look at the revenues. There is a possibility the u. S. Could default on its debt. Congresss failure to raise the debt ceiling mean to the u. S. Economy . Chairman powell i think it is essential that congress raise the debt ceiling in a timely way so that the United States continues to pay all of its bills when and as due i think any other outcome. Is unthinkable. We have never failed to pay our bills when do, so i assume and believe that the debt ceiling will be raised in a timely fashion. Rep. Wexton what would it mean for the economy and for Interest Rates if we failed to do so . Chairman powell i think it would be very uncertain territory if the United States were to stop paying its bills. I would not be able to capture the range of possible negative outcomes from that, the loss of confidence in our ability to run our fiscal house could be substantial. It would be a lot of uncertainty and i just think it is beyond contemplating that. Rep. Wexton well, and yet we must contemplate it, mr. Chairman. Thank you. And i agree. And i want to encourage leadership on both sides of the aisle and both chambers of congress to not wait until the last minute to make sure we raise that ceiling. Thank you. I yield back. Thank you. The gentleman from texas is now recognized for five minutes. Thank you, madam chair. Chairman powell, the board has done a great work with regard to foreign banking organizations, but im concerned about a lack of harmonization across jurisdictions with respect to foreign banking jurisdictions. I want to make sure you all are working to ensure that our u. S. Firms are not disadvantaged in the foreign marketplace. Could you speak a little bit more about your plans for that . Chairman powell i think here we want to give national treatment, equal treatment to foreign institutions and we fully expect we will get that in foreign jurisdictions. That is why we give it here. We want foreign institutions to do business here and let capital to people and take part in the Capital Markets. That helps their economy. We want our institutions to be able to take part in foreign economies. Many banks work across International Lines now. It is essential that there be fair treatment for nonnative banks around the world. Rep. Gooden thank you. I appreciate that stance. You mentioned trade and slow Global Growth as threats to the u. S. Economy. What would you say your biggest concerns . Chairman powell i really think that the most important thing is what we have been calling the are therrents, which trade tensions and concerns over slowing Global Growth around the world. Those are interrelated. There is a box in our Monetary Policy report about slowing Global Growth and manufacturing an investment, something we are seeing around the world. That is the thing that ways on our outlook. We see it here. We see confidence surveys among businesses. The consumer part of the economy is doing very well. That is where the weakness is. The other things or concerns, but i would but those at the top, along with low inflation. That is a concern, that is the other half of our mandate. We are concerned that inflation not run below 2 more persistently than we thought it would. Rep. Gooden putting that altogether, the current state of the economy, where do you see us going on a scale of 110 . How would you rate where we are as an economy . [laughter] chairman powell i dont think i will give you an actual grade, but i would say this. We are in the 11th year of this expansion, that is a first since we began to keep records on this. We are at 3. 7 unemployment. That is a 50year low. We have been there 15 months. There was no reason why that cannot continue. We are committed to using our tools to make sure that it does continue. I just would again point out that this expansion is now reaching groups that had not been reached in the first few years and there is a box on that in the Monetary Policy report, all the more reason why it is important we keep the expansion going. Rep. Gooden thank you and i yield my time back. Thank you, madam chair. Thank you for being here for your thoughtful testimony. You and the rest of the board of governors have a monumental task. You have made some good decisions and im heartened to see you are maintaining your independence and not allowing yourself to be bullied. Let me put a couple things on the record. We have had a lot of discussion about the cbo report in the minimum wage and i want to add Something Else to the equation. Yes, there has been some discussion about losses, but we need to consider the fact that 27sing the wage will elevate lowwage workers. Thated to be concerned lowwage workers are living at the poverty level. Them are in my state of north carolina. When we look at the fact that we want to raise people up, when we look at this 15 we keep hearing on, havingme move abouthat to a question the unemployment the inequality in terms of black unemployment, the overall Unemployment Rate is about 4 , the Unemployment Rate for African Americans is almost 7 in this recent bureau of labor statistics report, which almost doubles the Unemployment Rate for whites, which is about 3. 5 in the same report. Ratesese unemployment have been steadily falling since 2011. Does theany analysis Federal Reserve to to evaluate the degree to which Economic Uncertainty affects the africanamerican Unemployment Rate . Chairman powell affects the africanamerican Unemployment Rate . As a feature of our labor markets, africanamerican unemployment has often run at double, so that means it comes down faster when times are good and he goes up faster, twice as fast. That is not a good feature of our employment market. Rep. Adams thank you. What more do you think can be done to ensure that unemployment among minority groups gets as low as white unemployment and wrote what role can the Federal Reserve play in reducing these disparities . Chairman powell there is a box in the Monetary Policy report is not by about it African Americans it is by Different Levels of education, which we can show you, but it does talk about the disparate outcomes for people. , iterms of what we can do goes back to taking seriously the job you have given us which is maximum employment. Tight seeing in these labor markets communities, including africanamerican communities, that are being reached by the jobs market in ways they have not felt ever, or certainly in a very long time ago, when we had 3. 7 unemployment it was the late 1960s, which you and i can remember. Not everybody can. Rep. Adams thats right. Im a baby boomer and i do remember that. What is supposed to come out of the Monetary Policy review that happened earlier last month . Were there any important takeaways and will the be changes to the way that you and the board conduct Monetary Policy because of this review . Chairman powell we are just into the face of taking a close look. We are taking a look at the question, are there ways we can change our toolbox or strategy , closer to zero, which means we have less room to cut. Are there ways we want to get the best thinking and come out of this with the best ways to serve the public with our toolkit. We may make changes but that , discussion lies ahead. Rep. Adams thank you very much for your service and again thank you for not allowing yourself to be bullied. I think that is important in terms of the job you are doing. I yield my time back. Mr. Williams, the gentleman from texas is now recognized for five minutes. Thank you, mr. Chairman for being here today. Just as a reminder, im a Small Business owner, mainstreet america, and very much interested in what is happening at the fed. I want to reiterate my past statements about Interest Rates, even the slightest changes can have significant impacts on many parts of the economy. We both remember a time when Interest Rates were 20 in the principal balance compared to today was relatively low. When a new car costs 6,000 in the 1970s, now the same vehicle can be 60,000. With the principal so high, slight increases can crash businesses with high inventory costs and lower sales. We discussed this before, but i want to commend you for having a good pulse on the economy and making the appropriate Interest Rate adjustments. Before i begin my questions i wanted to make sure nothing has changed since you last came before this committee. Are you still a capitalist . Or have you undergone a drastic change of thought and now believe socialism would be a better Economic System for the country . [laughter] chairman powell no drastic change. Rep. Williams thank you. Yesterday in boston you stated , if the stress tests do not evolve, they risk breeding complacency from supervisors and banks. You said banks need to be ready not just for expected risk but unexpected. You understand the importance of the stress test, but i heard some criticism that the stress test have been watered down to let the biggest banks off easy. Do you believe stress tests have been made easier since he took over as chairman of the fed and how did he simulated scenarios compare in scale to the 2008 financial crisis . Chairman powell i dont believe we have made them easier. We do have the intention of having them evolve. I think we are 10 years into this. We have done nine cycles now. I think there is a risk that if we dont continue to adapt to the markets and the institutions and the state of the economy that they will become stale and you come back another 10 years and they are not a factor, they have been very successful, maybe the most successful regulatory innovations since the financial crisis and even the banks would agree to that. We intend them to continue to be strong Going Forward. Rep. Williams i asked you about Labor Force Participation rate. Even though there are over 7 million job openings, it is hard to hire people right now. You mentioned some factors keeping this number around 60 , including the skills gap in the Opioid Crisis. The fed has no control over any of these factors. We must deal with them here in congress. With that being said, have you noticed any of these factors improving and getting people that there are Work Opportunities and there are companies some of the problematic things people may have had in their lives and hire them anyway. We think that is really healthy in a tight labor market. If you have a tight labor market that lasts a long time, that is what you are going to get. That is a relatively new development and a fairly positive one. Rep. Williams according to the most recent Monetary Policy report, Consumer Spending was down in the First Quarter. Is a business you person, we have seen it pick up. What factors do you see as contributing to this turnaround . Chairman powell i think it is strong job creation, wages moving up, it is tight labor who say thatrs jobs are plentiful. It is a world where the worker and the family, people are quitting their jobs it is a world where they are feeling good about the economy relatively. You haveiams and when more jobs than workers, it has a tendency to drive up wages. Thank you for your service, i appreciated. I yield my time back. Thank you. The gentlewoman from pennsylvania is now recognized for five minutes. Thank you chairman powell for your expertise in explaining things to us. I learn a lot when i hear you speak and i thank you for that. I wanted to examine a little more closely some of the things you talked about. Consumer side looking strong, business side weakening. I want to ask you what are some of the triggers to the weakening on the business side . The trade policy uncertainty, you said it is no question uncertainty is elevated. What would greater certainty look like . What would greater certainty look like and what would the impact be on the economy . Chairman powell we think that the place where uncertainty is showing up is in business investment. Businesses make investments and those have to work for a longer period of time. When they are uncertain about the future, they may decide to hold off and wait until they build something or by something. Investment, it was very strong through 2017 in 2018, and it has slowed down to the middle of the year. There is no perfect way to identify these things, but we do connect that to trade policy uncertainty and we commend you factor in around the world. Rep. Dean what specifically in trade policy do you think is connected to that pulling back in investment . Chairman powell the people who are responsible for trade and that is not us we dont criticize them for what they do we have a broad series of trade discussions going on. If you are a Manufacturing Company in our economy of any size, the chances are pretty good that your supply chain goes across national borders, canada, mexico, china, vietnam, or someplace. Part of herhain is you do business and you assume it is working. When the supply chain is called into question we hear this a lot from businesses you pull it. You may have to change but i would not want to suggest that that is a criticism of those conducting the policy. Rep. Dean i understand and appreciate your independence. Im hearing the same thing on the ground from my businesses in pennsylvania. The uncertainty, the punitive tariff policy. Driving their conservatism in their own areas. Let me shift to Something Else you talked about. I care deeply about gun violence, the Opioid Crisis. Im wondering through your complex lands could you talk about the Opioid Crisis and or gun violence . One of the recent reports said gun violence in this country costs our economy somewhere in the area of 230 billion per year. I know that you are not involved in gun policy or the Opioid Crisis policy, that through your but, through your lens, and through the tools that you are using, what are you seeing . What could we in Congress Learn about how we could minimize or reduce that Economic Impact . Chairman powell i can probably do a little better talking about opioids, where there has been some great research, including by the late labor economist alan krueger, who passed away last year or earlier this year, about the effect of the Opioid Crisis. If you take prime age men in certain groups who are out of the labor force, and extraordinary percentage of them are taking some kind of painkiller. It is a big number. It is a big number of people that are on opioids and missing from the labor force. We want the u. S. Economy to grow faster and be larger and we want prosperity broadly shared. Here are people in their prime working years who are on opioids and it is a national crisis. I know people are working on it, but it is out there and there is a human tragedy, but there is also economic motivation to get these people into the labor force to lead healthy lives. Rep. Dean i appreciate that if you think about the numbers 72,000 people in a single year , dying of overdose you think impact tot economic the individual family but to the community their children, and elsewhere. I thank you very much for your work and i always learn something from you. I yield back. Thank you. The gentleman from oklahoma is recognized for five minutes. Thank you, madam chair. Thank you for being here today again, chairman powell. You know and we discussed many times the nature of my district. It is agriculture, energy, capitalintensive. The actions the fed and the treasury take have a direct impact on my constituency. Im very in particular sensitive about fed actions because my part of the world have suffered the most at the end of the 1920s and the 1930s, before we became far more sophisticated and how we handle these policies. You are the fourth fed chairman that has appeared before the committee in this manner and there are a handful of us on the back row who go all the way back to mr. Greenspan. I found you to be as upfront and as straightforward as anyone could be in your position and in some ways, really quite impressive compared to the things in the past. That said, ive also learned in my time to focus on things that matter to my people, that would make it difference to them even if it appears to be down in the weeds. I have a suspicion that you know we are going with this next question. But i have been raising the issue of interest affiliate initial margin nearly five years now and while regulators have agreed that the requirements are an issue to be addressed, we have not yet been given any indication of timing. When in congress can we expect some action, chairman . When in congress can we expect some action, chairman . Chairman powell i wish i could be here to give you perfect clarity on that, but neither am i completely emptyhanded. I do know that this is a subject of active interagency discussions at the moment and im hopeful that those will be fruitful. Rep. Lucas and you know like a bird dog on point that i would reiterate that the u. S. Is the only g20 country to impose these initial margin requirements and this has created what i fear is unlevel Playing Field for United States institutions and i believe it is time we come to a focus. My second actual question last month the committee on banking supervision agreed to provide an offset for client cleared initial margin under the leverage ratio and the bipartisan crpc Commission Support of the offset and im looking forward to the fed and other regulators implementing this global revision. Can you give me a sense about timeline on that perhaps . Chairman powell i will have to come back to you on that one. Rep. Lucas fair enough, mr. Chair. You are following in the most fine traditions dating back to mr. Greenspan and i respect that and i say that respectfully. One final question and i want to concern about the proposal of higher capital charges causing banks to pass the costs onto to commercial users engaged in oct transactions and congress clearly sought to provide relief for endusers as a part of. Frank. This proposal threatens to undermine users from engaging in Risk Management activities. I suspect you are aware of these concerns and i hope that we will see them addressed. Just noting from my perspective as a member of congress from the Third District of oklahoma, the food we produce, the energy we resources need these kind of Risk Management tools because of this sheer capitalintensive nature of the business. Focus, mr. Chairman, i know you will, thank you very much. Chairman powell that last one is out for comment after a lot of work. Rep. Lucas progress, mr. Chair. I like that. I yield back. Thank you. The gentlewoman from texas is recognized for five minutes. Thank you, chairman powell, for your endurance. We are almost at the end of the tunnel, it looks like. I wanted to focus a little bit on the widening equality gap we were talking about and i wanted to focus on your answers. You have said that we have seen the gains of the past decade accruing to the upper income and passing the middle and lower income groups. Can you expand on the longterm systematic risks that such inequality would introduce in the economy of such skewing of benefits if it continues on the present course into the future . Chairman powell so, i think the history has been that people have generally been able to and the economically better off their time than their predecessors, then their parents and grandparents and that kind of thing. I think that is how people think about, have thought about life in our system. I think the data show that that is less and less true. It is true for many, but fewer than it used to be. That is not good. To be spreaderity as broadly as it possibly can. We want there to be progress upward for lots of people and we want mobility from the bottom to the top and vice versa. We want the outcomes to be fair. You dont have that, what is the cost . The cost or big and that would include kind of a loss of faith in our institutions to deliver that, in our society. I think it it is a very important problem to address. Businesses and people coming around to that view that maybe were not thinking about that five years ago. Discussionlot of about this in the Business Community they see it in terms of good employees and in terms of people to divide their products. I think this is a national problem. Rep. Garcia so what happens to the bottom . It is not as simple as have and have not. If it is shifting and the goal is always to move up, what happens to the bottom . Do you track and look at the poverty rates . Do you look at the lower income levels . Chairman powell researchers do. Rep. Garcia and the people that are going, that are paychecktopaycheck . Chairman powell we do and lots of economists outside the fed rates, what poverty it is doing, your book talks 2 ,t the inflation rate of the Unemployment Rate as low as possible, but what is the bottom we can reach in terms of a poverty rate . Chairman powell i dont have a number for you. We have all the data. We dont put it in every Monetary Policy report. Thatrobably saw the box talked about disparate Labor Market Outcomes for people with a lot of education and less education. Rep. Garcia what you find is unacceptable in terms of a poverty rate . Before it skews Everything Else . Chairman powell any positive number. Rep. Garcia any positive number . Chairman powell i think i goal should be to not have poverty. What is an acceptable number . In our country, and no amount of poverty should be acceptable, it seems to me. I know we have a lot of poverty, but if you ask me the question rep. Garcia that would be my goal, but for others it may not. You follow that the president wants to change the poverty line it changes the cpi and there is a proposed rule change . E people would rather just changing the rules on how to calculate it does not get us anywhere. I just wondered if you have looked at the proposal and whether you favorite or disfavor . Chairman powell i have not looked at it and i would not have an opinion on the. Rep. Garcia one glad you agree with me that the goal should be zero. That is something i worked with my entire life and i will continue to do that. I think that the minimum wage increase would be a step in that direction. And a number of other initiatives that i hope to get through congress. Thank you, madam chair, a yield back. Thank you. The gentleman from minnesota is recognized for five minutes. Thank you, madam chair. When you get to me, you have reached the finish line. [laughter] question, why is the u. S. Dollar the worlds reserve currency . Dollarn powell the u. S. Is the worlds reserve currency there tends to be one. If you have the country with the best institutions, the largest economy, the rule of law, and relatively open to commerce, a treating nation, you can be that. What happens is there tends to be one reserve currency and tends to be a stable equilibrium for a period of time. The pound was the reserve currency for many, many years, but now the dollar has been for some time. Rep. Phillips what do you consider risks to that changing at some point in the future . Chairman powell it is a very long run thing. It is a fairly stable equilibrium. You have to think about what currency out there that would compete with the dollar and the euro or it is hard to see the dollar not being the reserve currency for quite some time. That does not mean that every trend there can be multiple reserve currencies. Be in equilibrium where there were two or three and that would be fine, but right now it is the dollar and i dont see that under threat right now. Of course, in the long run, it will come down to fiscal sustainability, it will come down to maintaining our rule of law and Democratic Institutions and prosperity and being a relatively open trading nation. All of those things are essential. Rep. Phillips in your opening remarks, you talked about concerns about high and rising federal debt. Would that be a concern relative to the u. S. Debt . Chairman powell in the long run, absolutely. Rep. Phillips second question, when you contemplate rate tonges, how much do you give current Economic Data versus forwardlooking weakness . Iairman powell you know, think Monetary Policy is always you have totlook. Take into account the current position of the economy, which is very strong, low unemployment , stable relative price stability. We are always about looking forward because Monetary Policy works with the lag. You asked about the yield curve. That is something we do look at, of course. There is a message. There are a couple of messages. You have to think carefully about what they might be and there is not a single thing that is a dominant financial condition. There are many things that we look at in Financial Markets and that is just one of them, but it is certainly one. Rep. Phillips lastly, do you agree the Federal Reserve has the requisite tools to fulfill its mandate without assistance of fiscal policy . Chairman powell well, as a haveoned earlier, we do the tools that we have and we will use them aggressively and we believe they will be adequate. As i mentioned, in a severe downturn, there comes a time support is policy necessary and appropriate and one of those times was during the Global Financial rices and the Great Recession. Fiscal policy is very powerful and i think is important to have. For the most part, the fed can handle cover cyclical policy. There will always be a role for fiscal policy. Rep. Phillips is the authorization to buy a wider range of assets at the lower bound be helpful or important or not at this time . Chairman powell i dont think we are seeking that. We will have plenty of treasuries to buy. If it comes to buying assets, there will be no shortage of treasury securities. You are referring to the fact that other Central Banks have the ability to buy a present all caps a different inks. It is not an authority we are seeking or looking at or think that we need. Rep. Phillips thank you, mr. Chairman, and i yield back. Thank you very much. And so now we have the gentleman from california. Your 1 00ing to honor time that we agreed upon and we are just running a few minutes we have mr. Chairman in. I hope the chairwoman and the chair man, i thank them for their indulgence. It has been a couple of decades in this room. I have watched republicans come here and condemn the fed for overly loose money and condemn you for quantitative easing, i have been pushing in the other direction. Interesting to see how with trump or think one of our colleagues said, the republicans seem to be in favor of loose money only when there is a republican president. The fact is that you have not hit your 2 inflation goal and as we talked earlier, it should be a 2. 5 inflation goal because and while unemployment is low , we have not had the big wage increases. It does not make up for 30 years of negative or stagnant wage for thosethis country without a college degree. Reverse, ive seen a role in another way. Nafta,ts voted against but now that trump is flailing at the trade deficit, i hear an occasional democrat saying we should just ignore the trade deficit. I dont think that flailing or ignoring is the right approach. I know there has been significant discussion about cryptocurrencys. This constitutes cryptocurrency, an attempt, i hope unsuccessful, to transfer power from the united dates government to sanctions evaders, terrorists, tax evaders, and drug dealers, while reducing the importance, as the chairman indicated, of the United States dollar as the reserve and trade currency. Madam chair, i know we have an executive from facebook coming to join us, but ultimately it is time to bring Mark Zuckerberg here. He is the one that has made ,illions of dollars out of us relies on the u. S. Government to protect his billions, and now wants to undermine the system, but i see his problem. And that is, he wants to invade the privacy of the average american and sell our data, and in order to compensate for that, he wants to provide privacy for drug dealers and terrorists, establishing how dedicated to privacy he is. I look forward to bringing him here because the libra is an attempt to create a cryptocurrency you could use to buy things they read right now, we can kind of monitor the bitcoin because to actually buy convertg, you need to it to the dollar. I want to shift to another issue. We talked about wire fraud the last time you were here. We got 40 of our members to write you and we just got the response today about the need for a name matching system, so that when you why your money, you wire it not just to an account number, but to a name, because especially in real estate transactions, we have had a lot of people tricked into wiring money into an account because hacking and spoofing has caused them to do that. Kingdom is moving to a safeguard system where when you wire the money, you do it not just on account number, but you match it to a name. Thatresponse indicated there would be some difficulty in doing that here. That we have state laws here that establish some rules, but you certainly have the capacity to regulate the Financial Institutions. You have regulations in this area, you could adopt regulations that say if you are going to adopt a wire transfer, it has to be wired to an account name, not just an account number. How do you plan on addressing this issue where people are conned into wiring money into an account number thinking that is the owner of the property they are trying to buy . Chairman powell we understand it is a serious issue and something that they do in a very organized crime kind of way. They try to hack into the players and divert payments. It is organized crime. , obviously,ly summarized the contents of that letter. I would say we have concerns about the matching name idea because it conflicts with state laws. We think that the way to get after it is to get banks to have appropriate id from customers. What i would propose is let me get the people who are experts on this to talk to you and your staff. Rep. Sherman i would point out this is clearly under state commerce, federal jurisdiction and legal and we have granted you the power, please use it. Chairman powell thank you. The gentleman from washington is now recognized for five minutes. Thank you very much, madam chair. Thank you mr. Chair for staying back. Five days ago, the president of the United States said we have a fed that dont know what they are doing. For the record, do you . [laughter] would sayowell i lets take a look at the economy and let that be the report card. Again, the economy is into its 11th year of expansion. Rep. Heck the longest in modern history. Keptman powell since we records, which began in the mid19th century. Unemployment has been at a low for a 15 months. Inflation is below where we would like it. As you know, we were concerned about uncertainties and other factors that are weighing on the outlook and looking at changing our policy, but overall, i would say our economy is on solid footing. Despite disagreements we may have had in the past about the actions i think the fed should have taken with ,espect to Interest Rate raises i want to state for the record i do think you know what you are doing. I thank you for being here. For your willingness encouraged to stay independent. I thank you for your accessibility. You are only the third fed chair i have had the privilege to work with and you are amazingly accessible. I thank you for your remarks earlier in conversations with various members regarding wage growth, and in particular not being tempted to characterize recent wage growth is adequate, because it is not adequate. As you know, ive been asking since i came to this committee, when does america get a raise . It is long overdue. It sets up a bit of a dilemma for me. You characterize that the cross currents confronting the American Economy are trade and Global Growth. I want to know why it is given that the fed and you have accurately pointed to the fact that our economy is 70 consumer driven, why hasnt the fed called out more than a generation of lack of wage growth restricted this economy . If we want to have a healthy economy that is 70 consumer driven, weve got to have decent wage growth and we havent. We have to have a prosperous, growing middle class, and we havent. Why doesnt the fed explicitly call out this lack of wage growth as a threat to the growth of this economy and the health of this economy . Chairman powell i think we do. We have been trying to promote rep. Heck you were asked and you said the cross currents are trade and Global Growth. The other crosscurrents, the other downward factor is the absence of wage growth. Is it not . Chairman powell i think it is really, if you look at to go back to your point, to go back to the turnofthecentury, what you saw was a decline in labor share. Has not been reversed. We are focusing on the change in wages, but really wages are missing 10 years of growth. I think that is really the underlying problem. We are getting reasonable wage growth, but we missed all of those years beginning at the beginning of the century, so i think it is a very serious problem and we should do a better job of calling it out. Rep. Heck i look forward to you doing just that. There was a recent article in the wall street journal that said that in japan, the phillips curve is dead. Obviously, the connection that was alluded to earlier has become more tenuous in this country. I would ask for your reaction, but the fact is that if you measure the phillips curve in terms of use three, the connection has been more tenuous , but if you just now indicated measured in terms of percentage 2554yearolds participating in the workforce, then the phillips curve is not dead and that is in part why we are beginning to see some traction. Why would we continue to use another method when it clearly is not reflective of what has gone on, especially in the aftermath of the Great Recession, when people keep coming out of the woodwork to join this workforce . As a consequence, the Unemployment Rate keeps going lower, but we keep adding hundreds of thousands of people to the workforce. Is it not have we repealed the law of supply and demand . To addwe, if we continue people to the workforce, expect continued wage growth . U3 is just all number to us, not the number. We refer to it quite a bit, but we look at a broad range of employment indicators. Im not sure i took your question, though. Is. Heck i think my point that we have not reached full employment as long as people keep coming out chairman powell that is where i thought you were that is what we are learning. A lot of the margin where people are seeing the improvement has been in Labor Participation and unemployment. You have seen in some months Labor Force Participation going enough Labor Force Participation increased that the Unemployment Rate to accept. That is a good thing. Rep. Heck i am way over and the chair even indulged me to ask questions. For which im grateful. Two things. We need more wage growth. Secondly, i believe you know what you are doing, sir, and i thank you for it. Chairman powell thank you. Thank you very much. Mr. Powell, we have one more member, the gentleman from georgia, mr. Loudermilk. Wrap it up. I will try to be quick and concise. I have a few restaurants, so i wont make any statements. The first one israel time payments. We have had this discussion before. Any idea of when you man outs when you will get into realtime payments or not . Chairman powell we are in the middle of we have not actually gotten to a place where we are getting ready to make a decision, but i think there has been a ton of work, so we are moving forward to make a decision when it is ready to do. Rep. Loudermilk ok. What are the factors you are waiting . Chairman powell as you know, this was something that came out of the Faster Payments Task force and that was a group that involved small banks, large banks, community activists, technologists, car companies, all of that, and there was broad support among the Smaller Banks particularly, as a mentioned earlier, for us to play a role in final settlement. That was a recommendation that came out of that. We put out a proposal last year. We asked for comment. We got 400 comment letters. We are piling through those. We are working on assessing the issues. We are working on requirements under the monetary control act. Question. Big policy is there a role here. There are people that feel strongly that there is a role and there are those who do not. We are having to make a decision on that and we will be doing that. Rep. Loudermilk ok. Keep us in the loop on that. We have several parties in georgia very interested in the direction you are going. Regardingsue proposals, the tailoring of regulation for domestic and foreign banks, the Comment Period has closed, so when do you expect final rules to be issued . Chairman powell let me look. Domestic and foreign banks. The Comment Period for domestic and foreign i dont have a date for you. Rep. Loudermilk i think the Comment Period is recently closed. Chairman powell from my understanding from my understanding the Comment Period recently closed. Chairman powell i have to come back to your office. I think vice chair quarrel said we see most things being wrapped up by the end of the Third Quarter and nearly everything wrapped up by the end of the year. Rep. Loudermilk do you want is a great domestic and foreign will be done together . Chairman powell i dont know. Rep. Loudermilk with the remaining time, one other issue that is important especially back in georgia, small dollar chairg when the fdic testified back in may, i asked her if they plan to address the small dollar lending issue for banks and she said that she was going to work with the other regulators to get this done. Is the fed committed to working with the fdic and occ to come up with a plan for the small dollar lending . Chairman powell i think we are doing that. I think there is an existing group carrying that forward right now. Rep. Loudermilk ok. Athink we are already to end very long morning. I appreciate that. Madam chair, thank you for your indulgence. Thank you very much. I would like to thank chairman powell for his testimony today. Without objection, all members will have five legislative days to submit additional written questions. They will be forwarded to the chairman for his response. I ask you to please respond as properly as you are able. 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