Transcripts For CSPAN Federal Reserve Chair Powell Testifies On Monetary Policy 20200211

president's efforts to interfere with the fed's independent monetary policy. a recent news story noted that trump has tweeted over 100 times about the nomination. many of those tweets appear to be attempting to exercise pressure on the fed. chairman powell, you're the fed brd -- you and the fed brd of governors must not be swayed by these aggressive tactics. in opposing the fed's independence. you should also be mindful of public perception. trump continues to try to claim credit for economic growth that was put in motion by the plcies of president obama. congressional democrat -- president obama, congressional democrats and the federal reserve. his irresponsible trade war and g.o.p. tax scam have blown up the national debt, slowed our economic growth, and harmed hardworking american families. trump continues to squander this inherited economy. let me note that i am, however, disappointed in the fed's efforts to deregulate mega banks, most relent -- recently by proposing to further rollback the volker rule. the dodd frank act made our financial system safer, but it depends on agencies like the feds to use the tools available to monitor and mitigate threats to our economy. the committee is carefully monitoring the development in the market and the fed's response. the fed should not arbitrarily reduce liquidity requirements in response to the repoe market. disruption as some on wall street have asked for. instead, the first degree should make appropriate adjustments to promote the well functions market while ensuring we have strong capital rules that can't through adressing, where banks alter their balance sheets to appear less risky. in addition, the riskyness of various financial assets is increasing as climate change poses a more serious risk to our economy. the fed and other regulators should utilize financial stability tools under dodd frank such as incorporating climate related losses into supervisor stress tests of big banks to address this growing risk. i would also like to discuss recent developments involving the community reinvestment act that is c.r.a. we have had a series of hearings on this issue and i'm very concerned abo.c.c., corp. troller audits, harmful proposals to turn c.r.a. into the community disinvestment act and allow banks to escape their obligations to make responsible investments in the communities here they are chartered. i urge the fed to not join comptroller's misguided efforts. the govern's statement, and i quote, it's more important to get reforms done right than to do them quickly. quout-unquote. that's absolutely correct. he o.c.c. and fdic should heed that advice as well and extend the public comment period as community banks, state regulators, community and civil rights groups as well as many democrats have called for so that all stake holders have an opportunity to voice their concerns. i also encourage the fed to keep a watchful eye on facebook's efforts to launch a crypto currency and digital wallet which as we discussed at our last hearing could have profound implications for monetary policy and compete with our own u.s. dollar in light of the many risks facebook plans to create i and other democrats have called on facebook to halt the plan until congress can examine the issue associated with the big tech company developing these digital projects. i look forward to your testimony today, chairman powell. i now recognize the ranking member of the committee, the gentleman from north carolina, mr. mchenry, for four hins -- four minutes for his opening statement. mr. mchebbry: thanks, chairman powell, for appearing before us once again. under the trump administration we have the best economy we have had in decades. the numbers are irrefutable. he added 225,000 new job in january, the unemployment rate is essentially at its lowest level in half a century. this prosperity is being shared by all americans. african-americans and hispanics, where their unemployment rate has reached regard lows last year. the prime age labor force participation has reached 2.2 million people that were previously out of the work force and not surprisingly, consumer confidence has increased dramatically since the months before the president's election. every member of congress should celebrate these remarkable outcomes which have resulted from republican leadership on pro-growth policies like tax reform and regulatory right sizing. but our economic prosperity also hinges on the federal reserve having good policy. the federal reserve is track view of its framework to determine tools it may need in the future. chairman powell, i raise the concern that we have regulatory policy that's impinging on your capacity to make proper monetary policy. and that is why it's important that you have a regulatory review of the limitations that those regulations put on your broader monetary policy decisions. that includes systemic risk concerns that i have raised as well as open market operations, especially open market operations in the repoe mark. i thank you for your prompt sponse to my questions about the repo market operations but i'm not sure there's a satisfactory answer to what cawed the market spike in the first place and that's troubling. i've also voiced my concerns with the transition from a libor reference rate. we have nine months later i'm still concerned consumers will be impacted by the transition. we still have contracts written to that reference rate and i given recent volatility in the markets i'm concerned about volatility in mortgages, automarkets and other consumer loans that is new rate is derived from secured overnight financing. at previous hearings i've spoken about cyber threats posed to our financial institutions and your institution. and china in particular. yesterday's news about the exquestion fax data breach is deeply troubling and is a wakeup call to every single policymaker that we need to take the threat of china and the chinese communist regime quite seriously. if we're not taking them seriously, have no fear, they are taking us very seriously. and now they have basically all of our data too. for the spillover effects of this question of chinese policy is significant. not just for cyber security but what we're seeing with the corona virus and the destabilizing effect it has on global health. i know you're not a global health expert but you can give us some sense of your measurement techniques and response to these economic changes that are being driven out of the coronavirus challenge in china and the spillover effect it has to its neighbors and supply chain as well that's derive through the china. the nature of china's regime may not fit neatly into the fed's risk assessments. the fed has acknowledged in its financial stability report that cyber risks don't fit neatly either. the risks are real. even though our data is limited to coming out of china and the limited data we have we question still, we should reflect appropriately upon what we know and how we respond as an american government to the western world in response to these threats. both cyber and health risks. and spillover effect it has on our economy. chairman paul, thank you for being here. thank you for your openness, thank you for your approach as chair of the federal reserve. to the -- in the language of the people rather than simply the language of the ph.d.s. with that, i yield back. ms. waters: i now recognize the chair of the subcommittee on national security, international development, and monetary policy, mr. cleaver, for one minute. mr. cleaver: thank you, madam chair. mr. chairman, first of all, appreciate your willingness to travel around the country to do 14 of those fed listens sessions one at the kansas city fed building. it's a rare opportunity for most people to get to sit down and discuss economics with the chairman. thank you very much. when you came to kansas city people were sitting around the table wishing you and -- listening to you and give jug a picture of their struggles and strife and trying to make it in the economy and people are also concerned about inflation. they believe it's like toothpaste, once it gets out, hard to get back in, so we're concerned about it but also appreciative of your work and i look bard to getting a little further into this as we proceed. thank you, madam chair. ms. waters: i now recognize the subcommittee ranking member, mr. french hill, for one minute. mr. hill: thank you, madam chair, chairman powell, thank you for being here today, we appreciate your willingness to come and field our questions and provide your insight. i want to take a moment and echo this comments of the ranking member on the community reinvestment act. i know that's received a lot of attention. i read governor brainerd's very comprehensive views on the topic and we had mr. auden here rae cently to discuss the o.c.c.'s point of view. as a former community banker it's my view that we should ultimately have one approach to c.r.a. among the financial services regulatory agencies. i've had 40 years of dealing with inconsistency and delivery of regulatory proposals and so i do think ultimately would be productive for us to have one approach to that regulation and modernize it for the digital world we live in today. i look forward to your presentation today and madam chair, i yield back. ms. waters: thank you. i want to welcome to the committee our distinguished witness, jerome powell. chairman of the board of govern yoffers the federal reserve system. he served on the board of governors since 2012 and as its chair since 2017. mr. powell has testified before the committee and i believe he does not need any further introduction. without objection, your written testimony will be made part of the record. mr. powell, you'll now recognized to present your oral testimony. mr. powell: thank you very much. chairwoman waters, ranking member mchenry and other members of the committee, i'm pleased to present the federal reserve's semiannual monetary policy report. my colleagues and i strongly support the goals of maximum employment and price stability that congress has set for monetary policy. congress has given us an important degree of independence to pursue these goals based solely on data and objective analysis. this independence brings with it an obligation to eblings plain clearly how we pursue our goals. today i will review the current economic situation before returning -- before turning to monetary policy. the economic expansion is well into its 11th year and it is the longest on record. over the second half of last year, economic activity increased at a moderate pace and the labor market strengthened further as the economy appeared resilient to the global headwinds that intensified last summer. inflation has been low and stable but has continued to run below the fomc's 2% objective. job gains averaged 200,000 per month in the second half of last year and an additional 225,000 jobs were added in january. the pace of job gains has remained above what is needed to provide jobs for new workers who enter the labor force. allowing the unemployment rate to move down further over the course of last year. the unemployment rate was 3.6% last month and has been near half century lows for more than a year. job openings remain plentiful, employers are increasingly willing to hire work wers fewer skills and train them. as a result, the benefits of a strong labor market have become more widely shared. people who live and work in low and middle income communities are finding new opportunities. employment gains are broad based across all racial and ethnic groups and levels of education. wages have been rising particularly for low-paying jobs. g.d.p. rose at a moderate rate over the second half of last year. growth in consumer spendinged are mated toward the end of the year following earlier strong increases. but the fundamental supporting household spending remains solid. residential investment turned up in the second half but business investment and exports were weak, largely reflecting sluggish growth abroad and trade developments. those same factors weighed on activity at the nation's factory whose output declined over the first half of 2019 and has beenlyle changed on net since then. the february monetary policy report discusses the recent weakness in manufacturing. some of the uncertainties around trade have diminished recently but risks to the outlook remain. we are closely monitoring the emergence of the corona virus which could lead to destructions in china that spill over to the global economy. inflation ran below the 2% objective throughout 2019. over the 12 months through december, overall inflation based on the price index for personal consumption expenditures was 1.6%. core inflation, which excludes volatile food and energy prices, was also 1.6%. over the next few month we expect inflation to move up closer to 2% as unusually low read frgs early 2019 drop out of the 12-month calculation. the nation faces important longer run challenges. labor force participation by individuals in their prime working years is at its highest rate in more than a decade, however, it remains lower than in most other advanced economies and there are troubling labor market disparities across racial and ethnic groups and across rezwhrovense country. in addition, though it is encouraging that productivity growth, the main engine for raising wages and living standards over the longer term, has moved up recently, productivity gains have been subpar throughout the long economic expansion. finding ways to boost labor force participation and productivity growth would benefit americans and should remain a national priority. i will turn now to monetary policy. over the second half of 2019, the fomc shifted to a more accommodative stance of mop tear policy to cushion the economy from weaker global growth and trade developments and to promote a faster return of inflation to our symmetric 2% objective. we lowered the federal funds target range at our july, september, and october meet, bringing the current target .75%.to 1.5% to 1 at our subsequent meetings with some uncertainty around trade having diminishing and thoughs that growth may be stabilizing we left the rate unchanged. the fomc believes the current stance of monetary policy will support continued greth and inflation returning to the 2% objective. as long as incoming information about the economy remains broadly consistent with this outlook they are current stance of monetary policy will likely remain appropriate. of course, policy is not on a preset course. if developments emerge that cause a material reassessment of our outlook, we'd respond accordingly. taking the longer view, there has been a decline over the past quarter century in the level of interest rates consistent with stable prices and the economy operating at its full potential. this low interest rate environment may limit the ability of central banks to reduce policy interest rates enough to support the economy during a downturn. with this concern in mind, we have been conducting a review of our monetary policy strategy tools and communication practices. public engagement is at the heart of this effort. through our fed listens event, we have been hearing from representatives of consumer, labor, business and other community groups. the february monetary policy report shares some of what we learned. the insights we have gained from these events have informed our framework discussion as reported in the minutes of our meetings. we will share our conclusions when we finish the review, likely around thed my tholve year. the current low interest rate environment also means it would be important for fiscal policy to help support the economy fit weakens. putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to insist -- to assist in stabilizing the economy in a downturn. a more sustainable federal budget could support the economy's growth over the long term. finally, i will briefly review our planned technical operations to implement monetary policy. the february monetary policy report provides details of our operations to date. last october, the fomc announced a plan to purchase treasury bills and repo operations. these have been successful in supplying an ample supply of reserves to the banking system and the reserve rate. as we continue to build reserves toward levels that maintain ample condition we intend to gradually transition away from active use of repo operations. as reserves reach durably ample levels we intend to slow purchases to a pace to allow our balance sheet to grow in line with trend demand for liabilities. all of these technical measures support the efficient and effective minnesota tear policy. they are not intended to represent a chance -- sorry, a change in the stance of monetary policy. as always, we stand ready to adjust the details of our technical operations as conditions warrant. thank you, i look forward to discussion. ms. waters: thank you, i recognize myself for five minutes for questions. in december, 2019, from the o.c.c. and fdic issued a notice of proposed rule making, the federal reserve did not join in this proposal. fdic board member green worge voted against the proposal, describing it as a deeply misconceived proposal that would fundsmentally undermine and weaken the reinvestment act. in remarks last month, federal bralord ard governor said, quote, given reforms to the c.r.a. regulations are likely set expectations for decades it is more important to get the reforms done right than to do them quickly. that requires getting external stake holders sufficient time and analysis to provide meaningful feedback, a range of option for modernizing regulation, unquote. chair powell, the governor also suggested in a speech last month that the federal reserve created a database of 6,000 public c.r.a. evaluations looking at how various c.r.a. investments support low and moderate income communities. as the fed used this database to evaluate how bank activities would be under the o.c.c. and the fdic's proposal to c.r.a.? >> if i understand your question it's whether we used our database to evaluate their proposal? ms. waters: that's right. mr. powell: i'm not sure we have, maybe i con provide context, if that's appropriate if i may, which is just that we do agree that this is a good time to update c.r.a. in light of changing technology and demographics. and we agree on the goals, we put a lot of work into this, tried hard to get on the same page but weren't able to do that. we have some different ideas. ms. waters: does the fed intend to do -- do you intend to do the assessment that i referenced regarding the database to evaluate bank activities? and how they'd be assessed under the o.c.c. and fdi's' proposal for c.r.a.? mr. powell: the real point of that data pace was -- day pa base was for us to create our own met ribs. we want to be very, very sure that what comes out of this is a proposal that, from us, that will leave all, you know, major participants in c.r.a. better off. so we think it's important that each metric, each change that we make is grounded in data. that was the purpose, to help us develop our thinking and our proposals. that's essentially what we've been using it for. ms. waters: given the magnitude of c.r. ample regulations, do you think the comment period should be extended to allow the public to weigh in on such an important undertaking? mr. powell: that's a decision for the o.c.c. ms. waters: i know it is but what do you think? mr. powell: i think it's not our role to comment on their proposal. we have our own work and our own ideas we'd be happy to share but it's up to them to make that decision. ms. waters: are you completing your assessment? are you continuing to look until you come to a final decision? mr. powell: we are. ms. waters: do you think don't you can the public should have more time to do that also? mr. powell: they will, when the time comes. for the time being what we are doing is looking forward to reading the comments on the proposal. i think we'll all learn quite a lot from those comments. and we'll be able to incorporate that thinking and whatever changes are made to the proposal. there may be substantial changes to the existing proposal coming out of the comments. so i think we're -- we're -- our view is that we want something that will lead everybody -- leave everybody better off and have broad support. that's what we're going to be working on. ms. waters: as you may be aware, democrats on this committee urge regulators to provide a public comment period of at least 120 days on any c.r.a. reform instead of the 60 days that o.c.c. and fdic has provided. community banks, state regulators and community groups have called on these agencies to extend the comment period and even though you said it is not your place to comment on whether or not it should be extended, i wish you would think about. this i wish you would, as you're doing the assessment, and as you have said, it is important for the public to be able to comment, review what you are thinking and if you change your mind, let us know. about commenting on whether or not we should extend the comment period. you don't have to respond to that thank you very much. the gentleman from north carolina, ranking member mr. mchenry is recognized for five minutes. mr. mchenry: when somebody else has a negative comment about the federal reserve that's sad but when i as a policymaker on the hill have a negative comment about the fed it's good. so it's all about the eye of the beholders when it comes to the political debate here in washington. congress made a decision over 100 years ago to outsource monetary policy to the federal se serve -- reserve. your construct of law, you're given independent operations, and you have a set term of office. so the independence of the fed for monetary policy is appropriate and is long-standing. every president in the last 100 years has had some private criticism and we found out at some point about that criticism. either through press reports at the time or later or some biographer's work about the president. but here on the hill, we can make negative comments about the fed and attack the president for having negative comments about the fed. right? so all this stuff is just rich politics. let's get down to the essence of this. you're one of the big -- you're the biggest regulator in town when it. cost -- comes to the financial world. i have concerns i want to address that are regulatory in nature that i think impinge on monetary policy. the repo market, for instance. these operations you said are temporary in nature. is that still true? mr. powell: yes. our expect is that we will continue our bill purchases at east through -- into intethe second quarter and continue repo operations into april. the sense of that is though we're building up a level of reserves to a level that will mean we don't have to be involved in open market oringses on an ongoing basis and that is going to take that period of time and as the underlying level of reserves rises due to our bill purchase, the need for repo will decline and at some point we'll reach that level of ample reserves. at that point forward it will grow at trend level. mr. mchenry: are you doing review on your capital requirements, for financial institutions that should be participating in the repoe market? >> i think we've reviewed supervisory practices that may be affecting the flow of liquidity. the main foe us is the -- focus is the federal funds market and our ability to transmit our policy decisions smoothly into she money markets through the federal funds rate. what happened last september, early september, was that there was unusual tightness and volatility and we attribute that to the fact that what appeared to be ample levels of liquidity didn't flow where they might have and so we're really doing two things. one, we're raising the underlying level of liquidity by raise regular serves to a level that's higher than we had thought we needed and that process as we mentioned would take to the middle of the year. part of that is a supervisory assessment as well. to make sure the policies being driven in terms of institutions. mr. powell: that's right. we've been doing that since september. mr. mchenry: so i raise this in my opening statement about china. now, you have spoken publicly about your assessment, your thinking as you see what is happening with china's response to the coronavirus. we wish them well. we have high hopes that they're going to be able to tackle this crisis, this public health crisis they're facing. but walk me through your thinking and assessing the situation in china now, in terms of the economics, and that potential spillover effect. mr. powell: i'll quickly start by saying again that we find the u.s. economy in very good place, performing well. we see signs of global growth bottoming out. we see reduced trade policy uncertainty. overall, the background we see strong job creation, continued modern growth. all this happens montana context of a good, strong u.s. economy. into that picture comes the coronavirus. so the question is how do we think about that? we observe the human tragedy which is ter to believe watch. the question for us really is what will be the effects on the u.s. economy? will it be persistent? will they be terrible? that's the question. wing know there will be effects on china through some part of the first half of the year and china's close neighbors and major trading partners in europe as well as asia and we know that there will be some, very likely be some effects on the united states, i think it's too early to say. we have to resist the temptation to spebling late on this. and so we'll be watching that carefully. again, the he question we'll be asking is will these be persistent effects that could lead to a material reassessment of outlay. mr. mchenry: so question of length of time and whether or not this is a temporary disruption. mr. powell: yes. mr. mchenry: thank you. ms. waters: the gentlewoman from new york, ms. velazquez, is recognized for five mins. ms. velazquez: thank you, chairwoman. i would like to follow up on ms. water's question on c.a.a. -- c.r.a. what aspects of proposed changes to c.r.a. do you find most troubling? mr. powell: what i'd like to do if i may is not so much community directly on the other proposal but talk about how we are looking at this. again, we think -- i will mention the areas in which we differ. ms. velazquez: i hear you, but i just would like to ask you if the fed is unable to reach an with them, can do you expect the fed to issue its own proposal? mr. powell: we haven't made a decision on that et yet. right now our focus has been on trying to get on the same page. we haven't been able to do that. now our focus is going to be on learning from the process. i think we'll learn a lot. ms. velazquez: are you meeting readily with the f.c.c. and odic on this issue? mr. powell: we did far long time but are not currently. ms. velazquez: do you agree with governor brainerd's comment that it's more important to get it right than do it quickly? mr. powell: yes, i believe that's right. ms. velazquez: we have been concerned by banks' grow regular license on cloud-based service providers for data storage needs. does the fed have all the access authority it needs or are there any contractual or legal limitations restricting the fed's ability to obtain the data held by third parties that it needs to properly understand and manage this growing reliance? mr. powell: i think we do have the legal authority that we need. we are able to look into third party service providers. and we're doing that more and more because of the -- as you mentioned, the prominence and size of these, growing importance of these cloud service providers. ms. velazquez: thank you. i yield back. ms. waters: the gentlewoman from massachusetts, ms. wagner is recognized for five mins. mrs. wagner: i thank the chairwoman, thank you for being here, chairman powell. we're all very interested, this just happened on january 29, despite the rico spike, i know the ranking member mentioned it, i know you're in the middle of your review and such. more uld this, a little specific question, could this market turmoil be symptomatic of deeper difficulties for the financial system? >> really it doesn't appear to be at all. since we took the measures we took in early september, r pembings o marks and money markets have been functioning very smoothly. hasn't been a return to the volatility. they're functioning very normal, really, without including over year end. we haven't had any return to that it's pretty clear that the measures we took directly addressed the problem. you know when the medicine is working you can really see and it seems to be working well here. mrs. wagner: we had a confluence of things happening at that time with the quarterly, the taxes due, along with the treasury auction debt of upwards of i think $78 billion, wasn't it? mr. powell: yes. mrs. wagner: do you think that was a function of perhaps this luke, would you call it? mr. powell: we knew all that we asked banks to tell us, what's your lowest comfortable level of reserve we got those nurps, added them up, put a buffer on top, and still suggested there was plenty of reserves in the system. this then this happened. that makes us think. we knew about those. mrs. wagner: right. those are definitely on the horizon. i hope you'll find if there's anything symptomatic and we look bard to that turn the page. chairman powell in december of last year, i asked vice chairman for an update on the status of updating the surcharge and plan for finalizing the capital buffer proposal which i understand will be -- will require a reproposal with a comment period. in january, vice chairman corls delivered a speech where he spoke about bring, quote, reasonable transparency to several aspects of the federal reserve supervisory and regulatory framework. last week the fed released the c-card stress test scenarios. to my knowledge, there has been no progress or update on the status of the stress capital buffer, apart from continued assertions by you and the vice chair that aspects of the proposal will be incorporated in the 2020 c-card. given the acknowledgment by principals at the fed of the importance of transparency, i guess i'm concerned about the lack of transparency in this process. when can we expect progress on this proposal that has, gosh, it's been in process now since i think april of 2018. >> we do continue to expect and intend that the corps of the buffer will be incorporated in the buffer in time for the 2020 stress test. we're moving along on that and we're on track to do that. mrs. wagner: you do feel on track to do that then? mr. powell: yes. mrs. wagner: committee republicans have underlined the importance of cyber threats as a potential systematic risk. we have recently seen mall ware attacks undermine -- malware attacks undermine government infrahaveture and according to research last month at the new york fed, a simulated cyber attack on just one major u.s. bank could have spillover effects impacting 38% of the wholesale payments network. what can the u.s. do better, chairman powell, in order to prioritize these constant flow of cyber risks and strengthen the resilience of our financial sector? mr. powell: i think we can, and have to, keep doing what we are doing which is to make this a top if not the top, supervise not - vupe sizery priority just for banks but across the landscape. we have very high expectations particularly of the largest banks on their ability to fend off cyber attacks, we're constantly meeting inside the government to make sure that our system is resilient and redundant and strong against attacks. but there's never a feeling you have got ton a place of comfort on that. we just have to keep working and it's staying in the minute, learning with the new attacks are, making sure that the banks are doing the basic housekeeping and all of that is very much in train and it will -- we'll just have to keep at it i think for a long time. mrs. wagner: thank you, my time has expired, thank you again for being here chairman powell. i yield back. nowwaters: the gentleman is ecognized for five minutes. mr. sherman: couple of responses . the stock market is way up and 1% in real terms after inflation. wages at the bottom have risen. chiefly in those states where we raised the minimum wage. and when we have a democratic majority in both houses, we will raise the minimum wage nationwide and deal effectively with those states that have not seen an expansion of wages at the bottom. i've grown not quite old but spent many decades in this room nd seen your predecessor's predecessor's and predecessor both en they are attacked traditional and new fangled and now we have a new president and they are pushing on the other side. all i'll say is that i have consistently from the days of mr. greenspan been pushing for wer interest rates and quantitative easing because you returned $55 billion to the treasury last year and that's not your purpose, but think of the kids that will get an education because we could fund aid to local education, think of the medical research and the lives that will be saved because we were able to fund medical research. i don't think the $55 billion should be regarded as irrelevant or embarrassment. as to the jobs' growth we have seen recently, the jobs grew faster in the last three years of the obama administration than the first first three years. he inherited a plane as he inherited so much else. the plane was on automatic pilot and was going in the right direction and hasn't completely managed to screw it up. we have an issue that i think ought to be completely bipartisan. it is libor. chairman powell, should congress give the fed the right to prescribe backup rates when the fed instruments do not do so or hould we adopt -- or what we can we do this year and solve the problem 12 months in advance. mr. powell: on libor our process is ongoing and having the banks ready by next year to switch over. that date -- mr. sherman: they need to know what to switch over to and we want to avoid the lawsuits when somebody can say it should be this instead of this. they not only have to have the technology to make the switch but legally what they are supposed to do. mr. powell: if we need a federal law changed -- mr. sherman: you have less than two years. mr. powell: i don't think we need a federal law change. mr. sherman: there are people who want to wait around between two, three months and come to congress and now fix it. two years is too short a time, because we are talking about the economy today and there is the slight risk out there of litigation and uncertainty with regard to legacy libor and that's one of the things we can help the economy. i hope you act within a month to let us know what you propose rather than wait until next year. another area we talked about before is the wire transfer system. we have seen $150 million lost to scams and those scams arise chiefly because when you wire money, you do so to a number but there is no payee identified. the british have gone to a confirmation payee system. the international standards organization has prescribed changes that would require at least i had fakes of payee -- identification of payee. ou have should and i can't see prevent the fed of what the wire system would be. and looks like i will ask you to get back promptly. ms. waters: the witness is required to provide a answer for the record. mr. lucas. mr. lucas: before the testimony you were asked what steps the federal reserve to assess the effects of climate change. in your testimony, you made the distinction between the stress test for climate risk that the which is gland does impact capital requirements. my understanding is that the bank of england is asking financial institutions to think through portfolios. but they are not currently integrating those measures in the capital requirements. what is the fed doing in terms of research on global climate risk. mr. powell: climate risk is very important issue that congress is largely assigned to other agencies and plays into our work as it relates to the public's reasonable expectation that we would make sure that the banks and utilities that we supervise are resilient against the longer term risks against climate change. we are in the early days of understanding what all that means. there is work going work around the world to figure that out. you talked about the bank of england stress test, those are not intended to reform capital requirements but what might be the effects on banks. mr. lucas: are you greening the financial system? mr. powell: we have attended their meetings. my theory is when you are join an organization like that, you are not necessarily signing up for everything that everybody there believes you can benefit from the work that is being done. we have not made a decision about membership. mr. lucas: there are changes that would increase accountability and i was encouraged by comments and will be following this closely, of course. one change the vice chairman outlined that the federal reserve should restore supervisory operations which will allow notice of a supervisory concern without rising to a level requiring attention. could you tell us the time line of what you see to improve supervision? mr. powell: what the vice chair did he pointed to this tension that exists between fundamental expectations between due process and transparency around what the government does and should, but also with supervision, which by its nature is private and discretionary and he pointed out that tension and the need to shed more light on that and to ask where there are places where supervision needs to incorporate that due process thinking. it is healthy to think about and something we will be working on. mr. lucas: in light of the cor owna virus, i can't help but think, i spent a lot time around my grand parents and great-aunts and uncles. their tales of firsthand experience were very graphic as it rolled through western oklahoma. the reason i bring this up, their description of that particular virus in that society and brought things to a stop. my mother's family and father's family were fortunate. no one died from what was called the spanish flu. but it brought society to a stop. with 4 ,000 cases worldwide and the impact in china, how is china and neighboring countries are responding to the impact .rom the cor owna virus mr. powell: they are responding to the outbake and containing it and the chinese government is taking strong measures. businesses are closing down in the affected areas. in terms of the economy, the people's bank of china has done a number of things to support economic activity and you can expect the chinese government to support economic activity and said they are open to cushion the economic effects. the e not yet able to size economic effects but governments will be acting in asian china to offset those. mr. lucas: i yield back. ms. waters: the gentleman from new york, mr. meeks. mr. meeks: in the past few years given the so-called the state of the economy. mr. powell: the pattern was at the beginning, it was more -- people who just left the labor force. what we have seen in the last two, three years has been wages moving up at the most at the bottom of the wage scale. we do see during this long expansion significant effects now in low and moderate economies and we have been hearing quite a lot about that. that is very positive. more to your point, though, waiting for the eighth, ninth, 10th, 11th year of strategy, we do see those things, the labor market is strong. but there are programs to address the longer run needs of those communities other than the business cycle. mr. meeks: during this period of time, would you say that a number of us have been arguing and moving toward a $15 an hour minimum wage for individuals on the bottom, do you think that has something to do with helping them also that many states have adopted a $15 or hire ming wage? mr. powell: let me first say we don't take a position on the minimum wage. that is what legislatures have to undertake. mr. meeks: i understand. mr. powell: what is driving up wages suggest there is a role there for the minimum wage increases. states have seen -- there is a noticebly higher increase. but it is broader than that and the factor is very low unemployment and strong labor market. mr. meeks: the other concern that i have, it seems as though unemployment goes lower, et cetera, it is still when you look at black unemployment it remains double that of white unemployment and stays that way whether it is a down cycle or up cycle. any signs of how we close those gaps? because there are always gaps that happen between the african-american community and whites. mr. powell: there are persistent gaps and very troubling and they are not in the long run that monetary policy can address. it is up to other policies by governments, state and local governments and federal government and businesses do. we have an interest rate tool and what we can do is support the goals you have given us. we see positive effects from that but over the longer run, it needs broader policies of education and other things that would help with that issue. mr. meeks: i know chairwoman waters asked you questions about c.r.a. and maybe you can answer some questions. the framework that was put brainard notvernor oo long ago is that the same framework of the federal reserve board or just her opinion and that of the board? maybe you can clear it up. is the board seen similarly as governor brainard. mr. powell: that represents the thinking -- she has been working on this and i asked her to leave this effort for us and has been head of that committee for some time. i'm comfortable with the thinking that is in that speech and support that set of ideas and that approach, but it's not at a place where we can say that is a proposal because we haven't taken it to the board yet. ms. waters: the gentleman from florida, mr. posey, is recognized for five minutes. mr. posey: the world is experiencing a dramatic growth in the space economy and many are marveling at the expansion of civilian space launches. i represent the kennedy space center and we are excited about all that. several incidents have put the level of current space economy at $400 billion a year with a growth rate of 8% from 2018 to 2019. in december, the bureau of economic analysis announced the creation of a satellite account. a new effort to measure the space sector on the u.s. economy with the special emphasis on the commercial space segment. input from ve government agencies. i recall that the atlanta fed has applied its expertise to report on the economy of the space district. first question, can you work with me to ensure that the deral reserve with an eye to avoiding boltnext on a path toal healthy growth rate? mr. powell: first i'm hearing about it. i'm happy to assure you we will look at it and something to be productive, we will take part. mr. posey: we have a expansive policy and ensure the freedom of the fed to manage our economy congress does not direct day-to-damon tear policy or generals in battlefields, nor should we. the g.a.o. conducts policy audits of the defense policy and strategy and g.a.o. is restricted from conducting policy audits. i'm challenged to understand how licy audits is ok and policy audits of the fed are off limits. the defense industry is as sensitive as the monetary policy. mr. powell: g.a.o. doesn't do policy audits at the fed with one exception. congress chose long ago to create a one step of distance away from the g.a.o. in order to underline our independence. that was a wise move. changing that would be seen by minimum you a dim is of our independence. we look to this committee on oversight. and our road to oversight and transparency runs right through this community and the senate banking committee as well. that's what i would tell you about the g.a.o. mr. posey: what do you think makes the fed more immune to review than the defense? what's the rationale behind it? mr. powell: everything we do on payments and financial regulation, every single we do is subject to g.a.o. audit. the public should understand we are audited, our business model is about as similarp will as that and not complicated and constantly audited. what this exemption it prevents the g.a.o. from coming in and assessing monetary decisions. which you saw fit to carve out of law. and i think it was the appropriate thing to do and it would be unwise to take a step back from that. i don't see the harm it's doing. mr. posey: the former chairpersons of the fed have indicated they didn't want to be second guessed on their decisions and the public doesn't have a right to know. i find that illogical, quite frankly and that's why i ask you these questions. mr. powell: we are very transparent, we publish minutes and transcripts. we publish everything but. mr. posey: the but exemption is overdue. ms. waters: the gentleman from missouri, mr. clay, the chair for the housing, community development, recognized for five minutes. mr. clay: thank you, chairman powell, for being here today. for most of the constituents in my congressional district, they are not focused on the dow, maintaining the 30,000 level, but simply trying to make ends meet. anes a as part of the demographics of wealth series examined the connection between race or ethnicity and wealth accumulation. over the past quarter century, it was the result of an analysis of data collected between 1989 and 2013 through the federal reserve survey of consumer finances, more than 40,000 heads of households were interviewed over those years. median hispanic and black wealth levels are about 90% lower than the median white wealth level yet median level are only 40% lower. the larger racial wealth gap could be due to hispanics and blacks investing in low return assets like housing as well as to borrowing at higher interest rates. hispanics and blacks could feel less of a need to save for the future because society's progressive old aged safety net programs will replace a a relatively larger share of the incomes they earn during their working years. could you comment on why many communities continue to lag and how the fed via its monetary policy might seek to address some of the underlying factors that have led to growth inequality. mr. powell: what we can do and what we have been doing is to take seriously your order to us to seek maximum employment and that's what we are doing. we just learned and watching what's been happening that unemployment can be lower than many had expected without raising inflationary or other concerns. that's what we can do and we will continue to do. that is showing up in communities everywhere. other governmental and other tools are necessary to address longer term problems. mr. clay: how do we address the pay inequity? how do we impress upon corporate america it does this country no good to have a persistent pay inequity among its workers especially when you look at the disparities in the races and the pay inhe canity? mr. powell: it's important that those issues be addressed. it's not really for the fed to prescribe the measures to address them. we have this grant of independence including the g.a.o. exemption and to keep that, we have to stay to stable prices and supervise the banks. mr. clay: on another subject when the federal reserve our proposal on the community re vifment -- reinvestment act hich takes into account. mr. powell: our focus right now is on the ongoing process of the other agencies' proposal and comments. we shall going to learn a lot from those comments and there will be changes to that proposal coming out of the comments. we have not made a decision about our own proposal. mr. clay: well, traditional monetary policy works through a single economy-wide variable, single interest rate or perhaps the money supply of growth or credit. cd policy aims at directing credit in specific forms towards specific groups of borrowers. credit policy consists of a central bank operations targeting specific segments of the private debt and securities monitored. what is your view of shifting from traditional monetary theory to one of use of more tools in order to enhance more borrowing to go segments of society? mr. powell: that has not been a function of the fed or central banks generally. one tool which is our interest rate policy, when you are talking about affecting different sectors of the business community or the population, that really should be another agency or congress itself in fiscal policy rather than -- ms. waters: the witness is requested to provide an answer. missouri, mr.from luetkemeyer. mr. luetkemeyer: you heard the speech on the need to reform supervision. the role of guidance. i pushed regulateors to clarify the use of guidance and came out with an interagency statement. and he urged an additional step of doing a rulemaking of the guidance. the trump administration reached recent actions. my question is do you need official rulemaking from the fed on the role of guidance? mr. powell: we are evaluating the o.m.b. memo. guidance is not enforceable. it is not a rule. mr. luetkemeyer: mr. corals was here and he intended to look at the guidance and what he needed to be under rule or strictly guidance. that is a great approach. do you anticipate a rule to be able to do that and force that in the future. are you looking to try to do that? mr. powell: we are looking at our guidance and see if some of it is more like ar rule. kind of concerning to me is the fact that we have a lot of banks d nonbanks that are in the home mortgage lending space. nbanks in general were eliminating $215 billion and expected to triple to $750 billion. nonbanks originated 95% of our loans. 5 % of loans sold to freddie mac and nonbank mortgages make up 87% of f.h.a.'s portfolio. originators were said they were a risk. do you have any concerns? mr. powell: we have looked at and mortgages are originated and in the case of a downturn, its banks have high capital and lots of regulation and lots of liquidity and that is a good place. but these institutions are operating sometimes under funding themselves with credit lines which might not be available. there are are risks and we are determining what to do with that ment we have highlighted as a risk. mr. luetkemeyer: do you have a timetable that you will come out ? mr. powell: this is something that the treasury has a lead on. mr. luetkemeyer: one of the things that concerns me with regard to home leapeding is the stack of forms you have to go through. we had a gentleman here, credit union but stack was this tall and he said we don't measure by the page but by the pound. this is how off the charts we have gotten when you have a stack of papers to do a home loan. i want to engage you in a way to reduce that down to where it is manageable and protections in there for the consumer and enough information to allow the bank and regulateors to see it. this can't continue to grow. this is crazy. do you have an opinion on that? mr. powell: to the extent it is not legally mandated. a lot of it is legally mandated. to the extent it is not, we try to make assessments what is necessary and what is not. but it is a big challenge. mr. luetkemeyer: i did not ask a uestion about cecil today. ms. waters: the gentleman yields back the balance of his time. the gentleman from virginia, mr. cott, is recognized. mr. scott: chairman powell concerning libor, the alternative reference rate committee is pursuing in new york legislation to aid legacy contracts in new york state. would the fed support federal action in that regard? mr. powell: mr. stot, some of the members, the members are not seeking legislation but some members approached the legislature. we have not reached a point where we think it's going to be necessary. we have plans to do that. if we do believe that federal legislation is necessary, we will come and tell you and we understand that that's not something you can do in 24 hours. we know the time for that is very good. mr. scott: let's move over to great britain for a moment. the u.k. regulateors have been very direct with their financial institutions and recently established a goal for their libor tions to see lending by the third quarter of 2020. why has the fed not been so direct? and do you have plans to set clear goals and guidelines for your regulated institutions? >> we will do that at some point. you may have seen that they have and they won't accept libor that will happen now well in advance of the deadline which is the end of 2021. mr. scott: chairman powell, your fed board recently finalized its rule of tearing into the hopes of providing more clear and well-defined risk indicators to determine the regulatory requirements that are placed on firms based on their size and risk but the board has never disclosed nor provided clear and quantity ta tatetive criteria under its enhanced supervise re regime that is called supervisory committee and even your vice chairman recently gave a speech where he said that he would like to align the portfolio with the tayloring categories and make the designation transparent. and you recently indicated you agreed on the need for brighter lines. could you outline what changes the board is considering to end this supervisory framework? mr. powell: we are working out the specifics, but i would agree that we should provide more clarity what is in the firm and that will be the category one firms. mr. scott: thank you. let's move to and you are a great man and good man, a good friend. i respect you tremendously. but chairman powell, the fed is the axle of our financial system. you are the most powerful regulator. and i want you to stand back up to mr. aweding of this business of him coming with this rulemaking change to the community reinvestment act. let him know that you not only ave a mandate for inflationary monetary policy, you have a dual mandate, employment, jobs and here's the other thing. you need to remind him that this bees of legislation, this law, the community reinvestment act precious to the nation, but it's precious to african-americans more than anybody, because when the civil rights act, when the voting rights act that dealt with the big issue facing african-americans, financial stability and the two anchors r that is a home, owning a house, and having a job. and this bill was the bill that outlined redlining that kept african-americans out. he needs to back off of that. you need to assume your power in this and let him now we are serious and to back off this rule change. wow ms. waters: the gentleman from ohio, mr. stivers, is recognized for five minutes. the last for about 3% the last few yours. mr. powell: if you look at a range of measures, then you would see wages moving up at about 3%. mr. stivers: we have record low unemployment rates for african-americans and hispanics, is that correct? mr. powell: that's correct. mr. stivers: the fundamentals of the economy are in pretty good shape, would you say that is correct? mr. powell: i would and i did. mr. stivers: an economic expansion does not die of old age. that is a great quote. do you think many businesses and investors are trying to talk themselves into a recession? mr. powell: i don't think so and i would hope not. there is nothing about this expansion that is that is unstable or unsustainable. mr. stivers: the fundamentals are strong but a lot of people are worried and i hope that they don't talk themselves into a recession. i agree with you on that. given 2/3 of lending and capital formation occurs in the capital markets, what is the federal reserve doing to coordinate with the securities and exchange commission and as prudential regulateors to make sure there is actual coordination on the capital markets. mr. powell: t they have primary regulatory authority for those mashts and we have supervisory regulatory authority over the banks. we egulate some and the collaborate on all of that. and collaborate on that. mr. stivers: the lines between securities are blurring more than ever before and i would ask you and vice chairman to redouble your efforts because i do hear it from some of the firms that are regulated and feel like it is not coordinated and redouble those efforts, i think it would pay dividends to the american investor and american economy. a couple of other quick questions here. what do you think the most significant risk to the financial system is today? mr. powell: i have to start by saying, i think the financial system is strong and has been materially strengthened since the financial crisis. stress test, keep them on their toes and they have real resolution plans. none of that was in place before. the financial system is germly in a good place. the thing that we worry about a lot is cyberattacks. i think we have a great game plan for traditional issues. it is more cyberattacks and the frontier where you worry and we work hard on that. all the agencies do. we work together. the institutions. but that is the major focus. mr. stivers: interesting note, mr. chairman, you are in line ith the c.e.o. o. of the biggest institution. mr. stivers: i'm out of time. ms. waters: the gentleman from texas, mr. green, who is the chair for the subcommittee on oversight and investigation is recognized for five minutes. mr. green: thank you for appearing today, mr. powell. this is an observation, not a criticism. you indicated that the fundamentals are strong. however, you also indicated that the last f.m.o. press conference that you were a bit surprised that wages failed to move up despite well into an expanding economy, sustained levels of historically low unemployment and increased labor force participation. fundamentals are strong. rong, yet nearly half, 42.4% of working americans in 2019 made less than $15 an hour. fundamentals are strong. good many of the people in my congressional district, mr. powell, are more concerned about the upermarket prices than stock market. and they go to the supermarket they are concerned about the prices of procket tore and gambel prices, not the stock. the stock market means nothing to them. it's what they have to pay for products in this surem market. this brings me to my question. has there been a study to give $15 an ense of what a hour wage will do for the economy? study of what a $15 an hour wage will do for the economy? has the fed done such a study? mr. powell: that's not something that we would do. mr. green: i don't mean to be crude, rude and undefined. disclosure the project. you concluded that the 500 largest companies are exposed to trillion dollars in risk. someone could argue that is probably something you ought not to do but i understand that climate change is important to the fed because it will have a global impact. but i think you can take a closer look at this, you are the ultimate authority on price stability. and what wages will have on the economy. give me some thoughts, mr. powell. can you help us, please. mr. powell: there is a great deal of research that is done on minimum wages and i don't know of a particular one but there has to be research of what a ederal what a $15 wage increase. mr. green: i agree with you. but they don't come from the fed r the entity that has the dual mandate, price stability, employment or unemployment. it would mean something to working people if we could get such a study, notwithstanding what others have done and these are observations. i have enjoyed visiting with you. notwithstanding what others have done. this would be meaningful to working people. by the way, $15 an hour is not enough as a minimum wage. it ought to be at least $20 now but i'll settle for $15 to get that. can we discuss with you the possibility of a wage project? mr. powell: i'll go back and talk to our labor people who know this issue very well and have published on these issues. let me come back. mr. green: i have 46 seconds and going to applaud you for it. personal applause. madam chair, i will yield back the balance of my time. ms. waters: is the gentleman requesting an answer in writing for the record on this question to the chairman? mr. green: yes. ms. waters: the witness is requested to provide anance. the gentleman from kentucky is recognized. >> i want to talk about the importance of fiscal policy in supporting the economy. what would you say is the lag time associated with a major change in fiscal policy? mr. powell: it can tend to be long. with monetary policy we can change interest rates and do. fiscal policy tends to take a lot of work and some time. >> fiscal policy has changed profoundly. tax cuts, less restrained energy sector, a pull back from dodd-frank. any of these impacting current impacting conditions? mr. powell: that's not what we do when we look at the economy. >> in your testimony, u.s. economy is presently exceptionally strong. since the 2016 election, 7 million new jobs have been created. more americans are employed today. wage growth is the highest and lowest income workers have been seeing the fastest pay increase since its 2016 election. this was the headline of the "wall street journal" which i'm sure you follow and the reporting was that a tight u.s. market is drawing americans off the sidelines at a record rate. despite after last week's state of the union speech, speaker pelosi said it was appalling of the president trying to take credit of an economy he inherited. i'm not asking you to weigh in, ut when there are economic policy, is it fair to say that this president's policies are impacting today's economic conditions? mr. powell: at a high level, of course they are. >> representative wagner's question about the surcharge. in your response to our letter you aim to have the key components of the stress capital buffer in time for the 2020 and can you describe what the key components fer components. mr. powell: we do intend and will put into effect the core of the stress capital buffer. so that is coming right out. i leave the darlse to -- they are still being worked out and will happen. >> let me try to get a little more detail. is it the federal's foundation is it a suitable replacement in light of the board's stability report from november which stated that the vull changed?ibles have not mr. powell: we have not made a decision on that. >> the business round table as you probably remember announced that it was redefining a corporate purpose to elevate so-called stakeholders ahead of share holders. an investment firm intended to divest of energy to check the social governance box. i'm concerned that firms that limit investment offerings based on social and political pressure may choke off capital toll perfectly legal, productive and profitable sectors of our economy and cause investors that they need to fund their futures. as the leading voice, would you commit to raising this issue with your colleagues and urge that body to examine the extent to which a misallocation of resources away from share holders to serve politicaler ands might compromise investor returns and undermine financial stability-n mr. powell: i don't know if i understand your concern but i would be happy to discuss with it with you. >> if share holders are not a prime concern, if stakeholders who have no ownership interest in the company are the focus of a corporation, then i would submit that there is a tremendous risk of misallocation of resources away from maximum share holder returns. and i would like them to take a look at that. mr. powell: i will look at that. ms. waters: mrs. beatty is recognized for five minutes. mrs. beatty: thank you to the chair and ranking member and thank you, chairman powell, for being here today. let me also acknowledge the advocates in their green t-shirts for being here today and thank you for coming to my office yesterday and sharing what i thought was valuable information with my team and i appreciate you sitting through the hearing. chairman powell, in the latest edition of the federal reserve survey, consumer finances that was published in 2017 and gave the breakouts between whites, blacks and hispanics as it related to their net worth and we heard the statistics, i think my colleague, congressman meeks, and i'm sure others have. but what is very interesting to me while that data seems great for those researching the issue, is there any way your office could break it down by regions or cities? because when we go back home, this is one of the number one things. people are coming into my office once you get through health care and people with jobs and education, they are saying is, we look at the wealth gap that is getting wider and not coming in and while we are talking about unemployment rates being better, many people have to work two, three jobs to try and survive. someone talked about the minimum wage. certainly as we are advocating for a higher number, it's not enough in my district. $18.70 to make between wage.0 to have a liveable can this information be localized to a region or to a city to help us as members of congress as we go back home? the second thing is, i just recently introduced a bill closing the racial wealth gap, which requires the federal reserve to further break down the data. and this is something i didn't realize until studying the federal reserve and listening to the folks here today, they have some really good ideas. my second question is could you tell me if you would entertain having your folks look into looking at wage as a measure because oftentimes, many folks don't work a full-time wage but they have a full-time wage. could we look at the data based on some of the things i'm hearing from the group that came in. and i'm sure they met with some of your folks. can it be localized? and can we entertain some of the things they think we should look at when we calculate or present all the good news that is not the good news for many of the individuals sitting here or in my district. mr. powell: you are making some of our people very happy at the board of governors and love to cut the data different ways. i don't actually know the precise answer whether we can do it regionally but we would be happy to look into that for you. mrs. beatty: what the about the individual ideas looking at a way to your calculation sna your folks would be willing to work with them on some of the ideas to use a starting point of at least discussing it. we are marrying the people with the power and what a good win- win that would be for all of us and especially those have to work a little harder than the rest of us. the next thing, will your agency work with my office? i'm excited about this deal. and as i understand it, part of the reason for asking for the data is the federal reserve actually collects the data that sets the policies that then get married with the allocations that come back to the districts. i want to make sure i'm on the right path and i go back home and i say i have a bill to ask the federal reserve to collect data that can help us in the end. is that in the ballpark? mr. powell: we should get the experts to falk to you and your staff and i don't know that we need legislation at all, but we have excellent sources of data and cut them different ways. why don't we try to follow up on that. ms. waters: the gentleman from colorado is recognized for five minutes. mr. tipton: thanks for taking the time to be here. i want to follow up on the c.r.a. and had a fair amount of conversation on that and the fed has been involved with the is that fdic, correct? >> from the very beginning. mr. tipton: you comfortable not only with governor brainar dverage and the contact of her speech with respect to the c.r.a.? >> yes. mr. tipton: you are talking about the analysis and comments but to be able to work on c.r.a. modernization? mr. powell: we said yes, that sounds like a good idea to update c.r.a. and make it more transparent and effective. we went around the count try and 29 events around the country where we talked to people about c.r.a. and it turned us in a particular direction. we had a bunch of ideas and unfortunate we weren't able to gee completely with their approach and weren't completely able toll agree with ours. we continued to push and learn. i would agree with mr. hill's comment, i dealy, you would have one agreed set of standards. >> i would agree with that as well. well encouraged reading your comments and statements, people that work in low and moderate -income communities, wages have been rising. that's an area that i have a lot of concern on. in my state of colorado, we represent the rural areas. areas continue to often struggle. we're starting to see some of that real movement. we're looking at the c.r. ample reinvestment acts, talking about community banks, ill encourage you to look at that proposal, i believe they do reach further in to rural america. and you talked about policy. do you have any assessment in terms of opportunity zones included in the tax cuts and jobs act? we're seeing some benefits and investments coming into rural areas in my district, are those some of the policies we need to be looking at? >> i'm not aware of any research we've done in opportunity zones but we probably have, truthfully. in the system i would imagine we have done research on that and we'll be happy to share it with you. >> fannie maye and freddie mac just took some steps, absofere, accepting sofere based mortgages. is there any work a at a high level to coordinate the adoption of sofere? >> very much so. we're coordinating with other agencies and with the market participants as well and you will see more of that. you'll see more instances in which libor will no longer work, will no longer be usable in a particular context. that's what fannie and freddie did this week, or announced this week. mr. tipton: to follow up on the question about community banks, do you see any pluses or minuses to using sofere over libor for community banks? mr. powell: libor itself is really a problem in the sense that there's no rate the -- no guarantee the rate will continue to be published but there's a question about having a credit sensitive rate in addition to sofere. sofere will be the main substitute for libor but we are working with liegal and larger banks about thed in of -- about the idea of also having a credit sensitive rate and that's omething that's ongoing. mr. tipton: we've had a conversation about the coronavirus and the impact on the economy. the president just signed into law the us mmbing ca -- usmca, do you see that providing opportunities for wage growth? mr. powell: we don't give advice on trade policy but i think the signing and enactment and implementation of usmca will be a positive in the sense that it removes up certainty around trade policy. i think that's been part of the issue over the last year or so, has been not knowing what the rules of the game are going to be, getting those rules set sled a positive thing. mr. tipton: thank you. my time has expired. ms. waters: the gentleman from illinois, mr. foster is recognize for five mins. mr. foster: first off, i'd like to thank you for facilitating our meeting with governor brainerd, representative hill and i had on digital currency. we enjoyed that, as well as the meeting with the staff who were excellent and it's great to see how plugged in they were to this issue. in a speech last week, governor brainerd highlighted, quote, the role of central bank digital currencies and ensuring that sovereign currencies stay at the center of each pane's financial system. do you agree with her, do you think establish act digital dollar will ensure that the u.s. dollar continues to serve as the core of the u.s. and world financial system? mr. powell: to take the first part of that, having a single government currency at the heart of the financial system is something that has served us well, it's a very, very basic thing that really hasn't been in question, and i think, you know, before we move away from that, we should understand what we're doing. so i think preserving the centrality of a central widely accepted currency that is accepted and trusted is an enormously important thing. i think whether a digital cunchcy moves us along that path or not is an open question. as you know, every major central bank is currently taking a deep look at that, we feel like that's our obligation. technology has made this possible. private sector is innovating, they're doing it, it's incumbent on us and other central banks to understand the costs and benefits and tradeoffs associated with a possible igital currency. mr. foster: how would you characterize your state of progress on this, faired to other countries? the swedish central bank developing and e-kroner, the chinese, one reason there was concern about the project is they would immediately have scale. another entity in position to do that is the chinese government to roll out at scale using their already establish payment by cell phone systems. they would immediately have the scale comparable to facebook if they rolled that out. and so how would you characterize our ability to respond to this potentially competitive threat? mr. powell: we're working hard on it. we a lot of projects going on, a lot of efforts going on on that right now. we haven't had the problem many mentioned, sweden, a lot of northern european economies have moved away from cash to a remarkable degree. that's in the happened in the u.s. economy even though it seems like it must have happened with our kids not using cash very much. nonetheless, the amount of cash in the u.s. economy continues to grow. at faster than nominal g. deform perform. so -- mr. foster: if you look at the curve on adoption of payment by cell phone, you know, it starts slowly and then all of a sudden it just happens. so that seems like that transition can happen in a period of just a couple of years and so we have to be able to respond, you know if that's the driving factor, we have to be in a position where we can respond by rolling out, for example, digital dollar on a couple of year time scale. i completely agree with that mr. powell: i eagree -- i agree with that, and lib rah lit a fire under that that this is come -- libra lit a fire under that that it's coming faster than we thought. if you use one of these big tech net woshes like libra did. we're working hard on it. we fully appreciate the importance of making quick pogress. we have not decided to do this, though. i think there are many questions that need to be answered around digital currency for the united states including issues of cyber -- cyber issues, privacy issues, many, many operational alternatives present themselves. so we're going to be working through all that, doing that work thoroughly and responsibly. mr. foster: do you have you have adequate visibility on what the chay these are doing on this? do you have contacts that give you some context of what their role is likely to look like? mr. powell: yes, we certainly have that. they're in completely different institutional contexts. there are things that, for example, the idea of having a ledger where you know everybody's payments. that's not something that would be, you know, particularly attractive in the united states context. it's not a problem in china. so -- but nonetheless. mr. foster: they're claiming in 're going to roll it out other couldn'tries some time quickly. so i urge you to keep the fire lit. mr. powell: thank you. ms. waters: the gentleman from texas is recognized for five minutes. >> thank you, madam chairman, thank you for coming back to our committee, mr. chairman. with baseball season slowly approaching i wanted to make sure one thing bf i continue, that you still are on team capitalism? mr. powell: oh, yeah. >> appreciate that. experian released their 2019 credit cre review, i think it the american icts economy. indeed the u.s. economy exceeded expectations. record job growth caused unemployment rays to drop to historic lows while the stock market flexed throughout the year. consumers in return showed confidence as they conned to borrow and spend energetically most recently evidenced by the strong 2019 holiday shopping season. he report goes on to say the all-time high in 2019 at an average of 703. this translates to people being able to get better rates to borrow money, to buy a house, get a small business loan or whatever they need financing for in order to live out their american dream. chairman powell, what would -- what should we be focusing on in this committee to continue for jobs explosion, new jobs, that we have seen the past few years? mr. powell: honestly, i think the focus for me really ought to be on things that address -- what are our longer run issues that can be addressed by legislation? it's really two important things. one is labor force participation. what are things you can do that we really can't do that will help people stay more attached to the labor market? we still have low labor force participation compared to essentially all our economic competitors. the other is productivity. what draws productivity in a stable legislative environment. it's a legislative and administrate yoif environment that supports growth and innovation, investment, those sorts of things. those would be my main focus. mr. williams: i know you're aware of the fed's work on the international standard being developed for the world. i've had my reservations about entering into an international agreement that does not conform with our current state-based approach to regulating our insurance companies. one particular piece of the international standard i want to ask you about is the flexibility our government was given to develop an i give lent solvency standard that would better fit our snushes ecosystems. so how does the fed plan on ensuring the standard will be deem ed give lent given what you're facing from europeans? >> i can just say that we will not be part of approving any international standard that doesn't accommodate our own american insurance regulatory framework. mr. williams: that's great. we're leaders, not followers. some of my threes on the other side of the aisle have called for a financial transactions tax. i think this is an extremery hi shortsighted approach that will greatly imneakt amount and ways that americans save for the future. additionally, the thought that adding an extra lay ore of tax is redundant since capital gains taxes are already in place and they should be lowered that take away money from successful investments. so if we want to further expand economic growth, we need to focus on continuing to low they are personal and corporate tax rates so americans can keep more of their hard-earned income and invest that back in their opingses. chairman, can you explain how implementing a financial transaction tax would imneakt u.s. economy. mr. powell: i think i need to stay in my lane here. we don't do fiscal policy, ypt to -- if i start commenting on particular taxes i'm worried where that might go. mr. williams: i'll understand that. i'll tell you from a main street standpoint it will hurt the economy, an extra layer of tax. we need to cut taxes. so looking at financial trends across the world, being in business for over 50 years like myself, one data point is that catch miseye are negative interest rates. can you help me understand the economics mind negative interest rates and talk about the potential threats that this phenomena poses to financial stability? mr. powell: a number of countries around the world, as you know, face the problem of what do you do when your policy rate gets to zero? some of them actually went below zero. the united states chose not to. we chose not to at the fed. we used other tools when we got to the lower bound. those were forward guidance and large asset purchases. i think going forward our inclination would be to rely on the tools we did use as opposed to negative rates. that's our instinct is that in the u.s. context that not a tool we're looking at. the question about intermediation is we have egative rates, you wind up creating downward pressure on bank profitability which limits credit expansion. there's some evidence of that. so in any case, we are watching other institutions around the world who have done that and we'll be able to see what the results are. ms. waters: the gentlewoman from michigan, ms. tlaib is recognized for five minutes. ms. tlaib: thank you, madam chair. i don't know if you know, in 2013, detroit filed for chapper 9 bankruptcy. which was marked as the largest municipal bankruptcy in u.s. history. in yull when you were here i asked you why is the federal reserve willing to back stop or support, you know, big banks and corporations during periods of credit market distress that we wouldn't want to make equally sure that state and local governments also had access to credit as well. you mentioned that you didn't have the authority to lend to local and state governments. madam chair i'd like to submit for the record section 14-2-b of the pral reserve act asserting that the federal government does have authority to buy municipal debt. ms. waters: without objection. ms. tlaib: given that you have the authority can you explain why shouldn't the federal reserve ensure ha state and local governments have access to funding in times of stress? mr. powell: we have limited authority, i think it's to buy short-term municipal obligations. we did do that in the 1970's briefly and then have not done it since. think a series of fomc's and fed chairs in all kinds of different political environments have thought of that as something that's not appropriate really for us in the sense that it's government finance, we, you know, that's to be dealt with by fiscal authorities rather than by the monetary authority. we focus on the job you've given us which is maximum employment and stable prices and to some extent also we're with other agencies working on financial stability and bank supervision. as opposed to solvency of state and local government. ms. tlaib: yes or no, the federal reserve has theable to open lending facilities? is that accurate? mr. powell: yes. to financial institution, we do. ms. tlaib: so when the fed steps in to rescue banks in a crisis is that because you believe their role in the economy is vital? mr. powell: really because we have we had no choice to prevent the financial system from collapsing. ms. tlaib: my city filing bankruptcy was devastating. so many retirees are 40, 50 years they worked for the city of detroit, saw their pensions completely diminished, gone. do you not believe that the government of detroit and puerto rico also play a rye tall role that should be preserved even if financial crisis makes it hard for them to borrow money? mr. powell: what i believe is that that's not a job for the fed. we have a particular role an particular authorities and lending to state and local governments and supporting them when they're in bankruptcy is not -- ms. tlaib: we're going to strongly disagree. i believe you do have the authority. you mentioned you would use the same tools of expand the balance sheet and purchasing long-term bonds, in other words, many of the same, correct? mr. powell: yes. chairs b: your former seem to believe based on remarks last month, for instance, chairman bernanke suggested a fiscal program might be helpful in the next recession, do you believe that would be helpful? mr. powell: that's been untested and not widely supported perspective. i don't believe chairman bernanke said that money supported fiscal policy would be something that we should do. i know that there's been a grandpa of people who have pushed that idea but i don't think it included former chairman bernanke. you may have seen something i haven't seen. ms. tlaib: look, the federal government is supposed to be about people and i don't see that we're treating pensioners, a city like the city of detroit which is frontline communities that have been hit hard by the financial recession, we haven't actually they keep saying detroit is coming bark, if i show you neighborhoods they'll tell you, we don't know what you're talking about, poverty has increased, access to housing has decrease, all those things that we start reflecting and understanding that i believe the federal reserve act gives us authority to help and treat just like we bailed out big banks, that we can do the same for our people, the residents of the city of detroit. so i thank you for that and again would actually ask and push you to look at this from a different lens versus what what's the same old process which i believe hasn't really worked for working class people. thank you so much, i yield back the rest of my time. ms. waters: thank you. the gentleman from arkansas, mr. hill is is recognized for five minutes. mr. hill: thank you, chair waters, chairman, welcome back to the house financial services committee. i want to thank you for the discussion you had with dr. foster a few minutes ago. i too want to thank you for your work with governor brainerd and our discussion that we had with the governor and the staff about the concept of the digital dollar and the work being done at the treasury about that i won't belabor some of the points that representative foster made but a couple of comments that i'd have for you on that, would you advise our committee or ask the fed to advise our committee what legal authorities the federal reserve might require in order to consider the use of digital dollar? mr. powell: that's a good question. it's one we're looking at. a lot of it would depend on the design of that. mr. hill: exactly. one thing we also talked about and we've had a lot of discussions in our task force here is about union's approach to this idea of a payment provider license which is now part of their financial services code. part of the open banking movement. the idea that one would have a regulatory license here in the united states for being a payment provider, might be a bank or might be a nonbank. is that something the fed is looking at as well? mr. powell: i wouldn't say we're specifically focused on that. but you, more broadly, we think it's a good idea to look at the whole landscape of oversight of our payment system and that would be a piece of that governor brainerd talked about that in another of her speeches last week. mr. hill: thank you for that last month the chinese regulators bailed out a bank thats of a $14 billion loan they arranged through one of their sovereign wealth funds. the chinese banking asset of $41 trillion are 47% of world g.d.p. is instability in chinese banking industry pose a financial threat to the mobile financial system? is it a financial virus like they've already contributed a hysical cry vieruss? mr. powell: generally, as i'm sure you're aware, china has had very high debt to g.d.p. for an economy at its stage of development, that includes the banking system. and the government has actually for several years now been taking measures led, i think, by the central bank, to try to control the growth of debt and they stuck to that through the last couple of years even though those were channeling years economically for them. it's something they're addressing. the other thing is they have plenty of fiscal space if you look at fiscally they have plenty of power to respond to downturn. so i wouldn't go so far as to say that their debt is a systemic threat to the world economy or anything like that. it's something that they need to address. mr. hill: it's something i think deserves review. that seems like over-allocation in the banking sector in china and could pose a threat to our system. in your report on page 24, you talk at length on your financial stability section about the decline and bind yields, particularly in the high yield mark, the ratings have fallen. i was looking at a mutual fund annual report the other day and it says of lar concern is the continuing high rate of issuance of trim-b bonds, the lowest rate of bonds if the economy stumbles and ratings dun grade issue could be a flood of fallen angels in this particular mutual fund, said they're staying away from the lower end of the high yield market. are you concerned about the high yield market? >> that's the so-called triple-b cliff. the idea is there are a handful of large issues which were downgraded which would be noninvestment grade and the idea is that some holders are not permitted by the terms of their agreements with their investors to hold noninvestment grade to trigger sales. that's an issue we've been monitoring for some time now really. with leverage lend manager generally, yes we're monitoring it very carefully. you do see, you know, low compensation for risks taken. you see high leverage you see a lack of cav nants and all of that i think it's a complicated picture that painer is now largely held in c.l.o.'s and mutual funds and exchange rated funds rather than on bank balance sheets. those vehicles tend to be stabley funded in the sense that liabilities are longer than expected maturity of the underlying strums. mr. hill: still a source of concern, thank you for your continued attention to it. i yield back. ms. waters: the gentleman from illinois, mr. casston is recognized for five minutes. mr. casston: thank you for staking around to the bottom of the dais here fism get elected eight more times i'll have as much experience in this line of work as i do in the energy sector. so i still come here primarily as an energied for the. i have a real concern that we are not dealing with the realities of climate change scientifically. we understand visly -- viscerally what it means to have rising sea levels but not an accelerating rate of change. compound interest confuses people, compound changes in the environment, we don't think about it as well as we should. mr. casten: just a couple of kata points i hope all of us can appreciate. the first evidence that homnids made fire is a cave 100 million years old. james watt invenned the steam 144 years ago an ushered in the industrial age. f we went to zero co-2 tomorrow, we're looking at six feet of sea level rise coming. a that level there's estimated about $23 trillion of economic loss to the system, $900 billion of u.s. property at risk before factoring in debt losses and ulling out of insurance. ere's some serious, systemic risks to the economy. when assets exposed to climate change exceed the entire subprime mortgage market, how is the fed talking about climate change as a systemic risk to the economy? mr. powell: climate change a very important issue, one that's the province of elected representatives to set the overall direction of society and how we will respond to climate change and its challenges. we have a job to do, to think about the potential implications for the financial system, for the economy, and i think we're at the very early stables of filling in what exactly that means. in terms of, you know, things like particular assets, these are longer term considerations. you know, it's -- we're essentially mainly concerned with business cycle issues, that's what we're focused on, issues for the medium term, climate change is a much longer cycle. mr. hill: the actors in the space do not have planning horizons you and we do. there are people signing 30-year mortgages for properties in miami beach and they may plan on selling that mortgage several time bus somebody will be left holding the pain we are that sea level rise coming. there's tiply is a one-year holding period. even if the u.s. is successful at reducing carbon emissions, there's still a massive reallocation of capital. have you looked at the transitional risks in how that starts moving around and dislo mating the economy? mr. powell: those are things we're at the beginning stages of looking intoosm as you know there's a lot going on in the financial markets. there's a lot of discle sure happening, expectations around disclosure are changing significantly for publicly held companies. that will have an effect. that's not really what we do. we do monetary policy, bank supervision. our banks, to your point, our banks have to be giving, have to be taking into account the risk of severe weather events and potentially i suppose of rising -- mr. casten: if you look at the fossil fuel industry, the oil and gas company the coal company the debt that they hold relative to their assets, given that their assets are so heavily dominated by fossil fuel reserves. if they were to ex-track their fossil fuel reserves things will be way worse than the $23 trillion i just told you. have you ever considered stress testing to see whether their fail wrur to fully monetize their reserves might effectively make them fiscally insolvent? to me that sounds like a materially adverse event but i wnt want to bet that the economy is going to commit suicide. if i look at the financial statements of a lot of those companies it's not clear to me that they can monetize those assets. that is a meaningful effect on the risk on money over there. $700 billion into fossil fuel companies in the last couple of years have you considered that as a systemic risk? mr. powell: systemic risk to the financial system and we'd be stress testing banks, as you know, the bank of england is doing some of that now. we'll be watching to see what they learn. mr. casten: i'll follow up with you offline and i yield back. ms. waters: the gentleman from georgia, mr. loudermilk, is recognized for five minutes. mr. loudermilk: first of all, i want to touch back on lisic. some have already touched on this subject and as you know, several weeks ago, vice chairman -- the vice chairman gave a speech where he outlined the number of changes that he would like to make to the fed supervisory and regulatory process. he said he intends to bring transpersoncy to the regulatory reyeem dideveloping clear and transparent standard for designating firms. he also proposed aligning lisic designation with the categories and limiting it to only category one firms. my question is, at a press conference after last month's federal open market committee meeting, you said you generally agree with the vice chairman and what he articulated. appreciate that. but can you give us an idea of when you expect lisic designation to be confirmed with new tailoring rules? mr. powell: i don't have a sense of where that is in terms of timing of it. we have a bunch of things in train to do, that's certainly one of them. >> hopefully sooner rather than later. mr. powell: there are things we're working on at all times. i expect we'll be moving forward. mr. loudermilk: that's good to hear. quickly, i'd like to touch on the c.r.a. i believe that all three banking agencies need to have a unified c.r.a. framework and i know you're hesitant to speak on behalf of the other agencies, specifically o.c.c. and fdic, and their proposals. if you don't want to comment on that, i understand that, what are some of your ideas, or the fed's ideas, for c.r.a. modernization? mr. powell: well, so, i would say, let me talk about the process. we kind of agree on the overall goals and the question is how do you get after that. so our thinking was, try to get really of improvements that woulded three more efficient, more effective c.r.a. e're looking at ways to make the assessment, the task clearer. in our thinking there's a separate or at the retail level there's a separate test for community development and for retail lending. and also that -- the other thing we're saying is let's make sure it's all very dated, grounded -- grounded in data. the chair mentioned earlier, 6,000 data sets that we look at. i think we really know when you make a change in the metrics we know what the effects are going to be and we feel good about that we try to develop our proposal around that there are a lot of overlaps but there are a handful of differences that prevented us from getting to full agreement. mr. loudermilk: do you believe we can remove some ambiguity on why projects do and do not qualify? mr. powell: absolutely. transparency, ex-ante, more transparency ex-ante as to what qualifies and where, more objectivity, should help to encourage banks to do more. what they really know what's going to qualify and what's not. i think that's all very constructive. it's about how you implement it. and we want to have a very high -- it's a very important law. we want to have a high level of confidence that what we change is going to have the desired effects. hat's what we're focused on. mr. loudermilk: i appreciate that. i would like to see us make changes where it's not financial institutions checking boxes to get credit but investing in projects that do help revitalize the communities. fiscal year 2020 appropriation law directs treasury department in consultuation the banking sagets to study whether any changes in bank's regulatory capital requirements are needed because of cecil. if the study concludes that that is the case are you open to modifying regulatory capital requirements accordingly? mr. powell: yes, i think we've said that we'll be monitor very carefully with what the implementation is showing because of some of the concerns that have been raised. mr. loudermilk: thank you. probably don't have time to get into other questions, so i yield back the balance of my time. ms. waters: thank you. the gentlewoman from california, ms. porter is recognized for five minutes. ms. porter: thank you. chairman powell, you frequently have spoken about your belief in the importance of maintaining the independence of the federal reserve. do you industrial that belief? mr. powell: i do. ms. porter: anything changed in the ewe -- in the new year? mr. powell: no. ms. porter: we don't want the fed to be making decisions about interest rates and other things with any interest other than the best of the country. you tend to leap on interest ates and appreciate your continuing importance on the fed. it's not just the president. there are others who would love to weigh in on fed decisions. what other kind of people may want to influence you in regards to fed decision making? mr. powell: what other people might want to influence us? potentially quite a wide range of people i would think. ms. porter: major investors, financiers. mr. powell: i don't know that people are really seeking to -- you say might want to influence us, the answer is i don't know the answer to that. many follow what owe do and respect what we do. i think people often when i meet them shy away from giving advice. i really come they feel like hey don't presume to -- ms. porter: you don't feel unduly pressured by political or special interests? mr. powell: i don't. mr. porter: would you say someone like jeff bezos, the c.e.o. of amazon could benefit from having influence over the fed's decisions? mr. powell: i don't know. ms. porter: what about jared and ivanka trump? they are wealthy do, they make different ams depending on what the fed does? mr. powell: yes. ms. porter: what about kellyanne conway? does she have an interest in amplifying the president's message, that's her job? mr. powell: i suppose. ms. porter: i'm going to project a picture up here so the audience can see and also hold it up for you. is this you? mr. powell: it is. ms. porter: where are you? mr. powell: an after part after the alfalfa dinner. ms. porter: where was that party? mr. powell: at jeff bezo s's home. ms. porter: when was this taken? afterwell: saturday night he alfalfa dinner. ms. porter: so just the end of january. can you imagine how attending a party at jeff bezo s's home along with ivanka and jared trump could give up to the public the scent that you're not immune from external pressures? i hope not. who what did you talk about? mr. powell: i didn't talk to any of the people you named. ms. porter: who did you talk to? mr. powell: i mainly escorted my son and his new wife and introduced them to people. ms. porter: i would say that this plays in the public's mind as counter to what you have been doing. if you could name a tchoism biggest drivers of economic growth in opportunityry -- country since the recession in the 1970's, what's been making our cu economy grow? mr. powell: factors making it grow, the hard work of the american people. i think what you've seen is tremendous growth in some sectors and less in other sectors, of course the big technology companies, they weren't around 40 years ago. i think we've seen lts of growth in some areas. other areas much less so. ms. porter: would it surprise you if i told you that women are actually, women in the work force are a bigger driver of economic growth than technology companies? and since the 1970's, 38 million women joined the work force and without those women our economy would be 25% smaller, so when we talk about the health of our economy we talk about g.d.p. growth, what i don't hear a lot about, what i'd like to hear more from you about, is the economic effect of things like childcare availability. in those same four decades which in which women grew the economy 25%, the cost of child care shot up 2,000%. do you know, mr. powell, how much child care in america costs today? mr. powell: how much it costst today in snerk it costs a lot. ms. porter: could you put a firmer number? mr. powell: my kids are grun up. s. porter: i yield back. ms. waters: the gentleman from ohio, mr. davis is recognized for five minutes. mr. davis: thank you for your time here today. thank you for the good work you and so many of your colleagues are doing at the federal vemb -- reserve. just going to address comments that came from my colleague recently. sit uns predened for the chairman of the federal reserve to attend a party or reception? mr. powell: no. mr. davis: it's not the first time a fair ched atended a party. i'm certain it's not the first time a member of congress attended a reception or party. i don't know if we want to say just because you're at an event somehow this is nefarious. you might have talked to a russian on a subway or something. the way that these things are linked for political motives is embarrassingly partisan and bad and i just thank you for resisting all those pressures. many of them are public of course. one i'm concerned about right market.he repoe back home a lot of people don't know there's such a thing as repo. some of the warning signs in it have given rise to the feds, kind of a blend between regulatory action and monetary policy to injection a lot of cash into that market. chairman quarles spoke recently about the need for that to continue for some time. can you explain the process about how the fed is going about reviewing the factors that are contributing to this repo spike and what you've learned from the review? mr. powell: sure. o what happened is as you know in early september, there was a spike in repo rates and the federal funds rate moved slightly outside of our band, our target range, for a day or so and so we didn't see that coming. market participants didn't either. we've been asking since, why is that? one clear reason is that the level of reserves which is cash on deposit at reserve banks needs to be higher than we had thought. in that stream we have immediately set forth a plan and xecuted it to create -- mr. davidson: some called this quantitative easing, you reject that, but we're artificially injecting cash to produss an outcome the market isn't producing of its own accord. i think it's odd that our action is to inject cash from the federal restoverb grow the balance sheet at the fed instead of looking at the underlying regulatory things. what have we talked about? what has the board talked about in terms of, you know, regulatory factors that instead of injecting cash to fix a problem, treating the root cause of the problem and changing the regulatory framework. mr. powell: we're doing both things. we're injecting cash to supply the cash for banks that need cash for liquidity purposes. we also said that without undermining safety and soundness we would look at ways in which regulation and supervision might have interfered with the otherwise free flow of cash to where it was needed and we, i think we've done a lot of work on that. vice chair quarles hit on a broad theme there, that is the idea of maybing the treatment, the supervisory treatment really of cash the same as that of treasuries. for this purpose. so you could achieve a better flow of liquidity through the system without affecting the overall level of liquidity in the system. which is just what we're looking for. so he broached some ideas for how to do that i think that's a profitable line of inquiry. mr. davidson: one of the changes, libor is going away, market forces are come, we're talking about replacing the benchmark rate. and of course arc includes 250 entities but there's a concern that as we've done this that the best rate isn't necessarily being provided. so is the fed taking the best proposed rate offered in these repo deals? or are we giving it out at a special tate raitt to maybe the top 10 banks? mr. powell: i lost track of that mr. davidson: when this liquidity is injected. the repo rate, going into the repo rate. mr. powell: i missed that. so the rate we've been offering on those -- on repos, they've been settling at a level a couple of basis points below rer. mr. davidson: when it's paid out at a high rate is it paid out to the best available offer or the best available customer? mr. powell: as long as you're eligible we'll see. ms. waters: would the gentleman like to ask the witness to provide the answer in writing or the record? mr. davidson: i appreciate the suggestion, i would love to see that answer in writing. ms. waters: the gentlewoman from north carolina, mrs. adams is recognized for five minutes. ms. adams: thank you, chairwoman water for convening the hearing today, an chairman powell, thank you for your testimony. e fdic board member voting against comptroller's proposal in describing it as a depply misconceived proposal that would fundamentally undermine and weaken the community investment act. can you comment on the deficiencies of the misguided the c.r.a., aress main piece of civil rights and banking law. mr. powell: our role is not to comment on that. i can comment on our own thinking about this but it's not for us to be commenting on the other agency's proposal. ms. adams: will the federal reserve release its own proposal? one that takes into account the needs of low and moderate income communities? mr. powell: that was why we undertook this work was to do that. we haven't made a decision yet about whether or when to make a proposal but nevertheless the whole effort was undertake ithin a view to creating modernization proposal for that. ms. adams: the federal reserve has a dual mandate, price stability and maximum employment. will the fed's goal for wage growth and are you considering this approach as part of the framework review? mr. powell: i don't see us targeting wage growth as an independent item. it's something we monitor carefully. our goal as assigned by congress is maximum employment and stable prices. those are our two statutory objectives. and those are the things we target. i don't see us targeting particular level of wage growth. ms. adams: have you considered adopting wage growth, flex -- for example, once we set a certain increase in pay the fed may consider 1wit67ing to a 2% inflation rate? mr. powell: we've said that we -- the sense of the project is we want to make the 2% symmetric inflation goal more credible. we've been missing it and central banks around the world have been missing their objectives for a decade now on the low side. achieve o resoundingly 2% inflation. that's really the objective of his review we've undertaken. ms. waters: let me ask you about the volker rule. do you support further changes to the volker rule given that banks enjoy certain benefits including access to the fed discount and that it was intended to limit banks from engaging in risky investment activities that could contribute o future financial crisis? mr. powell: we did put out a proposal on part of the volker rule. we think it's entirely consistent with both the letter and spirit of the law and -- but we're going to be reading the comments, it's out for comment now. we just put it out. we'll be looking bard to eviewing those comments. ms. adams: i understand you have a number of daily trading metrics by it's never been made clear exactly how these metrics are used to determine whether a intank complying with the law nor has any of the metrics been released todd public. is that true? mr. powell: i think it's true, we published the first volker rule six or seven years ago. i think very widely regulators and financial institutions found it to be a bit unworkable and so we set forth, we set out to provide a simpler set of metrics and ways that companies could conduct perfectly legal activity and have more certainty that they were doing so without having to prove every single trade what was in the mind and heart of every trader. there's going to be trading activity around legal activities not goird the volker rule. i think that's what we're doing. we're tri-ing to make that rule more effective and efficient and doing it in a way that's more consistent with the letter and spirit of the law. ms. adams: thank you. i yield back. ms. waters p.c. the gentleman from north carolina, mr. budd, is recognized for five minutes. mr. budd: chairman powell, welcome. i want to start by thanking you and your staff for your collaborative work with the u.s. state insurance commissioners on solvency regulation. also wanted to thank you for the pushback against the your peen efforts to try to force their system of insurance regulation onto our unique and sound 50-state insurance regulatory regime. not with standing the progress achieved to datemark in the industry are telling me europeans are still resistant and ultimately seek to change our regulations so that they mirror theirs. so given that, here's my question. will you commit to directly reaching out to your peers in europe to tell them explicitly that the u.s. will not be adopting a european centric i.c.s. or international capital standard and that we have our own rules that work very well? mr. powell: i'll just say clearly that we have a state-based insurance regulatory system and we have, you know, the federal rule is what it is. we're not foe -- that's not something we're seeking to change, we're committed to that going forward. >> they are seeking to change us. have you had any conversations with senior european leaders yet on the i.c.s., international capital standard in mr. powell: i have not. mr. budd: is there any reason why not? is that something that's being avoided? mr. powell: i'm not directly involved in insurance. mr. budd: i would encourage you and the governor to continue to press that. we have a great system that continues to work well. also, mr. chairman, as part of this ebazell 3 efforts, a number of changes to capital rules will have the effect of raising capital requirements on capital market activities. can you discuss your sthrines appropriate level of capital markets related activities such as market making or underwriting? mr. powell: those are critical to the functioning of markets and our economy. they do need to be appropriately capitalized. i would say that overall, i of k, and -- that the level capital in our banking system is about right. i don't see a need to further raise capital. i know we're pushing forward with the trade book and other bazell three end game threes -- baze -- basel three end game things. but i don't see them as needed to raise overall capital. mr. budd: can you share your views on how capital requirements and market making and underwriting, how they would affect the bans between bank driven and market-dritch finance in the u.s. system? mr. powell: i think capital requirements become quite bind, they encourage activity to move outside the banking system into less regulated and supervised entities. mr. budd: mr. chairman, there's been a lot of discussion in recent months about leverage loans and fsoc and others monitoring the market. in fact, you've had a couple of questions on this topic today but when people discuss the issue, sometimes i think they're referencing different things. so to help us with -- get on the same page here, in your opinion, how would you define leverage loans. mr. powell: there are a lot of different ways to think about it. a reasonable ballpark would be something that's rated below triple-b. or you could also say, the amount of leverage typically they'll have leverage of maybe six times cash flow. there are different ways to think about it. i think that the best way to think about it is probably noninvestment grade. mr. budd: do you think there's a difference in leverage lens in the banking sector and nonbanking sector? mr. powell: yes. i think before the crisis, there were -- they -- i think there's been a trend over time for leverage loans to be held by longer term holders outside the banking system. that is accelerated. so there are far fewer of them on the books of, you know, banks with deposit insurance and safety net as opposed to collateralized loan obligation or pension funds or hedge funds. that's where those loans are going. so it's more like, it's become a distribution business as opposed to a traditional lending business where banks would make a loan an put it on the balance sheet. that's not what's really happening. off bank performing an origination function on behalf of a sophisticated investor that's stabley funded, we hope, and in the case after the c.l.o.'s is but that's something we need to keep monitoring. mr. budd: thank you. ms. waters p.c. the gentleman from illinois, mr. garcia, is recognized for five minutes. mr. garcia: thank you, madam chair, thank you for being here, chairman. iled like to return to the topic of climate change for a bit. extreme weather events have had a great impabt on the midwest and working class communities like those in my chicago district and they're often the hardest hit during such destructions. climate change is also a risk to the financial sector. the host of "mad money" on cnbc in a discussion last week said major institutional investors want nothing to do with fossil fuels because of concerns about climate change. to guard against climate change impact the bank of england has decided to stress test the u.k.'s capital banks, largest banks, pardon me, and insurance companies against the risks associated with climate change while the -- will the federal reserve follow suit and develop climate-related stress tests? mr. powell: we're monitoring what the bank of exland is doing. these are stress tests that are not like our stress tests in that they'd have directesques on the bank's ability to make distributions. they're trying to make an assessment. we'll be watching that carefully. we haven't made a decision to proceed sw something like that. mr. garcia: incorporating climate change into economic forecasts will become more important. climate disasters such as hurricane maria in puerto rico or the wildfires of california last year are currently labeled transer to risks by the federal reserve. but we know extreme weather events will become more frequent and severe. the likely result, a corresponding increase in economic losses and physical risks, the brunt of which will be felt by communs of color and working class communities. so chairman, when the fed develops its economic forecast, at what point should climate change shift from being considered a transer to factor o a structural factor. mr. powell: our forecasts including the ones individuals like me write down, they're not for the much longer term. they're really what's important over the next year, two year, three years. and climate change is just -- it operates on a longer cycle than that. of course as you suggest, as severe weather becomes more common and that's connected to climate change, you will see those things, you know, entering the forecast period and certainly entering our supervisory practice as well as our economic forecasting. mr. garcia: in a recent speech on the economics of climate change, fed governor said, by participating more actively in climate-related research and practice, the federal reserve can be more effective in supporting a trong economy and a stable financial system. do you agree with governor brainerd's statement and if yes, what more will the fed do in the future to identify and mitigate the financial risks of climate change? mr. powell: i do think it's incumbent on us to do the research and understand the implications of climate change for our supervisory roles and roles in looking after financial stability. it's early days for that the public will expect that we do that and that we take the measures that we need to take to make sure that the financial system is resilient. mr. garcia: do you agree with her statement generally? mr. powell: that statement i do, yes. mr. garcia: three months ago, the federal reserve a merger that created the sixth largest bank in the u.s. with more than $450 billion in total assets and the freal serve's on research suggests that the failure of a single $250 billion bank would be far worse for the economy than the failure of five separate $50 billion banks. furthermore, the former fdic air, mr. bloomberg, warned that the fdic would not be able to wind down a bank that size without imposing significant losses on the deposit insurance fund and potentially destabilizing the financial system. in this light can the federal reserve justify its conclusion that, quote, this transaction would not appear a result -- to result in meaningfully greater or more concentrate risks to the stability of the financial system? mr. powell: i think we can and i think we did. we evaluate these mergers very transparently, had a number of public hearings on it. looked at all the statutory you have two banks coming together to form a regional bank that's akin to other regional banks. it didn't appear to me to have significant financial stability implications at all. ms. waters: the gentleman from tennessee is recognized for five minutes. mr. kustoff: thank you, mr. chairman. i heard your statements in the opening remarks about the coronavirus and some of the questions you've had today. i know this morning in a report that axios was today quoted from the global port tracker and it said that traffic at u.s. ports is expected to decline if february almost 13% and in march between 9% and 10% year over year. assuming those numbers are true and correct, what impact would have that on the retail sector and the overall economy? chairman powell: i think there's a lot of uncertainty around what the ultimate economic effects will be outside of china and particularly in the united states and the question will be -- we do expect that, consistent with that report, there will be some effects. the question really will be, what will be the size and scope of them? and also, will they be persistent or will it be something that just passes true? ultimately the bottom line question for us is, does it represent a material change in the outlook? something we should react to with monetary policy? that's really the question for us. it's really too early to say. we'll be monitoring it like everyone else will very carefully. that's where we are. mr. kustoff: along those same lines, also from axios, they've quoted from a bank of america security report. they surveyed -- they said they surveyed 3,000 companies about the global supply chain and that many companies around the world are looking at relocating . they called it in the report a quote-unquote tectonic shift in global supply, looking to other areas of south asia, india, also north america. my question to you, first of all, i don't know whether you're familiar with the study, this bank of america securities study or report or not, are those numbers or is that -- those anecdotal statements, is it consistent with anything the federal reserve is seeing? chairman powell: i'm not familiar with that report and therefore can't comment on it. i would say there are a number of channels through which this could have an effect, the first of which is just tourism, really. the second is our ability to export to china is less because there will be -- it's just less going on there. so exports could go down. you mentioned really supply chain. so many u.s. companies buy intermediate goods for creating their final product. supply chain issues we don't have any real evidence on that yet. i think the last channel is financial markets. financial markets themselves can be a channel for the transmission of risk off behavior which can effect economic behavior. so we'll be looking at all of that. it's way too early to say whether -- what it will amount to. we're just going to have to wait and see. there's no way to be kind of confident about anyone's assessment and their range of assessments. mr. kustoff: based on what you said, i think i know the answer but i'll ask it anyway. the report, it mentioned a number of reasons, one is the tariffs between our country and china and the impact that it's had on china and subsidiary companies. but also automation and the increase in automation. does that sound consistent with relocating the supply chains? chairman powell: yes. separate from the questions about the virus, there clearly has been, on the part of american companies, a lot of activity in moving to other jurisdictions like vietnam in particular gets mentioned quite a bit. i saw a report last week, a number of other countries have had american businesses moving their production activities out of china to other -- to other locations. that certainly has happened. mr. kustoff: including the united states. chairman powell: yes. mr. kustoff: or relocating back to the united states. i guess along those same lines, i represent part of memphis and west tennessee. in memorial, just outside my district, there was an announcement, amazon made two or three weeks ago, that they are locating a new facility there. it will be 1,000 jobs, and incidentally, we've had questioned on the minimum wage, they're going to start their wages at least $15, plus benefits. it talked about these new jobs in combination with automation. auto mace in terms of -- automation in terms of packing and shipping. you've talked about your concerns of automation and the effect that will have on employment in the future. can you see the two co-existing like with this amazon plant? chairman powell: well, over the last two natch -- 2 1/2 centuries we've seen advancing technologies and that was concern it would replace human labor. and that has happened. but what has happened is it has made human labor over time more productive. so there's displacement of current workers, but over time, advancing technology has led to rising incomes. that doesn't mean there won't be disruptions and a lot of pain for people in the short term. but nonetheless the process over time has led to rising incomes. ms. waters: the gentleman from florida is recognized for five minutes. mr. lawson: thank you, madam chair. mr. chairman, welcome to the committee. i would like for you to explain to me, for the past almost three hours, two hours and maybe 45 minutes, when you were talking and members on the committee were speaking in terms of how well the economy's we have know, how more opportunity for jobs and the economy, when you start eaking, the dow was up 125 points. while you were speaking, it went down. can you tell me why something ke this occurs, who is istening to your speech this morning in front of the financial service committee that would cause the dow to go down, because of the cut in interest rate, how do you explain that? chairman powell: i really can't. i'm not following the market as i sit here answering your questions. louisiana louisiana -- mr. lawson: i know the president tweeted out something similar. that when you started off, the dow was up, and then the dow went down. do you react to that or it doesn't mean that much to you? chairman powell: i'm sorry do i -- mr. lawson: yeah, do you react to, that the president's tweet, about -- also about how the dow went down and the cutting of interest rate, do you react to that? or is it just something that happens? chairman powell: my colleagues and i are completely focused on using our tools to support the american people, to support the achievement of our goals and that's really all we're focused on. mr. lawson: explain to me too, from the staff report they stated that starting in july, about three ear, different times the interest rate was cut by a quarter percent. how do you make decisions -- did that stimulate the economy, when you made those all the way through october, a quarter percent cut in the interest rate? chairman powell: we were really looking at a few things when we did that. yes, the intention was definitely to support the economy. part of it was to offset the affects of global factors and there i would say just the slowdown in growth in the global economy just went on and on and we felt the need to offset that, also take out some insurance against the affect that -- effect that might have on the u.s. trade policy uncertainty was weighing on the u.s. economy. we tried to offset any potential affects -- effects and take out some insurance there -- take out some insurance there. the third reason is we wanted to do what we could against the prolonged inflation. we've supported growth to support inflation moving back up. so those were the reasons why we did those three things. and that's the thinking that we had and that we announced. mr. lawson: ok. now, could there be -- i'd like for you to comment about the correlation between the growing student debt crisis and slowdown of the housing market, which we talked about a great deal in the last couple of months. as you know, many borrowers of student loans are not able to get homes because of the high ebt to income ratio. could there be a signal that there is a great need to address, first, the amount of student debt crisis? chairman powell: i would say that the rising student debt is certainly a concern. it's been rising fast and is now large. there's increasing evidence that shows that students who can't pay that, who can't service that debt, have difficulty having normal economic lives and buying homes and things like that. i haven't seen any evidence that would suggest that it's an important factor currently today driving the housing industry. i would say the housing industry's actually been -- activity in housing has been moving up here over the course of the last seven, eight months as the effective lower rates and just overall good labor market and things like that are showing up in more house building and more -- and also housing sales. mr. lawson: my time is about to expire. i have a lot of students in my district, in the fifth congressional district, and many of them are coming out of school, one of the things they're concerned about is the housing issue. with going into the job market, you know, how can they best share in the american dream like their parents, without getting the help from their parents? and so with that, madam chair, i yield back. ms. waters: thank you. the chair wishes to remind members that we have a hard stop at 1:00 p.m. today. the gentlewoman from massachusetts will be the final member to ask questions today. with that, the gentleman from indiana, mr. hollingsworth, is recognized for five minutes. mr. hollingsworth: i appreciate the time and, both in private and in public, i have been extremely complimentary of the work you and your colleagues have done, not only in calibrating conditions to match the current economy, but also in the framework by which you make many of your decisions. and how you present that in public. i really appreciate. and i know a cornerstone of what you've been trying to do with the fed is bring even more transparency to the fed and some of the decision making and the press conferences that you've had have added a lot of transparency to it. so it's hard for me to understand some of the challenges in stress capital buffers and some of the more vague language or inability to pin down timeline for changes to that, expectation of changes to, that especially when 2020 has already started. i know mrs. wagner already asked about this. i asked about this in december. i think i sent a letter to you signed by every member on this side of the aisle on financial services. just trying to get a feel for what are the changes that are going to be made, what's the timeline for those that would undertake these stress tests, getting those changes, they're trying to make decisions with trillion-dollar balance sheet, multibillion-dollar balance sheets, trying to make their plans, this time is now upon us. and i feel like we're still being very vague about what's coming down the pike and when we can expect, even, whatever that may be that's coming down the pike, when we can expect that to arrive before us. i wondered if you might give some more color on that or give reasons why you and your colleagues have been a little more hesitant to answer that. chairman powell: i can't give more clarity than exists. i'll just say again. we do expect that the core of the stress capital buffer will be incorporated into the stress test this year and we'll do that in a way that's timely for c-car. mr. hollingsworth: in previous conversations we've had general agreement that when the overstate that's incorrect, that some of the aspects of this need to be calibrated. right? we put a lot of this into play, pushed dodd-frank, we felt like we were doing the right thing in doing so. but perhaps we either had unintended effects, maybe the intended effects weren't as great as we thought they would be or perhaps this wasn't the area we needed to foe -- to focus on. i think some of this requires significant calibration going forward. do you expect that there will be further review in calibration of these tests to reflect either current conditions or alternativetively what we've learned about what works and what doesn't work and what maybe adding to significant reserves that many of these -- at many of these institutions? chairman powell: my strong view is that capital, the levels of capital, particularly in the largest institutions, are about rights. and there's not a need to raise or lower them. -- rates. and there's not a need to raise or lower them. mr. hollingsworth: tell me when you say rate, what's your set with data? what do you look at to say, this means about right? chairman powell: capital levels are much higher and the quality of our capital is much higher. mr. hollingsworth: that's undoubtedly true. i think we all agree that during the crisis or precrisis, capital levels weren't adequate. to say that they're higher isn'tdy fin nfib terms of are they too high? are they still too low? are they about right? what do you use it indicate this is the about-right level of capital? chairman powell: the stress test for one. you look at the stress test and you throw a scenario that's equivalent or maybe even a little stronger than what happened during the global financial crisis and you see do these institutions have the wherewithal to remain reasonably well capitalize and really well capitalized enough to continue to have the confidence of the markets? that's really the question. they have to be above certain minimums, and they do. but not by some giant margin. it doesn't suggest that capital's too high. it suggests that it's just about right. the stress tests are probably a great test for that. mr. hollingsworth: so i think you could see how it might be concerning for institutions that feel like they're caught in a bit of a circular logic, right? we can try these stress tests and if they chin the baron the stress test we believe that's right, that's exactly right without going back and changing some of the underlying facts that are go into the stress test. you can always say that, right? you can always say as long as they chin the bar that it's about right. no matter what the bar is. they want to go back and just look underneath the hood and say, gosh, are these assumptions still correct? the way that we have done these stress tests, is it the right way to do that? right? so maybe in a relative sense, yes, it's high, the capital is higher than what the stress tests have indicate bud in an absolute sense, we're not asking the question, is this testing the right thing and are we doing this test correctly and does it include all the right variables? i think that's what they're looking for, further clarification on when we can expect that review comprehensively that the fed has talked about for so long. chairman powell: i think we've been doing that all alofpblgt we what conference on the -- ss test last summer with [indiscernible] -- we're doing that all the time. everything we do with the stress test is transparent, public out for comment, things like that. it's not like we haven't adjusted the stress test. ms. waters: the gentlewoman from massachusetts is recognized for five minutes. mrs. lee: thank you, madam chair. i also want to thank the activists in the room who have been organizing for a more responsive fed. an ow having been raised by organize -- organizer, activism can be a full-time job. we thank you for taking it on. i thank the chairman for testifying before the committee today. just as with the fed now, the decisions you make do impact everyday working people. ms. pressley: your decisions impact how many jobs we have, who has what jobs, how much they're being paid, and who is most harmed when unemployment is high. now, the past you've said we want prosperity to be widely shared. we need policies to make that happen. however, the fed's approach has never successfully ensured enough well paying jobs are available to everyone who wants to work. even for a small time. in a 1944 address f.d.r. called for a second bill of rights which included the right to a useful and financially rewarding job. justice thurgood marshall argued a right to a job is secured by the 14th amendment. and martin luther king, dr. martin luther king called on the government to guarantee a job to all people who want to work and are able to work. dr. king's legacy is often reduced to one speech and the march on washington often mischaracterized. the march on washington was actually the march on washington for jobs and freedoms. it was a march for economic justice. i take special claim to the fact that dr. king and coretta actually met in boston. i represent boston and i don't think that she gets enough oxygen for the role that she played in the movement. after dr. king's assassination, coretta scott king picked up the mantle, pushing the fed to adopt a full employment mandate and was actually standing behind president carter as he signed the humphrey harkins act into law and that's the reason that you are here today. so, in the interest of time, if you would indulge me and answer as succinctly as possible, yes or no, mr. chairman, given persistent concerns about inflation, do you believe the federal reserve can achieve full employment? by full employment, i mean, anyone who wants to work and can work will have a job available to them? chairman powell: first, thank you for that history. i didn't know that. so, that's our goal. that's what we're working to do at all times. i think you know we're never going to say we've accomplished that goal. but we certainly made progress. ms. pressley: i'll take that as a yes. can a federal jobs guarantee succeed where the federal reserve has failed? yes or no? chairman powell: that's a hard one to answer. ms. pressley: guaranteeing a job. the history that i was providing. anyone who wants to work and is able to work -- ok. so chairman powell, by all indications, the u.s. economy has had ought output well below potential for eight of the past 10 years and for most of the decade prior. is it true that most of that period has seen unemployment well above target? while we almost never see inflation above target? chairman powell: that is true. ms. pressley: ok. so meanwhile, black unemployment remains double that of white unemployment. the fed began raising rates in 2016, even though inflation was still below target and when rates go up, unemployment tends to as well. do the fed consider how raising rates would disproportionately impact those who are already struggling to secure employment? like communities of color, individuals who were farmerly incarcerated, our immigrant -- formerly incarcerated, our immigrant neighbors? chairman powell: unemployment has continued to go down significantly since we began to raise rates at the end of 2016. actually, the end of 2015. ms. pressley: did the fed consider how raising rates would disproportionately impact those who were already struggling to secure employment? chairman powell: i think our consideration was really that the right thing to do is to get monetary policy back toward a place where it reflected an economy that had recovered quite a bit for the benefit of all people. including low and moderate income people. ms. pressley: a lot of people are still recovering. in the interest of time, given there have been no signs of the economy overheating since then, and you're now cutting rates, is it possible you began cutting rates too soon? chairman powell: i think history will judge that. we have to make the decisions in real-time. we have -- we really have learned something since then and that is that unemployment can be lower than most people thought. ms. pressley: so knowing what you know, would you is still have supported raising the interest rate when the fed did? chairman powell: i did support it then. hindsight's 20-20. i think you have to judge those decisions on what we knew at the time. reciprocity peres -- ms. pressley: would more americans have jobs today if the fed had not increased rates over the past three years? chairman powell: i don't know. we're at a 50-year low. it's a fair question. ms. pressley: thank you. chairman powell: thank you. ms. waters: i would like to thank chairman powell for his testimony today. without objection, all members have five legislative days which within to submit additional written questions for the witnesses to the chair, which will be brought to the chairman for his response. i ask you to please respond as promptly as you are able. without objection, all members will have five legislative days within to submit extraneous materials to the chair for inclusion in the record. thank you, all. this hearing is adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2020] proposed his rump budget. >> you can find our coverage of budget briefings and reaction on c-span.org. after the budget was released, house budget committee ranking member steve womack spoke to reporters. mr. womack: good morning. i thank the conference chair for the opportunity. look, i applaud the president for putting forward a budget proposal. that's a lot more than i can say for my friends on the other side of the aisle. as you've already heard, for the second straight year house democrats that lead the budget committee will not produce a budget. that's not leadership. the president's budget includes deficit reduction measures, specifically $4.6 trillion between 2021 and 2030, that's a nice start, but a lot more work remains to be done to put our country on a solid fiscal path. our debt is over $23 trillion, deficits continue to rise and we've -- we're headed toward a fiscal crisis in our nation. the time to act is now. there's little motivation within the democratic majority to make the tough budgetary decisions necessary to reverse the course. in the house budget committee we've heard time and time again of the daunting reality of our fiscal trajectory. we've heard about the warnings of our fiscal trajectory yet it seems the democrats are not taking these warnings seriously. policies promoted by some democrats like medicare for all and the green new deal would increase mandatory spending by tens of millions of dollars thus drastically adding to the national debt. frankly i know that's why my counterpart in the budget committee, john yarmuth, cannot produce a budget, because he knows it would be loaded with programs that would be crushing n terms of its impact on future generations. there's no better indicator of where democrats are headed than here they've already been. in this congress alone, house democrats have already violated their own pay-go rules 25 times. if you ask me, that's pretty clear evidence that our colleagues across the aisle don't care about the fiscal crisis we face that will negatively impact every single american. tomorrow, the house budget committee will hear from o.m.b. acting director russ volker regarding the budget qusm i'm looking forward to the discussion and i hope more eyes will be opened to the stark reality we face. i will be interested to see how many committee democrats will harshly criticize the president's budget knowing full well they failed to produce one of their own. in every reputable business, every local and state government, the fiscal plan of the entity begins with a budget. but here we are, the greatest nation in the history of the world, and we can -- we can't even muster something as simple as a budget. we must start doing our job to put our country on a sustainable, responsible fiscal path. this is our duty to the american people, not promoting budget-busting policies that will leave future generations sad wled the consequences of -- saddled with the consequences of congressional democrats' eagerness to spend with no way to pay. it's time for democrats to roll up their sleeves, join us at the table to do the difficult work. president trump is leading on the issues. he put forward a budget, democrats have not. doing nothing is no option. i yield back. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] [captions copyright national cable satellite corp. 2020] >> article 2 is adopted. >> do you solemnly swear that in all things pertaining to the trial of the impeachment of donald john trump, president of the united states, now pending, you will do impartial justice according to the constitution and laws, so help you god? >> the senate will convene as a court of impeachment. >> what we have seen over the last couple days is a dissent into constitutional madness. >> again, we think the basis upon which this has moved forward is irregular to say the least. >> donald john trump, president of the united states, is not guilty as charged in the second article of impeachment. >> for the third time in u.s. history, a president has been impeached and acquitted. from the house hearings to the senate trial, c-span has provided live comprehensive coverage of the impeachment of president trump. you can find all of our video and related resources at c-span.org/impeachment. c-span, your place for unfiltered coverage of ongress. >> our c-span campaign 2020 bus is traveling across new hampshire asking voters, what issues should presidential candidates address? >> the issue that's most important to me in 2020 is taking care of our veterans, making sure that we don't go to war, and that we are working with our allies to secure our united states. >> [indiscernible] -- financial reform. take on wall street and be able to stand up to wall street investors. >> racial justice, whether it be police brutality, addressing systemic racism within our government, and also issues of reparations. >> i'm mostly concerned about social programs, the maintaining of social programs such as social security. i know everybody swears on the bible they're not going to touch it, but you know that's going to be the next thing they're going to try to dismantle. i would say that's cause number one. >> i am most interested in ensuring the kids in schools and adults still have access to the arts. there's no programs that are suffering -- [indiscernible] -- funded as best we can. once we take art education out of the schools, keep children culturally aware, incredibly important to each one of us. >> voices from the road on -span. >> c-span, your unfiltered view of government. created by cable in 1979, and brought to you today by your television provider. >> tonight on c-span, our campaign 2020 coverage and the results from the new hampshire primary. a live simulcast of wmur tv, the abc affiliate, in manchester. >> we're clearly having something happen here. we just want to seize the moment. >> we're going to have a great day, a great night, we're going to have a big party and celebrate a historic outcome. >> mildly hopeful here in new hampshire. >> we have to have a good showing and we're positioned to o just that. >> voters will be the ones to make sure their voice come loud -- through loud and clear. >> we're a small but mighty operation. >> the last time wn

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