Transcripts For CSPAN2 Key Capitol Hill Hearings 20240622

Taylor rule, how would would that impede your response to such a crisis . The taylor rule would tell us that it should depend on only two variables the current level of real gdp or the out put gap and the current level of inflation. It obviously wouldnt take into account in any way our judgments about growth in the Global Economy how we expected the european economy would be affected or Global Financial markets by these such developments. So in that sense it really restricts any simple rule restricts the setting of Monetary Policy to a very short list of variables and typically there are current values. Thats one of the reasons. We spent spend a great deal of time and the forecast that we include in our Monetary Policy report that the participants right down, we present to the public every three months. Incorporate all of the kinds of information, what what we think is going to happen in the Global Economy, and those are economic developments. Those factor into our Economic Forecast and our view to the appropriate role of policy. We are providing providing a great deal of information to the public by providing these participate forecast. Our participants are telling the public how, in light of their recent forecast, concretely concretely with numbers, they think Monetary Policy should be set. That is information about the so called reaction function, namely the relationship between the economy and Monetary Policy. It is incorporated in Something Like the taylor rule. Thank you so much. Can you provide us with a quick update of this implementation of the socalled collins fix . We appreciate the Congress Passing the collins fix. In light of that we have a great deal of flexibility now to Design Capital standards that we think will be appropriate for the firms that we supervise including the insurance based savings Holding Companies in the insurance. We are working working hard to put in the Public Domain through orders or proposed rule when we figure that out. Thank you so much. The fiveyear look back our colleagues did say that weve been trying to be too big to fail. I dont think frank dodd is trying to be too big to fail. It directed us to be increasing the safety and soundness of Financial Institutions particularly those that are most systemic. It gave us tools to raise capital and liquidity to impose capital surcharges on those firms that would be deemed most systemic. We can use stress testing as a methodology to make these firms much less likely to fail and the amount of capital and liquidity is increased massively since the crisis. In addition dodd frank gave us both title to orderly liquidations which would be a new tool to resolve. I think youve covered it. Back to my idea about the labor market. Do you think ending the sequester and raising the minimum wage would be Good Strategies for getting our labor markets back together . This is a matter of congress. I knew you would say that. The time has expired. The chair now recognizes the gentleman from new jersey. Good morning. In front of me last night i read through what is called the joint staff report the u. S. Treasury market on october 15, 2014. It was the staff report that looked at what happened in the market back in midoctober. Are you familiar with that report and do you adopt that report even though i know the name of it is the joint staff report . This is a technical matter. Is this just the staffs opinion or does this include your opinion . Im certainly aware of its intensive staff work by staff in a number of agencies. I certainly support the report. Okay good, i assume so. I guess there are two questions. I also read your testimony in the addendums to your testimony this morning. First of all, is there a problem and secondly what was the cause . I thought we would all conclude that there was a problem but thats not clear from looking at the addendum to your report that came out as far as your testimony, where it says at the bottom despite the discussions and disruptions, the liquidity and a nominal treasury market do not indicate notable deteriorations. Then you go on to say that there really wasnt much problem in liquidity of the market. You give some talk about that. So i think theres a problem in other people think theres a problem. We had hearings on this and we were told there has been dramatic changes with respect to the market in recent years. So the question is is rich kitchen right that theres a problem in the marketplace or are your staff and you write that there is not a problem . Lets find out if theres a problem first of all. So i dont thing its clear whats happening in these markets. Know, but is there a problem . The report you mention that was just released looked at a 12 minute window carefully in which but overall he is saying there has been deterioration and there is a problem overall. Other panelists have said there is a problem on the market. Youre saying and your staff is saying there isnt any. It isnt clear whether there is or isnt a problem. By some metrics, liquidity looks adequate by trading volumes we dont see a problem but there are metrics that do suggest theres a problem so this is something we need to study. We need need to study it further. So youve studied it so far and have an 80 page report that looked at it and i find it troubling that it doesnt come too much conclusion. What i was looking for was the second question that the chair and i asked and lou and others what was the cause of this . This still fails to come up with any particular explanation. It runs through about a halfdozen half dozen explanation saying these are not the problem. One of them that it does refer to, it says the growth in electronic trading and other factors and regulations. That word regulation only appears twice but your staff says regulation is an indicator to the changes in the volatility and the liquidity in the marketplace. Said regulation is part of the problem right . We just dont have a conclusion about about what happened in the treasury market at this point. Regulation could have contributed in some way to this but there are many other things going on as well. It doesnt say that in your addendum at all. It doesnt say deniers death report. It doesnt say regulation. It doesnt say that here. We never got that answer from sec. Lou or anyone else from the administration. Are you saying today that yes regulations such as Capital Requirements they are potential problems in this area . There are things to look at. We have no way to know that those things you mentioned our problems. During this window. Mask your question . Did you direct your staff to look in to see if that was a problem . They dont say it once in the report that they looked at regulation as a causation. They looked at all other measures. Did you direct them to look at that and will you in the future . We asked them to look at what caused this very Unusual Movement and to study what possible causes and they were unable to find any single cause. They they pointed to a number of factors that could have been at play and it needs further study. Its galatian to be on that list of things that we look at. There is no evidence. Your time has expired. We now recognize ms. Maloney. Welcome chair yellen. I know some of you have been critical of your performance but i think you have done a tremendous job and i want to publicly thank you. You have been very responsive to congress and you have also managed to wind down the quantitative Evening Program very smoothly and right on schedule without causing any major disruptions in the Financial Market id like to ask you some questions about financial policy. Foreign Development Including the turmoil in greece and china, in your words, pose some risk to United States growth. Has the turmoil in china and greece changed your view about the appropriate timing for the first Interest Rate hike . So we look at interim National Development very carefully in developing our forecast. We have been tracking closely developments in greece and china and other parts of the world. The issues that exist are not new. For example, the committee in june was aware of these developments and in june when the participants wrote down their views of the economy and appropriate policy taking into account these developments and the risk they pose, they still thought the overall risk to the u. S. Economic outlook were balanced. They judged that it would likely be appropriate sometime this year to begin raising our target range for the federal funds rate. Of course we have continued to watch these developments, these Global Developments unfold and we will in the coming months. Who are we to judge that these developments did create substantial risks or werent changing the outlook in a notable way, then a change in the outlook is something that would affect Monetary Policy. As weve said all along, we have no judgment about the appropriate date to raise the federal funds rate. Our judgment will depend on unfolding economic developments and how they affect our forecast. You stress in your testimony that the pace of rate increases is more important than the timing of the first rate hike. Many economists including the imf have argued that the fed should wait longer to start raising rates, possibly waiting until next year, but should then follow a slightly steeper path of subsequent rate increases. My question is, if the fed eights longer than current forecast to start raising rates, will that mean a steeper rate of rate increases . If we wait longer it certainly could mean that when we begin to raise rates we might have to do so more rapidly. So an advantage to beginning a little bit earlier is that we might have a more gradual path of rate increases. As i indicated the entire path of rate increases does matter. There are are many reasons why the committee chose an appropriate path of rate increases is likely to be gradual. Given that we have been at this for over six years, it has been a long time, so when we finally begin we will be looking at what the impact of those decisions are on the economy. That strikes me as a prudent approach to take. As you know the markets have been anticipating a rate increase for quite some time and then it will follow one of the meetings that has a press conference afterwards. Currently there is a press press conference after every other meeting. As a result in the market view the fed only has two more chances to raise rates this year in september and november. Would the fed fed feel comfortable raising rates for the first time without a press meeting scheduled afterwards. In other words are the july and october meetings on the table for rate increases . Ive tried to emphasize that every meeting is a live meeting and we could make decisions at any meeting. Weve emphasize that if we were to make such a decision, we would, we would likely have the press a briefing afterwards and we recently conducted a test to make sure that members of the media understand how technically they would participate in such a press briefing. Time of the general lady has expired. We now recognize the gentleman from missouri. Thank you mr. Chairman. A few weeks ago we met and had a long discussion about a number of topics. One of them was Operation Show point. I asked you at that time or mentioned that i was very concerned from the standpoint that oversight reform of this report that they put out with regard to the internal email and memos that showed that they were going well beyond their Statutory Authority and duties in trying to limit the ability of certain legal business. It was impacting a lot of banks in a negative way. The fact that you oversee some of those banks as well, i felt you should be pushing back. I thought you should have a meeting with chairman greenberg. Have you done that yet . Yes i have done that. Ive had discussions with him on Operation Show point and our views about what appropriate policy was an part of the banking agencies with risk back to howard our examiners we both certainly agreed on the importance of making sure that examiners and our policies dont discourage banks from Offering Services to any business thats operating within state and federal law. He and i agreed thats appropriate policy. Did he indicate to you how he is going to stop Operation Show point within his own agency . I dont want to speak about his policy. I think its important that you make the point to him that he has to stop. In this report this report of his own emails within his own department, he is implicated as being part of the problem. Therefore, its important, i believe that important, i believe that you have a discussion so he has to cease and desist both activities and you will make sure thats done. He made explained to me that there are policies in place to be certain that his examiners are abiding by the policies. That is the banks that we supervise in the examiners in examining them do not. If at some time you find this is still continuing, will you confront him about that . If that is happening in the banks you oversee, will you confront him about that . Will you stop him from doing that if you see it . I will continue to discuss with him this issue to make sure that our policies all right. With regard to another issue we discussed one of the concerns that i have especially with insured and assets as we are designated, there doesnt seem to be a way for them to be not designated. There is no path thats written out. Obviously you can say they need to change their Business Model but i think it would be helpful whenever there designated, to say whenever you do this this and this, these are problems that can cause you not to be designated. I really dont see any path for that to happen. Can you elaborate . They review they review every single year the designations of firms and considers whether or not they are appropriate or no longer appropriate. Firms that are designated are given very detailed materials to enable them to understand the basis for the designation. I would just encourage you, every year, to be sure to put something in there so there is certainty on the part of the folks that are designated. I have 30 seconds left so let me get one more question and with regard to the boards charge of it adopting capital concerns for insurers. This is important and that this is the first time the fed ever got involved with Insurance Company capital standards. Would you commit commit to us or prioritize adult mastic capital prioritizing any of those would not become effective in the u. S. Thats my concern. We want to make sure that the domestic Insurance Industry is protected. Thank you mr. Chairman and welcome back chair woman yelling. You were quoted in a june 17 american bankers article as stating that the Federal Reserve was examining ways to improve its implementation of the Community Reinvestment act amid concerns that regulators are letting too many poor communities go unserved by banks. How would the Federal Reserve effort seeking to improve implementation of the Community Reinvestment act encourage advancements in places like the ones that i represent such as ferguson missouri and other communities throughout this country that are in poverty . Weve been working to improve implementation of the cr regulations with other banking regulators, and weve been doing that in part by trying to improve our guidance, adding questions and answers on the reinvestment, and do we came out with additional cue and day in 2013 and and we are working toward our further additions. So what this guidance does is help to meet the needs of low and moderate income folks. By doing that i hope what we will be doing is encouraging banks to consider providing the kinds of Banking Services that people in these communities need to be an important part of their program. Along those same lines of questions, you stated in your testimony your concern about the limited availability of Mortgage Loans. As a supporter of dodd frank, has the law given us unintended consequences and tap down banks ability to lend money in order for people to get Mortgage Loans . So its hard to say. I mean certainly lending standards are much tighter than they were in the time up to the financial crisis. I i think most of us think appropriately so we dont want to go back to those standards but the steps weve taken may be having some unintended consequences. We may need to work on that to make sure that credit is available. So do we need to tweak the law in order to allow banks to really get money out and into our economy and allow people to realize the American Dream and purchase homes . There are a number of obstacles that banks seek in terms of lending. There are matters that they are working on with fannie and freddie. There remains uncertainty about securitization and rules around securitization and weve not really seen an active market comeback for private residential mortgagebacked securities and that could be part of whats happening. The Federal Reserve released a report titled strategies for improving the u. S. Payment system. A followup to a 2013 consultation paper that signaled its intention to expand its presence in electronic payments. Why has the fed embarked on this Faster Payment Initiative and what does it hope to achieve and what is the Federal Reserves plan . Our basic plan is that we want to see a faster and safer Payment System in the United States. We think many steps can be taken to make that possible and the main rule we expect to play is that of the convener to bring private sector participants to the table to talk through these issues. For them we have set up task forces on faster payments and safer payments. Participants are discussing what they can do in order to bring this about so we are trying to play the role of facilitator of bringing people to the table. Time of the gentleman has expired. We now recognize the gentleman from wisconsin mr. Duffy. Welcome chair yellen. Along with my colleague we have been doing an investigation. We have kindly asked for you to reduce documents in regard to this leak. You you have failed to comply. They issued a subpoena for those documents and you failed to comply. What is your Legal Authority in the case of lower statute that allows you not to comply with the subpoena . First let me say that we have cooperated with the committee. No, no i have limited time so give me the Legal Authority that you have not to comply. Weve asked for document and you have not given them to us. We have said that we will give you the documents that you requested but we are not going to provide them now because this matter is the subject of an open criminal investigation by the boards Inspector General and by the department of justice. They have indicated to us that it will compromise likely compromise their investigation. You are the chair. You can read the statement all day long but i want to know the Legal Authority you have. Basically you said in the letter that the oig requested but you dont give it to us. You are not bound by the dod j or the oig. Weve asked for the documents. You said you will not give us the document. Is it fair to say you do not have any Legal Authority because you do not have an exemption. We said we will give them to you but we will not compromise and open investigations. We want to see this investigation succeed. You do. Lets talk about that. You want to see that succeed. Lets talk about the timeline. Congress is going to obstruct an investigation when it had information you did nothing to perpetuate an investigation that would do this to the truth. Eventually the ig did their own investigation and then they closed it and guess what . Congress did forward and said listen this is important stuff. As Elizabeth Warren would say we just dont want to have those that are wellconnected get information three weeks. We should know who the leaker is and so is because we pressured the ig with eight closed investigation and we pressured you and all of a sudden there is now second badeaux no no we cant it be that documentation because its a pending investigation and we are concerned about you jeopardizing it read madam chair it appears that you are the one who is jeopardizing or the fed is the one who is jeopardizing this investigation. Am i wrong . The fomc has in place a clear set of rules that are to be followed when there are allegations of elite. You didnt follow them. They called for a review of the incident by the council and the fomc secretary. We have described to you how that review took place. It took place before the review is complete. The Inspector General reclaiming my time. Did the general counsel per year guidelines talk to the fmo seaboard or did you make a recommendation to the ig . The requirement is that it initially be reviewed and solely determine whether they make a referral to the ig. They didnt do that. Before his review was complete he was informed by the ig but the ig had undertaken his own investigation and therefore the ig was already looking at it before it was necessary for him to make a decision. My time is almost up. If anyone is trying to sweep this under the rug its the fed. Congress is trying to bring light to this. I sent you a letter with response to your denial from chairman hensarling and we have a full page of footnotes where congress has done oversight during open pending doj prosecution. We have the right to use documents. You have a duty to provide them to us. You have cited no Legal Authority to deny that request. We are entitled to do oversight. I hope that you will reconsider your denial. I yield back. The time of the drummon has expired and the chair recognizes the gentlelady from alabama mrs. Sewell. Thank you chairman for being here today. I wanted to bring your attention to the wages and what i see it as income inequities and really get your take on what we can do as far as monetary policies to close that cap. Since the height of the financial crisis the u. S. Economy has made remarkable progress particularly compared to other parts of the world. Here in the United States in employment rate fell from 10 to 5. 3 in june and the president has pointed out in his budget over the past four years we put more people back to work in the United States and europe has and japan and other nations however despite the overall employment gains there are still some districts mine included that have folks who want to work who havent been able to find work. The hourly Labor Compensation has been tending to lag behind the growth in particular and the president s budget projects that the share of National Income going to labor rather than to capital will remain at the store closed years to come. What in your view can and should be done to reverse this trend and ensure that workers reap more of their wards in gains from our growing economy . Im particularly interested in the disparity that exists among minority and employment. I can tell you in my own district of alabama while the overall nation has 5. 3 unemployment our median average unemployment in a district that is disproportionately africanamerican is right at nine to 10 which is vastly different. We would love to know how you think their monetary policies can go about changing that trend. So Monetary Policy is aimed at trying to achieve a strong recovery in the job market and while we are not there yet i believe we have made substantial progress. As the economy improves and the labor market gets stronger i would expect to see the growth of wages pick up over time and at this point i think we are seeing at least some first tentative signs that wage growth is increasing. Its been running at a very slow pace. There are often likes between improvement in the labor market and a pickup in wage growth. Do you think Unemployment Rates, is it more because of this actual changes are cyclical factors . O. Cyclical and structural factors matter so cyclically estimate labor market picks up the pace of aggregate wage growth will pick up but structural factors are also very important. Productivity Growth Matters over time to real wage increases and productivity growth in recent years has been frankly very disappointing and that may be holding wages down but across groups differences in wage trends across different groups in the labor market i think reflect a deeper set of longerterm structural influences and go way back to the late 70s or mid70s where we have seen growing gap by education. We have seen a persistent increase in the returns to highskilled workers and stagnation at the middle and at the bottom. You think changes in our tax or spending policies could help close that gap quicker . I get that you know systemic problems and persistent poverty caused lots of segments of the population to have their unemployment lag behind sort of overall unemployment. I really want to know if there are substantive things we can do as far as tax or spending policies i would hasten the closing of that unemployment gap . There ares large literature on this and many economists who have made suggestions about things that congress could consider that would address inequality certainly with high return to education and skills being a very important factor in determining wage outcomes policies that address education at different levels. Are there any particular policies or outreach efforts in order to really understand the difference in communities of color with respect to the wage and income inequality . We do have surveys. We are trying to collect information. Household surveys that enable us to gain better insight into this and we have Community Development efforts that are addressing low and moderate income communities to try to see what could be done. Thank you for your efforts and i hope youll continue. The time of the gentlelady has expired and the chairman recognizes the gentleman from tennessee mr. Fincher. Thank you madam chair. I appreciate you being here today and im going to get right to the point rate the couple of lines of questions cost benefit analysis and raising Interest Rates and what impact that will have a National Debt versus personal debt and the Committee Room being remodeled i have also been watching the tvs which are very informative and the charge that i think are being shown by my colleagues on the other side of the aisle if we would just change the top to progress that has been made since republicans took control of the house in 2011 and i think the charts are great so appreciate my buddies on the other side of the aisle getting a kick out of that. Back to costbenefit and all of this. The small mediumsized banks lending institutions all over the country, the impacts of doddfrank being burdensome overburdened some just two or three questions and you can answer and we will move on. Is the feds independence and setting mandatory policy mean that financial relations are above the law and is anyone at the Federal Reserve done an analysis of the cumulative impact of doddfrank regulations on broader variables such as Credit Availability Economic Growth Capital Capital formation and perhaps most importantly job creation lacks the cftc, sec these other agencies do this. Why arent you doing this and can you shed some light on why you were not and would you be open to doing it . We do a great deal of analysis to try to understand the costs of regulations that we put in place and their benefits. For example with respect to the basel iii r. Choir meant. We participated along with other countries in a very detailed costbenefit study the likely impact of raising capital standards. We came to the conclusion that even though there might be a very modest burden on bracing spreads and the cost of capital to the economy, the cost of financial crises had been so dramatic and so large that the impact that we would have a producing the odds of a financial crisis passed the costbenefit test easily. We regularly make sure that we comply. So not to interrupt but would you be open to doing a specific costbenefit analysis for every big decision because what you are saying, i know its very complicated that you are saying well in order to make sure we dont hurt this one over here we are doing this here but we are not going to give you the information. Its not cut and dried. Would you be open to doing a costbenefit analysis, yes or no no . We do follow the analysis thats required by current law and in some cases i think it would be difficult to do that. Congress for example in doddfrank already made a judgment that they want to see us put certain requirements into place based on congresss judgment that it would make the Financial System safer and sounder. They put out proposed regulations for comment to try to accomplish an object it that congress has assigned to us because they determined it would be beneficial. It seems like a common sense approach. The sec cftc and other agencies we have a common sense approach cost benefit analysis and i think you are saying that you are not in favor of doing that at this time and maybe Congress Needs to do something else. Let me move on. But you are not in favor of it. Raising Interest Rates nationally the debt that we always see the current National Debt. Personally the debt that Many Americans are low in this country. When we start down this path of raising rates im afraid theres a whole generation of people that think the Interest Rate 0 as the standard because they dont know what Interest Rates when i was a kid when Interest Rates were 18 to 20 under the carter demonstrations that when you start down this path of raising rates might there he is we will go into another recession and you cant raise rates again because rates are already low. The only answer is dumping more money into the economy and that gets very serious very quickly. Do you fear that raising rates is going to do this . We are not going going to raise rates if we think its going to put the economy into a recession. We will raise rates because we believe the economy is Strong Enough that it is appropriate to have higher rates to meet the objectives assigned by congress. This is a concern for u. S. Well. Bui wouldnt do something that would jeopardize unless inflation were at risk. The time of the gentleman has expired. The chair recognizes the gentleman from illinois mr. Foster. Thank you mr. Chairman and thank you terry yellen for appearing today. You know that net exports that is to say trade imbalance has been in the substantial drag on gdp growth. The house and senate will soon go to conference on a customs bill that is part of a trade passage passed into law last month so my concern is and continues to be around the potential for our trade partners to undermine the value the free trade can have without strong enforceable provisions on current currency manipulation. During the debates the administration put forth the position and insisted it was impossible to do fine currency manipulation in any way for example with the imf definition of currency manipulation that would not have him paged on your ability to have accommodative Monetary Policy including quantitative easing in response to the downturn. My question to you is do you agree with that and specifically in what ways would for example of imf definition of currency manipulation prevented you from accommodating Monetary Policy . So i do with rape with the concerns that were expressed about currency manipulation. First let me make clear that im opposed in the g7 and g8 20 have weighed in that intervention in currency markets by government for the sake of changing the compact Competitive Landscape and purposely trying to avert trade to a country is wrong. Its an upper brit behavior. Our Treasury Department is deeply engaged with other countries. Understand. The question is it impossible to make actionable objective criteria to define currency manipulation which would not have impinge on what we have to do in response . I believe its difficult because many factors influence the value of currencies that are traded in markets. You are aware the imap definition does not talk about the value of currency. We have to be running a persistent trade surplus and accumulating additional Foreign Exchange reserves and you have to be holding excess foreign reserve exchange reserves. Its my belief that none of those three would have been triggered by all of our response and the question is soviet administrations position was fundamentally wrong that imf definition would have prevented us from you know the accommodative Monetary Policy that was so important to rescuing our economy. So my concern with this is that i think its important for countries to be able to conduct monetary policies that does pursue domestic objectives. Those policies are not intended to impact currencies but it goes they do affect Interest Rates and Interest Rates affect Global Capital flows they have to pass on currency values. All i have said about this topic is that i would worry about any type of legislation that could cripple Monetary Policy from achieving the objectives that congress has assigned. The precise question is, is there anything you did that would have triggered the imf definition . I am not sure. I havent studied that carefully enough area to. Would the possible for you to get back to us what they answer on that precise question . I have a little bit of time left so im a physicist, are you familiar with our 9 cents quote that any theory of the universe should be made as simple as possible but not simpler and are you ever reminded of that quote when you talk about things like the taylor rule . Imagined the entire universe can be reserved, reduced to a linear relation to a handful of variables . I think thats a very good point and i think it is apropos of the taylor rule. It would be nice to be able to reduce appropriate policy to the current values of two simple variables but i think the world is more complicated than that. We cant take everything into account that there are important things that need to be considered and that is why we have an fomc that has been asked to bring a great deal of information to the table. The last thing is sort of a corollary of that which is if you have something that is a function of many variables and it is changing over period of time in response to a single one of those variables then that obviously does not mean that the real response function as a single function of a single variable. The time of the gentleman has expired. The chair recognizes the gentleman from california mr. Royce california mr. Royce churn of the House Foreign Affairs committee great. Cherry yellen in your first appearance as fed chair before this committee you commented on the need to move forward with Housing Financing reform and youtube continue believe the current state of our secondary Mortgage Market poses a Systemic Risk and should congress and the fhfa be taking steps to share that public risk backed by taxpayers with the private sector . Secretary lew suggested such an approach. We would have to support. So i mean i have long said and my predecessors have as well we think it would be desirable to see congress address g. At the reform, to decide explicitly selfconsciously what is the appropriate role of the government and the Mortgage Market and to try to bring private capital back into the Mortgage Market. There are a number of ways different strategies congress could take to accomplish that but i do think its important for congress to try to resolve those issues. Thank you terry yellen. Last year iowan with others wrote to treasury secretary lew and copied you regarding our concerns about fsocs lack of a formalized process for reviewing nonbank Financial Institutions and we shared concerns about the need to conduct a thoughtful review of the Insurance Industry before moving to designate individual insurers. The afsoc has taken steps to understanding Asset Management industry which were needed after the report specifically Federal Reserve governor trujillo has been market wide analysis in an activity space systemic review but they afsoc is not taken steps to understand the Insurance Industry so do you think it would be appropriate to conduct a thorough study as well quack shouldnt all nonbank institutions face a similar process for review . The Asset Management industry is one where afsoc. It appropriate to focus on activities and to look at whether or not they are our Systemic Risks associated with some Asset Management activities activities. Examples would include liquidity and redemption risk and use of offBalance Sheet leverage. With respect to insurance this is not a matter of going from reviews of individual companies and the activities type of approach. Its not something that fsoc to the best of my knowledge has discussed. Let me go to my last question. And their brave 2014 i asked about the deepening crisis in the commonwealth of puerto rico. He said then that the Federal Reserve was monitoring developments and continue to analyze potential consequences for Financial Stability of these events. You also said it would be best to not have the Federal Reserve stepped in as a creditor of a state or municipality. You said that it is more appropriate for congress and not the Federal Reserve to address Financial Issues based by states and municipalities. Do you believe the best. Com would be the Puerto Rico Electric Power Authority and its creditors come to an agreement without any Government Intervention with respect to this issue . With out what . Without Government Intervention but instead work it out between the Power Authority and the creditors. This isnt a manner in which i have an opinion. The Federal Reserve comments something that the Federal Reserve cant and shouldnt be involved in. I think its appropriate for congress to consider what is best to do in this case and its not a question of which i have formed, i have informed judgment judgment. What we have been doing is obviously monitoring developments in puerto rico which economically are very difficult. We are looking to see are there risks that are being transmitted to the broader municipal debt market and we are not seeing signs of contagion. Thats another topic that is obviously important but exactly what should be done in this situation i think its a matter for congress to consider. In the past 2 cents last night to have the Federal Reserve stepped in. I continue to believe that very strongly. The time of the gentleman has expired in the chair recognizes the gentlelady from ohio ms. Beatty. Thank you mr. Chairman and thank you ranking member. Thank you for being here today and let me just say we are very proud to have the last week in the great state of ohio although it was not columbus the capital. We certainly look forward to having you come just a few miles north to visit us. My first question is, to follow up on congresswoman waters question where shed asked about discrimination and the laws of wealth based on subprime lending and part of your answer im not sure if you got to finish, when you said that there were some other policies that congress could pursue to address discrimination and inequality. Can you elaborate on what those policies are . More broadly in terms of inequality among households in terms of wealth and income there are many factors that affect inequality. They tend to be deeper Structural Forces including technological change that is increasingly skilled demands for a workforce and a return to a skilled workers relative to those who are less skilled. Certainly education, training are matters that are within congresss domain to consider how to make sure that individuals have access to a worldclass education thats going to enable them to earn a higher wage policies affecting infrastructure and Capital Formation entrepreneurship, other things also affect inequality and i was referring to all of those factors where congress could potentially play a role. Thank you. When you were here in every before this committee januarys Unemployment Rate was about 6. 6 overall. About four months after that the rate decrease to about 5. 3 however in africanamerican communities while it declined it went from 12. 1 to 9. 5 or send over that same period. While africanamericans Unemployment Rate did decrease the number is still high. In fact it has doubled the International Employment rate and you would agree that is unacceptably high so my question is as you assess the health of the labor market to what extent are used taking into account the fact that minority communities dealt ace unacceptable higher rates of employment and is there any outrage or anything that the Federal Reserve has engaged in to understand the extent and communities that i represent . There really isnt anything directly that the Federal Reserve can do to affect the structure of unemployment across groups and unfortunately it has long been the case that africanamerican Unemployment Rates tend to be higher than those on average in the nation as a whole. It reflects a number of different sources of disadvantaged better operative there and our national Monetary Policy we are trying to achieve a situation where jobs are broadly available in the economy to those who want to work but we seek the maximum sustainable level of employment or we have to be careful not to try to push the economy to a point we have to worry about inflation remaining under control and given our focus on inflation there are certainly limits on what we can do for any particular group. Thank you and ive a few seconds. But the continuously talk about the office of minorities and women inclusion. You know section 342 that created the office and part of the thing that we have struggled with is the whole reporting authority and the standards for reporting back what those federal regulation officers are doing. Do you have any insight on the program . I think it is important for countries to take a look at their own debt. And its time for us to look in the mirror and address our own problems, including the 18 trillion in debt that we have accumulated at this time. The Federal Reserve has employed and i will say exceptionally accommodated monastery Monetary Policy to spur Economic Growth, but we are now nearly seven years out with the federal funds rate still at the down. The quantitative easing have made it much easier and certainly has solve our longterm debt problem. And both you and your predecessor have argued that the fiscal reform is important over the long term. However, you also stated that the fiscal prudence can be ignored in the short term does not hamper the economic recovery. So it has now been seven years and we can no longer say that we are looking at the shortterm. Like my predecessor i believe that this is a nation facing a serious debt problem in the years ahead. At the moment mainly because of congressional actions and those have succeeded in lowering the deficit to the point where the next several years the debt to gdp ratio was stable, but over time the cbo projections as the population ages and especially if Health Care Costs rise it has been historically typical in the country will face an unsustainable debt path in which the debt to gdp ratio rises and that requires further actions that is mainly related to retirement programs and Social Security and even more important, the medicare and Health Care Costs trends. So we have known about this for decades and there remains a need for action on this front. There does remain a need and this includes reports on some of the consequences with growing federal debt is comes from the longterm budget out lead. Things like lower income, pressure for larger tax increases or spending cuts, reduced ability to respond to domestic problems and a greater chance of a fiscal crisis. Are the things that you all consider at the Federal Reserve with regard to Monetary Policy . I agree with the consequences that you just read to me. And ultimately when we see those things being manifested the consequences in the years ahead if the deficit becomes very large, it will put pressure on the economy, not right now, but in future years, it will likely cause i was to have fire higher levels of Interest Rates that we otherwise would have, diminish levels and productivity growth in this economy, we would have to go and offset those forces by having a tighter Monetary Policy and we are not in that the tuition in a particularly leading to a great greater chance of fiscal crisis, is this something that we discuss what we are looking at his Systemic Risk reign. I have not been part of this discussion but it obviously is a significant issue for the longterm. When we get to the longterm . After seven years am adding a trillion dollars in debt over the last handful of years when did we we get to the longterm . The economy is recovering i am pleased by the progress, as i indicated my colleagues and i think that if the economy progresses as we expect, we will probably began to raise Interest Rates this year and that takes us to the longterm. How does that affect the current . Two ways higher Interest Rates will raise the cost of servicing the debt but a stronger economy will cause us to raise all that tax receipts and that is something that is favorable with this budget. We now recognize the gentleman from michigan. Thank you. Thank you for being here. The functioning is a pulling guard right now and it has good coverage, and so the work that ive did before and i love the work that i have been focused on since i have been here, it really to the Economic Health of americas cities and towns. And i know that a lot of the regional banks most notably boston and cleveland, chicago and in some other ways philadelphia, they have been focusing on this attention of the issue of Fiscal Health of communities within their supervisory area. And i have raised this with the predecessors and again with you. And im curious as to whether the board of governors my in the near future take up the question and we have an institutional failure in this country and its it is there is often a tendency to think about cities facing stress is being anomalies were having that problem as a result of significant mismanagement or an episodic sort of fiscal stress situation and what we are seeing, what the data shows us is that there is a structural problem in the municipal government of all types are facing stress hundreds of millions of dollars of revenues and many dozens of these municipal institutions are facing potential failure. I know that the fed has involved itself on the question of Municipal Bonds as a source of liquidity for banks looking at them in a simple and financial situation from the investing site is only one half of the equation and i think its overdue with the dual mandate particularly the mandate related to employment, to take a look at the potential employment impacts of the failure of dozens potentially of American Cities that are really central to the economy. Im wondering if you could comment on the problem. And im wondering if you could offer whether the board of government can take this up. Its an important issue to take up. Its something that im happy to raise with my colleagues. Im well aware of the work thats going on in the number of reserve banks and all of them have active Community Developments and functions and many of them have been very focused on older cities or cities that have suffered declines and in some cases because of the decline of manufacturing and trying to help them work toward strategies that would lead to the revitalization and they have done some very creative work. A number of them have and so i can discuss with my colleagues what we may do in that space and i am pleased to see the efforts and the good work that the reserve banks have taken. I think that its been helpful to Community Leaders as they have tried to devise strategies for revitalization. Two thank you. I would just encourage you to look at the work of the board of governors that south looking at the role that the banks the regional banks have done, it is important. And from the perspective of the region it is seen as an anomaly. I think of the fed would be willing to use the Research Capacity to help and many policymakers, not only does this problem have a potential negative impact on employment, but its also is a troll and pervasive problem that goes beyond what is seen as an episode based on management failure or an unforeseen circumstance. I really do think that its well within the responsibility of the fed to take a look at. I appreciate your suggestion i know a number of years they have collaborated to initiate work on this topic and they have chosen number of community is around the country, cities that were those that were hard pressed, those are working on understanding what the tragedies are working to revitalize these different kinds of communities and it could be collaborative work of the reserve bank takes to get their. Thank you very much. We experienced appreciated. We now recognize the gentleman from kentucky. Welcome back to the committee are in i want to talk to you a little bit about the policy that the Federal Reserve has sued, ill effectively almost zero shortterm Interest Rate policy that we have pursued for six years. One of the original target that they sent to began is one it reached six and a half precent, as you testified 5. 3 and i appreciate your testimony that you have expected to raise the target gradually by the end of this year and what i want to ask what are the reasons that they have delayed Monetary Policy beyond the point you have targeted for increasing rates and what that says. First of all, what does it say and this includes Effective Communication that transparency is desirable. But doesnt the fact that we are below this almost a year and a half, and use the have not raised rates, doesnt that undermine the commitment to transparent the and the commitment to communication . I want to make clear that its six and a half precent that was never a target and we never said we intended to raise rates when unemployment fell to six and a half precent and we said it was a threshold. If unemployment was above that level and ration was well under control, we would not raise the rates. But once unemployment fell below that level we would begin to raise rates and we have followed the policy and we never said that it was a target. I understand that. I appreciate the caveats and youre very good at caveats and i appreciate that. But i think that that brings me to my second point which is that a full six and a half years after the recovery even though we have seen a decline in unemployment as you have acknowledged, there are significant weaknesses in the labor market and the overall economy and the recent investors business investors business daily article said that the overall growth in the 23 quarters of the obama recovery has been 13. 3 , that is less than half the average in the previous 10 recovery since world war ii they had the obama recovery been merely average the gdb gdp would be less. That translates into 16000 and i think you recognize that saying that the measure remains elevated and that would explain why you invoke that caviar and have not raised the rate even though you came below that. So i understand that and lets talk about the cause of that underlying weakness. Its clearly not Monetary Policy from this standpoint because you have engaged in these extraordinary measures, six years and very accommodating of policy quantitative easing. Shouldnt we start looking at fiscal policy . The obamacare says it is contracting by 2. 5 million jobs, a 30 hour work week which is forcing people to go parttime the epa rationing of energy. 18,000 lost coal miners we are losing employment by the day. Doddfrank, they say over the next 10 years that they will reduce the gdp output by almost a trillion dollars in just last week one of your colleagues acknowledges that this could be a diminished fix them in the economy. The Economic Growth, we have seen this flag and this flat, as you said. Should we diagnose this problem differently that this is a fiscal policy disaster. It is appropriate to look at what we have had such a slow recovery. It really has been painstakingly slow getting the economy to the point where unemployment is 5. 3 and we have a devastating financial crisis in which it took a huge toll on households with many of them struggling with debt and with massive losses in wealth and being underwater on their mortgages, trying to get that under control. And this has been very cautious about investing. This one final point. I think that the low rates are not the problem and what i am concerned is we have delayed raising rates. And now we have no tools left and what your responses now if we go back with this Balance Sheet and zero rates, we have no tools to address this next recession. The chair recognizes the gentleman from florida mr. Murphy. Thank you, mr. Chairman, thank you, ranking member, thank you for being here. I think one of the biggest problems that we have is the disappearing middle class and one of the factors that is not addressed in that conversation is often housing and in a state like mine in florida, you go to areas like this where there is a lot of growth and a lot of the numbers there for growth are through the roof way better than ever expected and that includes those that have the credit scores. And they are not experienced this bounce back and that includes getting to this middle class and my question relates to regulation and curious as to when you think the Federal Reserve will be able to finalize the domestic systemically important things so that this committee can have more than a billion dollar line which american banks are started making a 30 year fixedrate versus the ones are truly most risky. We would tend to finalize the list of systemically important banks. Where we have eight mastic banks that have been globally part of this among the banks that are subject to the advanced standards and those banks we have for example, they are subjected to a higher leverage your bierman with other banks and we supervise them in a different process and we will be proposing enhanced capital standard or surcharges for those of systemically important banks but others that are not in that group are also important and have significant importance and are subject to enhanced prudential standards and supervision. Will you be putting that list out . Yes. Im not sure what list. We are talking about this and there has been a lot of conversation here as to whether it is just a 50 billiondollar arbitrary line that is being considered first things like interconnected derivatives and suitability and etc. And if that is going to be taken into consideration. We give special attention to all banks that are over that threshold and we have talked about this and there is no list of banks that meet this criteria and there are several that have been designated for supervision by this that are subject to enhanced supervision. Right now its 5. 3 . Well, first of all, i think that there is more slack in the labor market than 5. 3 measures somewhat more. And usually we detail this in the Monetary Policy and usually that is one factor in addition. And i think that Labor Force Participation it remains to be seen that there are some components with those that do reflect a weak economy or labor market and more people would rejoin the labor market if it were stronger. And so to my mind it shows how strong the labor market it and that includes wage growth as well. The time of the gentleman has expired. The chair recognizes the gentleman from pennsylvania. Welcome. Last week the Federal Reserve approved a 180 billiondollar bank and this will put the new above 200 billion and the Federal Reserves final order approving the merger analyzed Financial Stability of the merger. The Federal Reserve noted that it did not present a meaningful risk. And they used a factor based model. Should we consider this a factor based approach of stability . This includes the characteristic of trying to arrive at a reason for judgment taking this into account of whether or not this would create a Financial Stability threat and it looked at the details of the situation. They listed a number of factors that they took into and that is a useful situation. This month marks five years since the doddfrank at. That this would leave us all part of this mandate, which researchers have shown who produce this by 895 billion or 246,000 for each person. And why the percentage of adults are looking for just 62 the lowest in 72 years and why they have admitted its 10. 5 . And you know, they have averages since 2009 about one pursuing percentage point less over the 25 years preceding the Great Recession and i would note that this raid after the reagan recovery was 4. 8 and that was a recovery amount according to lower taxes compared to higher taxes that we have here. Considering that average is 2009 and for example in both the First Quarter in 2014 and 2015 the economy actually shrank. Is that correct . To has come according to the statistics. In light of that i would like to draw your attention and i dont see any negative growth. And he think even this is part of the economy gdp growth . Well, it looks like the numbers that you have on this chart our yearoveryear numbers between 2011 and 2015 i see quite a few and its hard to see what is represented here. This isnt my chart. Would you agree that the chart does not show the negative quarters . Two i dont even negative orders with the yearoveryear. But do you do see more of tween 2010 and 2015 that would represent the yearoveryear enact. Yes, yearoveryear often means fourthquarter of the Previous Year for the Third Quarter of the Previous Year and because negative quarters are infrequent. We have all been a part of in that chart. Given the gdp numbers when you compare this since 2009 and your own acknowledgment that a percentage less than the 25 years previously, this is the more accurate one in some of the quarters. And so given that anemic growth, you compare that to Regulatory Environment in the 1980s. Do you think the doddfrank has lifted the economy . I think the doddfrank has led to a stronger and more resilient Financial System. And this includes the yearoveryear negatives, at a huge loss of output and in charge in this leads it for such a devastating facility to be medically reduced. Paterno recognizes the gentleman from washington. Thank you, mr. Chairman. Madam chair, thank you so much in this includes scholarship as well. Kind of tracking the longterm decline of entrepreneurship and business formation, fewer businesses irvings darted and fewer are living past the first year and as we all know there is a declining number of Community Banks in this country and my question to you is what can you do and what can we do to help Community Banks serve the local economies. Community banks are quite vital to local economies and i have seen this firsthand when i was in San Francisco and president of the reserve bank they are. And it is something that we are focused on that the Federal Reserve wants to see Community Banks, we want to see them try been know for many Different Reasons that this is a difficult environment and Community Banks and the slow pace of Economic Growth and recovery that we have had below interest environments and squeezing their margins and the Regulatory Burdens that they face and it has been really quite high and they are struggling with it. For our part, we are looking in the way that we supervise Community Banks to do everything within our power to reduce the Regulatory Burden. And i could give you a list of things that we are doing to try to minimize the exams to the risk profile of the bank. If i could reclaim my time, kind of in the spirit of this the congresswoman asked what you could do specifically to help communities of color that have disproportionately high Unemployment Rate and you indicated that you do not have specialized tools and i will respectfully disagree. And i would encourage you and others as well to take note of some recent Research Done by graduate students and who indicates that when Community Banks and branches lead census tracts where there is a concentration of low income or communities of color that local business wanting declines are statistically even when there are other national or other International Branches retain in our community. He tracks that its not true with mortgage lending but it is true it will business wanting and with all due respect you have merger Approval Authority oftentimes when Community Banks or purchase it can make conditional presence in those neighborhoods where we began to document a decline. So the little amount of time that i have left, i am always did in your opinion about what you see as the threats to the continuing recovery and i will use this opportunity to address that i dont believe that it is as robust as it can be and not have a conversation about the output gap and the dire need for the fed to be able to think of themselves differently as it relates to infrastructure, but im not going to go with you. And so what you see as the threats that could induce or the factors that could contribute to another downturn in the economy . What keeps you up at night remapped. Let me first start by saying that i do think the economy has improved a great deal and in a way i am focused on the economy strength and its good performance whether then lying awake and worrying about a further downturn. The fed has reduced the projected growth rate of the gdp by 20 in the last few years. 2. 5, going to two and three that is immaterial downward projection. But the question still is what is out there that worries you. Our projections on growth, partly it reflects that productivity growth is consistently disappointed for a number of years and so the unemployment projections have proven more accurate than our output projections and in essence we have had decent job growth, better job growth than we would have anticipated and so imparted is a reflection of disappointing productivity growth. The chair recognizes the gentleman from arizona. Thank you, chairman. Madam chairman, on a personal basis we have talked about this with more questions that we have thrown at you. But in a couple of the conversations here there has been a discussion of Interest Rate policy and ultimately what it does in the fiscal policy and so does it ever reach the level of conversation of Interest Rates going back to some level of normalization and what it actually means to our deficit and debt . And the projection of our finances . Its something that the staff looks at something that i have looked at. We expect this and this is embodied in the dbo projections that as the economy continues the shortterm Interest Rates are going to rise, longterm Interest Rates reflect that and as the years go by shortterm Interest Rates do rise with the recovering economy and long rates are going to move up further and this is going to affect the interest burden of the debt and it will add to the deficit. So its clear and its also true that a raping economy in means stronger tax receipts. Its obvious and i have seen in the discussions around here when we are looking at environment with the reports telling us that interest is going to equal the entire Defense Budget and that is what the new normal Interest Rate models are going to work towards. So great Monetary Policy is ultimately emboldens us to engage in bad fiscal policy and we will pay a price for that particularly if we keep seeing the revisions on the gdp growth we may have to deal with this much sooner rather than later. You should be aware that Interest Rates are likely to rise and that that is going to raise the interest if that should be part of the calculations that youre making. A oneoff type of question, we touched on this in your very kind to engage in conversation. I have an interest in the distortion of the price of money in more than just what the fed does in its liquidity and Bank Reserves from this purchase, it is what we do tax policy wise on what is guaranteed, we sat down with some folks a while back who tell us that the vast majority of total debt not including Student Loans in this country has implied credit. And are we in the time of distortion of the price of money and does that make your job more difficult to use money as a communication of activity in the market . It is absolutely true whether it is a student or household not only at the Interest Rate that they have to pay but what the other terms are of borrowing and if it is a tax advantage to them, of course it is true that there are more then head line Interest Rates. Ultimately its the concern of the saving rates and we have created distortion that we have this incentivized savings and frugality and are part. You have been asked a couple of questions and you have been good at bringing up entrepreneurship and one of the things that seems to be working in the economy hum of the alternatives with access to platforms and much of this is about as stomach risk in the cascade effect of the Financial System these actually have no cascade effect. Do you believe that they will take a light regulatory touch to the alternative financing models out there that are much more like this but in many ways much safer . We have new forms of financing that are being made available and not aware of regulatory issues at this point it affects those vehicles, but i can get back to you and we do have concerns. Thank you, mr. Chairman. We now recognize the gentleman from california. I have five minutes to try to convince you not to raise Interest Rates until the spring and spring is when things are naturally part of this. It isnt a better part of winter. There are some reasons that you are aware of until early next year. You have more economic experience in all of us but you should not underestimate the ability of politicians in europe to screw things up and you need to price in the prospect that we do not pass all the Appropriations Bills and that we do not raise the debt limit. And im sure that youve factored in, but thats not just beijing and washington that you need to worry about that morlock connecticut. And i have mentioned this to you a few months ago and im hoping that you can do this for two purposes, one to let the country know how important this is and what the economic effect would the, the second to inform your own decision so that if theres prospective decision does occur you factor in the fact that its going to shave half a point away from the Economic Growth at least. And that means that we are going to capitalize and this would add 2 trillion to the corporate Balance Sheets and liabilities the 2 trilliondollar increase. Not because anything has happened in the economy but because as a matter of theological and esoteric and accounting thinking that i have to confess and from no benefit to the economy we have to add 2 trillion, when you do that you through all of the Balance Sheet ratios out of whack and you force companies to try to retrench and look better and do strongly this incentivized entering into the longterm leases and companies will save you can open that Shopping Center and when we find the sleaze for the store. And we will renew it later but we cant assign more than one year with weeds and so if you factor all of those reasons in maybe it will push you in the right direction. And the Unemployment Rate doesnt camp capture all of those, we have an alltime participation rate, the Unemployment Rate does not justify the increase. The reason given to raise Interest Rates is to deal with the prospect of inflation and inflation is already low and you have a 2 target, you have to keep the Interest Rates low and many have argued for a 4 rate. And theres a business where things stick, where you could have an employee who gets fired who may not get fired if there was an easy way to reduce the costs by two or 3 . And then finally you have all of the baby boomer retirees and its not near mandate but it is in the declaration of independence, a desire for happiness. And that is way less than 1 . For everyone else they lived in a nominal world. If you are a retiree in a zero inflation rate, 1 Interest Rate world, you are living on 1 because you psychologically cannot convey principles. And you are deliriously happy. You are earning 4 an anomaly you are not invading the principle in this works for everybody. The chair recognizes the gentleman from colorado, mr. Tipton. Thank you for taking the time to be here today. And we are staying in a failed economy from minority communities and i would like to be able to expand that to what we are seeing in Rural America as well, where the economy is moving and this is obviously access. Its been a difficult time for Regulatory Burdens that have been part of it. We have the gentleman is well that we have in overzealous burden that is impacting some of the Community Banks. What insurance he has talked about, and it is a matter of this and it looks like they are out of doddfrank. What were we going to be doing. We are very focused on Community Banks. That is what they are worried about, by the way. They come to see us twice a year, the entire board is meeting with them and they are also in each of the 12 Federal Reserve districts on a regional scale on the council to advise the reserve banks on factors affecting Community Banks and so we arent listening. And we are trying to be responsive. I appreciate that. Putting a little explanation point on that. Especially with Community Banks in my district, they feel that they are not only working as a banker but they are working just to be able to comply with regulations that are in place and while we may have hearings they dont feel that anyone is actually listening because this is stagnating the growth in this community. We are taking a series of steps that are meaningful to reduce and we are taking these banks, disrupting the other activities that we want to reduce the demands for documentation taking a focused approach on the burdens of exams. We try to make clear what is relevant to them. So many of the regulations were put into effect when we talk about the most systemically important. We recognize that a lot of the Community Banks have to be able to comply with those doddfrank regulations even though they say that we are going to look the other way. They are still filling the impacts. There are things that they impose on all, including the volcker rule and there are individuals that are trying to tailor the implementation to minimize the burden on Community Banks that they are subject to and there might be some stats. And they have 55 different baking organizations that have endorsed the legislation and we hope you will as well, we have to be able to get the economy moving as well because when we are looking at that 5. 3 and we are talking it up as was pointed out, real unemployment level, 10. 5 , its part of the problem. What youre really saying is that our economy stinks right now and we are at just not seeing the movement to be able to stimulate it. Weve gotten the economy in a much better stay. They say no the economy doesnt think that we are close to where we want to be and we now think that the economy needs higher rates and so there have been headwinds and we have tried to use Monetary Policy to overcome them but i want you to know that we share the goal of minimizing is and will remain part of this. We have this process that is in play at the moment and its focusing on burdens. Thank you, mr. Chair, thank you and thank you, mr. Chairman for being here. And this includes for the people that havent been able to benefit from the economy and the recovery. As in regulation causing a problem . To my mind there has been an increase in the Regulatory Burden on banks and what we are doing is trying to create a Financial System that will keep credit flowing through the economy and particularly if we ever experience this situation where we saw banks withdraw credit from the economy which took a huge toll on Economic Activity by having more capital at liquidity in the Financial System and we hope that we are preventing future episodes like that devastating ones that we have been talking about, if there is those costs the benefit is a far reduced chance of a financial crisis that will take this kind of tool that you just described. It has been pointed out that you have a low Labor Participation rate. Also we are going to have over time a decline in the Labor Force Participation and this is because we have an aging population and this is going to continue. And i have said that there is Something Holding Labor Force Participation back that reflects the economy and that we would expect some people who have been too discouraged to look and to move back into employment. But the major reason that we are seeing this trend downward in the Labor Force Participation is because of demographics and it will continue. Congress created this to enhance Consumer Protection and has been very focused on doing that. Some of my good friends, you know, they have complained about it a lot and i have just tried to get an Expert Opinion on whether it is a good thing or bad thing for the economy. So it is addressing the potential consumer abuses and trying to enhance the Consumer Protection. Does that help address issues like the mortgage issues that we saw in 2008 and before end of that help the economy and how to market the individuals more accurately . Does it help employment . We certainly thought that the subprime crisis had a harmful effect on the economy and on low income communities and that that burden continues to exist. So we are going through a time in which we are trying to address all of the issues, including improper securitization and practices which led to the devastating experience and its difficult to get the balance right and to configure what the best way is to design regulations and there are always consequences in terms of no unintended effects of regulation and we need to be vigilant about trying to address that. You know how big it is and it is it a drag on the economy. It has increased, im worried about the high levels of hidden debt and an individual cannot repay and it never goes away, it cannot be written off. But on the other hand education is critical to succeeding in this economy and to make sure that students have access to quality education so that they can get ahead and they need good information in order to avoid mistakes. The time of the gentleman has expired and the chair recognizes the gentleman from texas. I can tell you that Small Business is hurting. And its hurting because regulations and you have talked about are really choking the heart out of Small Business. And so i think that we have talked earlier about an ali and i would say that competition is the key which takes care of in a holiday and not the federal government. My colleague was just asking for an Expert Opinion on whether doddfrank and this is good for the economy. I can tell you that they are bad for the economy, the worst. And so that being said in comments before the joint Economic Committee and i will be somewhat repetitious and i think its important that we remind you where we need to talk about. My own discussions with businesses are exactly the same things that youre talking about. Concerns with regulations about taxation and fiscal policy, going on to say that theres more work to do to put this fiscal policy on a sustainable wars and that progress has been made in bringing down the deficits in the short term and the combination of demographics and structure of entitlement programs and trends in health care, we can see that over the longterm that the deficits will rise to unsustainable levels. My constituents home in texas are very concerned about the health of the economy because its not good. In texas we have great things going but it can still be better. In texas estate that is recovered since 2008 you have 115 Community Banks, 105 fewer credit unions, and a lot of uncertainty about where the economy is headed, so my question is what do you say to those communitybased institutions that this former chair characterized as saying that we are being penalized by your policies particularly when these policies have at the same time help to produce meaningful Economic Growth in the communities those institutions serve which rose their profitability. We are trying to do everything that we possibly can to relieve burdens on Community Banks that have been through very difficult times and a time and that has taken a toll on their profitability. And in a low interestrate environment as well. And i think that the low interestrate environment we have had and the accommodation of Monetary Policy has served help to serve the economy overall and get it moving back to full employment if you compare the United States with any number of other economies than also suffered in the aftermath of the crisis we are among the leaders in terms of how we are doing economically and other countries are now pursuing the same kinds of monetary policies that we had put into place earlier. Which in a way is an endorsement of their effectiveness. I can tell you and you probably heard this as well, having to hire more compliant officers and loan officers, that takes money out of the system that can belong to people like me, those that can create jobs, and we have had them if they can slow down this doddfrank legislation because a lot of this is not completed. Because we are losing so many banks and credit unions, we are going to take a look at it that is a bad policy. So you stated that the Community Banks shouldnt face the same scrutiny as bigger bangs. If the fed will tailor the supervision to reduce Regulatory Burden. Now, the Competitive Enterprise Institute calculates that the cost of business in america in one year to comply with just federa