Transcripts For CSPAN3 Federal Reserve Chair Confirmation Hearing 20171201

Secretary and undersecretary of the treasury under president george h. W. Bush. Where he was responsible for policy on Financial Institutions and the treasury debt market among other areas. He also has firsthand experience in Investment Banking and was a partner at the Carlyle Group before being appointed to serve on the board of governors in 2000 twelve. During his years of service in government and in the private sector governor powell has proven hes qualified to lead the fed. If confirmed hell play an Important Role in striking the proper balance between a safe and sound Financial System and the need to promote a vibrant, growing economy. Over the past year ive been encouraged to see the federal regulators carefully evaluating current laws and regulations. Governor powell has shared specific areas in the past. Where the fed believes some laws and regulations can be changed to alleviate burden, including the culver rule, stress tests and resolution plans among others. Several weeks ago 13 members of this committee including myself introduced legislation to improve our nations Regulatory Framework and promote Economic Growth. Introduced by ten democrats and ten republicans, the bill demonstrates very strong bipartisan support for tailoring and simplifying regulations. Part of the bill tailors regulations for smaller finance institutions and Community Banks while at the same time improving access to mortgage credit and housing and insuring strong Consumer Protections. The legislation also addresses the 50 billion threshold for which governor powell, chair yellen, and many others have expressed support. On the Monetary Policy front, i was encouraged by the feds june announcement detailing the approach it will use to reduce its assett holdings in a gradual and predictable manner. As the fed continues its path to normalizing Monetary Policy, which i hope it does continue, Clear Communications should be a central priority. I look forward to working with the Federal Reserve on some of these issues and welcome any additional thoughts or ideas that governor powell has on areas where the fed and congress can act to further reduce unnecessary burden and promote Economic Growth. Congratulations again on your nomination, mr. Powell. And thank you and your family for your willingness to serve. Senator brown. Thank you, mr. Chairman. Welcome governor powell. Nice to see you. I want to start off by thanking janet yellen, the chair of the Federal Reserve. She has done an excellent job leading the fed during her tenure as chair and vice chair of the u. S. , experienced one of the longest economic expansions in its history, an expansion we still enjoy. As i i said at the time of her nomination, chair yellen was one of the most qualified people to ever be nominated for chair of the Federal Reserve. You dont have to have a dockerate in economics to lead the fed, but we were lucky that both she and chairman bernanke were students of the feds mistakes in the 1930s. Her strong and steady stewardship of an independent Financial Bank following the worst financial crisis since the Great Depression insured we did not repeat those mistakes. Chair yellen was the first woman ever to serve as chair of the board of governors of the Federal Reserve. Im disappointed that President Trump has broken with the tradition of reappointing the last president s Federal Reserve chair. This administration has also broken with the tradition of trying to make the federal government more diverse. That said,thosis decisions, governor powepowell, were not y. We have had a good working relationship since you were first nominated to be a member of the fed by president obama in 2012. I hope that will continue. You supported tough rules for the nations largest banks as the fed implemented wall street reform. For that were appreciative. As chairman of the reserve bank Affairs Committee you worked to put more diverse individuals in the top spots of the banks on their boards and throughout the feds workforce, much more needs to be done. There has been some progress. And you understand the importance of an independent central bank. You strongly opposed misguided congressional efforts to micromanage the fed and manage make other changes that undermine the ability of the fed to conduct its Monetary Policy. I hope youll stick to those positions on these important matters and on others. But there are good reasons to be concerned. The Current Administration does not appear to value independence. In the judiciary, the fbi or in the Federal Reserve. Its an unprecedented way the president has made comments about the current fed chair as well as Interest Rates. The search for the fed chair too often seemed like an episode of the apprentice. Im concerned about the direction of Financial Regulation under the Current Administration. Once again paying executives big bonuses, the administration makes unfounded claims in order to justify the rollback, the reforms put in place after the crisis. The new vice chair for supervision at the fed does not seem to be inclined to support the current Regulatory Framework put in place by the fed since the crisis. He has troubling views on stress tests and more generally the role of watchdogs in the Financial System. Industry has an outsized influence. Industry, especially wall street, has an outside influence on this administration. The individuals have put in charge that the individuals theyve put in charge as financial watchdogs are far too often former bankers or bankers lawyers. Some federal Bank Regulators seem willing to abet rather than combat regulatory arbitrage. The june report put out by secretary mnuchin was a big bank wish list. In formulating the report, treasury met with 17 industry representatives for every Consumer Group representing ordinary americans. 17 industry representatives for every Consumer Group representing ordinary americans. Mr. Powell, even your schedule indicates you were meeting far more frequently with industry than with Consumer Groups. You have met with wells fargo ceo more times than all the Consumer Groups on your schedule combined. This administration has already forgotten the americans who lost their jobs and homes and Retirement Savings less than a decade ago. I take this personally. In many ways. As members of this committee have heard me say my wife and i live in cleveland, ohio. That zip code in the first half of 2007 experienced more foreclosures than any zip code in the United States of america. I still see the blight 200 yards from my house that happened in large part because of wall street overreach. The loss to so Many Americans of jobs, of homes, of Retirement Savings was particularly harmful to africanamericans and latino communities which have not recovered from the financial crisis as quickly as white americans. Financial industry is doing better than ever. There seems to be a collective amnesia in this room, in this committee, in this congress, a collective amnesia about what happened ten years ago, but Americans Still struggle because of low wages, because of underemployment or unemployment and lack of opportunities. Loosening the rules for some of the countrys largest banks is not the way to solve these problems. Your record has been strong on a number of these issues. We urge you to continue that record. I look forward to hearing your views on the direction you will Monetary Policy and Bank Regulation and central bank decisions. I hope you will make your decisions based on facts independent from the political pressure from the president of the United States and from the treasury secretary. Thank you. Thank you, senator brown. At this point we will administer the oath. Governor powell, will you please rise and raise your right hand . Do you swear or affirm that the testimony you are about to give is the truth, the whole truth and nothing but the truth so help you god . And do you agree to appear and testify before any duly constituted committee of the senate . Thank you, you may be seated. Your written statement will be made part of the record in its entirety. And i invite you to introduce your family in advance of making your statement. Governor powell, you may proceed. Thank you senator crapo and Ranking Member brown. And i will begin as you suggest by introducing my wife, alyssa, without whose loving support and wise counsel someone else would have been sitting here. Ill also introduce two of my five siblings here today, my sister libby and my sister monica. The other three siblings are here in spirit and all will later claim to have watched this hearing live. Which im sure will be true. Well deem it true. Some stories are too good to fact check. So thank you again, chairman and Ranking Member brown and other members of the committee for expeditiously scheduling this hearing and providing me the opportunity to appear before you today. Id also like to express my gratitude to President Trump for the confidence hes shown by nominating me to serve as the chairman of governors in the Federal Reserve system. Federal reserve has had a productive relationship with this committee over the years and if you and your colleagues see fit to confirm me, i look forward to working closely with you in the years ahead. As you know, i have served as a member of the board of governors and the fomc for more than five years, contributing to our work in a variety of capacities, including most recently as chairman of the Boards Committee on supervision and regulation. My views on a wide range of Monetary Policy and regulatory issues are on the Public Record in speeches and testimonies during my service at the fed. Congress established the Federal Reserve more than a century ago to provide a safer and more flexible monetary and Financial System. In almost exactly 40 years ago you assigned us the dual Monetary Policy goals of maximum employment. Meaning that people who want work either have a job or likely to find one fairly quickly. And price stability, meaning inflation is low and stable enough it need not figure into household and businesses economic decisions. Ive had the great privilege to serving under chairman bernanke and chair yellen. Like them, i will do everything in my power to achieve those goals while preserving the Federal Reserves independent and nonpartisan status that is so vital to their pursuit. In our democracy, transparency and accountability must accompany that trance pairense. Were transparent andab accountable in many ways. Among them we affirm our objective annually and affirm our projections quarterly. Since 2011 the chairman has conducted regular News Conference to explain the fomcs thinking. Additionally were accountable to the peoples representatives through twice a year reports and testimony as well as through oversight and audited financial statements. I am strongly committed to that framework of transparency and accountable to continue to look for ways to enhance it. In addition in our federated system, members of the washington base board of governors participate in foc meetings with the president s of the 12 Federal Reserve banks, which are deeply rooted in their local communities. I am a strong supporter of this institutional structure, which helps ensure perspectives on Monetary Policy and also helps sustain public support for the Federal Reserve as an institution. If confirmed, i would strive along with my colleagues to support the economys continued progress toward full recovery. Our aim is to sustain a strong jobs market with inflation moving gradually up toward our target. We expect Interest Rates to rise somewhat further and the size of our Balance Sheet to shrink. However, while we endeavor to make the path of policy as predictable as possible, the future cannot be known with certainty. So we must retain the flexibility to adjust our policies in response to economic developments. Above all even as we draw on the lessons of the past, we must be prepared to respond decisively and with appropriate force to new and unexpected threats to our nations Financial Stability and economic prosperity. The original motivation for the founding of the Federal Reserve. As a regulator and supervisor of Banking Institutions in collaboration with other federal and state agencies we must help ensure that our Financial System remains both stable and efficient. Our system is without doubt far stronger and resilient than it was a decade ago with higher levels of capital and liquid assets, with greater awareness of the risks banks run, and greater ability on the part of the banks to manage those risks. Even as we have worked to implement improvements we have sought to tailor regulation and superhave vision to the size and risk profile of banks, particularly community institutions. We will continue to consider appropriate ways to ease regulatory burdens while preserving the core reforms of strong levels of capital and liquidity, stress testing and resolution planning so banks can provide the credit to families and businesses necessary to sustain a prosperous economy. In doing so, we must be clear and transparent about the principles that are driving our decisions and about the expectations we have for the institutions that we regulate. To conclude, inside the Federal Reserve, we understand our decisions in all these areas matter for our families and communities. I am committed to making decisions objectively and based on the best available evidence. In doing so i would be guided solely by our mandate from congress and by the long running interests of the american public. Thank you and ill be happy to respond to your questions. Thank you, governor powell. The fed recently began the process of shrinking its Balance Sheet which currently sits above 4 trillion. In a speech earlier this year, you cited long run estimates of the appropriate size of the Balance Sheet at 2. 4 trillion to 2. 9 trillion by 2022. Would you clarify what you do believe is an appropriate stable size for the feds Balance Sheet and what factors you expect to focus on in determining the pace and ultimate scope of the Balance Sheet reduction . I will, senator. So the feds Balance Sheet is about 4. 5 trillion now, and we know it will be much smaller than that when it reaches its new sort of equilibrium size. It will be larger, however, than it was before the crisis. And weve also said that it will consist primarily mostly of treasury skurs at that time, and it will be no larger than it needs to be for us to conduct Monetary Policy. We will be shrinking the Balance Sheet to allow securities to roll off passively, and that process should take three or four years before we reach our new sort of stable level of the Balance Sheet. And the factors that will determine that will really be in the end the publics demand for our liabilities, particularly cash and reserves. Those will be principle factors that will decide what the final size of the Balance Sheet will be. We dont actually know what that demand will be, but my own thinking, it moves us to a Balance Sheet in the range as i mentioned, 2. 5 trillion to 3 trillion. Again, theres no certainty in that. All right, thank you very much. And the last time you appeared before the committee you stated, it is very important that the intensity of regulation be tailored appropriately for the risks that the institutions present. Theres bipartisan support to tailor existing regulations and laws to insure that they are proportional and appropriate. Are there any specific areas that you think could benefit most from tailoring . Yes. First let me say that tailoring of regulation is one of our most fundamental principles. We want regulation to be the most intense, the most stringent for the very largest most complex institutions. And we want it to decrease in intensity and stringency as we move down through the Regional Banks and Community Banks. So this is something we strive to achieve. Were taking a fresh look at that right now. And i would just point out a couple of areas i think in certainly capital, we require the largest banks, higher capital. And we have less stringent requirements as we move down and more simple Capital Requirements as well. I would also point out Something Like the volcker rule where really it can apply in its most and strongest form to the banks that have very large trading books and much less stringently, we believe, as we go to the smaller banks. In fact, i saw that your proposed bill exempts banks under 10 billion in assets from the volcker rule, which is something we have been in favor of. Thank you. And actually my next question is on that bill. As you just pointed out, two weeks ago 20 u. S. Senators introduced the Economic Growth regulatory relief and Consumer Protection act. And im not going to ask you to get into the business of the politics of that act with us. But i do want to know, do you believe, if you had a chance to review it, do you believe that that act, if enacted into law, will provide significant regulatory relief to Community Banks, midsized banks, and Regional Banks while still giving the Federal Reserve the authority it needs to supervise and regulate those institutions . I do. On both accounts, i do. Thank you. And lastly for me, housing reform. After our Economic Growth markup next week, Housing Finance reform will be one of my Top Priorities for the remainder of this congress. Earlier this year you gave a speech in which you outlined a few principles for Housing Finance reform. And in your words, do whatever we can to make the possibility of future housing bailouts as remote as possible. Number two, change the system to attract large amounts of private capital. Number three, any guarantee should be explicit and transparent and should apply to securities not to institution. And number four, identify and build upon areas of bipartisan agreement. I strongly agree with these points that you made and believe that there is bipartisan support to seek a solution in that zone. Would you commit to work with the committee on our efforts to pass Housing Finance reform . Yes, i will senator. And i guess ill take my last 15 seconds to ask my last final question on that. I believe housing reform is one of the most significant issues we need to make next. Thats why i said i would prioritize it. How would you rank housing reform in terms of the importance we move to it and get a resolve . I think its a highly important piece of Unfinished Business from the financial crisis. And i think there have been a lot of great proposals, and i think this, at a time when the economy is healthy, this is a great time to move forward, and i look forward to working with you on it. Thank you. Senator brown. Thank you. In 2013, you stated that the fed was created as an independent agency of broad consensus has emerged among policymakers and others inform in service around the world and the most important part of the quote, that better Economic Performance is achieved when the conduct of Monetary Policy is free from political control. What will you do if confirmed to ensure that the fed maintains its independence from outside political influence, especially influence from the white house . And be as specific as you can. Senator, im strongly committed to an independent Federal Reserve, and i would add nothing in my conversations with anyone in the administration as given me any concern on that front. And i just would plan if confirmed to follow in the footsteps of distinguished prior chairs and of our long tradition, really, to ensure we do conduct Monetary Policy and financial regulatory policy, by the way, without a view to political outcomes but with a view solely to the right answers. Thank you. The senate this week will vote on a tax bill that will reduce federal revenue substantially over the next ten years. When the country fell into the Great Recession a decade ago, the fed had to resort to extraordinary measures, in part because of the tepid fiscal stimulus provided by congress. Nine years later, amidst one of the longest recoveries on record and low overall unemployment, some of my colleagues think now is the time for 1. 5 trillion in attempted stimulus. What does the fed anticipate will be the impact on gdp growth over the next decade if the tax cuts are enacted along the lines before the senate . We dont have an estimate on that. And i would say these fiscal policies are an important matter for you and your elected colleagues to decide. With all due respect, governor, the feds projection for longterm gdp growth now is 1 . I have to assume with the staff, the highly skilled, not tiny staff that the fed has, that you have done modeling and all kinds of different ways, different legislation, different ideas coming out of the house and senate. You have a meeting coming up in maybe two weeks. Are you telling me the fed has not modeled any of this any of the tax bill and these kind of tax cuts and what it will do to Economic Growth . Senator, of course were monitoring these discussion. But it remains unclear exactly what will pass. So its really, in my view, its been very difficult or impossible for us to start but you know, governor, that the overall arching theme of this is 1. 5 trillion in tax cuts that it will cause greater economic it will cause a larger deficit. You know that people on this side of the aisle claim as they always do every time theres a tax bill, that well grow out of that. Dont you have a responsibility in an ongoing sort of way to talk to us about the modeling you have done, what this will mean for the fiscal situation of our country in the years ahead . I think our responsibility is to carry out the mandate youve given us, which is to achieve stable prices and maximum employment and look after the Financial Stability of course, we rely on you for data all the time. Respectfully, senator, i dont think you rely on us to score fiscal proposals. Thats not really our role, and i dont have a forecast for you on that today. Weve discussed the need for an independent fed. Do you believe its important for the other independent financial regulatory agencies to be free from administration pressure . The independent agencies to be free from administration pressure . I think its good for all supervisory regulatory agencies to operate doing the best that they can with their mandates and not to not to look at the politics of things. I cant tell if thats a yes or no. I wouldnt want to hypothetically agree with our hypothetical theres a political future. Im not asking that. Im asking should should regulators in the various independent agencies be free from administrative pressure . Should they be free from independent pressure, im not asking you if they are. Certainly on individual enforcement and matters like that, i think the administration is well within its rights to express its views on different regulatory matters. But as it relates to super vision of individual institutions, absolutely. Is independence well served by the appointment of an interim agency head who holds another Fulltime Position and reports directly to the president and the president s chief of staff . Senator, i have to say thats not my thats not something thats in my baileywick to deal with. And you have no opinion of that . Not today, no. Tomorrow . Im concerned as i think we all are, about the administrations attempt to push out a fulltime independent director at the cfpb with a director at the cfpb with a short time attacking the bureau. And im concern would that attitude infecting other independent agencies. Im concerned about the tradition or the potential the way that the president could look at this and begin to do this in other places, a nonconfirmed appointment like hes doing trying to do. The judge will decide, to the cfpb, and im concerned too, mr. Chairman, one of the first things mr. Mulvaney did as quote unquote, acting director, was to stop payments to consumers, to service members, to veterans payments where they were wronged, Civil Penalties payments that they were wronged by banks and they need to be made whole, and this director stopped it. That kind of political interference, i bring that up, one, because a lot of us in this country are very unhappy with what happened. Second, i bring it up as a warning to all of us that independent agencies, i have watched your career. You have followed things you have done things with integrity, but i worry about white house pressure and a white house we have never seen the likes of in terms of not understanding the independent judiciary, the independence of the fbi, the independence of cfpb, the independence of the job you will have at the Federal Reserve. Thank you. Thank you. I did give the Ranking Member a little latitude on the clock there. Im going to encourage the rest of my colleagues to please recognize the clock. Senator rounds. Thank you, mr. Chairman. Mr. Powell, first of all, congratulations on your nomination. I think the first time you and i met was when you were a scholar at the Bipartisan Policy Center in washington. I most certainly appreciated your thoughts and commonsense approach to not only federal policy with regards to the budget, but i was very, very happy to see when you had been appointed as a member of the Federal Reserve as one of the governors. I think the fact that you have worked with chairman yellen and that you have worked through issues with her, i think that speaks in terms of how you would handle a board and how you would approach policy. Im just curious. I was listening to your comments with regard to that which the senator crapo was visiting with you on, and one of the most common criticisms that ive heard about our governments current regulatory structure is Financial Regulations arent written according to the risk that theyre meant to mitigate. Treasury secretary mnuchin talks about this during his confirmation hearing saying Bank Regulations should be tailored to activity, not just to the size of the institution. Many of the recommendations in the treasury report released in june also discussed this issue with respect to a number of regulations. Earlier this year i was able to once again reintroduce the taylor act, which would require federal regulators to more precisely tailor the regulations they issued based on the risk profile of the institutions theyre writing regulations for. In response to chairman crapo, you agreed that tailoring regulations is important. Can you elaborate on this view as it applies to asset thresholds and should we have asset thresholds to begin with . So the decision of whether to have a numerical threshold or not is clearly one for congress. Congress has tended to it provides clarity, of course, a numerical threshold makes it very clear who isnt covered above a certain level. And thats nice. If you go entirely with discretionary approach then youre leaving the regulators a lot of room to decide things. So congress has generally come down and done both. And i think maybe both are appropriate. I do think, though, that fundamentally, size is only one indicator. And i think its healthy, one indicator of the riskiness of a firm and of the possibility of it damaging the Financial System through its failure, through its activities. So the Business Model really matters and all sorts of things matter. So i think we have a set of factors we look at, and i think its healthy to look at those, too. We said were willing to work with you on numerical thresholds, on discretionary thresholds, and well work with you on any of those combinations. Im sure that youre aware as the chairman has indicated that a number of my colleagues on both sides of the aisle and on and off of the Banking Committee have recently come to an agreement on a regulatory relief package that would right size regulations for smaller Financial Institutions and improve our financial Regulatory Framework. Im pleased to see we were able to Reach Agreement on a number of priorities that i had, such as the data reporting relief, the right sizing of the enhanced supplemental leverage ratio, reform to the way that municipal debt is treated in bank Capital Requirements and relief from some of the most arduous supervisory standards in dodd frank. From what you know about the agreement, and i understand that you had a chance to cursory look through it, are there any additional reforms you would recommend the committee include in this agreement or in future legislation . Did we miss some things that were obvious . Once again, this is a bipartisan plan and thats exactly what we want it to be. Its a first step us for, but are there things we should be addressing that we havent really looked at . Senator, we did get the text of the bill just before the thanksgiving break. And we have all looked at it quickly. We have agreed to come back to the committee with our technical thoughts and policy thoughts as well. I will just say in response to your question, we will be happy to do that. I think generally, we look at the framework as a workable one, as a sensible one. So well try to come back with very construct thoughts on how to bring it forward. Very good. I look forward to supporting your nomination, sir. Thank you, senator. Thank you. Thank you, mr. Chairman. Thank you, senator rounds. Senator reed. Thank you very much, mr. Chairman. Thank you, governor powell, for your service. As you mentioned in your introductory statement, you have a dual mandate. One is maximum employment. But right now, we seem to be doing fairly well. Your comments on where we are with respect to the maximum employment . Maximum employment is indeed our statutory goal. And i guess the thing i would say at the beginning is its kind of an imprecise thing. You cant look at one particular measure of what that is. So we look at a range of things. For example, 4. 1 unemployment is at or around or even below many estimates of the natural rate of unemployment. So thats one data point. There are other dimensions. For example, Labor Force Participation really matters. In particular Labor Force Participation by prime age workers particularly prime age males. And that is one measure that stands out now of suggesting there may be more slack, more people that can come back to work. A wide range of other indicators suggest that were at or near or in the neighborhood of full employment. We really cant be more precise than that. The other one was wages, of course. We look at wages, and wages in one sense are at appropriate levels given low productivity and low inflation. But at the same time we dont see wages signaling any tightness in the labor market. Theres no sense of an overheating economy or a particularly tight labor market. Theres no sense of an overeating economy or a particularly tight labor market. So thats what i would say. It raises alarms for both of us. That is as you point out we have this large number of people who seem to be out of labor force but years ago would be in the labor force. We have a group of part time workers whod like to be full time workers, and wages seem to be not rising at all. And what can we do . I dont think we can claim victory as you suggest on employment. But weave to take steps on monetary and fiscal steps. Any suggestions . Senator, i would say the steps that can be taken are really steps for congress and not so much for us. We can manage demand through a business cycle, and we can try to achieve our goal of maximum employment, but these are very long running trends. For example, among prime age males participation in the labor force has been declining for 60 years kind of thing. And, you know, the Opioid Crisis plays a role in it now. Its making it worse. So these are issues we dont really have the tools to deal with. You dont have to respond to this, but i think weve identified specific problems and the tax bill before the senate doesnt respond in my view to any of those problems of how to get people back in the work force. And oh, by the way, how to prepare for a future in which artificial intelligence, Autonomous Vehicles are going to be more and more competing with human beings for work. So weve got a lot of work to do. Let me ask another question, though. Could you explain why you think the Liquidation Authority is so crucial and why it must retained . Sure. So my view is that bankruptcy should be the preferred option for the failure of institutions, including large institutions. I think weve made tremendous progress on that through multiple living wills. Much more progress than i anticipated we could. However, there may come a time when bankruptcy is not going to work in a very stressful situation that really threatens the Economic Health of the country just like happened in 2007, 2008, and 2009. And in that case we really will need a back up in Something Like the Liquidation Authority. It isnt a perfect law or perfect structure, but we need Something Like that which we can guarantee will be there for a really major situation in which bankruptcy isnt going to work. First of all, we talked about this. I spent a lot of time in trying to develop platforms for derivatives. And as youve widely pointed out, weve taken bilateral risk weve made it mutual risk, but we still have a problem with those platforms. So i would hope in your tenure you would look very carefully at this potential for Systemic Risk as youve indicated before, is critical. Cyber security is an issue that is not going away. Its going to be even more dramatic in your tenure. Chairman clayton of the secc has pointed out this is something weve got to get on. I sincerely believe were way behind and the Federal Reserve has to take a very proactive position with respect to cyber security. If you can in a very few seconds comment upon your view of cybersecurity . Well, i agree with everything you said. Its just very, very important. Maybe the most single important risk of our Financial Institution wrgz our economy, our government institutions face. Were very focused on providing the resources to deal with it and to make sure the Financial Institutions we regulate and supervise address it. There could never be any sense of, you know, Mission Accomplished there. Its just one of those things were always going to be feeling like were doing as much as we can but its just not enough. But were very committed both as it relates to the Federal Reserve as an institution and the institutions we supervise. Thank you, senator reed. Senator kennedy. Thank you, mr. Chairman. Good morning, governor. Good morning. I rive read those media accounts where in the past year you met with 50 wall street executives. How Many Community bankers did you meet with in that time . I dont have a number for you, senator. But it would certainly be in the hundreds if you consider the state delegations and the other meetings that weve had. What did the Community Banks do wrong to contribute to the meltdown in 2008 . Fair to say that the Community Banks did not contribute to the melt down in 2008. Okay. Then why as a governor have you repeatedly voted to punish them and regulate them half to death . I guess i would quibble with my characterization of my votes and the things weve done. Id like to think that weve been and frankly my colleagues as well on the board have been very focused upon avoiding excessive regulation for Community Banks. And i actually chaired the subcommittee of the board that its sole job was to make sure that the regulation that we put in place for the larger institutions do not apply to the smaller banks. I understand this is never a battle that you win. You just have to fight it every day. We do fight it, and were committed to doing better. I mean no disrespect governor in saying this, but you need to fight harder. I think youve been in 44 fed meetings. Youve not dissented one time. And the Community Banks in america have had to pay the price with the overregulation. And i dont understand given your public statements that you want to help our Community Banks, i believe you. I think youre sincere. But youve supported regulating them half to death over the past five years. Senator, i think were wellset up to make progress on that, and i hope youll hold us accountable for that. Do we still have banks that are too big to fail . I think weve made a great deal on progress on that. As i mentioned ural, i think if you think about where we were before the financial crisis where really no one had thought oh, what would happen if theres a run on one of these big center bank, and really the regulators had no practical choice but to keep them from failing because they would have brought down the whole finance system with them. So you start from that place crown less than ten years ago and you look at where we are now. So we now have living wills. We have the banks that please forgive me for interrupting, but were limited strictly to five minutes. And i understand what weve done. But i want to ask you again, do we still have banks that are too big to fail in america . Yeah, i would say no to that. I want to ask you about in 1991, governor, you were working for the treasury department. And by the way while were on that subject, what role did secretary mnuchin have in helping you make decisions if youre confirmed . He would have no role in that. None . I dont believe so. I cant think of any. Zero, nada . In 1991 while helping theory help would the collapse of england, decided to guarantee all deposits. How many of the bankers went to jail . There was some jail going. I cant put on a number on it for you. Okay. In that same year while you were at treasury there was an auction rate bond big bid ridding scandal. You remember that . Very well. I do, too. Maybe some other time we can talk about what an auction rate bond is. But you were in charge of dealing with the scandal. And you did not iron out an agreement that penalized the bank. But what about the people who did it . Did anybody go to jail . Indeed they did. Thats good to hear. How many . Again, im not sure. I know maybe just one, but it might have been more than one. For sure, tow, one in particular did jail time over that. Isnt it true that throughout this entire auction rate bid rigging process, which cost taxpayers in this country billions in dollars in states that less than five people who participated in this bid rigging went to jail . Im not sure what scandal youre referring to now. In the solomon scandal, it was something quite different from that. This was okay, the auction. Im over. I want to try to stick to my time. Forgive me for being so direct, but this is obviously an important job, governor. Thank you, mr. Chairman. Thank you, mr. Kennedy. Senator menendez. Thank you, mr. Chairman. Governor, congratulations on your nomination. In a speech you gave in june you noted that the average hourly wages are only rising about 2. 5 per year, slower than before the crisis. And while the nation has experienced the longest postwar economic expansion on record, corporations have raked in record profits, many families in new jersey and throughout the country are still waiting for a raise. Some claim that if we give corporations a massive tax cut families will see their wages rise by an outstanding 9,000. Now, i havent seen any evidence thats credible. In fact a 2016 Federal Reserve board study found there is no evidence that Corporate Tax cuts boost Economic Growth unless they are implemented in midrecession. So in reality what this comes down to is hardworking families already squeezed with rising housing, medical and education costs whose paychecks will now have to foot the bill for a bad deal. So my question is assuming that there is a plan in which families making less than 75,000 a year would collectively lose more than 59 billion inhouse hold the economic, an income loss thatted we as high as 13,000 per year for certain households, explain to us the potential negative Economic Impacts itll have for middle class families . Senator, i guess i would start by saying part of the deal when youre an economist at the Federal Reserve board, you have time to do your own research. And i think if paper youre referring to was the research of three or four individuals, and it doesnt represent a position of the board. Its just someones research. So dont associate that with a position of the board. More broadly, you know, as i discussed earlier, we dont have a model of the effect of these tax bills. Its just not something we do. We will incorporate when its done, fiscal changes will be made. Therell be many factors well, let me refine my question. Its not a trick question. So what im [very simply is do you think its good or bad for the economy if middle class families were to lose 50 billion inhouse hold income year after year. That i think is an easy one. And yes, i think it would be bad. What do you view both an economic risk at a household and micro level if we would add an additional 1. 5 trillion in debt. Again without commenting on a particular bill, im concerned that our sustainability of a fiscal path in the long run. And its something that needs to be attended to overtime. Very concerned about that. But it would be a negative conquence to further add to the debt which already exists. I think we need to be concerned fiscal sustainability over inlongterm. Now, in a speech you gave in june you said with regard to Monetary Policy, and i quote, accommodative policy did not generate high inflation or expensive credit growth. Rather it helped restore full employment and return inflation closer to the 2 goal. Thats not a study. The thats your comments. So can you explain in your view the feds Monetary Policy stands over the last five years helped contribute to the economic expansion, and how will this inform your approach to Monetary Policy Going Forward . Thank you, senator. So i think the fed remained committed after the financial crisis to provide significant accommodation to the economy as it recovered. When i joined in 2012, which was about five years ago, i think unemployment was still above 8 . And i think weve been patient in removing accommodation. And i think that patience has served us well. I think now the economy is strong, unemployment is low, growth is strong and appears to have been picked up. So its time for us to be normalizing Interest Rates and the size of the Balance Sheets as well. But i do think that policy weve had in place has generally served us well. Let me ask you this. As you know health care accounts for nearly 1 of u. S. Gdp also fueling innovations in patient care, diagnostic, preventative health, research and development of curative diseases. Earlier this year i asked chairman yellin about the impacts of the spike in the number of uninsured american. And she said that large scale loss to heth insurance could have a Significant Impact as well as impact job mobility. Do you agree with her assessment . I think she was referring to some research, and if chairman yellin was referring to research, we can be pretty confident she was accurately referring to what that research said. Mr. Chairman, thank you. And governor, thank you for being here. Appreciate you taking time and glad to have your family here also. Welcome them also. Youre ability to become the most important economic policymaker in the world. How do you feel about that . I feel fine about it, senator. Im glad to hear that. Historically i did not support your nomination in 2012 nor in 2014. Worried about the wall street bail outs, concerns about new bail outs and new regulations. But what im trying to do as we talked personally is to try to figure out how to get yes on your nomination this time, and ill continue to look for that. But i do somewhere some questions for you. You talked a lot in your Opening Statement about transparency with the feds. The question i have is do you continue to oppose the fed e legislation . I do. And ill tell you why. The fed of course is audited. In fact i chaired the committees of the board who oversee. So we are audited in the sense in which, you know, the general public would understand that word. It means Something Different in the current context. And in this context what it means is congress has chosen to shield Monetary Policy from a policy audit by the general accounting office, generally Accountability Office we call it now. And that has been a wise choice as been made for Monetary Policy. I think a ga audit at the request of congress would be a way for congress to insert itself. This is not something i think would serve us well on a meeting by meeting basis. Do you support the dodd frank reforms . Thats a big, broad bill. I guess i would say that let me broaden it out if i may, senator, to the postcrisis Reform Program which is broader than dodd frank. I think the things weve done our capitol, higher liquidities, our stress test, we can make them more transparent, efficient, that sort of thing. I think other things we can do more tailoring. Generally speaking i think the Financial System is quite strong. You said october 5th, more regulation is not the best answer to every problem. Do you continue to believe that, and if thats the case would you work with us to consider changes in dodd frank . I do strongly believe that, and well work with you as appropriate. What do you anticipate the gdp being next year . Next year youve got to make a decision in december whether or not to raise rates, dont you . Let me say this year i expect gdp to come in around 2. 5 , plus or minus in that range. We continue to see high confidence among businesses and households, accommodate financial conditions, stock market is strong. It seems like were going to see continued strength next year. Im going to push on this tax bill we have here. Im going to assume youre going to tell me the board doesnt have a position on the tax bill. Yes, sir. What about personally, do you have a position on the tax bill . No, senator, i dont. Are you going to raise rates in december and next year . You know, ive made it a practice not to talk specifically about individual meetings because thats we have the meeting. Were all supposed to hold back on that final decision ask then go in and listen carefully to each others views, all the reserve banks, all the governors. Thats how we do it out of respect for each other. I will say the case for raising Interest Rates at our next meeting is coming together. Do you anticipate we will be raising rates in december . Well, to repeat myself, senator, im not going to give you a really specific answer on december because i dont know what coming together means. Thats why i asked the question again. I think the conditions are supportive of doing that, but we need to go in and have the meeting and listen to each other. We generally have a rule, its a Communications Rule were not supposed to be saying what were going to do before we go in and listen to each others views. I respect that. Governor, thank you for being here and taking the time. Thank you. Senator warren. Thank you, mr. Chairman and governor powell. Welcome and congratulations on your nomination. So before the 2008 crisis the fed had a lot of authority to regulate and supervise the biggest banks in the country, but they failed to use that authority. When times were good it looked like maybe we didnt need strong rules and then the feds failure to put strong rules in place ended up costing millions of people their jobs, their homes and millions of people their savings. Under chairman yellins leadership the chair has adocumented a number of rules. And you have supported those rules and helped implement them. I understand that now if you are confirmed you intend to take another look at those rules. In your written testimony you say that you will, and ill quote you, continue to consider appropriate ways to ease regulatory burdens. So let me ask this. You specifically say that youll look for ways to roll the rules back. Are there any rules you believe should be made stronger . Well, i do, yes if you think of the four principle pillars of reform, i think they can all be made stronger and more transparent, clearer and efficient. Ive also said there are a number of things i wouldnt roll back. So what are the rules you said you would make stronger . Well, i think with resolution. On stress testing so you would want to see rules that more aggressive on living wills, for example. Yes, and not so much thinking about rules as our expectation. Well, thats the question im asking about. If youre going to revisit the rules for roll back purposes, which is what you said in your testimony, the question im asking is the reverse. I dont want to see a oneway street here where its all about rolling back rules and not where were making the rules stronger. I do think weve had eight years now of writing new rules. And honestly i cant really think of a place where we are lacking an Important Role. Its really a question now of dealing with things from a soup visery standpoint. So of all the rules the fed has issued during your time on capital, leverage, liquidity, stress test, you dont think a single one should be made tougher . Honestly, senator, i think theyre tough enough. Okay, i got to say this worries me. But let me take a look on the rules you say you want to roll back. A few years ago the fed and other agencies finalized the voka rule with your support on that. It prohibits banks from trading on their own accounts unless it directly relates to customer service. And this concerns one of the ways banks got into trouble on the build up of the financial crisis that sent them to crisis for a 700 billion bail out. Do you support the changes for example by exempting additional forms of trading . I do support a rewrite of the rule. I do believe we can do that in a way thats faithful both to the language and intent of the law. So you would exempt more changing, for example . I would favor a tailoring of the application okay, i think we would call that weakening of the rule. Ill tell you what, my time is nearly up. I am deeply concerned that you believe the biggest regulatory problem in the country right now is that the rules are too hard on wall street banks. That kind of mindset led the fed to ignore the Financial System risks before 2008. It helped lead to the financial crisis, and it helped lead to the recession that followed it. So im worried that we not go down this path again. Because if we do, its going to be the same thing. And that is that millions of families are going to pay the price while the banks end up once again getting bailed out and with record profits. So ill submit a question on the record, mr. Chairman, on this line. Thank you. Thank you. And i noticed you had 15 minutes credit, but it only lasts for this hearing. Senator scott. Thank you. Thank you, mr. Chairman. Governor, good to see you again. Thank you for your availability in the recent past. We have talked about these issues before and very much like mr. Kennedy, ive had some concerns as it relates to past performances. But i do want to talk about specifically the Interest Rate environment that we have currently. Senator heller asked a couple of specific questions as it relates to increasing the Interest Rate in the next meeting. As opposed to asking a specific question, i want to paint a story paint a picture and then ask a question about the Interest Rate environment overall. If you were a retiree in South Carolina, by the way a great place to retire whenever that time comes, it certainly has a high quality of life. Good economy, wonderful place to live, but if you are on fixed economy in South Carolina and retired, the current Interest Rate environment cuts really into your ability to live off of your interest income. As an example, someone with a 10,000 cd, 12month cd earns about. 25 interest. If you extend that for five years its still less for 1 . Said differently if your ness egg is half a Million Dollars you are living off of 220,000 a year. So the artificial impact has negative unintended consequence i assume in the current marketplace. I do realize that the advantage of a low Interest Rate environment helps spur Economic Activity, folks are more likely to buy homes. But that knife cuts both ways. Id love for you to talk to me about the principles and characteristics of that economy that would require a more normal Interest Rate environment. Thank you, senator. So i think we have that economy right now. And that is we have low unemployment. 4. 1 unemployment. We have strong growth. The very low settings of Interest Rates that were appropriate during the crisis and after to support Economic Activity are no longer appropriate. Thats why we are raising Interest Rates on a gradual path. And i expect that will continue. But i agree as we discussed i guess yesterday or the day before, the Interest Rates are a blunt instrument we have. So while low Interest Rates support Economic Activity and lower peoples interest bills, support investment by businesses generally supported a pretty strong recovery particularly in the labor market, if you are dependent on fixed income and Bank Deposits and short term Interest Rates, then its been a burden for you. And unfortunately i think overwhelmingly people are helped by lower Interest Rates and have been. I would just say help is on the way. I do expect that rates will continue to go up. And that will feed through into the Interest Rates that your constituent is having. Thank you. As related to the Balance Sheet of the fed, over the last decade we have seen the Balance Sheet balloon. And i know we talked a lot about creating a new starting place for a conversation about unwinding that Balance Sheet. And then getting to a number that would be our perhaps our new normal. Not necessarily the 1 trillion i believe it was beforehand. But can you walk me through what you see as a snapshot in about 30 seconds or less, because my time is running out, of what you see happening with that Balance Sheet. Sure. So as weve announced we are allowing as bonds mature, we are allowing them to just giving the money back to treasury. So our Balance Sheet is passively. Market hasnt reacted to that well be down to new normal. Much smaller than the Balance Sheet of ten years ago. And ultimately that level will depend on two things, will depend on the publics demand for cash is for them liability for them asset. Also on banks demands for reserves which will be much higher than it was before the crisis. Demand for cash has more than doubled in ten years. So those two things are the reasons why the Balance Sheet will be bigger. And ive said earlier my guess, and its a guess, it will be somewhere in the 2. 5 to 3 trillion range but the truth is we dont know. Im encouraged by your thought fullness about taking a look at the asset thresholds that may be a part of this senator crepe owe legislative package and looking for ways for us to perhaps increase the thresholds that have stringent prudent regulations. The second thing id say is i would encourage, as we look at the designation in the nonbank arena, having spent quarter of a century in the Insurance Industry, i would suggest that clarity on what makes you gets you designated and clarity on how you lose that would be incredible important. Thank you, senator. Thank you, senator shots. Thank you, mr. Chairman, thank you governor for your willingness to continue to serve. Thank you for the conversation last week. I want to give you some data points. According to the fdic banks had record breaking profits in 2016 and highest return on equity and shows banks are likely to do even better this year across the board. Bank have increased dividends to Share Holders by 17 t Community Banks earnings have also been increasing up almost 10 this quarter compared to last year. Home loans, credit cards, has surpassed prerecession highs. Hanna according to the feds sluggish home growth is due to lack of demand. So the question follows on senator warrens question, which is what problem are we solving with deregulation . Im not going to characterize what we are doing as deregulation. I would rather think of it looking back over 8 years as very innovative, things like liquidity requirements and stress testing. Those are all new. And looking back, making sure what we did makes sense. Isnt the objective to get all these metrics up and arent these metrics already up . So doesnt it make sense to err on the side of caution . I understand in principle, some people in principle believe that too much regulation is a problem and it ought to be eliminated almost as ideological preseptember. But if you are looking at a practical matter, arent these the data points you want . Arent we where we want to be in terms of Bank Profitability . In fact, isnt Bank Profitability not the problem, but to the extent that there was net income among the ten Bank Holding Companies in the United States, 99 of their net income was distributed in the form of dividends and stock buyback. So i ask the question again. What are we fixing and for whom . Let me agree the Banking System is healthy. That wasnt the case a few years ago. And its nice to see banks profitably serving customers again. So we are not looking to change that. And i would also agree we do want to err on the side of caution and we think we are doing that. But even consistent with that, it doesnt help anyone for banks to waste money, if you will, to spend more money then they need to spend to accomplish these safety and soundness objectives. Those costs will fall on customers. And borrow tears and such. So its our obligation, among other obligations, to make sure that regulation is efficient. You are just saying its too much paperwork . Too much compliance . Yes, you hear that a lot from, you know, from different, on different issues, Different Things on different issues. But there are certainly just a lot of regulatory burden, and a certain amount unavoidable but our job is to protecting safety. I guess my concern is if you are a bank, both sort of dispositionally and from the standpoint of wanting to make profits, you want to reduce paperwork burden. And no doubt when you lay down a whole new matrix of regulation, there are going to be instances in which its a pain for a bank, small or large, to comply. But, again, they have managed record profitability, even despite whatever paperwork and compliance burdens there may be. And there is zero evidence that if we reduce the paperwork burden or the compliance burden, that they will pass on those savings in the form of increased lending, or increased remuneration in whatever form to their customers. I only have 50 seconds left hand i want to follow up on a question that i asked you in private. When the fed formulate the Monetary Policy, it takes a broad look at the economy and identifies short and meads um risks. I have a brief discussion of the Economic Impact of hurricane related disruptions as well as dislocation from wild fires. The minutes indicate that in the past these have only had temporary impact. So ill take these, ill over the questions, and then take the answer for the record. How many events would it take to have a Material Impact on the economy . Has the Federal Reserve considered what number that would be in terms of the number of events or total cost of the damage . And have you worked with noah or other science agencies . My basic point is i understand this is difficult to quantify but you are in the business of analyzing things that are difficult to quantify, and i believe we now think this is material and ill like you to consider it and ill take those for the record. Senator tillis. Thank you, mr. Chairman, thank you for being here. Also thank you for being so generous with your time and meetings youve had in my office. I covered some of this in the meeting we had in our office but i want to go whack to it again. Youve been nominated to a position where you are ultimately going to be, i believe, when you are confirmed randy corals boss. You also said in the private, in our meeting in the office, that you are going to rely a lot on him to take a look at Regulatory Reform issues, regulatory right sizing. And in the first meeting any boss has with somebody theyre working with, they try to give them some direction. The maltally, what are you going to talk about when it comes to recalibration of regs post crisis, im kind of curious on your comments on bosal community. Start with that. And regulations, its not about repealing regulations, some of them need to exist, and if they had been in place in 2008 we probably wouldnt have had a crisis the magnitude we had. But almost its as if we have the too many people regulating, too many organizations, and not really clean in our executions which is making it costly, very difficult for businesses and distracting from what they want to did, which is it run their business. So thats a compound question. You can answer any part of it or all of it. Okay. So let me just ill start by saying my relationship with randy quarrels goes back so far i actually hired him in treasury 25 years ago and hes been a close friend all that time. I think we are very well aligned to the approach to issues that hell ha approach as vice chair. You asked about bosol, my understanding, and vice chairman quarrels has the lead on this now, but my understanding is that there is significant progress toward an agreement among all of the principle participants at boss ol or around uniform floors for particular risk categories, that would give us a way to wrap up bosol 3, and i think that would be very much in our interest to do so. Its other countries that have lower floors and lower risks on their assets so this really helps us. I just came from a press Conference Promoting the tax plan that we hope creates Economic Activity. But in my own personal experience in North Carolina the two things that really combine create a great Economic Activity were tax reform and Regulatory Reform. So im hopeful over the course of this year, within your lanes, you are doing everything you can to question how regulations get executed, right sizing them to the point to the minimum lightest touch necessary, so that we are reducing what is increasing cost and regulatory compliance. And by definition with all due respect to my friends and colleagues at price water house, many of those compliance jobs are by definition nonproductive jobs, all they do is count whether or not the productive activities were cross tied right. So hopefully we can see some leadership on your part with respect to the fed. And the other regulatory agencies about more clarity. And i think more tip of the sphere, we had a discussion about tip of the sphere, regulators staying in the lanes and relying on others in order to complete their responsibilities. Now i have a question about the goal of the fed over the last nine years. Its been increased inflation and not growth. But what has a more corrosive impact on middle class, low growth or low inflation . Low growth. So outside of the things that you are directly responsible for on the supply side, what sorts of things should we be looking at to help stimulate growth . Let me just amplify. Our mandate is inflation and maximum employment. Stable prices and maximum employment. Its not growth. So really the things that can increase the stable, Sustainable Growth rate of the u. S. Economy are in your lane, not so much ours. And i would boil that down into a couple of things. One is Labor Force Participation. And the other is productivity. If you think about it, really you want as many people as possible taking part in the labor force, not just for the over all u. S. Economys good but for their own good. People are happier and healthy if they are in the labor force. Productivity is very difficult to forecast. And comes down to technological advance and very hard to forecast. Its also, though the skills and aptitudes that labor force brings to the job. And that is something you can effect. Its policies that promote investment. Investment in infrastructure, private investment by companies. And i think all of those policies are really in the hands of congress. And i think its important that we have a long run focus on sustaining our growth rate. So just a quick question. If you reduce the tax burden on certain businesses in your opinion more productivity . I think there clearly are ways in the tax code to support different kinds of activity. And certainly investment is one of those. Thank you. Thank you. Senator van hall in. Thank you, mr. Chairman, and to the Ranking Member and congratulations mr. Powell on your nomination. You know, both the immediate predecessors of the fed, chairman yellen and bernanke testified before congressional committees about their concern and impact of the rising debt. National debt on the economy. Heres what chairman bernanke told the committee in june of 2001. He said, large deficits in debt over a long period of time raise Interest Rates above levels where they normally would be and crowd out private investment and are bad for growth and productivity. They also may involve borrowing from foreign lenders which is also a drain on current income. Unquote. Do you agree with chairman bernanke statement . Yes, i do. And here is what chairman yellen said this year on july 12th before the House Committee on Financial Services expressing her concerns about rising debt. She said current spending and taxation decisions will lead to unsustainable debt situation with rising Interest Rates and declining investment in the United States that will further harm productivity growth and living standards, unquote. Do you agree with that statement . I do. Now, obviously if we increase the national debt, we are going to make those problems even worse. In other words, the longterm debt impact harming Economic Growth. Isnt that the case . Yes. I think the idea would be to get gdp growing faster than the debt over a long, long period of time. Do you have any reason to doubt the congressional budget offices analysis of the debt increase that would result from the bill thats been proposed here in the senate by republican senators . To tell you the truth, i havent looked at that. Its not something that we are responsible for. No. So you have no reason to doubt those numbers, do you . I have no reason to know those numbers, let alone doubt them. Do you have a concern about what the debt impact of actions the senate and house take, whether on the tax side or spending side, with respect to the economy . So its a bit of a fine line that we have to walk on this, and im hoping i can walk it. And that is, you know, clearly the debt needs to be on a sustainable path. We all know that. I think we all agree on that. On the other hand, its not for us to be taking part in the discussion that you and your other elected colleagues are having over this. Thats not our role. And there are agencies who have that role. Its really not for us. Well, both your immediate predecessors commented repeatedly about their concern over the impact of Rising National debts. And you just indicated that you shared their concern. And agreed with their earlier statements. So putting a side whether or not you think the cbo analysis of 1. 5 trillion Additional Debt is correct or not, if there is another 1. 5 trillion to the debt, it would make a bad situation worse, would it not . It would. And if chairman bernanke said a number of years ago, he said, and i quote, so at some Point Congress is going to have to make a trade off between what spending programs are and what taxes, he said at that time, raise. We are now talking about reducing the amount of revenue coming into the federal treasury. But the basic math remains the same, doesnt it . It does. So if you want to avoid making the debt even worse, and you are going to add 1. 5 trillion to the debt, only way to deal with that is to then cut things like social security, medicare, medicaid. Isnt that the case . You know, there are a lot of moving pieces in it. As i mentioned earlier, what the country really needs is to have debt growing faster than gdp. What matters is our debt to gdp ratio. Thats what makes it on a sustainable path. So growth also enters into the equation. Thats right. And congressional budget office, they have their own projections, as you do, as was indicated earlier of what the projected growth path would be. There may be things that we may or may not be able to do to approve that. But there is no credible analysis that suggests when you have a massive tax cut primarily major going to corporations that the result is actually going to be a growth that actually makes um for the lost revenue in terms of debt. Do you have any credible analysis that shows that . Senator, i honestly, im not been following the analysis. Do you know of any credible analysis that indicates that this tax cut would, quote, pay for itself . I am not an expert on what analysis is out there about this tax bill, this proposal. This senate proposals. All right. Well, i would urge you to follow the tradition of your predecessors who were very careful not to wade into the specifics of the fiscal decisions made by congress but did express this concern about rising debts. And i thank you for your testimony. Thank you, mr. Chairman. Thank you, senator purdue. Thank you. Im encouraged that we are having a conversation about our debt. And i appreciate the conversation you and i had private about it and i like her considerations on that. Id like to remind the committee, you know, in the last 16 years weve added 14 trillion to 6 trillion debt at the end of 2,000. Four in president bush and 10 in the last administration. And in that last administration we had the lowest Economic Growth in United States history. In the next ten years if we do nothing from today, this federal government will add 11 trillion in current dollars to the current debt. So well end up right now current projection is if this government doesnt change the way it does business, well add 11 trillion to the debt. In 2,000 the size of the was 2. 6 trillion. Last year it was 4 trillion. There is our problem. We collected more tax last year than any time in our history. And the year before that we collected more tax than any other time in our history l globally we have 200 trillion of debt. Of that 60 is sovereign debt. Of that 20 trillion is u. S. Debt. Yet a number of countries have Interest Rates in their sovereign debt that actually are put out negative Interest Rates. And i dont think the world has ever seen a situation where we had the four major Central Banks with somewhere around 18 trillion on their Balance Sheets, and a situation where we have 200 trillion of debt of which 60 is sovereign, and of that a significant number is let out negative Interest Rates. As you think about restructuring your Balance Sheet, what concerns you relative to the size of government debt, sovereign debt around the world, and of that the United States being onethird of that sovereign debt in terms of how you are going to manage one of the four major Central Banks Going Forward . Thank you, senator. I this i we have a good plan. And i think the market agrees to shrink our Balance Sheet. We have laid out very clearly in ha series of public minutes over three meetings in the last year, i think we were quite careful to socialize the plan, and the market has accepted it, and it will lead to a much smaller Balance Sheet. And it will do so over in what these matters is fairly quick period of time, three, four, five years, kind of a range of time. Im sorry to interrupt. Any assumptions in that calculation or in that thought process of the freeing of capital on the private side in terms of the money thats withheld from being active in the Economy Today . Some estimates as high as six or seven trillion are not at work in the u. S. Policy, because of fiscal not mon tarry policy. Does that weigh into that decision . Actually it doesnt. What happens, senator, is when we allow a security to roll off, treasury will reissue a comparable sized security or in bulk the same amount. U. S. Government debt will remain the same issued to the public though rather than being on Balance Sheet. So it doesnt add to capital. You point to the other Central Banks, and their big Balance Sheets, but they are some way behind us. So ideally over time all of our Balance Sheets can shrink. But all four of the Balance Sheets are between four to 5 trillion right now. Thats the highest theyve been. So i applaud your back ground and ability to deal with that. Id like to change subjects in the minute i have year to talk about bock technology. Its a little off the wall but im going to be concerned we have another bubble that is some four our five times the size of the dot com bubble in the ninths. And bitcoin is bigger than all the s p corporations in america. Assuming that this continues, and talking about that bubble, in the size and the growth of the use of these crypto currencies, if that continues to grow, to what extent will that affect your ability to effect results from your typical Monetary Policy options that you typically have as a central bank . You know, in the long, long run, things crypto currencies could matter. They dont meter today. There isnt anywhere close to volume. That was the problem with the dot com bubble too, so few entity and so much money interested in chasing, thats whats happening in the bitcoin area. But the growth of that area was much, much faster than anybody thought at that time too in the late 90s. Yes, no question evaluations have gone up quite a lot in the last year or so. I dont have a few on the appropriate level of the evaluation of course. But again from our standpoint crypto currencies are something we monitor carefully. We look at block chain as something that has wholesale economy, something we Pay Attention to. So you are watching what alley baba is doing in asia today do the block chain technologies. We are watching all of them, its something we have to do, and its enjoyable and interesting to do. Well, thank you for willing to do this. Thank you. Thank you. Its good to see you again. Welcome to your family. Its great to see you here as well. So im going to start with something a little off topic and different. President mester of the cleveland Federal Reserve gave a speech earlier this morning where she noted that more immigration is needed to drive the u. S. Economy at a time when the population is aging and productivity is stalling. Governor powell, do you agree with her that we need more not less to drive our longterm Economic Growth . Senator, as i mentioned earlier the size of the labor force is good. Its slow half of one . Go back 30 years 2. 5 . So big reason why our economy has slowed down. Immigration is another one of those issues thats really not in our lane. And really those decisions are for you and sur elected colleagues. No i appreciate that. But weve been talking about growing the economy and part of your purview is labor. And i appreciate your comments that immigration is important part of that labor force that grows our economy. So thank you. As chair of the feds committee overseeing the Federal Reserve banks operations including the president ial search processes, we have seen some improvement in the diversity of the Regional Bank president s, boards of directors, bank workforces and better interactions in the banks communities. If confirmed, what will you do to increase the diversity of the leadership workforce and opinions in the Federal Reserve system . Thank you. As i mentioned, i am a big supporter of the Federal Reserve system and also of diversity. I think we make better decisions when we have Diverse Voices around the table. And thats something we are committed to at the Federal Reserve both at the governors and reserve banks. Thats something ive been deeply involved during my time there. And this is something people have been working on for decades now. And you begin to see what works. And so my view of what works is a lot of private companies have been very successful in advancing diversity. And what seems to work is to have a holistic plan that you stick with over a long period of time. And its about recruiting. Its about going out of your way to bring people in. Once they are in, its about giving them a pass for success. And its about having an overall culture and Company Really focused on diversity and sticks with that for a long period of time. That works. Its not something you can do overnight. You mentioned reserve bank searches, that is something i have been responsible for and i assure you we have always been a diverse thank you for your comments there. Congressional republicans are set to pass, as weve discussed today, a tax cut bill geared towards large corporations. At the same time this committee is about to consider legislation to roll back rules for some of the nations largest banks. What can you do at the fed to ensure this tax windfall and deregulation actually benefits workers and doesnt just translate into more executive bonuses and stock buybacks . Well, our tools are what they are. So we have Monetary Policy, which can shove the economy in the direction of stable prices. And we have regulatory policy which can ensure soundness of institutions. When institutions become more profitable, taking your suggestion, you know, some of that is going to go to shareholders, some is going to go to customers, some is going to employees. But we dont really have tools that effect the distribution of profits. Right. And so but you do have a component of Consumer Protection. We do. And you do have concern about the workforce, and growing that workforce and making sure there sa strong workforce, correct . Yes. So part of the concern that im hearing, and i really havent heard a lot of that discussion, what youll do to address specifically those Consumer Protection issues and particularly also protecting the workers and that workforce . Consumer protection we havent talked much about. So weve been assigned an Important Role in Consumer Protection and take it seriously. Im committed as chair responsibility for our budgets that Consumer Protection will have resources it needs to do its job. Whatever congress assigns us we will try to do well and aggressively. Thats my undertaking to you. I appreciate that. I flow my time is running out. And ill submit the rest of my questions for the record. I like many of my colleagues do have concerns. I come from nevada. Dodd frank was there for a reason. We had a horrific crisis, as you well know. We talked about this. And the deregulation of dodd frank and many of these regulations that were put in place to protect individual consumers are so important. And i am concerned about rolling back any regulations that is going to open that door and lessen any type of Consumer Protection, any type of work that we have done, particularly in nevada across this country to protect individuals. So look forward to having further conversations with you with respect to the idea of tailoring your regular vagss as well. Thank you. Thank you, senator. Thank you. Senator shelby. Governor powell, congratulations. I look forward to voting for you and helping any way i can help get you confirmed. I think it will not be long, hopefully, that youll be over at the fed as the chairman and youll have a full complement over there which youll need and youll put the stamp on the fed and i hope it will be in a good way based on your experience in the past. We talked about a lot of things here. Im going to get back to basic inflation scares, if any, price stability, which is so important as one of your mandates. A lot of economists are puzzled by the outlook of inflation statistics at times. You mentioned or alluded to that theres not real these are my word, not yours, not real pressure on wages, which is always a big factor. I dont see a lot of myself, a lot of pressure from energy costs and so forth. We are in a different economy than some of us grew up in with the globalization of things. Where do you you alluded to the fact that you do have an open market meeting soon and you could bump up the Interest Rates some. I hope you will not spook the bond markets in doing this gradually because certainty is important in the economy and predictability. So where do you see the spectrum inflation . I dont see the psychology of inflation out there, which is a dangerous thing. I dont see the wage stuff and other things i already mentioned. What do you see there that maybe we dont that you tell us about . Okay. Thank you, senator. So inflation has been below our 2 objective i think every single month or maybe every single month but once since i joined the board of governors in may of 2012. For most of that time its been in the range of 1. 5 . It is actually really important that we achieve our 2 target because our credibility is important on that front. And lately inflation was moving up and it got pretty close to 2 at the beginning of this year. And then this year came and we have actually stronger growth. We have a healthy labor market. But to my surprise, to all of our surprise, i believe, inflation readings started to come in weak. That was a surprise. And the question is why . There are multiple possible explanations. One is that these are just factors like the ones that you hear about that there was a big drop in pricing for mobile Telephone Services because of a price war and also a change in the way they calculate that. In addition, pharmaceutical prices basically, you know, underlying inflation moves according to a slowly changing evolving trend. But then there are these factors that move around a lot. We happen to have a number of factors that push it down. There are different views. Weve been very public about this debate that weve been having and in our public remarks as you mentioned. And one question is, is it transitory or are there other fundamental things at work. I think were all watching carefully to see. Well have to be guided by the data as they come in. We really dont know yet, do we . No, we dont. Is it transitory or is it a larger trend. Youll be watching it day by day, what . We will and thats what will dictate the path of our policy. We can go slowly if we determine that inflation is going to perform lower than we thought and we can move more quickly. Lets talk about the Balance Sheet just a minute. I think youre on the right trajectory. But i think you used the term that you might draw the Balance Sheet down to 3. 5 trillion, Something Like that. Is that the new norm . Because that was not the norm. Thats still a pretty high threshold. If you did draw it down to, say, 3. 5 trillion, does that hamper you down the road in case you had some drastic things to do . Senator, i would say that we dont really know with any certainty what the new normal will be. My own guess would be, and this depends on a number of things ill mention and this would be 2. 5 trillion to 3 trillion. Ultimately what will dictate the size of the Balance Sheet is the publics demand for our liabilities, particularly cash which has been growing surprisingly fastly in a world where everyone seems to use electronic cash. Nonetheless, people like paper cash a lot. Also demand for reserves which are going to be higher than they were because of requirements for banks to hold high quality liquid assets, the highest quality liquid asset is our reserve. Somewhere in that riencange mige the answer. In the area the other mandate youre involved in is regulatory, the area. Is it important when you come through the fed or fdic or anybody comes through with a regulation, proposes a regulation that they have some type of serious cost benefit analysis before they implement a regulatory change . It is, senator. And, you know, we always try to implement the laws that you pass. We try to turn them into regulations as appropriate and we try to do it in president most efficient least costly way thats sufficient with congresss intent. Weve been putting out white papers in connections with big rules like the surcharge or others i could mention. They explicit comment on cost benefit analysis. Weve also started a unit that is of economists and policymakers thats going to focus particularly on cost benefit analysis. So i think we are always trying to be better at that. We regard it as a fundamental part whof what we do. You also mentioned the word capital which is important to any Financial Institution. I think its key to survival and financial survival. Liquidity is important, too, isnt it . You can have all the capital in the world if you dont have liquidity. Agriculture you suggested, its what kills banks. When they die. But having higher capital makes it much less that therell be a run on the bank in the first place. Thats the sense in which i agree with you. They do work together. Theyre both important. Thank you. Senator tester. Thank you for being here. I want to start my comments by echoing the comments on janet yellen. I think shes done an incredible job in a very difficult situation when she came on board. J governor powell, i appreciate you being here. I guess the debt is about 20 trillion. Could you give me an idea on what an additional 2 trillion would impact, how that would impact the economy, another 2 trillion in debt. Holding all else equal . Yeah. Youd have higher interest costs, obviously. If you hold all else equal, then you have higher interest costs and either taxes will have to go up to pay for that or youll have even more debt and that will crowd out private capital. Is there any numbers that you have on potential impact of the economy, the higher the debt goes . Is it half a percent, quarter percent, full percent per trillion . Dupe . I dont have that handy, no. The reason its important is because about a third of our current debt, the last tax cut that was done during the bush administration, so i think we need to get the right administration. I dont know that theres anybody on this side of the aisle that doesnt want to see a more simplified tax code and that doesnt drive the economy in a positive direction, but i think the ran the Ranking Member asked the questions and the reason i ask the questions is theres not a lot of impact out there about what the impacts will be and after its continue its too late. Its not in your portfolio, but it will impact your portfolio significantly moving forward. Theres a bipartisan bill out that were probably going to address i think later this week or next week called the Economic Growth regulatory relief and Consumer Protection act. Have you had a chance to take a look at that . Theres 20 cosponsors. Have you had a chance to take a look at it . Yes, i have. If this has been asked before, i apologize. As you looked at this bill, are we doing anything thats going to put our financial, since im a cosponsor, putting our Financial System at risk with the regulatory relief thats in that bill . I really dont see anything. Were looking at it carefully. Were going to offer technical comments. But i dont see anything, no. Okay. Part of that bill is eliminating the vocal rule of compliance for Community Banks with less than 10 billion as long as they have less than 5 Trading Assets and liabilities. Any concerns there . None. Okay. Theres a process that the fed completed earlier this year. A portion of that review talks about streamlining, something that everybody can get behind. I think as key the regulators need to work to share information so that theyre not being duplicative. It is something i hear a lot from Community Banks. Do you have any plans as chairman, because i think you will be confirmed, but do you have any plans as chairman to update and modernize the examination process between regulators . Between regulators . Yeah. So that there isnt that duplication. Assuming if i can assume for a second that i will be confirmed, then that is something that i am committed to trying to do better on. We have we are blessed with a, you know, a lot of regulatory agencies in our system. And some of that is good, but it does lead to overlap and duplication and i will be committed to improving on that. As you look at your position, and youre no rookie to this. Youve been around the block a time or two. Would you say that the number one job that you have to do as chairman of the fed is to make sure that consumers arent harmed without harming the safety and soundness of our Financial System . I cant disagree with that. Okay. Good. Just real quick, and ive got about 50 seconds here, senator hel l heller introduced an account that would require the Federal Reserve to create a committee on International Insurance standards, would require for transparency surrounding the process when the standards are being set. As chairman of the fed, how would you work with prudential regulators to ensure the fed fully understands of nature of these entities and their creptly regulatory oversight. For Insurance Companies we have acquired a significant amount of insurance talent at the fed and other agencies. Wed be committed to understanding the industry as best we can. And by the way for our regulation of insurance of the Insurance Industry to be as tras pa trans pa thank you very much. That concludes the first round. There have been several senators who have asked for a second round so we will do that. I will forego, although i reserve the right to jump back in, but im going to go immediately to our Ranking Member senator brown. Thank you, mr. Chairman. Again, thank you for being here, governor. I want to followup somewhat on senator Cortez Mastos comments. Since 2008 bank profits are up. Executive compensations rebounded. But wages for working people are stagnant. The wealth gap between whites and africanamericans and latinos has narrow. Many people in my state have to feel the impact of the economic recovery. You know all those things. I hope theyre central to your chairmanship. Past fed chairs cited inequality not just as a humanitarian and personal problem but also a pressing economic problem. Theres a consensus among economists that income and equality and wage inequality is a drag on growth. Do you agree with that . And if so, what do you do to address inequality . I do agree with that, senator. I would say to me the most compelling factor, i think a number of factors are at work, but if you look at the flattening of u. S. Educational attainment in the 70s and 80s and you look at the rise in inequality of the stag nation of middle class incomes, medium incomes, those two stories fit together so well that i think that it you know, the way for u. S. Workers to compete in the Global Economy is through having the best skills, the best education in the world and in a sense that is a big part of the story behind inequality. But the question was what do you do . Youre not president. What do youre not a member of congress that should do more to invest in retraining and education and, you know, Early Childhood education. What do you do to address income inequality . We dont have a lot of tools to address the income inequality. We dont have tools to address distributional effects really at all. But i would say that our commitment to, you know to, to our dual mandate is to, you know, is to make sure that anyone who wants a job can have one or can find one easily. Does that give you pause to raise Interest Rates because were at full employment knowing full employment may be for people that look like me that get to go to college. If full employment, if people of color have left the work force, given up on a job. Its not full employment for them. Doesnt that give you pause about increasing Interest Rates . Yes, of course. We are very focused on pockets of people and different pockets of people for whom the recovery is not real yet and people who have groups have higher Unemployment Rate than others and higher poverty rates. We do deal at the aggregate level and its important to say that were raising Interest Rates now because the economy is strong. If we wait too long, not saying were waiting too long, but if we were to wait too long, the economy could overheat, railed raise rates and the economy would have a recession. The best way to sustain the recovery is to continue on this path of gradual Interest Rate increases. As i ask you privately about coming to cleveland as your predecessor did and seeing ohio, high tech, good, strong, productive, efficient high manufacturing, i would echo what pope francis said. He said go out and smell like the flock. And i would ask you to do think about doing some of the things that she did. Not that you pattern your chairmanship after any one of your predecessors. But to really talk to people and see people who still arent in this economy thats been pretty good for People Like Us but not so good for others. One other question. Financial crisis wasnt the single bad decision. Earlier this month fdic chairman said hes feeling, quote, a certain sense of deja vu, unquote, with bankers and policymakers become complacent. Between this legislation, this committee is set to consider that the chairman and you talked about and all the deregulation in the works by the administration and regulators, look who the president has put on some of these boards and regulators, were on course to weaken the rules for large Regional Banks, were on course to make stress tests and living wills easier for global banks. Were on course to insert more exemptions. Are you certain that all these changes arent paving the way for the next financial crisis . Certainty is kind of a high certainty r sta standard. Thats not the sbept aintent an dont see how the things were talking about doing would push us in that direction. Potentially fewer stress tests . Well, thats not something weve decided. I think stress testing is a really important post crisis innovation. Maybe the single most successful and i think the barcnks will sa that to you. Youve said it and the banks have said it. So should we be considering pulling away from stress tests and even the Regional Banks . Well, i think that the i would go back to tailoring. We really want the most stringent things to be happening at the important banks, the most stringent stress tests in particular and we want to taylor or taper as we go down into less significant, less important institutions. Werent some institutions like country wide smaller than some of these Regional Banks that will have a relaxed stress test or a less frequent, less than annual stress . Again, thats not something weve decided. Its something you weighed in on a moment ago on a bill that congress is looking at. I think youre referring to the idea of having regular stress tests as opposed to to periodic i think is the word which is a very different word from annual. Does that concern you or does that give you discretion to decide . I havent had a chance to, as we discussed, you know, thats not something that weve looked at yet. But youre coming to this committee, with all due respect saying that you support this legislation and now youre saying you havent had time to really look at it. So i guess that means youre not publicly yet supporting this legislation, that you might after digesting it as the chairman decide to support. Its not the legislation. Its what we do with the legislation. I think it will be in our discretion, i take it, if i understand it correctly, proposed legislation, to decide how frequent stress tests would be. Theyd be periodic. I dont know what were going to decide. We havent looked at the question. Were going to exempt banks below i guess its 1 100 billio from stress testing. So that makes some sense to meec my strong preference will be that we will continue to have meaningful stress testing for them because i think its a successful tool. Thank you. Senator warren. Thank you, mr. Chairman. I want to followup on senator browns questions about full employment. As you know, Congress Gave the Federal Reserve a dual mandate to pursue maximum employment and to keep prices stable. The official Unemployment Rate is now 4. 1 . Many economists are predicting the rate will dip below 4 in the near future. And Unemployment Rate this low in the past would have been considered full employment. Which would be good news for the workers that should be accompanied by higher wages. But wages have barely budged. So let me start by asking mr. Powell, given that wage growth is so weak, do you believe that the labor market is currently at full employment . Full employment is not a its not sort of a precise concept in our thinking, in my thinking. And i think a number of indicators would suggest that we are at or around full employment. But ill point to a couple that suggest that maybe theres more room for growth in the labor market. And those would be in particular wages, which you cited. Theres no indication in wages that the labor market is overheating or even hot. And how about stone cold . Well, we have people are trying to live on those wages. I think thats how they feel. You have growth of about 2. 5 which is roughly in keeping with increases in productivity and inflation, but nonetheless, that growth is not as fast as it was at other cyclical peaks or before the crisis. Thats an indicator i would agree with you that suggests a lack of tightness in the labor market. So let me just push on that a little bit. Because one possible explanation for the breakdown in the relationship between low unemployment and increasing wages is that the labor market is not actually that tight. As you know, individuals who arent actively looking for jobs arent counted as unemployed under the traditional youth three unemployment measure that the Federal Reserve relies on. A better measure of the strength of the labor market might be the prime age employment rate which is the simply population at age 25 to 54 who actually hold a job. As of last month, the prime age employment rate was only 78. 8 . S in other words almost one in four prime age workers. Thats 24 million americans dont have a job. And while the prime age rate has been increasing, the proportion of prime age work force who actually have jobs is well below the high that was setback in 2000. So mr. Powell, there are a lot of reasons why the prime age employment rate is so low. So i want to focus on one. That its not typically on the Federal Reserves radar. According to recent research by princeton economist allen kruger, about 44 of prime age out of workmen who said they had taken pain medication within the preceding 24 hours and about two thirds of them are taking prescription pain medications. So mr. Powell, if youre confirmed as chair of the fed, how does this affect what you will do as fed chairman to achieve full employment . Well, let me just agree with everything you said about prime age participation. Thats the other place i was going. Is a full percentage point lower than it was before the crisis. Theres no real obvious reason for that. That also suggests some slack. In terms of, you know, participation by prime age males, and particularly allen krugers research, you know, what we can do is we can push harder on maximum employment. I think were doing that. I think we are looking at an economy thats going to go under 4 unemployment. Ultimately, though, the tools for dealing with the Opioid Crisis and with the long term 60 year decline in participation by prime age males, those are tools that Congress Really has to wield. Its your opinion to ensure that the United States labor market is reaching its full potential, Congress Needs to deal with the Opioid Crisis. Is that fair . Yes. I want to ask you about one other Factor Holding back prime age workers. More than twice as many prime age women are out of the labor force as prime age men. According to a recent study by the hamilton project, more than half of women who are on the sidelines in the labor market cite that they arent working because of care giving responsibilities, either for children or for seniors. Mr. Powell, how can the fed bring women who arent working due to caregiving responsibilities back into the labor market . Again, we dont really have those tools 67. Good. Thats really the point i want to make. I appreciate you making the point that the opioid eck dpide and that congress has to do something on both fronts. If youre confirmed i hope you will come before congress to advocate and make our labor market and our economy stronger for everyone. Ill take that as a yes . Thank you. Senator cortez masto, do you wish to i do. One more. You will be our final questioner. Thank you. Governor powell, large banks have been fined and combined 160 billion since the crisis, yet recidivism continues and regula regulators have been reluctant to impose harsher penalties. Do you view the post Crisis Response on the part of regulators towards the largest banks as being too harsh . Well, i guess i would regard the fact that were still seeing things like what you referred to in the paper as very disturbing. I dont think i would characterize our reaction to these kinds of problems as too harsh. I do think its appropriate that we strike a professional tone in our supervision and regulation of Financial Institutions, that we always strive to do that. But no. My main reaction to what you referred to is one of concern that institutions are still having problems with bad behavior, bad conduct toward consumers. So can we then address the issue, and im looking at this as well, but the conversation that you just had with senator brown regarding stress testing. And the changing of the threshold which would then diminish any type of stress tests for wells fargo as well as bank of america and some of the others. Is that true the way you read the bill . No. I dont think it would have any effect on stress testing for wells fargo or the other larger institutions. It would only affect institutions between 100 and 250 billion in assets. It wouldnt impact them domestic la domestically. No. If it did, would you have concerns . It would depend on what the effect would be, but i dont see any case for legislation of that nature that would affect the largest and most complex institutions. Thank you. And i know i said i would let senator cortez masto be last, but im going to take the chairmans prerogative and ask you a couple other very quick questions. I just wanted to be back and clari clarify my understanding of an answer that you gave to i believe senator heller. One of the senators asked you what your understanding was of the current gdp rate of growth in the United States today. Well, for the year 2017, about 2. 5 . I would say for the last three quarters of this year its more like 3 . You did mention what your expectation was as to what we could expect in the next year or two, didnt you . I would say in a range, you know, the truth is that theyre big uncertainty bands around these forecasts, but my starting point for next year would be in the range of 2. 5 , 2 to 2. 5 which is better than what its been for the last few years. Thats just where i would start. And then do you have any i know im kind of pushing you out further and further, but for next year or the following year, would you expect them to say in the same range or not . You know, id have no confidence on a forecast two and three years out. Ultimately as were nearing full employment and everybody is back to work, it will then at that point it will come down to productivity and its hard to see growth quite as high. You might see a little bit lower growth. Lower than lower than 2. 5 . You could see growth more like 2 . All right. Thank you very much. I appreciate the fact that youve been here and answered all the questions. We appreciate your willingness also to serve the country, governor powell. For senators all questions for the record need to be submitted by friday at noon and governor powell, we ask for your responses to those questions by monday at 10 00 a. M. Please respond quickly to questions you may receive from the senators. With that, this hearing is adjourned. Thank you, mr. Chairman. The senate is working on the gop tax reform bill with amendment debate and votes and a final passage vote expected later. Watch live on cspan2. Join us on cspan3 this weekend for American History tv. For a few highlights, saturday at 3 00 p. M. Eastern, in honor of the 50th anniversary of the 1967 public broadcasting act, the library of congress hosted a discussion about the history of news and Public Affairs programming with former pbs news hour anchor and talk show host dick cabbott. The university of kansas pro fesser on the rule of africanamerican ministers and organizing and running for political office. Sunday at 8 00 a. M. Eastern, the recollections of the battle of midway. Sunday at 4 00 p. M. Eerp astern real america, the film dreams of equality. American history tv all weekend every weekend only on cspan3. Referee the cia recently released the latest assortment of thousands of files recovered in the may, 2011 raid on Osama Bin Laden compound in pakistan. Two senior fellows with the foundation for defensive democracies spoke about goingbe given a firsthand look at the documents and videos. Next their analysis between the relationship of al qaeda and iran as well as al qaeda and isis. Well, good afternoon and welcome to the foundation for defense of democracies. Im cliff may, the founder and pr