Supportive of the provisions included in the recent treasury report. I hope that the Federal Reserve is taking the recommendation seriously, have you read the report . Chair yellen i have read the report. There are many very useful and productive suggestions that mirror things we have been thinking and doing ourselves with respect to tailoring of our regulations, reducing burdens on Community Banks. I think the recommendations pertaining to the volcker rule and looking for ways to reduce burdens are useful. There are a few points where we have a different view. A lot is very useful. I look forward to working with you because while our branch of the government is a check on the executive branch we want to work with you to try to improve the ability of our banks to do the job of helping the communities grow. I am glad you mentioned Community Banks because i have a quick story i like your response to. I have shared this with the committee in the past with regard to Midamerica Bank and trust, a small bank in my district has been caught and Federal Reserve purgatory for five years. The agency has blocked the merger and acquisition of this institution because of concerns over certain products. The same products that have been encouraged by the fdic and the state of missouris division of finance. Your staff has forced of this bank through the years to produce document after document which they have done. The bank has made several offers to remediate but the fed has rejected them. Midamerica has spent over 2 million in legal fees and it is a small bank that cannot afford that. His process has to stop the Federal Reserve after five years does this institution a determination of whether they can get this done. Are you aware of this case . Chair yellen i am aware of this case. What can be our expectation of the resolution of this . Chair yellen i am not prepared today to comment in detail on what is a confidential supervisory matter. There have been a set of complicated issues pertaining to consumer , iwith all due respect understand where you are coming from and the bank on my site is open about what the problem and concerns are. We have an individual who has medical problems who wants to divest themselves of this back and a very viable and well structured bank that wants to take them over. What is happening is a punitive way of punishing this bank for a product that was something the fed did not like. That five years this has gone on, that is enough. The opaque rules and unwillingness of the fed to work cooperatively with the banks and attorneys and regulators is not something we can continue to go and support. This is why i asked the question at the treasury report, the treasury report has solutions to some of the problems the thatatory we have appeared is, the punitive nature of some of the actions taking by some of the agencies, including yours, it has to stop and we want to work with you to increase the stability of the Community Banks and improve their communities and help their economies grow and i look forward to that as i yield back. Has expired and the chair recognizes the gentleman from minnesota, mr. Ellison. , chairman yellen and thank you for being here today. Let me start out by saying i am happy about the appointment of rockdale boston as president of the Federal Reserve bank of atlanta, he meets the legal mandates and has great expertise. Also, he increased the number of africanamerican Bank President s from none to one, which i think is important. Thank you for that. We debate around here a lot of the cause of Slower Growth over the last several years. You have been exposed to some peoples theories as to why we have Slower Growth. Read intrigued by a book i recently called makers and takers. It is a book that talks about the financials asian of the ofnomy financialization the economy and the author says one of the reason for low productivity and slower wages is the outside process earned by some of the Financial Services sector, banking, real estate, insurance come hedge funds, wall street. Has the stat on the screen i would like you to look at. She says that while the Financial Sector is a little less than a certain percent of the economy it provides about 4 of the jobs and earns a whopping 25 of corporate profit. 25 of corporate profit, that is a lot of money and as a result you see money flowing into those sectors, rather than plant and equipment, and other sectors of the economy that might lend themselves to greater employment. Do you have a take on that . Impressions about that theory . Chair yellen the Financial Sector has grown in importance relative to the u. S. Economy. But my sense is that if we look plight with respect to wages and jobs of the middle class families, we have seen diminishing opportunities and downward pressure on their wages. We have to take that into account factors such as technological change which have eliminated many middle income jobs. And globalization which has reinforced the impact of technological change and that has to be those things have to be an important piece of understanding what is happened. I understand technology has played a role but we have always had technology. When we went from horsedrawn carriages to cart, people who made horseshoes had to find something new to do. I am skeptical when i hear people say that technology. We have always had technology and more employment. We have had a slow growth period and some people say it is because some people do not want to supply labor because theyre living to get on welfare. Possible that the Financial Services sector is channeling investment into activity, and not into agriculture, Manufacturing Services that employ people. I will give you an example. If you look at Sears Department stores, closing to 50 stores this year 250 stores this year, thousands of employees will lose their job and thousands of communities will lose retail access. You could point to technology, i am sure that is part of the explanation. Can you share some ideas or. 2 theysis to explain why Retail Sector is being hit so hard. But i am say amazon doubtful that explains the whole problem. The you have specific information on the role finance may be playing in part of these decisions . Investors a man outside returns that the Major Companies like sears fire workers and sell real estate so that you can have better returns on financial equities . Chair yellen investors a man oe i do not have anything specifically for you on that. I would be happy to take a look. I would point out that, for many years, Many American companies have been sitting on a lot of cash. And have been unwilling to undertake investment in plant and equipment to the scale we would ideally like to see. I think there are a number of different things. Thank you very much, i yield back my time. The chair recognizes the gentleman from michigan, mr. Huizinga, chairman of the Capital Markets subcommittee. Hiding behind a couple of my colleagues. It is good to have you here and i appreciate the opportunity. I was not expecting to do this but i want to touch briefly on something that chairman bar had talked about, the labor force force workforce participation , these are u. S. Bureau of labor statistics, labor force for dissipation rate, a study by the st. Louis fed. Was june 17th and it clearly shows that what i heard you say is disappointing levels of Labor Force Participation are unavoidable because of aging demographics. I wish i had the chart i put up. Me what is most concerning is the drop of participation comes from the youngest americans. That chart released by the fed of st. Louis shows the highest levels we have seen since the 1960s for americans aged 55 and older. It seems to me the argument that our economy has not responded the way it has, we talked about this last time you were here. I think i labeled it one flam not one these statistics what the statistics are showing. Your semiannual testimony before this committee in 2015, you were asked about concerns about a lack of liquidity and certain fixed income markets and you said that is not clear what it has happened to the market and what is causing what. You continue that, we do not see a problem, you said, but something you needed to study further. Has there been additional study and followup by the fed on that issue . Chair yellen that is something we continue to look at. We provide this committee with regular reports, particularly pertaining to Corporate Bonds. There has been a number of studies inside the fed and cleare of it that show no pattern. Some suggestions that regulation may be negatively impacting liquidity. Other studies reaching different conclusions. You do not believe there is problems in the fixed income market . Chair yellen so, the inventories of bonds held by some of the largest banks and Market Makers have declined. On the other hand, spreads are low and Corporate Bond issuance is has been healthy. The market has done well. Isnt it true we do not there is a lack of transparency. Chair yellen it is hard to draw conclusions purely based on that. We will be exploring this in my Capital Markets subcommittee on friday, we have a hearing on fixed income markets. Trying to figure out what is going on. Maybe we can help you with some of that analysis, with some testimony. We need to have that investigative effort by the fed on this. I quickly want to move on, former fed governor suggested that a new regulatory paradigm is needed to expand fiduciary duties of directors of banking institutions. He posed the question whether existing modes of Financial Regulation could be further supplemented by modifying the fiduciary duties of the boards of regulated Financial Firms to reflect what ive characterized as regulatory objectives. Specifically he believed that there is a special Corporate Governance measures are needed as part of an effective regulatory system. And says traditional for this year he did is focused on shareholders are not adequate for banking institutions. This is for banking institutions. Eu agree with his recommendations . Chair yellen those are his personal recommendations. Is that a no . Chair yellen i am not prepared to say i agree with all of those recommendations. We are focused on trying to clarify expectations for boards of directors, distinguishing what Important Role they have in the banking organization. And what is the job of Senior Management versus the board of directors. That would be a concern i have, is what expertise the fed has on Corporate Governance issues like fiduciary duties or Corporate Boards. And under what Legal Authority does the fed seek to preempt state Corporate Governance requirements and a number of things. I appreciate your answer. The time has expired and the chair recognizes the gentleman from colorado, the making member of our terrorism and illicit finance subcommittee. Thank you for being here and being a steady hand at the Federal Reserve. You must be doing an ok job. Because i have listened to my republican friends who generally piercing andd probing and accusatory questions, they do not have those today. Because things are going pretty well. In colorado, thank you, we were umps eight years ago with 10 unemployment and housing crashing, foreclosures through the roof. In my district, 2. 1 unemployment. The state is generally 2. 2 . That is not the same for some of the parts in my state are tougher and across the nation. But generally, things have been steady and i want to thank you and the policies of the fed in helping us get out of what was a very bad situation. Chair yellen thank you for that. A couple of questions. First, there is a guy who has wanting to dogged in under telling me that we need to shrink the feds accommodative policy. He is in the audience today. , directly behind you a couple of rows, he has been very firm over these years in wanting me to press you on this. Would you explain to me how you plan to shrink the accommodative policies that we took in 2008, 2 009, 2010. Chair yellen the Federal Reserve was dealing for many years with an economy with very high unemployment and inflation running below our 2 objective. We did everything we possibly could to try to achieve the goals that were assigned by congress, mainly a maximum employment and price stability. In our constrained ability to use shortterm Interest Rates as a tool. So we used our Balance Sheet and undertook other measures to try to stimulate the economy. I believe we have been succeeding, while inflation is still below our 2 objective, the labor market is much healthier and the Unemployment Rate is now even running a little bit under levels we regard as sustainable in the longer run. ,hat is entirely appropriate given that inflation is running below our objective. And weeconomy improves come closer to achieving our objectives, we see it as appropriate to begin to gradually remove accommodation and moved to a neutral stance. As i said on many occasion, the new normal with respect to what level of Interest Rates is neutral, appears to be rather low. We have raise the federal funds rate target. I believe policy remains accommodative but, given low estimates of the neutral federal funds rate now, namely levels of the funds rate that would be consistent with sustaining the strong labor market over time. We perhaps have some further moves that we envision making, if the economy proceeds along the path it is on, we will be anticipating that neutral may move up some, although remaining at low levels. And that generates a view that, over time, we may want to increase the funds rate a bit more but in general it depends on how things evolve. Let me change the subject real quick. On page 12 of the report, there are two words that i have never seen in any reports. Abysmal performance. Is productivity developments in the advanced economics, that is the section. Andmbination of Technology Advances in science and everything else, coupled with labor, we are seeing something in the second column, a number of potential explanations have been put forth for the abysmal p, thatance of pf there is a waiting i am out of time, i thank you for your service, you are doing a heck of a job. The time has expired and we recognize the gentleman from wisconsin, mr. Duffy, chairman of the housing and insurance. Thank you and welcome madam chair. My friends across the isle seem to be excited about lower unemployment. And an economy picking up. The stock market and 401 k s are improving. They want to give you a lot of highfives and backslapping. You get all the credit but what changes have you made since november 8 to kickstart this economy and make it grow that you are not doing before november 8 . Chair yellen what changes have we made to kickstart the economy . Yes. Chair yellen continued on the course of normalizing the path of monetary policies, the economy continues. Been, weal change has have a new president in the white house. I will make that point to my friends across the aisle to not get too excited on who should get credit for an improving economy. I want to follow up on why on int my friend was asking regard to the rule that the fed is playing on Corporate Boardrooms and Financial Institutions. You would acknowledge you do have a role in these boardrooms . What role do you have . Chair yellen it is our job to make sure that banking organizations are operating in a safe and sound manner and have sureies in place that make they are safe and sound management and compliance with federal laws and regulations. And Corporate Boards play a theical role in ensuring performance of Financial Institutions. Isnt it fair to say that virtually anything could fall under the umbrella of this . Who is hired and who is fired and who is disciplined within a Financial Institution could fall under safety and soundness, right . Chair yellen it is important, and we are going to try to do this it could fall under safety and soundness, right . Chair yellen it could. And who lends to, could fall under safety and soundness, right . Chair yellen it could. The fed could replace the board of directors who have a fighter shearing duty to the shareholders and take over boards. All under the premise of safety and soundness. Chair yellen we believe the Corporate Boards play critical what in ensuring falls outside the scope of safety and soundness in a Financial Institution . Chair yellen anything you mentioned. Exactly, you cannot give me an answer is everything falls under that scope, which is a concern. The fed does not have a fight is dutyhe duty fiduciary to shareholders and they have potential criminal and civil liability in their service on a board. Does the fed have any civil or criminal liability should things go wrong on a Corporate Board . Board members are liable. Chair yellen we have supervisory responsibilities. Are those fed members who are sitting in board meetings, are they potentially criminally or civilly liable for the decisions they push a board to make . Chair yellen not to the best of my knowledge. Mine either and that is a concern. You do have a supervisory role and i want you to do a good job. From the feedback we get, the involvement the fed has in our Corporate Board rooms has far surpassed i think the vision any of us had in this room. It concerns us. Chair yellen let me say, we have talked to many Corporate Board members and understand that there has been an accumulation of a large number indicated thate board members, along with Senior Management, should be responsible for. I do not believe you have the authority. To make decisions. That is the feedback we have had from members. One last question, do you anticipate this will be your last time testifying before this committee . Chair yellen my term expires in february. It may well be. Are you seeking another term . Chair yellen i have not said anything about that. I intend to serve out my term. I want to thank you for your hard for your service and i yield. I recognize the gentleman from illinois, mr. Foster. Thank you for your service. I have sent letters to you and other federal regulators about the requirement that custody banks hold supplementary leverage ratio against deposits at the federal, presumably because of worries that in some future universe, the fed deposits may become less safe and available been cash. That is a universe i do not enjoy contemplating. I believe the Federal Reserve deposits are the safe place for these large immediately callable cast positions that we should be encouraging because of the strength and liability of the Federal Reserve as a counterparty. We have Bipartisan Legislation to require that prudential regulators provide relief before institutions that place cash with the fed. At the same time as providing significant flexibility for the regulators to deal with unusual circumstances. Do you see any safety and soundness difficulties if this legislation were to go forward . Chair yellen i will not comment on the legislation. But we are looking at the supplementary leverage ratio, because of the impact you mentioned. Beeverage ratio was meant to the backup supervisory device. Calibrated appropriately, relative to riskbased capital requirements. General, we face capital requirements, especially with the largest and most systemic institutions are at levels that i think are appropriate and comfortable with. It may be that the supplementary leverage ratio needs to be recalibrated relative to that. I am aware of the problems you mentioned. And we are considering how to address them. Thank you. I would like to comment briefly in defense of my home state of illinois in response to some of the remarks from a colleague from new mexico. Every year, the citizens of illinois by a check for proximally 40 billion to states largely in the sunbelt and rural areas because for every one dollar of tax money illinois receives back only . 75 of federal spending. In contrast, new mexico receives 2. 40 for every one dollar of tax money. This check we write for 40 billion per year handed to them and put into a Rainy Day Fund, instead of redistributed to other states in the union, would have resulted in a balance in that Rainy Day Fund in excess of 1. 5 trillion today. When people discuss the fiscal problems of illinois, the starting point should be there. To i cochair a future Work Task Force for the new democrat coalition. We are looking at the effects of technological and other changes that may occur in our workforce in the coming years and what policies we should adopt to remediate the bad side of those. A lot of about why inflation is not increasing as you would have guessed in the past, particularly wage inflation. Market, gap the job that is rapidly employers would start giving up wages but that does not appear to be happening the way it used to. One of the explanations that is suggested for that is that employers have the opportunity, instead of bidding up wages, to invest in technology that replaces jobs. Do you think there is a reasonable chance that you will have to change your Macro Economic models to reflect the loosening and length between the the tightness in the market and the increase in wages . Chair yellen we are seeing a tenuate at length link between the labor market and market and the increase in wages . Chair yellen we arewages. Even to a greater extent, prices and inflation. The relationship between those two things has become more attenuated than we have been accustomed to historically. And general, when the robots show up, they show up as low prices. If you ask the average farmers, what force them to consolidate, they do not say it is the machines, but low grain prices. Lets break away from Janet Yellens testimony with stocks rising in europe, the close settling for a moment, the big four indexes rising at the biggest level since april. And gain or the stoxx 600 janet yellen signaling the fed will not rust to tighten policy inflation remains persistently below target. Lets look at the currency board, the currency to watch is sterling, given that unemployment in the u. K. Today fell to a 42 year low, earnings increased, wages more than expected, it comes as the bank of england policy maker said he is not ready to support a rise in rates. Sterling up by a third of 1 against the dollar and the euro down against the pound and the pound down against the yen and the euro down against the dollar. Finishing up with the bond board in the wake of fed chair Janet Yellens comments. Up threeyear gilts basis points and declines in spain and italy. Lets return to the testimony. This keynote flies into the face of the fomc policy on external communications of participants which states that, i will read this right out of the policy, Committee Participants will strive to ensure that their contacts with members of the public do not provide any profitmaking person or organization with a prestige advantage over its competitors. They will consider this principle carefully and rigorously in scheduling meetings with anyone who may benefit financially from apparently exclusive contacts with Federal Reserve officials and in considering invitations meetings thatk at are sponsored by profitmaking organizations, or that are closed to the public and the media. Chair yellen, we want transparency and accountability for our Monetary Policy so that it remains insulated from political and profitmaking interests. Notvice chairs speech does help with that at all and flies in the face flagrantly of policy. These these occurred days before jeffreyfed official, lacher, abruptly resigned as the richmond fed president after admitted he played in the role in the 2012 fomc leak where markets into the details of the Central Banks internal deliberations were leaked to a private consultant who shared the details with client whose to net millions in profits by trading ahead of the release of the news. However, the true lakers remains akers remain at large as he only incidentally confirmed Insider Information that they had already received. This is something that i come as chairman of the oversight and investigation subcommittee, will continue to look into. Chair yellen, how could this speech have been allowed to happen, given everything that had occurred with the 2012 fomc leak . Chair yellen let me start by saying, the very beginning of our policy on fomc external Communications States that the Twoway Communications between members of the committee and members of the public are very important, both to communicate with the public and to gain information. And that these will occur in a variety of ways, including in some closeddoor meetings. There is no requirement that fomc members cannot meet in closeddoor sessions. The Brookings Institution is not a forprofit institution. It is a nonprofit. We have a clear set of guidelines governing what can and cannot happen in such the remarks were released to the public. Chair yellen the clear rules are that no fomc confidential bulls on can be the in aged, including closeddoor setting and fomc officials may not discuss even their own views on policy, except to the extent that they have already been presented in a public forum. Remarks did not pertain to Monetary Policy, they pertain to financial the difficulty with this is that we do not know that. In the interest of transparency and accountability, perhaps it would be good to show the light of day on whatever his remarks were to wall street bankers that were invited to his speech at the Brookings Institution. I have to say, madam chair, that it is very clear that these should not be closed to the public or the media. I am very concerned about this Going Forward and am also concerned about the resolution on the board because of internal governance that happened on the fomc leaks. I would like to submit that in writing and get your information. Chair yellen i want to say that we have cooperated fully with our Inspector General and lawenforcement agencies. They have had access to all information relevant to this matter. They announced simultaneously with president the board must improved standards and keep to its standards. Time has expired. The chair recognizes the gentleman from missouri, mr. Clary, Ranking Member of our subcommittee. Thank you for being here. Perhaps we should replace some of the fantasy that we have heard today on the other side with the reality. You know, i hear my colleagues over there saying that within six months of this new administration we have improved the economy and improved Employment Opportunities for americans. I guess they are pointing to the carrier deal in indiana where they were promised over 1000 jobs to stay in this country and about 750 we hear are moving to mexico. But we will give the president credit for that deal. That they, i know reason why the economy is turning around is the sustained job growth of the Previous Administration over more than six years. Here is my question to you. Chair yellen. In may, the overall unemployment year low. 3 hit a 16 although the Unemployment Rate rose 1 10 of 1 in june, this reflected the positive news that more workers who had dropped out of the labor force had returned to look for work. When the overall rate of employment now down at historically low levels, would you say that the economy has reached full employment, or do you believe that this headline rate masks weakness in the labor market where additional progress must be made . Chair yellen so, not all groups in the labor market are faring equally well. About,remain concerned particularly for africanamericans and hispanics, weaker job market outcomes. Policy is a blunt tool. As you point out, the Unemployment Rate and overall rate of the labor market is strong with many job openings workers. Tunities for the Unemployment Rate is slightly below levels that my colleagues would regard as sustainable in the longer run. Rate foreen a steady several years now. Constant rate of Labor Force Participation which with an aging population tending to push five suggests groups finding opportunities and entering the labor force and gaining employment. That is a strong performance. This has been going on for a number of years. And has continued and is continued this year. Thank you for that response because progress does not happen in six months, especially when you have to recover from a devastating recession. For the other side to give credit to someone who is not even focused on our economy is ridiculous. One more question, what in your view has been the key drivers of the job gains since her last testimony before this Committee Six months ago . Driven byains been longerterm trends from a growing economy or largely resulted from new policy adopted in recent months . Chair yellen so, the global. Conomy has recovered it was a source of weakness earlier. That has been a source of support. We have had ongoing job gains and increases in, for example, housing prices that are boosting the wealth and Consumer Sentiment of americans. That is driving consumption spending that is Strong Enough to create ongoing job gains that exceed what is needed for an expanding labor force. The job market continues to strengthen and unemployment continues to move down. Thank you for that response. I hope this is not your last visit to this committee. I am sure it will not be the last time we visit. Feature recognize the gentleman from florida. Thank you, i hate to get into john and of who shot his policies are doing what. I heard the remark that the Economic Analysis cannot show any significant shortterm results or something to that effect. I will like to remind the other side that i saw dramatic overnight change in the stock market from the election to the inauguration. I think we will go on. Get to see you, chair yellen. Good to see you, chair yellen. The most cosponsored, bipartisan, significant piece of legislation since i arrived in congress has been dr. Pauls original legislation to audit the fed. It goes nowhere at the other end of the building. Are you afraid of getting that passed . Chair yellen i am strongly we are to audit the fed, audited in every way that normal americans would regard in an audit, our financial accounts and holdings are public. Not audited like other agencies. You are aware that the list of exemptions. If the fed removes one exemption the Federal Reserve enjoys, which is realtime policy reviews by the gao of our Monetary Policy decisions. That is the essence of Federal Reserve independence and trying to keep politics out of decisions that should be technical, professional, and nonpartisan. I would agree if i thought there was truth to that statement. Auditing is something after the fact has nothing to do with influencing a decision. I would not think. I would consider it an important matter of transparency. For the life of me i cannot understand what the fed fears. Can you give me an example that would justify a lack of transparency . Chair yellen we do not have a lack of transparency. You do if you cannot audit it. Know, it is a i lack of transparency but i do not understand and that is the reason i am questioning you about it. Chair yellen the Federal Reserve is one of the most transparent Central Banks in the world. That is a statement. What do you fear about the audit, give me a realtime example. Fomc needs a the space in which it can have honest conversations and deliberate in real time about the decisions that we make. Without having political influence brought to bear and secondguessing decisions that we have made and opining on them , possibly with the idea of reversing them. We can discuss things in public that are sensitive, national security. The Supreme Court does the same thing. They do not worry about the transparency influencing them. Give me an example of how transparency can hurt the fed . One example of how it could hurt the fed. Chair yellen what you are talking about with the gao our policy reviews. An example, not a general swipe. Take for example, this. If somebody said this, it would be horrible and the end of the world for the fed. If me an example like that. Give me an example like this. Chair yellen a situation where the General Accounting Office at the request of congress may come in and say at our meeting a week ago that they have taken the transcript and reviewed what we have said and believe that the decision we made was the wrong one at that meeting. I would say that is an extreme interference and politicization of our ability to make independent Monetary Policy decisions. You are saying we should not be transparent for the fear of being secondguessed . For somebody criticizing you because you thought they thought you were wrong. Do i get it . We are talking about chair yellen we are talking about the lyrical interference. Political interference. If it is after the fact, it is not a defense. The time has expired. The chair recognizes the gentleman from georgia, mr. Scott. Thank you very much. Chair yellen, welcome and get to have you again. Good to have you again. I first of all want to thank you. And the Federal Reserve. Under the leadership of our Ranking Member, mr. Waters, and wrecking members Ranking Members john conyers and myself and others, we were hopeful that, for the first time in history, american history, the Federal Reserve would appoint and higher the very first africanamerican ever to hold the position as a regional president of the fed. And you did that. We want to say thank you. So much. We deeply appreciate that. That means a lot. Not just to the Africanamerican Community but to all americans. That is what this great country is about. Let me go to one other thing. Let me talk. You and i have had ongoings about high and employment rate of africanamericans. I always remember fondly when you referred to that as a blunt instrument. Said to james bond to describe them. In other words, you could not go through it. You said that congress had to come up with legislation. We did that. House resolution 51 and 52 of which we sent a copy to you, which would get africanamericans Unemployment Rate young men in the innercity to Apprenticeship Training programs. Attached to rebuilding a crumbling infrastructure. That has been introduced. Thewe have to by law fund 1890s africanamerican, we put 95 million in the appropriations, hopefully, that we will be able to spread over 45 years at 5 million for 5 million. At five years. I have read your past report that you have given and you have talked about housing. We would like to move to that next. Reports, youthree made a point to dedicate full sections of the report to specific topics related to the disparity. That the Federal Reserve is seen in the data seeing in the data for the Africanamerican Community. I want to call your attention specifically to those sections to the three most in from the three most recent report to congress, the titles of these, you referred to them as boxes, if you recall, boxes. Hat is what the fed calls them one said have a gain to the economic expansion been widely shared . Number two said homeowner by e mf intensity, and this race determine who climbs the economic ladder . In that discussion, of those highlighted and colluded socioeconomic differences between whites and blacks, poor Credit Scores because of income disparities, and continued discrimination. That laissezfaire. Lays it bare. Of all of these factors in your ises, which of these factors most pressing . And what recommendations on substantive solutions can we in Congress Work on to help address the homeownership problem urging africanamericans hurting africanamericans, as much as you say we should develop legislation moving forward on unemployment of africanamericans. Chair yellen i do not want to try to give you detailed suggestions for what legislation you can put forward. Our job is to try to do the best we can to provide information and background that will be helpful to you as you decide what is appropriate. I believe this is squarely in the domain of congress and the president. We are trying to provide useful absolutely and we wont and we will pursue that. I would love for you to stay on in your position as chair lady of the fed. Time has experiment and we recognize that time has expired. Time has expired. The chair recognizes the gentleman from new jersey. Thank you, chair yellen, down here, over here. Welcome. I want to thank you for your service to our country and i appreciate you being here. Your testimony has been helpful to me. Explore, oneant to is nonbank cities, my state, new authorized by4 legislation our department of banking and insurance to do Group Supervision of insurers involved in the international marketplace. Sock under at doddfrank when it reevaluated designations annually, required to consult with state regulators. I wanted to get a sense from you of whether how you would view a state Insurance Department doing regulatory work of a group insurer. Does that impact how it might look at this designation of an insurer . Chair yellen this is a matter them to decide as we have met with state regulators in new jersey and i am aware of this development which is a heartening one. I was state the focus and designation is the Systemic Risk that the failure of a given entity could pose to the broader financial system, the best of my knowledge, most state regulators focus in supervision on protection of policyholders, which is a very important objective, but not on the Systemic Risks that the activities of a company could pose to the broader financial system. In considering this matter, fsoc would have to take account of with a focus of that Company Supervision would think. I appreciate that. , somebody would add who estimate a lifetime in insurance, i think state regulation has proven to be, when you regulate individual companies within a group, you create a safer company. I think our system is better than the european system which focuses on the group and not the company. That is another matter. The other area i wanted to explore was the Labor Participation rate. You mentioned it twice today. That our you said aging population is pushing it down. Hand, that the one makes intuitive sense, we have a baby boomer bubble working through. I wanted to ask you about a few particulars with that. Do you use the bureau of labor Statistics Data on Labor Participation . Chair yellen i believe that is the core data. Their the bureau of labor statistics Employment Data on my ipad and im looking at it. I did not do it ahead of time so i cannot put it on screen. When i look at the data, all people over 16 years old, everyone who is of working age, that has gone Labor Participation rate from 66. 6 in 2004 to 62. 0 in 2014. A decline in Labor Participation. You suggested it is because people are getting older and dropping out of the workforce but that is not what this chart says. 65 and older has in 1994 rom 12. 4 in 2014 1994 2014. 6 in the one that has gone down, the group that has gone down his the 2550yearolds who have declined from 83. 4 participation to 80. 9 participation. 2554 year old group, peak earning years has declined by 2. 5 . That times 324,000,005 relation is a. 1 million Unemployed People in peak earning years 8. 1 Unemployed People in peak earning years which does not square with your assertion. Chair yellen very quickly, it is true that people in the retirement years, 65 and older, are working more now than they used to. But the level of Labor Force Participation over that group is dramatically lower than of prime age workers and an increasing share of the population is now moving into those years with low Labor Force Participation. There is no conflict between the number that you cited and my statement that an aging labor force. Time has expired. Chair yellen it has also participation of prime age workers the chair recognizes the gentleman from california, mr. Sherman. Thank you for coming every few months, you have not yet used or authority to bring up the too big to fail institutions. I will spend the next minute reminding you they are too big to fail. , it one entity goes down could take our whole economy down with them. They are too big to compete against because economic studies say that investors and the markets the soon they will be they will assume be bailed out and there will be new legislation to bail them out if that is thought necessary to save the economy. Therefore, they are able to get a cost of funds that may be as much as 80 basis points less than they would otherwise. Asy are too big to jail former attorney generals have said they would not prosecute because it may take down the economy. If the same thing was done by a media size bank mediumsized bank, go ahead and prosecute. With the wells fargo debacle, a different between republicans and democrats for the democrats blame management at wells fargo and says they were to believe thats too big to manage and republicans blame regulators which fruits they were too big to regulate. To big to fail, too big to compete against too big to jail. , too big to when a protozoa gets too big it splits into two healthy cells. I would think the geniuses on wall street would have at least the same level of intelligence as the average oneself aquatic celled aquatic animal. Here, people criticize low Interest Rates in our economy. With low Interest Rates, you get more Economic Growth but you may also get more inflation. Over the last five years, has rampant inflation been a disastrous difficulty for the American Economy . Chair yellen inflation is running under our 2 objective
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