comparemela.com

It is 2 and a half hours. The committee will come to order. Today, we will receive testimony from janet yellen regarding the feds semiannual report to congress on Monetary Policy and the state of the economy. It will come as no surprise to you that improving Economic Growth is a key priority for congress this year. Was the 11th Consecutive Year that the u. S. Economy failed to grow by more than 3 . One way to improve our Economic Growth is it to study and address areas where regulations can be improved. Since the financial crisis regulators have imposed thousands of new pages of regulations. We all need to better understand the combined impact of these rules on lending, liquidity, cost for small Financial Institutions, and broader Economic Growth. It is time to reassess what is working and what is not. Im encouraged by President Trumps executive order on Core Principles for regulating the Financial System. Directing the treasury secretary in consultation with the heads of the other member agencies of asoc including you to report on how well existing laws and regulations promote or inhibit Economic Growth will be a helpful step as we move forward. Financial regulations should strike the proper balance between the need for safe and sound Financial System and the need to promote a vibrant growing economy. I expect the vice chairman for supervision once confirmed will play an Important Role in striking this balance. We want our nations banks to be well capitalized and well regulated without being drowned by unnecessary compliance costs. Be wellcapitalized and wellregulated without being drowned by unnecessary compliance costs. This is especially important for the Community Banks and Credit Unions in america. Which lack the personnel and infrastructure to handle the infrastructure and Regulatory Burden of the past few years. Yet in many ways, are treated the same as the worlds biggest institutions. At the last humphrey ayou stated that simplifying regulations for the Community Banks continues to be a focus for the fed and i hope that remains the case. Our Regulatory Regime should be properly tailored and avoid a onesizefitsall approach. The fed recently took an encouraging step in that direction when it finalized changes to exempt certain banks and the qualitative portion and i appreciate that. Another area i would like to just as the 50 billion threshold for regional banks. In prior hearings we discussed whether 50 billion is the appropriate threshold. I hope we can Work Together to craft a more appropriate standard. My goal is to work with senators of the committee and financial regulators to better strike the balance between smart thoughtful regulations and promoting Economic Growth. It is also been nearly a decade since fannie mae and freddie mac were put into conservatorship. Housing finance reform remains the most significant piece of Unfinished Business following the crisis. And it is important to build bipartisan support for a pathway forward. For many years the fed express concerns about fannie mae and freddie mac. And i encourage you chair yellen to work with us to solution. In the fall of 2007. In response to the emerging financial crisis. Today the fed still holds close to 4. 5 trillion in assets on its Balance Sheet. Which includes approximately 35 percent of the Outstanding Agency Mortgage Backed security market. I look forward to hearing from you on how the fed plans to normalize Monetary Policy and wind down its Balance Sheet. The Banking Committee has a lot of work to do this congress. My goal is to work with Ranking Member brown and other members of the committee to identify bipartisan approaches that we can quickly get signed into law. At the same time we plan to start working on Housing Finance reform. Flood insurance tensions and legislation to boost Economic Growth in the country. I look forward to working with you chair yellen, the Federal Reserve and other members of the committee to tackle some of these Critical Issues i mentioned this morning as well as a number of others. With that metal chair we look forward to your comments today. But first i turned to Ranking Member brown. Senator brown. Thank you. I appreciate the hearing today and chair yellen, thank you. It is an honor to always have you here and a pleasure and your insight is always helpful to all of us. Thank you for that. Since your appearance madam chair last june the economy has improved enough as we know that the fed raised the rates in september for the second time since the financial crisis. Businesses continue to create jobs, on a slow but steady pace some 70 months in a row. And there finally is some wage growth. Yet they are concerned. Too Many Americans who want fulltime work still cannot find it. Many workers have left the labor force, the games have been not large enough and uneven. Foreclosures and job losses had africanamerican and latino communities particularly hard during the crisis. One study found that the average well ahas grown three times faster as the rate for African Americans and families and 1. 2 the times the growth rate the latino families in the last three decades. These rates will take hundreds of years for those families to match where a white family is today. For stock portfolios have recovered nicely but for most ohio and most of the states, the story is very different. The states job growth last year was the lowest since 2009. We actually went backwards by about 12 months. Many places one in four homeowners are still underwater. As you heard me say and as members of this committee has heard me say in the first half of 2007 they were more foreclosures in my zip code than in any liquid of america. For ohio manufacturers and the dollar continued to hurt experts. And much as been injected into the economy by the administration already and by the majority party. Can americans continue to count on having Health Insurance . When us manufacturers and exporters have a continued access to foreign markets . Importers have to pay a 20 percent sales tax. Immigrants in this country have access to jobs and universities and they do not even know what to expect tomorrow let alone to do any kind of longrange planning. All of that, our country and our economy is dependent upon. Americans elected a new president based on his promises to drain the swamp, take on wall street and bring manufacturing jobs back to the industrial lands. We are concerned when you look at some of the nominees confirmed with virtually every republican, virtually every time voting for amazingly ethically challenged nominees. Nominees that would have stepped aside eight years ago or 16 years ago with the president s. We are all concerned about that. Instead of focusing on infrastructure and real job creation and tax cuts for the middle class and education and workforce development, using the new administration target working americans, furthering a billionaire special interest agenda. And threaten wall street reform based on the false promises that banks are not lending. False promises some might call ai think everyone can agree there are parts of wall street reform that can be improved and steps that can be taken to help small banks and Credit Unions. That is an ongoing process for both congress and the regulators. I applaud the fed decision madam chair, the recent decision to remove banks below 250 billion in assets from part of this process. Many of my republican colleagues are looking at going beyond the bipartisan adjustments in seeking to repeal reforms are key to preventing the next devastating financial crisis. Working americans lost trillions of dollars in their Retirement Savings after large wall street firms made risky bets with other peoples money. Either failed or built up during the crisis. That is why congress put in higher Capital Requirements for large banks, mechanisms to identify and regulate risky nonbank companies and tools to make sure Financial Firms can fail without bailouts funded by taxpayers to recent statements by top officials in the white house indicate they are specifically targeting these important safeguards. Even though these parts of the law were supported by both parties back less than a decade ago. Now the initiation is putting wall street bankers in charge. Steve ahe was confirmed by the study athe senate last night. They tried to take their freedom away to make difficult decisions. These priorities are wrong. American voters agree 80 percent of one pole, those republicans and democrats and independents. 80 percent agree we need to have rules and stronger, not weaker penalties for wall street. I want to take a moment to recognize one person in particular was the one of the chief architects of the stronger rules that have been put in place over the past several years to rein in wall street. Misbehavior and access. Last week the governor tarullo announced he is stepping down. I also want to recognize john alvarez who is in his 36. Federal reserve. He is seated right behind. Mr. Alvarez. He is in his 36th year at the fed. He has been general counsel for over a decade. Thank you for your service mr. Alvarez. Madam chair look forward to hearing more from you about the currency of the economy, the importance especially in sports of strong rules to guard against economic calamity. I know youre not going to be there for ever although i wish you were. And the importance of a strong rules that you have put in place and you will continue to put in place over the next dozen months or so. And what congress can do to help the economy create jobs and make it easier for all americans. And io, all americans to accumulate wealth to buy a home, to pay for college and to have a decent honorable dignified retirement. Madam chair. It is a pleasure to see you. Thank you senator brown. Again, madam chair we appreciate you being here. We look forward to your Opening Statement at this point and then we will engage in some important discussion. You may proceed. Thank you. Chairman michael crapo, Ranking Member brown and other members of the committee, i am pleased to present the Federal Reserves semiannual Monetary Policy report of congress. In my remarks today i will briefly discuss the Economic Situation outlook before turning to Monetary Policy. Since my parents are left in the economy has continued to make progress toured our dual mandate objectives of maximum employment and price stability. In the labor market, sharp gains averaged 90,000 per month over the second half of 2016. The number of jobs rose an additional 227,000 in january. Those games bring the total increase in employment since its trough in early 2010 to nearly 16 million. In addition, the Unemployment Rate, which stood at 4. 8 percent in january is more than five Percentage Points lower than where it stood at its peak in 2010. And is now in line with the median of the federal open Market Committee participants estimates of its longer run normal level. A broader measure of labor which includes the marginally attached to the labor force and people working parttime but would like fulltime jobs. It is also continued to improve over the past year. In addition, the pace of wage growth has picked up. Relative to its pace of a few years ago. The further indication that the job market is tightening. Importantly, improvements in the labor market in recent years have been widespread. With large declines in the Unemployment Rates for all major demographic groups. Including africanamericans and hispanics. Even so, it is discouraging the jobless rates for those minorities remained significantly higher than the rate for the nation overall. Ongoing gains in the labor market have been accompanied by a further moderate expansion and economic activity. Us real Gross Domestic Product is estimated to have risen 1. 9 percent last year. The same as in 2015. Consumer spending has continued to rise at a healthy pace. Supported by steady income gains, increases in the value of Household Financial assets and homes, favorable levels of Consumer Sentiment and low Interest Rates. Last years sales of automobiles and trucks were the highest annual total on record. In contrast, Business Investment is relatively soft for much of last year. That would posted some larger gains toward the end of the year, in part, reflecting an apparent and to the sharp decline in spending on drilling and mining structures. Moreover, Business Sentiment has noticeably improved in the past few months. In addition, weak foreign growth and the appreciation of the dollar over the past two years have restrained manufacturing output. Meanwhile, Housing Construction has continued to trend up. At only a modest pace in recent quarters. And while the lean stock of homes for sale and ongoing labor market gains should provide some support to Housing Construction going forward, the recent increases in Mortgage Rates may impart some restraint. Inflation moved up over the past year. Mainly because of the diminishing effects of the earlier declines in Energy Prices and import prices. Total Consumer Prices as measured by the personal Consumption Expenditure. Or pce, race index rose 1. 6 percent in the 12 months ending in december. Still below that fomc is to present objective but up one percentage point permit space in 2015. Core pce inflation which excludes the volatile energy and food prices, moved up to about 1 3 4 percent. My colleagues on the fomc and i expect the economy to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to two percent. This judgment reflects our view that us Monetary Policy remains accommodative and that the pace of Global Economic activity should pick up over time. Supported by accommodative monetary policies abroad. Of course, our inflation outlook also depends importantly on our assessment that longrun Inflation Expectations will remain reasonably well anchored. It is reassuring that while marketbased measures of inflation compensation remain low, they have risen from the very low levels they reach during the latter part of 2015 and the first half of 2016. Meanwhile, most survey measures of longerterm Inflation Expectations have changed little unbalance in recent months. As always, considerable uncertainty attends to the Economic Outlook. Among the sources of his uncertainty are possible changes in us fiscal and other policies. The future path productivity growth and development abroad. Turning to Monetary Policy, the fomc is committed to promoting maximum employment and price stability as mandated by congress. Against the backdrop of headwinds weighing on the economy over the past year, including Financial Market stresses that emanated from development abroad, the committee maintains an unchanged target for the federal funds rate for most of the year in order to support improvement in the labor market and an increase in inflation towards two percent. At its december meeting, the committee raised the target range for the federal funds rate by one quarter percentage point to one half to three quarters percent. In doing so, the committee recognize the considerable progress the economy had made two of the fomcs dual objectives. The committee judged that even after this increase in the federal funds rate target, Monetary Policy remains accommodative. Thereby supporting some further strengthening labor Market Conditions and a return to two Percent Inflation. At its meeting that concluded early this month, the Committee Left the target range for the federal funds rate unchanged. But reiterated that it expects the evolution of the economy to warrant further gradual increases in the federal funds rate to achieve and maintain its employment and inflation objectives. As i noted on previous occasions, waiting too long to remove accommodation would be unwise. Potentially requiring the fomc to eventually raise rates rapidly. Which could risk disrupting Financial Markets and pushing the economy into recession. Incoming data suggest that labor Market Conditions continue to strengthen and inflation is moving up to two percent. Consistent with the committees expectations. At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations. In which case, a further adjustment of the federal funds rate would likely be appropriate. The committees view that gradual increases in the federal funds rate will likely be appropriate, reflect the expectation that the neutral federal funds rate, that is, the Interest Rate that is neither expansionary nor contractionary. And it keeps economy operating on an even keel. Will rise somewhat over time. Current estimates of the neutral rates are well below precrisis levels. A phenomenon may reflect so productivity growth, subdued Economic Growth abroad, Strong Demand for safe longerterm assets and other factors. The committee anticipates that the depressing effect of these factors will diminish somewhat over time, raising the neutral funds rate albeit to levels that are still low by historical standards. That said, the Economic Outlook is uncertain. And Monetary Policy is not on a preset course. Fomc participants will adjust their assessments of the appropriate path for the federal funds rate in response to changes to the Economic Outlook and associated risks as informed by incoming data. Also, changes in fiscal policy or other economic policies could potentially affect the Economic Outlook. Of course, it is too early to know what policy changes will be put in place or how their economic effects will unfold. While it is not my intention to opine on specific tax or spending proposals, i would point to the importance of improving the pace of longer run Economic Growth in raising american Living Standards with policies aimed at improving productivity. I would also hope that fiscal policy changes will be consistent with putting us fiscal accounts on a sustainable trajectory. In any event, it is important to remember that fiscal policy is only one of the many factors that can influence the Economic Outlook and the appropriate course of Monetary Policy. Overall, the fomcs Monetary Policy decisions will be directed to the attainment of its congressionally mandated objectives of maximum employment and price stability. Finally, the committee has continued its policy of reinvesting proceeds from maturing treasury securities and principal payments from agency debt and mortgagebacked securities. This policy, by keeping the committees holdings of longerterm securities at sizable levels has helped maintain accommodative financial conditions. Thank you. I would be pleased to take your questions. Thank you very much chair yellen. I want to get to the last issue you talked about with regard to the feds Balance Sheet. But before that ive got two or three quick questions i wanted to go through with you. First, dodd frank established a new position at the Federal Reserve, the vice chairman of supervision. President obama has never yet designate anyone for this role and instead, fed governor dan tarullo has acted as the defective vice chairman for supervision in various ways including by chairing the Federal Reserve Boards Committee on supervision and regulation overseeing the Large Institution Supervision Coordinating Committee and representing the fed at the Financial Stability board and in basel. Among other functions. What role do you envision for the fed vice chairman for supervision happening and how do you envision working with this person when we get one nominated . And is it your expectation that a president ially appointed federal vice chairman for supervision will have the responsibilities that governor tarullo currently has including and among other things chairing the committee on supervision and regulation and negotiating and we have of the Federal Reserve in basel . Chairman crapo, i think you know the entire board has responsibility for approving new rules. But the vice chair woodhead our supervision and regulation committee. And would coordinate our efforts in this area. He or she would also represent the board on International Negotiations with financial regulatory standards, including representing the fed in basel and beyond that, the new vice chair would fulfill any statutory obligations such as providing semiannual testimony to congress on supervision. I look forward to working with that individual. Thank you very much. Secondly, President Trump recently issued an executive order directing the treasury secretary to work with the member agencies of f sock to review the extent of which existing laws and relations promote certain Core Principles. First of all, dear greed is important to promote the Core Principles mentioned in this executive order and you plan to work with the treasury secretary and other members to ensure this review occurs . So, i certainly do agree with the Core Principles. They enunciate very important goals for our Financial System and for supervision and regulation of it. I look forward to working with the treasury secretary and other members of fsoc to engage in this review. Thank you very much. My third question before you get to the Balance Sheet is, fannie mae and freddie mac were put into conservatorship in 2008 and continued to dominate the mortgage market. I am not alone in calling for housing reform. And considering it the most significant piece of Unfinished Business following the financial crisis. You believe that finding a durable competence of legislative solution for the Housing Finance market is urgently needed and are you willing to work with us to help achieve that . Yes, i think it is very important that congress continued to deal with the gses and figure out what the governments role in Housing Finance should look like going forward. The goal of bringing private capital back into the mortgage market, i think is important and i would hope that congress would decide explicitly on what the governments role is. And if there are guarantees that they would be recognized and priced appropriately and we look forward to continue working with you to help achieve these objectives. Incorporated you. I just wanted to get your comments on those few issues before going to this final question on the Balance Sheet. The fed has said that it will not begin shrinking its Balance Sheet until normalization of the level of federal funds rate is underway. Recently some reserve Bank President s have suggested that it is time to consider beginning that process. What are the benefits of starting to let the Balance Sheet run off rather than relying solely on shortterm rate hikes to tighten policy . And as shortterm rates rise, is it problematic to have a large Balance Sheet continued to put downward pressure on longerterm rates . Well, chairman crapo, the Federal Reserves report resorted to purchases of longerterm assets after the financial crisis. At a time when the economy was very depressed. Unemployment was very high, inflation running below our objectives. An extraordinary support was needed. But we would hope that that was a very unusual intervention and one that we would not frequently be relying on in the future. The fmo c has enunciated the a the fomc has enunciated it is longer run goal is to shrink our Balance Sheet to levels consistent with the efficient and effective implementation of Monetary Policy. While our system evolves, and i cannot put a number on that, i would anticipate a Balance Sheet to substantially smaller then at the current time. We would like to, in addition, we would like our Balance Sheet to again, be primarily treasury securities. Where as you pointed out, we have substantial holdings of mortgagebacked securities. Now, to just, financial conditions in order to influence Economic Development in line with our dual mandated objectives, the committee would like the maximum extent possible to rely on variations in our shortterm overnight Interest Rate to accomplish that objective. It is our traditional tool. It is the one that we have the most confidence in. It markets best understand how we set it and we have the greatest confidence in our ability to calibrate it relative to the needs of the economy. So we do not want to use fluctuations in our Balance Sheet policy as an active tool of Monetary Policy management. So what we would like to do is find a time when we judge that our need to provide substantial accommodation to the economy in the coming years is minimal. When we have confidence that the economy is on a solid course, and the federal funds rate has reached levels we have some ability to adjust weakness by cutting it. And once we have that confidence. We will try, we will begin to allow maturing principles from our investments to gradually and in an orderly way, we will stop reinvestments or diminish them and allow our Balance Sheet to shrink in an orderly and predictable way. The committee has decided that it will not sell mortgagebacked securities but as principle matures, we will begin to allow those assets to run off our Balance Sheet. So we do expect to be discussing in greater detail, we gave general guidance that we want to wait to start this process until the process of normalization is well underway. And the committee in the coming months will be discussing issues pertaining to reinvestment strategy to try to provide further guidance. Thank you very much. Senator brown. Thank you, sir. Madam chair, detested by lester that the Banking System was more safe, more resilient. Is that still true . I believe so, yes. I mean it is much more capital in the Banking System. The quantity of high quality capital. To your one capital has more than doubled since before the financial crisis. There is much more liquidity. I believe the Financial System is much more resilient than it was. Thank you. Now that we know that, and i think we already knew that, i appreciate your assertion and convincing argument that you made it for some time. Some have remarked that banks are not lending now. Is that true . Well, a recent survey by the National Federation of independent business, which is smaller businesses, indicated that only four percent of respondents were unable to get all of the loans that they needed. And the fraction of businesses ranking in adequate access to credit as their main problem, stood at two percent. Which is an extremely low number. So just because . Just because people in high places zeta street does not make it so. Others say that us banks cant compete but us banks competing relative to their International Counterparts . Us banks are generally considered quite strong. Relative to their counterparts. They built up capital quickly, partly as a result of our insistence that they do so. Following the financial crisis. And as i mentioned earlier, our very wellcapitalized and they are lending, they are priced two book ratios are substantially higher than the ratios of banks headquartered in other areas and they are gaining market share and they remain quite profitable. So banks are safe and more resilient. Banks are lending, banks are able to compete with International Counterparts. Some have said consumers are worse off since the crisis are they better protected safe from abusive deceptive and fraudulent practices than they were . Well, certainly we are focused very much on protecting consumers and our implementation of strengthening the Financial System. And of course, consumers were very seriously harmed by the financial crisis. But i think weve seen a significant recovery. And the fed is tailoring rules as we have discussed personally and in this form. The fed is tailoring rules for communities and for Community Banks, regional banks, the largest banks based upon factors including size and riskiness, correct . Yes. Seems to be steps taken after the crisis with higher Capital Requirements as you have said, with stress test, Orderly Liquidation Authority with these Consumer Financial Protection Bureau has made our economy stronger, Financial System more stable, banks better capitalized and consumers better protected. I think if the rules are removed as one executive said during the crisis, if the music is playing you have got to get up and dance. If the rules are removed wall street, will almost assuredly be back to the risky and reckless behavior we experienced before you took this job that before the crisis. A couple of other lines of questions if i could madam chair. Mr. Chairman, the executive the secretary of treasury situated Financial Stability Oversight Council to review the rules and other activities of each Member Agency including the fed to determine if they are consistent with a certain core principle of the executive branch. Another fed and other agencies regularly review their work to make sure that rules continue to enhance Financial Stability and promote safety and soundness and protect consumers. To the extent that you provide any information or conclusions to treasury or to fsoc about your agencys rules as part of the process, could you provide those materials to the Banking Committee . So i dont yet have any clarity about what the process will involve but . When you do. We always try to work with our oversight committees to provide materials that are relevant to your oversight of us. We will strive to ax we will count on that, thank you. I have doubts about the executive order that requires federal agencies to eliminate two rules. In many cases to Consumer Protections. For every new rule, and particularly troubled by what that means for financial regulators a little. Like telling the Highway Department to take down two feet of guardrails for every foot it puts out. Is it clear that, a series of questions and i will put them together, including financial regulars including the fed are not covered by this rule . Does it make sense to remove to safety and soundness rules for every new safety and soundness protection . Does make sense to remove to Consumer Protections for every new Consumer Protection . Will it make our system more stable and better protect consumers from bad actors . I believe the independent are not covered exclusively by the rules but let me say this. Considering Regulatory Burden and looking for ways and issuing roles and reviewing outstanding rules constantly looking for ways to mitigate burden i think is an important goal. It is one that we will strive and have strived and will strive to achieve and it is legitimate and important goal. Understanding of course what some people call rules and regulatory overreach, others call Consumer Protection and Environmental Protection and worker protections. Chair yellen last question, i want to follow up on the issue we talked about, diversity in the Federal Reserve system. We see the least diverse president s cabinet. That we have seen in the last three decades. The president s of two of the most diverse Federal Reserve districts in the country, richmond and atlanta have announced their retirement. Each bank has begun its search for the replacement. What is the board of governors doing to ensure a diverse set of candidates is considered for these positions . Search committees that are charged with nominating individuals to serve as president of the reserve banks. And we consistently emphasized that diversity is an extremely important goal. We ensure that the search is inclusive, that robust efforts are made to identify diverse pools and that the boards are focused on this important goal as they go about their searches. And the last question. Significant disparities in unemployment wages persist everywhere. Not of course just in mississippi louisiana maryland South Carolina and places in both of these districts, what is the fed doing to ensure that these challenges are understood by the board of directors in these districts . What can be done by the fed or others to address these issues . Well, i think we are trying to address issues of high minority, unemployment by adopting policies that results in robust labor markets and strong overall job conditions. Over the last year, for example, the Unemployment Rate of africanamericans i believe has come down about a percentage point. Moved substantially more than that for white americans. So a strong labor market does improve the situation of vulnerable minorities although it is, as i mentioned, disturbing that such large disparities continue to exist. Thank you. Senator shelby. Madam chair, good to see. I want to pick up on the theme that chairman crapo got into a moment ago dealing with device chairman of the fed. We have been hoping that we did at one time hope that president obama would nominate someone but he didnt. Now as i understand it, there are going to be three openings at the fed. In april, two other openings that are there. Then your tenure, your appointed until next february, is that correct . Correct. Do you intend in this last year . I do intend to complete my term as chair. What will be the mechanics of how the fed vice chairman would work, with the whole board . You mentioned he would come before the committee to testify. Represent people on the international and deal with regulatory relief and regulatory affairs. Do you have anything else to add to that . Importantly, he would share our Board Committee on supervision and regulation. And that Committee Takes the lead on behalf of the full board and working with the division of supervision and regulation to craft rule makings that are then brought to the full board for a vote. The vice chair woodhead that committee. And would have oversight in that role for our division of supervision and regulation. And would also represent us in supervision, International Supervision groups such as the basel committee. So if we have new athree new opponents to the board of a theyll be three new people to deal with and you have to deal with that as a chairman, is that right . Of course, we have you know a diverse membership. Changes over time and the role of the chair is to work constructively with all the governors to manage the matters that congress has charged us with. When youre getting in the area of Monetary Policy, inflation, deflation and so forth, price stability awhat is the biggest challenge as you are looking at all of the data inside to see where inflation is rearing its head and so forth. Is it wages and salaries . Is that one of the big components . Is it energy, energy is generally a component there. And food is a component but sometimes you dont count that. You know. What is your biggest challenge in measuring, engaging and configuring what inflation is doing or not doing quite. We look at many measures of inflation. Our objective, we recognize that food and energy are very important. Volatile. Consumer spending good share of their budgets on food and energy. We do not want to ignore movements in food and Energy Prices. In measuring inflation. So in my testimony i began by saying that an overall comprehensive measure of price increases that includes food and energy ran at 1. 6 percent last year. There are many different measures. We have focused explicitly in saying we have two Percent Inflation goals and we regard this is the best measure that we have of Consumer Prices which is the personal Consumption Expenditure price index that is well known and we think it is actually more comprehensive measure. Now food and Energy Prices are very volatile. And looking forward over a number of years and trying to estimate where inflation is going, we often look at measures called core measures. Wage development, it is unclear that they have much direct if left on inflation. But generally what we found is that in a situation where labor and product markets are tight, inflation tends to move out. And movements in wage growth gives us a sense of just how tight labor markets are. In the area of regulations, last time we can refer this committee back in june, i asked you if the Federal Reserve plans to tailor the c car process to provide muchneeded relief to smaller banks. And the Federal Reserve issued a rule which tailored the process for institutions that have less than 250 billion in total consolidated assets and less than 75 billion total nonbank assets. What is the significance of what you did there and how will that help . I think that the change will reduce burden substantially. Regulation. Yes very significant number of institutions. After engaging in a fiveyear review of c car and our stress testing methodologies. We decided that the Capital Planning process of those smaller institutions could be adequately reviewed and commented on to the normal supervisory processes and it was appropriate to exempt them from the qualitative portion of that capital review. But we still are subjecting them to our stress test and asking that or requiring that they conduct stress tests themselves. That is an important component of our supervision. As a regulator you will continue to monitor that and if it needs to be tailored you will do whatever it takes . Yes we believe very strongly in tailoring to make sure our regulations fit the risk profiles and particular institutions. Especially for smaller institutions. We are very well aware of the burdens that they face and are looking for every way we can find to medicate those burdens. Thank you. Senator reid. Thank you mr. Chairman and thank you madam chair for your leadership. Congress has called on using a formula at setting Interest Rates. And acan you explain to us how this affects particularly working americans. How do we, would it be good or bad and had to be explained the ramifications to the constituents . Well, right now to tailor the rule with call for a shortterm Interest Rate somewhere between 3 and a half and four percent. Which is obviously a much higher value of the federal funds rate than the f moc has deemed appropriate given the need to the economy. I believe we would have a much weaker economy if in the last number of years we follow the dictates of that rule. Unemployment would be substantially higher. The labor market would be weaker and instead of inflation which is running below two percent, and we want to see move up towards two percent objective. I believe inflation would likely be lower than it is now. So we would see fewer jobs, higher mortgage Interest Rates, weaker economy, essentially automatically for following a formula. Thats right. A few weeks it will go i gave a speech at stanford where tried to explain why i thought it was appropriate to adjust the recommendations to take into account for example, the fact that not only the fomc but most outside forecasters believe that the socalled neutral rate of interest has been unusually low in the aftermath of the crisis. And the taylor rule would assume that it is at two percent current estimates would put that estimate closer to zero. There is another aspect i have been working on for years. Particularly incorporated some of the language in the dodd frank bill. It is ensuring that the clearing platforms are used but there is a risk because systemic failure would be significant. Can you give us an update on what you are doing to ensure that these platforms are adequately protected from failure in consumers ultimately . We strongly believe that wellregulated and managed Financial Markets and infrastructures that would include central counterparties. Play a financial, a positive Financial Stability role. They can help us stem the propagation of disturbances and they reduce the volume of transactions among key Financial Institutions. And we think they play a Financial Stability role. But they can also be sources of risk in the Financial System if they are not themselves. Wellmanaged, dodd frank created a structure that the Federal Reserve, have oversight responsibilities to make sure that these key infrastructures of our Financial System are managing their own risks successfully and we are cooperating with the other regulators in our examinations to make sure that appropriate Risk Management standards are in place. One final question. Cybersecurity is the issue on everyones mind. And you recently have ait would require board of directors to have adequate expertise. I have been involved in legislation. [inaudible] is not limited, it is ubiquitous. Can you just briefly, very briefly give us your sense of how important it is to get the Cyber Security expertise . I think cybersecurity is a major risk that Financial Firms face. I think they are very well aware of the risk and my sense is that boards of directors generally appreciate the seriousness of Cyber Threats but sometimes they do not have a comprehensive or enterprise view of the institutions capabilities and this area. It is very important for boards to have appropriate expertise. Thank you very much madam chair. Thank you. Thank you mr. Chairman. And madam chairman. Thank you for your service and being here today. I want to thank mr. Tarullo, i dont always agree with every decision he made that we had a vigorous debate and he is a committed Public Servant and i want to thank him with his a for his service along with mr. Alvarez. We were in the foxhole many times back in 08. And again i thank you for your service. Madam chairman, i was interviewed earlier today. People have always sort of hinge there futures on what you have to say and i guess it is somewhat, thankful now that it looks like you have a little bit of a partner. At one time there probably were not going to be changes here, not the majority just the environment we live in. Now we look at potential tax reform, potential changes to the healthcare policy, we look at things relative to infrastructure and all of that. As you see those possibilities occurring, is that affecting how you look at Monetary Policy decisions moving down the road . A stagnant situation just again because of the environment, a very changing possibility, policy environment here. Is that something that is affecting your deliberations . So, we recognize that there may be significant Economic Policy changes. And that those changes could affect the outlook we are very aware of that. And we do not yet have enough clarity on what changes will be put in place to really clearly factor those policy changes into the Economic Outlook. So, we do not want to base the current policy on speculation about what may come down the line. We will wait to gain greater clarity on policy changes and . Policy changes, once you develop greater clarity might think is coming down the pipe could invent that Monetary Policy decisions. It is one of many factors that could affect Monetary Policy decisions. So i think the answer is yes, they could. Exactly how depends on the timing. And growth. That would generate, growth would generate additional inflation and pressures. So paying attention to that in that happening, when it happens it can happen fairly quickly. Can it not . We will certainly Pay Attention to it. I think some policies may have supplyside impact and raise productivity growth and. She mentioned about sustainable trajectory. Youre hoping the ministration will develop a policy that calls sustainable trajectory and fiscal issues. Is there anything that youre saying coming down the pipe or being debated that has caused you to raise that issue . I agree with you by the way but is there something youre looking at that cause you to put a note in there that this is a standard line that would be in a report like this quaint. I think we have known for many many years that the us fiscal trajectory is not sustainable. The recent forecasts show deficits increasing over the next 10 year. Under the baseline and the ratio of . So nothing, it is just standard. Nothing youre looking at coming out of the administration or congress causing you to raise the alarm. It is more of a standard instrument many of us have that we, we are really conducting ourselves in a totally inappropriate way as it relates to deficit. Nothing is being discussed policy wise right now wait. Well i mean, some of the policies that are being discussed might well raise deficits and in that context, they may also have impact on Economic Growth. In the economys Growth Potential so, it is not a simple matter to evaluate. But i do think it is worth pointing out that fiscal sustainability has been a longstanding problem. And that the us fiscal course as our population ages, and healthcare costs increase, is already not sustainable. Very 100 percent. You give a very full answer to the Balance Sheet question and i understand how the fed funds rate is much more targetable and much more accurate. I guess i have not understood is just allowing the maturity, in other words allowing the Securities Just to mature and rolling off, it is hard to understand how that would create vagaries relative to Monetary Policy that would be hard to predict. Can you share why . Yes, im sorry i did not mean to say that would create a problem. We want to allow it that process to occur in a gradual and orderly way. Wouldnt just allowing them to mature a. The resulted in some tightening of financial conditions. So, before we turn the process on and started, we want to make sure we have adequate ability through our normal Interest Rate, overnight Interest Rate moves to meet the needs of the economy, particularly if it were to weaken some, which would it would be a long practice if its running off. We want to make sure that we have enough scope in the economy is Strong Enough that we are not creating a problem for the economy. I just want to look at the statement, i note you are coming in and interviewing for the poster and being affirmed you mentioned to me that when when times call for it you would allow Interest Rates to rise, you are known but some people criticize the rate at which the rices have taken place. Probably me included, but i want to thank you for allowing that to happen, hoping it will continue as we return to marlin normal circumstances. Hopefully the balance she will rolloff. And if we allow deficit spending to continue. To make and while we let that process take place that is something that will show the economy is doing well and the increases have been a reflection of the strength we seen in the economy. Thank you. Chairman thank you for your leadership at the Federal Reserve, although not perfect it we have made tremendous strive since the financial crisis and ensuing great wiping out 13,000,000,000,000 in Welfare Health and cost 9 million americans their jobs. I think it has shown us how important and positive the Consumer Protection has been to economy to strong markets into American Families and businesses. I want to ask you specifically as you know, healthcare accounts for nearly 20 of u. S. Gdp including not only the delivery of lifesaving and life enhancing services but feeling innovations in patient care, diagnostics and research and development and cures of diseases. In response to the fy 17 budget resolution passed last month, the former director of them office of management and budget sent a letter to congress same the resolution the resolution would add 9. 5 trillion to the deficit, recent studies have shown it would have a detrimental impact on the labor market including a reduction in court job court job growth by 2,600,000 jobs in 2019. My home state is estimated to be at the top of the list when it the spike of the uninsured. It stripping 30,000,000 people of their Health Insurance would have a Significant Impact on the productivity of the workforce, are you are you concerned of how this major increase in debt coupled with downturn in the labor market and decreased productivity would have on the larger economy . We would have to look at what the impact is a shifts in healthcare and the Economic Outlook. Healthcare as you mentioned does account for significant share of spending. And a loss of access to Health Insurance could have a Significant Impact on spending of households for other goods and services them beyond healthcare itself have impacts on the economy. In addition to access to healthcare had some individuals are likely increase their mobility and diminish the job lock where people are afraid to leave jobs because of losing Health Insurance. That could have implications of the labor market as well that we would try to evaluate. So we should tread lightly before we make major changes that create disruptions. In the years leading up to the financial crisis many lenders and Financial Institutions exploited the uncoordinated and misled consumers into subprime mortgages even if they qualify for prime rates. As part of the landmark reform we were able to in power a cop on the beach to protect hardworking americans from abusive practices. As an independent agency whose job is to force Consumer Protection laws, they have returned almost 12,000,000,000 dollars in relief to more than 29,000,000 consumers. More importantly, the bureau has helped level the playing bureau has helped level the Playing Field for hardworking American Families ensure consumers are protected when they purchase a home, take a student loan to these prepaid cards. Do you believe you believe that if an independent consumer focused agencies had existed to please Mortgage Markets prior to the mortgage crisis to workingclass families wouldve been avoided . In addition to protecting families and also enhanced financial instability . I do agree that consumer abuses in the mortgage and secure play key role in the crisis. The Federal Reserve at that time had responsibility for enforcement of these and in retrospect i wish the state had acted more aggressively and earlier to address those abuses, we have certainly learned from the financial crisis that it is critical to monitor this area and the potential to set the practices and Consumer Lending to create financial crisis or Financial Stability issues. Son entity the Consumer Bureau which in essence has done that since the Great Recession has played a Critical Role in ensuring that, certainly i agree had the feds been more active with our others instead of being asleep at the switch wouldve been absence of that they are actually playing a significant role in the kitchen that they have a level Playing Field. They have been focusing on these issues. Let me close by saying that in the history of the Federal Reserve, it is had 134 different president s of regional banks. Not and there was considerable discussion about a fiscal stimulus in the form of an infrastructure bill and i dont think anyone disputes that the president campaigned on a lighter regulation, campaigned on this. It seems that most of the world responded with the view that that increases the likelihood that we would have stronger Economic Growth. Equity markets responded powerfully and immediately. Bond markets sold off, which is consistent with the view of stronger Economic Growth. And yet at the december meeting, the fomc members had no change forll about the prospect Economic Growth. In fact, the upper bound, the highest estimate actually decreased. Like looks on the surface the fomc members either believed its unlikely that any of those orngs will actually happen they think that those things are not necessarily progrowth. Obviously, the rest of the world is of a different opinion. Does the fed have the view that they prospect for growth is not at all changed by the prospect of tax reform and Regulatory Reform . Mrs. Yellen we dont have clarity on lexus is about likelihood. Most of my colleagues decided they would not speculate on what policy changes would be put into effect and what the consequences would be. If youve my colleagues mentioned, in writing down those forecasts, they assumed that there would be a mild fiscal stimulus. But most of my colleagues have taken the view that we want greater clarity about the size, timing and composition and changes to fiscal policy before trying to incorporate those into our forecast. Senator timmy ok. That is what i expected. Havet you the concerns i about see car. Compliance is anonymously expensive for the banks who are subject to that. There is a gao report that suggests that the model employed by the fed in testing procedures are not transparent. I think that is generally acknowledged. The gao goes on to suggest that the fed does not engage in management ofk the models it uses. The gao report also concludes that the fed has not assessed whether it is inadvertently process local, despite the intent that it be countercyclical. Im concerned that it might byrease Systematic Risk correlating the risks of bank behavior and allocation of capital. And the implicit risk weighting, which we have to and for, because they are not explicit. For they different from banks. As you know, it is not required by statute. Sicar is not. Mentioned there is an increase in capitalization by banks post crisis, which is certainly the case. Othere fed already has ways of boosting Capital Requirements, like the countercyclical capital buffer and the surcharge. Caren all of that, isnt c somewhat duplicative, costly and not mandated by statute, would you consider bringing it to an end in the foreseeable future . Detailed ellen it is in a situation and forwardlooking of the Balance Sheet. I think it is a cornerstone of our efforts to improve supervision, especially if they largest banking institutions, whose stability is really critical to overall u. S. Financial stability. The gao, in their assessment found that the stress tests have been useful and played a useful role. End did not recommend to them. They made specific recommendations that we agree with and are working on. And we will continue to review. Ur practices torecently changed ccar exempt most of the institutions at 250 billion in the qualitative ccar review. I think extensive stress testing has greatly strengthened our process. In the absence endcar does not necessarily stress testing. I think it is duplicative. One quick closing comment, mr. Chairman. A de all know, we have had chairman wholike never went through the nomination and yet exercise of the powers of deposition. Its my hope that the president will soon be able to nominate individuals to complete the board of governors, including a vice chair for supervision who will go through the process, who will be vetted and confirmed by the committee. In the hope at such time, the fed will refrain from issuing new regulations, which i think billy out to benefit from the import of these new people. Senator shelby we havent talked about this, madam chair. The current account, our trade in balance, what would you share with us and share with the longtermeople the danger of an imbalance of trade that we have been running for years and years as opposed to shortterm and so forth, and where are we you are an nomics process for professor. We are told it is not a good thing in the long run. Chair yellen we have a current account deficit senator shelby tell the people what that is. Most of the people here know. You have a nationwide audience here this morning. Chair yellen its the difference between the amount that we spend on goods and services that we import from abroad. Senator shelby import versus export, isnt it . Chair yellen correct, of goods and services. We have a current account deficit. It has increased in size. Ultimately, it leads to a buildup of our indebtedness to foreigners. So it can be a longterm concern if it is not on a sustainable path. Senator shelby what is it now roughly . You can furnish the exact figure for the record. Believe, in i 2016, it amounted to about 2. 6 of gdp. Senator shelby and in dollars, what would that be roughly . Chair yellen close to 500 billion, a little bit below that. Senator shelby thats in one year, right . Chair yellen correct. Senator shelby what is our total indebtedness . Chair yellen i dont have that. Senator shelby we finish that for the record . Chair yellen yes. I would be happy to furnish you with that figure. Senator shelby would you call that a troubling thing . Longterm. Chair yellen it depends on what the longterm trend is. It also depends on what we earn on our Foreign Investments versus what we pay. Historically, we have earned more on our assets that we hold tooad than weve paid foreigners who hold our assets. But the trend is important. Senator shelby when is the last small, had a surplus, im sure, in our current account . Roughly. Chair yellen im not sure. Senator shelby will you furnish the for the record . Chair yellen certainly. Senator shelby as a been a number of years . Chair yellen it has been. Chairman,s madam thanks for being here today. You have a difficult position and a very important position. To working with you and promoting sound Economic Policy in our country. Im sure you are familiar with the ad sector of our company in our country is suffering. Soon, there will be 2 million farms in america for the First Time Since the louisiana purchase. Have beenprices sinking. The Ad Department estimated that those who are still able to farm will see their incomes drop by 10 in 2017 and the strength of the dollars making it harder for American Farmers to compete abroad. Our nations farmers are being left behind. Recognizing that they need access to capital and to literally being able to borrow money at a time when we have made it more difficult to borrow money, a lot of these folks are saying an end, because they work seasonal,stry that is some years they make in some years they dont. Could you suggest, number one, what is in store in economic headwinds for our economy . And what policymakers should be focusing on to make it through the next couple of years. Colorado right now has an emergency hotline for suicides in the ranching community. This is not something that will go away quickly. Its gathering momentum. Could you talk to us in terms of what you see things that we can do to perhaps take some of the burden off of these Farming Families . Your yellen i cant give recommendations for what congress should do to address the ag issues. The fact thatg on there is pressure on Commodity Prices, particularly on food prices after a number of years in which conditions were really very strong and land prices were pushed up. In some cases, we are seeing increases in the limousine rates on loans increases in delinquency rates on loans. Certainly we have grossed in the Global Economy coupled by dollars that began to appreciate substantially around mid 2014. It has pressured farmers that is putting pressure on agriculture as you indicated. More specifically from a moose from yeartoyear. You could could have a joke, you could have excessive moisture. Not every single year net every year going to be successful in your in dead bird. In regard to Financial Institutions and your ability to carry debt, shouldnt there be some understanding within the policy of the federal level the ability to survive not just a 12 month cycle but 36 month cycle. It would seem that would be appropriate policy to at least continue to explore. Would you see value in that . Honestly this is up to congress to consider and look into. Its not something the Federal Reserve has the ability to mandate. Financial institutions which are the source of that ability to borrow money and during the year in which you have a bad year for crops or Commodity Prices may be down for a while. It seems rather illogical to simply base the ability to borrow money from a Financial Institution on a 12 month cycle. Should an operating loan be extended and so forth. What im asking is, what it makes some some sense it to allow this segment of the economy a different cycle to be considered without having their loans be a nonperforming assets and the auditing of the Financial Institutions that really do want to continue on in Credit Credit for longer than a one year time. Its something we can look at. I think Financial Institutions are trying to engage in safe and sound lending. Want to be careful to protect themselves from losses. Thank you madam chair. Thank you senator. Thank you mr. Chair. Thank you for appearing force. I like to discuss with you lack of wage growth. We track this as a matter of economic inflation. It has been largely stagnant although we have seen some positive trends in the last six months. Want to look back beyond the last few years, starting in the 1970s and i think we have a graphic that will does display this. Wages for workers with College Degree has increased wages for those without College Degree has declined. For those without a College Degree its declined raise the demand for skilled workers and raised the rewards revealed to use technology, coupled with globalization, its and made it easier to offshore or outsource jobs that involve teamwork. It can be done elsewhere or is subject to technological change. Fore seen different trends a faster wage growth for higher skilled individuals and much slower wage growth for those who are less skilled. The gap between the earnings of collegeeducated and high school educated or less individuals continues to grow. And this has been a major source of the trends you are describing in your chart. Some improvement in recent months. Do you care to venture an assessment of why we are seeing that . Chair yellen the labor market is pretty tight and wage growth has picked up somewhat. Up someone, for example average earnings were up to and have in 12 months ending in january. That would compare with around 2 from 2011 until 2015. And other measures, theres not a dramatic increase in wage growth in recent years. Theres some evidence of a pickup but not traumatic. In part i think youre seeing a reflection of healthy labor Market Conditions. The fact that it remains solo is also related to productivity growth in the u. S. Economy. And whats been contributing to a tighter labor market . Well we are trying to do our job and put in place conditions to lower the Unemployment Rate, improve Market Conditions, youve that come down, the pace of job growth is strong and its probably sustainable in the longer run. The labor market is continued in a general sense to improve although clearly the gains are not evenly distributed among segments of the population. If the labor markets would continue but also through federal reduction in unskilled and low skilled immigrant workers would we see continued wage growth with those with a High School Degree or less . Not certain, i expect the labor market to continue further. We have to be careful not to allow conditions to become so tight that we push inflation above ours 2 objective that will be a tentative to that but i expect a stronger. Is that more when its at a relatively elevated level . Workforce Participation Rate has been down. Historically spent. Its relatively high but its going to be trending down overtime. Immigration has been an important source of Labor Force Growth. That would be if immigration were to diminish. Think you. Senator warrants thank you mr. Chairman. Its good to see you again. For the 2008 financial crisis cost millions of people their jobs, their homes, their savings. In Response Congress passed the bipartisan dodd frank act which aim to prevent big banks from blowing up economy. President trump has called dodd frank a quote, disaster. He has vowed to dismantle it. He started two weeks ago when he issued a second report on financial regulation. Hes put two men who have spent a combined 42 years at Goldman Sachs in charge of rewriting the rules to help big banks. Im aware of the smallbusiness survey that you cited earlier since dodd frank was enacted in 2010. Chair yellen cn island at this point it has grown and exceed its 2008 peak on the basis the same is true of either commercially held thanks since 2010 theyve grown over 75 and in the most recent period, the loans grew 7 and they are usually sort of Small Business related and grew almost 4 . So, we have seen healthy growth in lending in the economy. I believe over half of the Small Businesses indicated they didnt need to blend credit for a variety of reasons. They didnt need to borrow including slow growth in the economy. The banks have been forced to hold capital and build capital instead of Lending Capital to the clients. Candidates do whatever they want including lending . Its not a requirement they take money and stick it in a safe where it cant be used. The capital is used to make loans. The chief economic adviser is wrong about that basic fact. Lets look at another statement. He said we have the best of the highly capitalized banks and we should use that to our advantage on the flip side, we have the most highly regulated overburdened banks in the world and that sounds like a contradiction. The banks have a competitive disadvantage because the world knows we carefully regulate the banks over the banks have a competitive disadvantage because of those requirements. Simply put the new rules in place. I believe that banks are more profitable and they have a higher market value is relative they have the market share from european banks and they will capitalize the banks until regarded as safe, sound and strong in the competitive disadvantage in the banks competing for business. The banks have thrived both big banks and Community Banks are making literally record profit. Mr. Chairman and i would like to submit the most recent Quarterly Report from the fdic to show that they of all sizes are more profitable than ever as well as the wall street journal article from november entitled the banks report record profits in the third quarter. As important as the rules in place another financial crisis we need to start with facts, not those alternative facts that the administration has become known for. The facts show that donald trump is wrong and as the chief economic adviser is wrong about a major reason that theyve given, commercial and Consumer Lending is robust. The banks are blowing away the global competitors. Why go after banking regulatio regulations . They want to scrap the rules so they can go back to the good old days. We did this regulation and it resulted in the most natural crisis since the great depression. We cannot afford to go down this road again. Thank you mr. Chairman. Senator scott. Thank you for being here this morning. The town hall meeting with the educators and a question about dodd frank for repealing or changing it apart if your answer wawas Community Banks feel the burden of regulation is very great. Looking at the smaller institutions to mitigate the burden there could be modifications that could succeed in reducing the Regulatory Burden for the smaller institutions. Its important to look everywhere we can to mitigate the Regulatory Burden. As we suggested previously and i would reiterate dodd frank is the Congress Might want to consider exempting the banks from the rule and some of the incentive compensation provisions that apply to them quite a bit we see being able to do this ourselves and weve taken steps to extend the cycle from the wellmanaged capitalized banks and the duration of the reviews for the Community Bankers when the teams and examiners come in and stay in the bank for a long time it can be disruptive. We are doing much more work on site. We are trying to reduce documentation request that we think are highly risk and that we put out to the largest banking organizations and not to the Community Banks so we try to make it clear this doesnt even apply to you. We tried to make it clear what does apply and what portions apply to the Community Banks. We try to reduce the frequency of the consumer compliance exams from the banks that are managed and low risk. Those are some of the things we are doing and we are attempting a review wit with the other bang regulators to identify a. We have put out provisions that reduce the amount of information that we require on the reports. If we can see that in writing [inaudible] which of course is a positive sign and there is a correlation between the Educational Achievement in ohio and detroit michigan black unemployment without a High School Diploma is at least twice as high as any other demographic with the same level of education. What do you think drives the disparity and what is the effect of the policy on that specific demographic . African americans generally have Unemployment Rates in the Market Experience that is more cyclical and they tend to be badly affected. They are basically regaining the ground that they lost so we can see stronger gains. For example just over the last year whereas the white unemployment great remained stable, the africanamerican rate dropped from 8. 87. 7. It is a much higher rate and the same is true of all education levels. So the employment rates are much higher than those in Higher Education levels. For example, those at two and a half in january with 7. 7 , and again as they tend to have worse experience. One of my concerns, 15. 8 for africanamericans without versus 7. 8 were all demographics versus the Unemployment Rate of 7. 4 versus those folks that have the level of education. My concern long term is the labor force Participation Rate down 8 or so so the real unemployment when you add up the numbers together is 9. 2, 9. 3. Our entire Financial System is still wired around the defined benefits platform so your lover labor force Participation Rate means its incredibly difficult to meet the obligations of the Social Security medicare. The longterm if it is from the People Perspective for africanamericans and hispanics. Its appropriate for congress to focus on policies who might mitigate the trends that we have discussed. The education and Training Workforce Development are part of that but other things might be as well. Thank you. Its great to see you again. Because the isolation of the geography and the additional education challenges i always want to point out that we cant leave our native american citizens behind. I also want to associate their remarks on the banks and spend all of my time talking about it because it has eaten up pretty quickly. I want to focus on automation and what it will mean for employment. The chief economist for the bank of england referenced a startling statistic that 47 of all u. S. Jobs are likely to be replaced by technologies over the next ten to 15 years, and that would be more than 80 million altogether. Obviously, we see this from automation and trust and retail moving to online retail. So im curious what steps theyve taken to study the issue of automation and the impact on the economy and the u. S. Economy moving forward. Obviously a lot of concern on how we move forward. The technological change more generally has had a very important fact on the economy over many decades. The [inaudible] do you think we are paying attention to this issue obviously during the campaign able to talk about trade and the displacement and a lot less talk about automation which i think has been a larger driver of displacement so how do we get the public attention and the educators attention to this and how do we change the labor market skill set so that eventually we end up with unemployment in the country . Automation and technological change more broadly has been the source of growth in incomes for america generally this created huge disadvantages for those with less education and often those in manufacturing and other areas that are seen outsourced or affected by both automation and mobilization. I think we need to think about ways to address the workers. I think we need to be having a major discussion about what the job in the future looks like and while the job market in the future looks like. One more question this is about the lack of prosecution after 2008 and what we can do about it to hold people more accountable to. Its requiring them to adopt the Performance Fund as a portion of Senior Management compensation and he finds the penalties incurred by the Performance Fund that would incentivize to design and implement the changes to improve the firms culture. What is your view on the current incentive based on wall street using the firms to rely on the equitybased compensation and what are the risks with this model . That was an important factor in the financial crisis and we workeneedfor an hour and supervo put in place compensation schemes that do not seem to be inappropriate risktaking they may include longer period of deferral or forfeiture provisions if an individual that takes the risks on behalf of the firms but i think its important to strengthen the compensation practices. Enforcement is a strong deterrent especially if someone is addicted but i do believe that enforcement is a strong deterrent in whitecollar crime and i think that there is too often a sense that if i didnt know about it i am not culpable. So i think to respond to peoples concerns about wall street and whats happening, we need to have a better system of not only Civil Enforcement of criminal enforcement, so be looking at this and this congress and be very interested in feedback from other regulatory agencies. Without the ability to prosecu prosecute. One relates back to a discussi discussion. I dont agree with that and people are valid in assuming that based on the dat the data y are using there is a fair amount of data that says increased Capital Requirements you have a negative effec affect on the lon underwriting. What we see among the household lending and smallbusiness loa loans. You referenced a survey that said all but 4 of the people contacted for getting the loans they wanted. It shows a substantial decrease in the amount of bones and im not going to talk about the household loans or mortgages. They should have been underwritten before the crisis. But it is a different consideration. As opposed to 2011 and beyond. It is about 7 for small banks and around 60 of the crisis for business loans. Is it possible that reason by 4 of the people would say they are getting the loans they want because fewer people are asking and creating businesses . I think that is true and we have a slowly growing economy and many Small Businesses save sales groups dont justify the expansion to make it desirable that are not looking to bar a. They leave the meeting thinking that Small Businesses think that they should move forward and create risks to make us think that this is a phenomenon thats all about Small Businesses that everybody is getting the loans i think i there is a pentup demad out there so please, finish your thought. Their ability to finance in your professional opinion, do you think that the universe of the potential Small Businesses could be created or businesses that exist and want to expand. The personal relationships that they had in the past where they could get a load underrated and more pivotal and now they feel like they have to go at it since you have the same amount of access and can secure the loan. Its not to be up in bureaucratic i dont ask another question and i apologize to senator kennedy tha but i do want to toh on it. The second subject we are talking out of both sides of our mouth in washington and im not criticizing you but when i take a look at the capital, of course it could be led to anybody. It is lending to the supposition by a couple of the members of the committee and its absolutely defiant. Its the banks and North Carolina that leads me to my last question. Before the crisis i think that there were very important reforms that have to be implemented with dodd frank. It expands into a framework that was enabled. And in particular in North Carolina we had a driving Financial Service ecosystem we had the regional banks in North Carolina and a couple of relatively big things now weve seen a substantial decline in North Carolina and that is a National Trend you know the numbers as well as i do and since they have been implement implemented, there were different banks chartered on the reservation. We have completely destroyed the foundations of the banking ecosystem in my opinion because the Inflection Point was after dodd frank was implemented and all the regulatory agencies started extending their reach. Do you believe that is an area that we need to be concerned in one of the questions the Community Banks probably do need but can you talk about that and im sorry for going over my time. I agree with some of the trends you described. There is to confine cost and i agree that its important to look for ways to relieve the burden and i committed the Federal Reserve to doing everything we can to mitigate the burdens on these institutions. There were so many communities supporting thank you mr. Chairman and also for enduring quite a long hearing in the questions before we get to the questions i want to echo what dodd frank has done for the economies and stability of the Financial System. It has impact strengthened our economy and undermining dodd frank isnt the correct course of action. I want to ask about Climate Change. Its affecting the economy and a number of ways in the droughts that reduced agricultural coastal flooding, increased severity of storms and many of the industries depend in 2016, there were 15 different client events across the economy over 200 billion must we think this is an aberration its important to remember the number and the cost of the events has doubled over the last decade and has increased eightfold over the last 30 years so they are taking a toll on the economy and they are expected to become more and more intense going forward. My question as to what extent do they take into account the Climate Change and assessing the Economic Outlook and future economic risks. In the Monetary Policymaking the focus is on trying to achieve a strong labor market and the price stability and the forecasts usually go out a few years. Sometimes a hurricane or a drought can have some of which may be related to climate chan change. Iit may result in the period of weakness or gdp but there is not very much that we can do when incorporating that. There is a unknowable. There may be a higher frequency of Severe Weather events and they may be more severe. Im talking about the last four or five years to measure this trajectory so there isnt a lot of debate and they are all datadriven so in the private sector of the Financial Markets especially in Insurance Companies so its not a ten, 20, 30 year horizon so it is 2018. I would offer to you i think that analysis and that desire to stay on that which is knowable is a good instinct, but we are now at the point we know what is happening and its having a Material Impact on the economy now. Would you care to comment . The various international are looking into the economical aspects of Climate Change that could affect Financial Stability and the exposure of the financial organizations. I think thats appropriate. Were we recognize that the climatclimatechange could have n the system. The general approaches the financial crisis to try to build resilience among the banking and financial organizations so they are all int in the position to l with these event. I understand the difficulty of addressing something that i would like for you to consider the following proposition which is just because we dont know the extent of the risk doesnt mean that we should look at it at zero. It is no longer five, ten, 15 years. You may need a couple different quarters to assimilate that in the decisionmaking process. At some point, the fed will have to recognize that Climate Change is real and its not only a political issue but an economic one. Thank you for your indulgence. Thanks for holding this hearing and for being here. Appreciate your time following through on some of these questions. I will just ask the question did you make a comment on whether or not the Interest Rate will rise in march . In the upcoming meetings, he tried to evaluate and if we find that they are, it probably will be appropriate to raise Interest Rates further. We think a gradual path of the increase is likely to be appropriate if the economy continues on its common course. Is that the same answer for the increase in june . At the two most important questions to come out of the hearing. So, my colleagues and i cannot be outlook is uncertain and may change but defend our expectations at the time, most of us concluded that a few Interest Rate increases would be appropriate this year and that means the eight meetings a year and in some if things remain on course or on target for the federal funding great, precisely when we would take action whether it is march, may or june when i think people are focused on achieving it would be a. That would argue that the markets are anticipating great increases. Would you agree with that . The rate increases will be appropriate. We have an average price around 288,000 are shifting over to the Housing Market for a minute, 288,000 can see we are a long way away from the recovery so as the Housing Market continued to struggle, how does this impact the hikes . Its been recovering at a slow pace. We recognize that higher Interest Rates can have a restraining impact on the recovery into the house prices have been moving up so it is one of the fact others but remember the employment growth is strong and well into the support for housing as well as the fact is potentiathatthis potential for e in the Home Ownership so i expect the housing to continue recovering but overall we need to take account of all the different forces that affect job growth and inflation in the economy. And everything put together we think some removal of accommodation is likely to be appropriate. How likely is a fiscal stimulus to the next Interest Rate hike . We dont know what fiscal plans will they decide on. Its not on the current Interest Rates on speculation about that. The economy has been making solid progress on the object above the Unemployment Rate is closer to the levels we regarded in the long run and they did move top. Its th the trends that are drig policy decisions and not the speculation about the fiscal policy. Also, remember that as many fact is that affect the economy. It may matter but its only one of the things we need to consider. Whats better, the tax hike or spending . I think this is in your domain to prioritize. Theres a Corporate Income tax and this is a decision Congress Needs to me. Do you support the border tax or not . I will not tell you that either. Senator. Its nice to meet you. Find the new senator from nevada. Let me just ask you because i am new to the committee and keeping on what fiscal policy. They discussed the spending and significantly slow the pace would you agree with that . The policy provided in the period of the recovery overall, both federal and state were substantially lower than would be typical historically in the expansionary period. In the downturn there was a lot of support it as the recovery proceeded until the last several years to fiscal policy overhaul was politically tied in comparison with the past historical periods. Theres a lot of benefits to immigration in america. In the range of the cultures that we have in the competitiveness into the Global Leadership moreover its important for our Economic Growth and we have proof that it contributes to the gdp and the economy. There is a report from the academies of medicine revealed Economic Growth and entrepreneurship and they came with little to no effect on the overall wages or the employment of nativeborn workers and also found children go on to beat the most positive fiscal contributors in the population. Despite this, we are hearing information coming from the white house and the executive order dramatically expanding the enforcement in place is estimated for the undocumented immigrants at risk of deportation including families and residents. The order has the effect of making every undocumented immigrants in the usa priority for the removal and direct the department to hire what is essentially a deportation. In your view as i noted what impact would that have on the growth and competitiveness as we continue down the path of the massively expanding immigration and along with that what would be the consequences for the prices of goods and services . I would say Labor Force Growth has been slowing in the United States for the fact the economy has been growing at a slow pace and is an important source of Labor Force Growth was slowing the immigration would slow the rate of the economy. We are hearing a lot about the 20 tax on imports from mexico to pay for the border wall. The economies are closely tied for the United States and of the economy is in synchronous with the mexican economy. Why is the economy growing so slowly . The potential to grow is largely determined by the growth of the labor force and productivity growth output into the Labor Force Growth is relatively slow and productivity growth in recent years has been depressingly slow. But i guess over the last six years grown at an average of only one half a percent each year. The almost at full employment r d tax the economy for a number of years has been growing faster than the resource growth and productivity growth would have allowed into the labor market has been tightening and coming down and its been diminishing. That should help the economy. Its enabled us to grow at roughly 2 each year and the fact that its diminished at 2 . Do you consider that acceptable for the economy . I certainly wish that it were faster. But we have seen as i said the productivity growth. Why is that . Nobody is certain. Thertheres a number of elemente have seen played a role and some people think the pace of change it could be people do not have the money to invest in the capital. The Capital Investment has also been quite slow. Would blame if any does the system have to play in the fact that we are growing so slowly . Is assigned to price stability as 2 inflation and maximum employment and put in place a Monetary Policy over many years to get the economy operating at its potential so there was a lot of slack in the labor market and the economy was falling short of operating at the level and we tried to remedy that and weve now come close to us of thmissile the labor suppld productivity i dont mean to interrupt but i dont have much time. Can we agree 1. 9 isnt acceptable for most americans . I wasnt here in 08. What did the Community Banks do wrong in 2008 . 50 billion or less what did they do wrong . They were not the reason for the financial crisis. It was the larger institutions that took risks that developed outside of the Banking System that resulted in the financial crisis. Its not the case that they apply to the same banks and institutions and the most severe requirement apply to the largest most systemic institutions. The other banking regulators according to the risk profiles. Youre not saying dodd frank has regulations on the Community Banks. It has imposed some of the larger parts did not apply. The water isnt coffee to keeboth feetdeep its only 12 f. We have done our best to taylor the risk profiles of the banks. Its important for the firms to have a Strong Capital standard including the Community Banks theyve been imposed on the larger banking organizations with more complex activities. Does any individual person responsible for oa that went to jail . Those that are accountable should have had appropriate punishments to the justice department. The regulators cant impose the criminals up to the justice department. My understanding has been a they couldnt get criminal convictions. They are angry because there are too many undeserving and they feel too many undeserved at the top. Do you think it is true . I think we have tried to put in place following dodd frank. They are responsible for the Risk Management and sound compensation systems especially the largest and most systemic Institutions Holding the capital. Madam chair, thank you for your service. We appreciate it. When we look at some of the things that have caused damage over the years you would hear about a day or two after they occurred those layoffs brought a troubling pattern of executives prioritizing the media profits over the Long Term Health and companies. It may be due to the relentless pressure of spending trillions in the dividends occurred at the expense of the workers and communities and longterm economic value creation. They far outperform their economic and financial success. Im wondering if you agree. Focus on the longterm investments that have significant payoff for compani companies. Do you agree they should be stewards of the whole Company Including the workers and its longterm health did you think that makes sense . Most Companies Understand this. At the same time that those workers were let go. Thats why the American People are so angry and think the system is so rigged we are going to fire between the carrier and huntington have already agreed to a structure. Something that makes people mad. And some steps if you have any idea if that the responsibilities. I was thinking with your experience and your abilities and talent. When a small town is devastated by job loss as it has happened to so many across this country. On the gas stations, restaurants, Grocery Stores helw does a small town succeed when it feels like so many of these have been against them for so long . Theyve seen the devastation that has occurred. It is extremely difficult for them to cope with in many towns in rural areas that were very badly affected by these developments. Here is what also happens. Kids are dreaming about going to college into the best schools. Have you seen this intergenerational impact and its impact on success, an and is the anything that the fed can do in terms of policies to try to make it so the next generation of leaders for the shot . Well, i mean, theres tools to deal with the issues that you are describing is limited, and we generally feel that the best contribution that we can make is to use our tools to create Overall Economic decisions in the labor market that is generating enough jobs and that there are opportunities. But that doesnt always mean that the jobs are exactly what the people want in the places that they are and congress and the administration need to think about ways in which they can foster greater inclusion and mobility and provide people with the tools that if your father lost his job in a good manufacturing jobs the child can get a strong education and can get a job may be in this sector of the economy that is growing more strongly that has strong Job Opportunities and there certainly are things we can do to foster greater equality across generations. Policies that promote investment in people or human capital, physical physical capital, both Public Infrastructure and private investment are also important to him promoting product tivoli. And then policies that foster innovation, the the formation of new firms, research and development, the business climate, those things can foster productivity growth. In addition to those and i support those investments as you indicated. A number of those policies were in place over the last decades. Nevertheless you had not even distribution of the gains in productivity. Is there anything mr. Donnelly asked you about incentives in the corporate sector. Of those things within the power of the fed today that could influence those longterm versus shortterm populations that the fed is not currently employing foley . I think a Strong Economy and is sustainable Economic Growth so business firms can look out and see a favorable economic climate that they expect will be sustained with low inflation, those foster investments. That is what the backdrop for this decisionmaking. Thank you. I hope the committee looks as we keep in mind over the last three decades we have seen over most of those times rising productivity rights but the gains have been unevenly distributed which gives rise to a bipartisan sense. It is shared by constituents that folks who are doing really well have their roles stacked in their favor against the average american. I think think we need to look at all of our policies that are outside the purview of the fed and change them. Thank you. Thank you senator and thank you you have spent nearly three hours with us and we appreciate the work you do and also you taking the time to spend time with us today. This earring is adjourned. [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible] [inaudible]

© 2024 Vimarsana

comparemela.com © 2020. All Rights Reserved.