Transcripts For CSPAN Key Capitol Hill Hearings 20150228

Constitution of our country. I believe our conferees should have an opportunity to go in there and do the right thing to protect the people of america through the funding of the department of Homeland Security and to do the right thing to defend the constitution of our country. By defeating this motion and Going Forward with the conference, we give the process a chance to work. And to work well in both of those regards. So i respect the people on the other side who think we should just give in. But i dont think we should just give in. Because i dont think the American People want us to just give in. I think the American People want us to do our work. To make sure we protect our country by appropriately funding the department of Homeland Security. But that we also defend our protect our country by defending the constitution of the United States. I believe the actions taken by the president are unconstitutional. A judge has stayed those actions because hes got some legal issues with them. I dont know whats going to happen in that Court Proceeding im not going to try to predict that here on the floor of the house because a lot of times when you try to predict a Court Proceeding you find out youre wrong. In the meantime we have an obligation to do our job. I think Going Forward with this Conference Committee is doing our job in the most important consensus. I appreciate the opportunity to stand here today and address this house and to urge my colleagues to defeat this motion so that we can do something we havent done in a number of years, and that is to fulfill the obligations given to us by our fore bears, do our job, get this thing done, get it done right and make sure weve done right by the people of the United States. I yield back. The speaker pro tempore the gentleman from texas reserves. The gentlewoman from california is recognized. Ms. Roybalallard how much time is remaining on both sides . The speaker pro tempore both sides have 14 minutes remaining. Ms. Roybalallard i yield two minutes to the gentlewoman from texas, ms. Jackson lee Ranking Member of the crime terrorism, and Homeland Security subcommittee. The speaker pro tempore the gentlewoman from texas is recognized for two minutes. Ms. Jackson lee let me thank the gentlelady for her excellent work on the Homeland Security Appropriations Committee and the gentleman, mr. Carter. To the statements that have been made on the floor, might i just chronicle a more correct if i might say, articulation of really what happened. First, it is an applause and appreciation for the work done by the gentlelady from california and the gentleman from texas, along with the ranking and chairman of the Appropriations Committee because they had 12 Appropriations Bills ready to go forward. What my good friends have missed on the other side of the aisle is they debunked the full funding of the department of Homeland Security because of their ire against the president s authorized constitutional executive action. Thats why were here today for no other reason. Rather than allowing the debate on the clean fund thoring only the bus bill the 12 that have come from the house they took out the department of Homeland Security and left it to the side. They took it out in the light of young women, as i indicated, three denver girls played hooky from school and tried to join isis. They took it out in the light of the f. B. I. Director saying theres an isis cell in every state. They took it out in the light of the tragedies that happened in paris, in denmark, and have happened around the world, in australia, on boko haram. They took it out. They took out that full funding of the department of Homeland Security and skewed it by adding their contempt for the executive action. But then lo and behold what happened is a judge didnt rule it unconstitutional in texas. That was not the order of the court. It was that there were questions that should be decided and it was actually a stay. And that it should have gone to an administrative procedure, the a. P. A. It did not rule it unconstitutional but it was an action that caused at least a moment, a stay in the actions of the president. What does that say, madam speaker . It says that today, we can come and give a full funding for the department of Homeland Security. The speaker pro tempore the gentlewomans time has expired. Ms. Roybalallard i yield another 30 seconds. The speaker pro tempore the gentlewoman is recognized for 30 seconds. Ms. Jackson lee thank you. That order answers their concern about the executive action. In the meantime, we have every opportunity tonight, today, to vote on a clean, full funding of the department of Homeland Security until september because that is what the senate did. They did their work. But now we are playing games, in spite of the letter from the secretary of Homeland Security, and were telling the customs and border protection, were telling the t. S. O. s, the f. A. A. , i. C. E. Officers, all of them wurk put a stop sign and said we no longer want to secure america. I ask for support of this motion to instruct and ask for full funding for the department of Homeland Security. Lets do our job. I yield back. The speaker pro tempore the jerusalems time has expired. The gentleman from texas is the gentlewomans time has expire. The gentleman from texas is recognized. Mr. Carter i yield two minutes to the gentleman from north carolina, mr. Pittinger. The speaker pro tempore the gentleman is recognized for two minutes. Mr. Wittinger thank you mr. Chairman. Madam speaker mr. Wittinger thank you, mr. Chairman. Madam speaker, we are here today and im in amazement because were in discussion about the constitution of the United States. This is an issue of the balance of powers. This is an issue of our liberties. This is as important as the Homeland Security bill is, we recognize today that the congress has made its statement, the president of the United States has made a statement 22 times, that he did not have the right to declare amnesty. The courts have made their statement. And yet today, were in a dialogue, i hope the American People are watching today and seeing the miscommunication of truth. The truth is, we are committed to the constitution. We are going to stand by the constitution. Were not going to allow the edict of one person to commit this country to a direction unchallenged. Were here, committed to that principle. We believe that the rights of the American People are founded in this constitution, and we will submit ourselves to that, and i yield back. The speaker pro tempore the gentleman yields back. The gentleman from texas reserves. The gentlewoman from california is recognized. Ms. Roybalallard i reserve the balance of my time. The speaker pro tempore the gentleman the gentleman from texas. Is recognized. Does the gentleman continue to reserve . Mr. Carter i continue to reserve. Madam speaker, i can yield to someone to speak. Did she reserve. The speaker pro tempore the gentlelady has reserved. Mr. Carter at this time id like to yield to austin scott of georgia two minutes. The speaker pro tempore the gentleman from georgia is recognized for two minutes. Mr. Scott thank you thank you for yielding thank you, madam speaker. As i listen to this debate and watched as some of the people talked about what our duty was and was not as members of congress, i thought i might come down and read the oath that we as members of congress take. And it is simple. I do solemnly swear or affirm that i will support and defend the constitution of the United States against all enemies foreign and domestic, and that i will bear true faith and allegiance to the same, that i take this obligation freely without any mental reservation or purpose of evasion and that i will well and faithfully discharge the duties of the office on which i am about to enter, so help me god. Ladies and gentlemen this is not about immigration. This is about whether the president has the ability to unilaterally run this country by creating fees and spending those fees as he sees fit and i would submit to you that he doesnt. And if the president can do this, if the president can do this, is allowed to get away with this then when we get a prolife president then that prolife president can create a fee on abortion providers and use it to fund adoption it. Now, it seems to me that the democratic party, who prefers free cell phones to taking care of the men and women that protect our country in uniform like the rules when theyre working for them but dont want to abide by the rules all the time. Now, what the president has done violates violates, i believe, the separation of powers, and i would suggest to you that this is a very dangerous precedent and this this is well worth fighting for in maintaining our oath as the members of the United States congress to defend the constitution. And with that madam chair, i yield the remainder of my time. The speaker pro tempore the gentleman yields back. The gentleman from texas reserves. The gentlewoman from california is recognized. Ms. Roybalallard madam speaker, i yield two minutes to the gentleman from massachusetts, mr. Keating. We got our wires crossed here. The speaker pro tempore the gentleman from massachusetts is recognized for two minutes. Mr. Keating thank you madam speaker. Lets not lose focus here. Were talking about our countrys security and we heard what would happen if the homeland function is eliminated immediately if we shut down, even with the emergency provisiones that are existing, but i want to address an important issue and thats our security being jeopardized because of these stopgap budgets. Now, what does that mean . That means we continue to work within the constraints of last years priorities. We cant move beyond the funding thats there for those functions that we said were important for our security last year. Now, the trouble with that is the terrorist threats are changing every single day. The landscape is changing under our feet, and yet we are in a straitjacket dealing with it. We cannot continue Going Forward. Its already jeopardized our ability to look at Nuclear Detection in this country because of these stopgap budgets. Now my state suffered through a terrible tragedy in the Boston Marathon bombing, but i think all of us agree and we all saw the way they organized, the way they coordinated, all the functions stayed local federal government, the medical functions the Emergency Service and we all concluded rightfully so, the countless lives were saved because of that. And you know why . Because there was training and preparation for what could come. We cannot deal in this country successfully with the threats that are there today and tomorrow confronting us from terrorist attacks with last years priorities and not being able to shift an meet those priorities. Lets stop these stopgap budgeting. Its hurting our country. Its hurting our security. Lets do what were supposed to do under the constitution, make these decisions to fund it, and with that i yield back to the gentlewoman from california. The speaker pro tempore the gentleman yields back. The gentleman from texas is recognized. Mr. Carter reserve. The speaker pro tempore the gentleman from texas reserves. The gentlewoman from california is recognized. Ms. Roybalallard madam speaker, i yield four minutes to the gentleman from maryland, mr. Hoyer, the democratic whip of the house. The speaker pro tempore the gentleman from maryland is recognized for four minutes. Mr. Hoyer thank you madam speaker. I rise in support of this motion. I also rise to lament the fact that we had an opportunity just a few hours ago or an hour ago to do what the senate rationally did and that is conclude after four opportunities of trying to adopt the house position, the senate failed to do so. Now, i heard my young friend from texas talk about the constitution. Ive heard a lot of people say we ought to read the constitution. I agree with that. And the constitution has provided for the resolution of the injury of which you speak so passionately and thats article 3 of the constitution. Marbury vs. Madison said the Supreme Court had the authority, whether it was the president or the congress, to say that is not constitutional. But frankly by us passing a law and saying this is constitutional, as has been attempted and done in the past by my republican friends we say by legislative fiat this is constitutional. Now unfortunately today we gave up the opportunity to act responsibly. And my friend, mr. Rogers, for whom i have great respect, and mrs. Lowey know well be back here some 20 days from today with this same debate because the senate has already said, a, theyre not going to conference. When i say the senate, the democrats are not going to give 60 votes, as the republicans would not give 60 votes to go to conference on other bills in past years. What we did was we reversed the order of the legislation were considering. Had we done the original order, we would have done this motion to go to conference and the motion to instruct first. And as a result we would have still had the senate bill in the house of representatives to act responsibly, but there apparently was the fear that we might do that so that bill was sent back to the senate before we considered the c. R. For 21 days. So i urge my colleagues to vote yes on this motion to instruct. Vote yes to at some point in time do what is the responsible and doable alternative. Its not a question of whether you like it or i like it. It is the alternative that we in the congress can do and thats why 68 members of the United States Senate Republicans and democrats voted to say weve tried for six weeks to do what we all need to do and thats fund the department of Homeland Security to keep america safe but we are going to delay that. But at minimum we ought to say to the conferees few of us on this floor believe there will be any conference. Again, the senate will not vote to go to conference. Let us vote at least for this responsible motion made by the gentlelady from california. And i yield back the balance of my time. The speaker pro tempore the gentleman yields back. The gentlemafr tass recog mrcaermam ear,ay i inquire as to how much time we have left . The speaker pro tempore the gentleman from texas has 10 1 2 minutes, and the gentlewoman from california h 5 1 2 minutes. Mr. Carter and id first like to say i certainly hope that mr. Hoyer, when he referred to his young friend from texas, was talking about me. That makes me feel really good and i appreciate that. At this time id like mr. Hoyer i tell the gentleman that mr. Carter well im certainly glad to hear that, mr. Hoyer. At this time id like to yield three minutes to my young friend from texas, mr. Gohmert. The speaker pro tempore the gentleman from texas, mr. Gohmert, is recognized for three minutes. Mr. Gohmert thank you, madam speaker. I appreciated so much my friend, mr. Scott, bringing that oath. It does mean a lot. In my case, taking that oath to serve in the army for four years taking basically the same oath to be a prosecutor in texas, to be a judge in texas to be a chief justice in texas and now to be in congress, it means something. And protecting the constitution means that if we dont preserve the balance of power then this this little experiment in democracy or the republic, madam as Benjamin Franklin referred to, will be lost. So i appreciated what my friend from maryland said, and i wrote it down because it was profound and i quote, we gave up the opportunity to act responsibly, and i would humbly submit, madam speaker, that thats been going on for the last six years. Now, some of it went on during the Bush Administration as the president and used executive orders and took powers that probably shouldnt have been his. But in talking to people that have been in congress over the last 35 years or so, theyve told me whether it was gerald ford or richard nixon, when goldwater went down pennsylvania avenue, gerald ford, Jimmy Carter Ronald Reagan george h. W. Bush bill clinton or george w. Bush, there was a willingness on both sides of the aisle to get in a car together and go down pennsylvania and say, mr. President , you have usurped far too much power. We cant let you destroy the constitution any further. We are taking a stand, and we have missed that opportunity to act responsibly but fortunately its not yet too late. This will act responsibly to say and if you dont know what irresponsibility is then look at judge hannons opinion. He spells it out. This president didnt even have the gumption to write an executive order and sign it. He spoke his new amnesty law into being and then jae johnson did a memo. That took the power of congress away from us so the question on acting responsibly is, do we make that message clear were not having laws spoken into being in this country and having some bureaucrat unelected, come around with a memo that undoes laws by different congresses all these years signed by different president s with a memo . Come on. Its time to act responsibly. Now is the time. Please. I know Party Divisions run deep, but stand with us for the constitution. I yield back. Mr. Carter reserve. The speaker pro tempore the gentleman from texas reserves. The gentlewoman from california is recognized. Ms. Roybalallard madam speaker, i yield one minute to the gentlewoman from california, ms. Pelosi, democratic leader of the house. The speaker pro temre gentlemafr cifni ms. Poss recognized for one minute. Ms. Pelosi thank you, madam speaker. I thank the gentlewoman for yielding and commend her and congresswoman lowey for their very important motion to instruct conferees to accept the senate language. I want to talk about what our previous speaker mentioned but ill go to the most previous speaker. If you feel so strongly because i dont know if this is about thinking or feeling so strongly about the immigration issue and executive actions taken by the president , i respect that. But why are you jeopardizing the Homeland Security of the United States of america by attaching your emotions to this bill . Thats what this is about. You have an argument about immigration, have an immigration bill come to the floor. Lets have that debate. But it is totally irresponsible and you did say that we have given up the opportunity to act responsibly. Well, thats exactly what you are doing today. Policy differences about immigration or the rest are the legitimate debate in this great marketplace of ideas that is called the house of representatives. But for you to hold hostage the Homeland Security of our country, to jeopardize the opportunity to prepare to prepare to have what is current and necessary for the realities of the threats that we are facing now instead of three months three months from december into march 19 threemonthold carried over from last year. A lot has happened since then. In paris, in the middle east, threats in our own country. Get a grip on our responsibility. Get a grip, mr. Speaker. Give us a chance to vote on a bill that passed by more than 2 3 in the United States senate with a strong bipartisan support. And as far as your criticisms of president obama nobody said boo over there when president reagan used justifiablely so, rightfully so his justifiably so rightly so on using his executive order on protecting immigrants. George Herbert Walker bush the same. George w. Bush. The invigoration of our country but nonetheless he led on that subject. Youve made a mess, you have made a mess. We have so many bills, counterbills, c. R. s, all the rest of it coming back forward and all the rest. And every time i ask all of you whats happening, everybody says, i dont know. Well, its only six, what, eight hours until the government will shut down. That cant possibly happen. And i want to address that point. Someone has said to me, well, the president said he wont let government shut down, that he would sign this threeweek thing, if thats a bad choice that we have given the president , to shut government down or extend for three weeks when that threeweek extension is as undermining to our National Security as the shutdown in government. Thats just not right. Its not responsible on our part, so i say to our colleagues, if they want to go down that path of poor choices, let the republicans do that. They have multi agendas here, antiobama agendas here about immigration and the rest let them go down that path. Let them put their 21 votes on the board without associating ourselves with it. And just because the president s person says, of the two bad choices he would choose, if it came to his desk, the three weeks dont let that deter you from voting no on that and yes on what congresswoman roybalallard is putting forth and congresswoman lowey as well. Yes we do take that oath, the gentleman said, whether youre a judge, whether youre in the military, whether youre in congress, the president of the United States. To protect and support the constitution of the United States. Were not protecting anything with what you are doing here. Were not protecting anything. Were dragging it out. Were sending a message that for some historic reason we are now taking it out on barack obama because were angry about what the republican gentleman said the one on the republican side, that reagan bush, clinton, bush have done. Bring it up under another circumstance. Keep it off, the protection of our country. Your chairman, mr. Rogers, working with our Ranking Member, congresswoman lowey, were able to put together 12 bills which were a compromise a compromise that everyone was prepared to support. Until you decided you were going it use immigration to hold hostage the national Homeland Security of our country. And so kick the can to here. Now youve kicked the can to here, now youre going to kick the can to march 19. What do you think is going to happen on march 19 . Weve already had two recesses today, in this very day of congressional deliberation. What do you think youre going to accomplish if youre not willing to grow up, bite the bullet, youve made your point. Your colleagues republican senators, do not agree to drag this out. Theyre giving you a facesaving path. The judge in texas gave you a facesaving path. The urgency is very, very clear. Well, clear to everyone except you happen to exist in this chamber. When your negative attitudes to president obama have so overwhelmed you that you are willing to jeopardize the national the Homeland Security of our country, the Homeland Security, so whether its firefighters or safer acts or fema or anything that comes in contact, where the federal government comes in contact with people, you are standing in the way and using immigration as an excuse. For some of you it may be a reason. Maybe it is for some of you. But for some of you it is an excuse and for all of you it is a shame. It is a shame. So follow the lead of your one of the gentleman said, if we accept the senate language, were not living up to our responsibility to have a bill in the house. And then you expect them to accept your language. Doesnt it hold true both ways . If you dont want to accept their language, why do you expect them to accept your threeweek language . Do you not understand the legislative process . This constitution, which we value, has the legislative branch, the first article of government, the legislature, preeminent. The president cant sign what we dont send him in terms of making the law. He can take executive action. But the law is stronger. Let us honor our responsibilities. And stop stop standing in the way of protecting the American People. Its about the security of the American People versus the philosophy that you have going over there, which is perfectly to be respected. In another piece of legislation. Lets have that debate separate from protecting its about time its about time for us to come together to get the job done. The senate did it we can. Please support congresswoman roybalallard, congresswoman loweys motion to instruct the conferees to accept the senate bill. With that i yield back the balance of my time. The speaker pro tempore the chair reminds the members to please direct your comments to the chair and not to other members. The gentleman from texas is recognized. Mr. Carter madam speaker, about how much time do we got left . The speaker pro tempore the gentleman from texas has 7 1 2 minutes. Mr. Carter oh thats good. You got other witnesses . The speaker pro tempore is the gentlewoman from california prepared to close . Ms. Roybalallard im prepared to close. Mr. Carter i believe she has the right to close but i would like to say a little bit before we get there. The speaker pro tempore the gentleman is recognized. Mr. Carter ill yield to myself about as much time as i may consume. Ive had a lot of School Teachers shake their finger at me and tell me things, most of the times i deserved it. Ive been looked right at and been told ive been wrong before, some of those times i deserved. It but i want to make something really clear deserved it. But i want to make something clear. This is not a debate on immigration. This is not a debate on whether or not we are going to fund the department. We are funding the department for the next three weeks. Using the same manner that we funded this department for whole years at a time, when our colleagues on the other side of the aisle were in charge of this house. The c. R. Was one of the most popular vehicles that they used in funding our country during the period of time they ran this place. So, were not using anything that we dont all use. It funds the department. It keeps the Border Patrol paid. But it also allows us to do something that by the way, the gentleman is absolutely right, in what we would call recent history, going to conference is so rare, my mother used to say rare is hens teeth. When they ran this place. So we are at least doing something that was designed to be done and were going to conference. When you go to conference and you have two sides of the story, youre supposed to go in there and discuss the two sides of the story. What they are asking to instruct here is to just take what the senate sent us. Well, you know, to some extent i guess we should reward the senate. This is about the first thing theyve sent us in recent history. Where weve actually had a bipartisan vote. In fact, last year we just didnt have any votes at all. In fact, you wonledsered if they even knew wondered if they even knew how. So here we are. Were going to conference and doing it the way its supposed to be done. And all parties will be able to participate and maybe we will resolve our differences and maybe we wont. But the American People also ask us to try to work in a bipartisan manner. And heres our opportunity. The Homeland Security department will be funded. They will have a paycheck. We will address this issue in conference and hopefully well come to resolution the way were designed, with bipartisan participation. But this is not about immigration and after having spent four years with some of my colleagues on the other side of the aisle and some of the colleagues over here, working on immigration, i am not antiimmigration policy. This is antistepping on the feet of the framers of the constitution and walking and walking all over that piece of paper and thats why were here to fight today. Were fighting for the rights of this legislation legislative body, as we address the executive. And were fighting to fund the department. With that i yield back the balance of my time. The speaker pro tempore the gentleman yields back the balance of his time. The gentlewoman from california is recognized. Ms. Roybalallard madam speaker, let me just say that regardless of what the other side of the aisle will have us believe, the secretary of Homeland Security and the men and women who every day put their lives on the front line for us and to protect this country tell us that a continuing resolution jeopardizes their ability to fully and effectively protect this country. So i urge my colleagues to do the responsible thing and to vote for this motion to instruct conferees to bring back a clean, fullyear, bipartisan funding bill that will enable the department of Homeland Security to fully and effectively protect our nation the house returns for legislative business on monday at noon. The senate back monday at 2 00 p. M. Eastern and at 5 30 a vote on whether to go to conference to work out the differences. And controversial language dealing with the president s executive action on immigration. Live coverage of the house and cspan and the senate on cspan2. The little landscape changed with the 114th congress. Not only are there 43 new republicans and 15 new democrats in the house and 12 new republicans and one new democrat in the senate also 108 women in congress including the first African American republican in the house and first woman veteran in the senate. Keep track using congressional chronicle on cspan. Org. Vogt ruts and statistics about each session of congress. New congress, best access on cspan, cspan 2 cspan radio and cspan. Org. The cspan cities tour takes book tv and American History on the road. Traveling to u. S. Cities to learn about their history and lit rarery life. We partnered with con cast for a visit to galveston texas. Opening of the canal in 1869 sailing ships really were almost dealt a death blow. With the opening of the canal coal fired ships hat a shorter route to the far east and to india and all of those markets markets so sailing ships really needed to find a way to make their own live something instead of high value cargo they started carrying lower valued cargo coal, oil, cotton. Alyssa found her niche in carrying any kind of cargo that do d. Not require getting to market at a very fast pace. Aslays connection to galveston is unique in that she sailed and arrived near galveston probably about 100 yards from where we are standing back in 1883 with a cargo bull of bananas and came again a second time in the 1880s in 1886 and it was real important for Galveston Historical Foundation to find a vessel that had a connection and the fact that she was sailing vessel is all the more. Watch all events from galveston, saturday, march 7 at noon eastern on cspan 2 book tv and sunday march 8 at 2 00 p. M. Eastern on American History tv on cspan 3. Federal reserve chair was on capitol hill to deliver the semi annual Monetary Policy record to congress. The Senate Bank Committee marked up legislation to award the congressional gold medal to marchers of the 1965 selma to montgomery Voting Rights march. This entire hearing is two hours and 20 minutes. The committee will come to order. We a quorum. An executive session to report s 527 to award a congressional gold medal to the foot soldiers who participated in bloody sunday turn around tuesday report final selma to montgomery Voting Rights march. Resurge the catalyst for the Voting Rights act. Im pleased to serving a original cosponsor and thank members including the Ranking Member who agreed coexperience the legislation. With that i understand there are no amendments and no objections to a voice. Thevoicevote. Im pleased we can mark up the important piece of legislation today. A bill with strong bipartisan support that home runs those americans who fought so hard for civil rights. I want to thank senator scott a member of the committee for joining with me in oh coechairing the bipartisan congressional civil rights pilgrimage to selma to commemorate the 50th anniversary of the march. My third trip and i knee number of other senators will be on the trip. Think we best honor the selma foot soldiers by remembering them not with just with a medal but with staying true to their purpose. I was secretary of state of ohio in the 1980s. I followed election law closely and voting laws closely since then. It used to be we were in the business of expanding voter roles but lately too many states have thrown up barriers to voting ossie spencibley to cure the problem of end person voting fraud. Lets honor the foot soldiers about whom senator shelby talked not just today but on march 7 and in everything we do. Thank you, mr. Chairman. All those in favor say ay. Aye. All opposed nay. The ayes clearly have it. Order that 527 without amendment be reported favorably by the banking committee. I also ask unanimous consent that the staff be aloud make any technical and conforming changes and that we waive the cordon rule. Hear nothing objections, so ordered. We will move to hearing on the Federal Reserve semi annual Monetary Policy report to the congress. Today the committee will receive prime ministerFederal Reserve chair yellen as required by statute since 1978. Although the chair has been using this venue for decades to communicate directly to congress and the American People, i add and many of my colleague vs. Been calling for greater accountability and more effective disclosure for years. In response, we heard the chorus of current and former Federal Reserve officials who have lined up to defend the structure and the degree of transparency of the fed. Further accountability to congress some have argued is not needed. Im interested to hear whether the current chair shares this view and whether she believes that the fed should be immune from any reforms. As far as Monetary Policy is concerned many question whether the fed can rein in inflation and avoid a destablizing asset prices when the time comes to unwind the massive 4. 5 trillion Balance Sheet. The minutes posted online do little to answer the questions of when and how this will be done and the most recent f. O. M. C. Transcript available to the public is from from 2008 over seven years ago. Even though the fed is avenue ral Monetary Policy tools at its disposal and action of this magnitude has never before been taken to my knowledge. The federal open Market Committee continues to report that it can be patient in keeping the federal funds rate near zero. Too much delay could lead to a more painful direction down painful correction down the road. What the fomc is think and how they are analyzing this difficult problem set remains a mystery, however. And yet some continue to dismiss calls for change or more transparency at the fed. I would argue, however, there is an even greater need for additional oversight by congress and further reforms. Our central bank has expanded its influence over households, businesses and markets in recent years. Not only has it pushed the boundaries of traditional Monetary Policy, but it is also consolidated Unmatched Authority as a financial regulator. As the fed grows larger and more powerful much of this authority has become more concentrated in washington d. C. And in new york. The fed emerged from the financial crisis as a super regulator with unprecedented power over entities that it had not previously overseen. With such a delegation of Authority Comes a heightened responsibility i believe for congress to know the impact these new requirements place on our economy as a whole. The role of congress is not to serve on the federal open Market Committee. But it is to provide strong oversight and when times demand it bring about structural reforms. As part of this process, the committee will be holding another hearing next week to discuss options for enhanced oversight and reform in the fed. Senator brown . Thank you mr. Chairman. Welcome back. Good to see you again and good to have you in front of the committee. The economy continued to see strong employment gains and Economic Growth at end of 2014. But we note improvements in the economy are not being felt by enough americans. The gains we over the past five years, 11. 5 net private sector job growth comes on the heels of losing 4. 5 million jobs. Some have been predict runaway inflation for years and clearly dont have a good grasp of what is happening for most americans. Low wage growth continued for the majority of americans and the declining participation in the workforce is troubling. As you pointed out income inequality gap widened during the recovery. It is good that we bebeen agy commemorating the selma foot soldiers. The wealth gap between white and black American Families has widened. Low and middle income american vs. En benefited from low Interest Rates. Workers with stagnant wage wage wage vs. Trouble saving for a down payment or retirement or childrens education. Issues that congress should be addressing but the every day struggles of americans need to be part of the feds consideration in make Monetary Policy too. I appreciate your announcement last month of plans to create the Community Advisory council and we will have 15 members and meet twice a year with the board in washington to offer perspectives on their economic circumstances and needs of low and moderate income communities and consumers. I hospital entire Federal Reserve system the 12 Regional Banks as well as the board in washington will in gage Community Leaders way more than they have in the past and will do what you have done bisseting the known washington and i corps rate diverse perspectives into their decisionmaking. We often too often hear concerns that the stead a system that is run by and to benefit the very largest banks. Last november, i healed subcommittee hearing on one facet of this, regulatory capture. Hearing explored concerns about the culture of the banks and regulators. A regulatory culture that is fair and tough that challenges group think that produces rules and regulations designed to strengthen the Financial Stability of our economy and protect americans financial interest. I applaud the fed for finalizing strong rules for the largest and riskiest Financial Institutions and encourage you to move forward to finalize outstanding proohsals so that everyone proprosals so everyone will benefit from the certainty of vague pope patriot rules in place. More than a year since the fed released an advanced notice of proved rule making on commodities trading and fiscal asset ownership. In todays papers reports of a d. O. J. Investigation of 10 bancs for activities in the precious met ales markets and we have yet to see a prosed rule. You must seaned message to the examiners that the rules must be implemented and enforced. While some colleagues are eager to help you to help you and the fed decide Monetary Policy i think that is the wrong role for congress. Im all for transparency. I think smore better as a general i think more is better but there are times you can do better by having a candid discussion in private. One real goal must be to have a federal restarve works for all americans to have a Strong Economy that benefits low and middle class low wage workers around middle class as much as the wealthiest and to have a stable and diverse Financial System that provides opportunities for all americans. Not one that threatens their savings. And that is why your dual mandate to promote price stability and employment and i so appreciate perhaps more than you perhaps more than any of your predecessors or at least as much understands the dual mandate including employment how important that is. It remains importantmains important today. Thank you. Madam chair, welcome to the commitcommittee. We look forward to your testimony in the question and answer period. Your written testimony will be made part of the record in its entirety. You can proceed briefly to outline what you want to tells. Chairman shelby Ranking Member brown and members of the committee, im pleased to present the Federal Reserve semi annual Monetary Policy report to the congress. In my remarks today i will discuss the current Economic Situation and outlook before turning to Monetary Policy. Since my appearance before the Committee Last july, the Employment Situation in the United States has been improving along many dimensions. The Unemployment Rate now stands at 5. 7 , down from just over 6 last summer, and from 10 at its peak in late 2009. The average pace of monthly job gains picked up from about 240,000 per month during the first half of last year, to 280,000 per month during the second half. And employment rose 260,000 in january. In addition, longterm unemployment has declined substantially. Fewer workers are reporting that they can find only parttime work when they would prefer fulltime employment and the pace of quits, often regarded as a barometer of worker confidence in labor Market Opportunities has recovered nearly to its prerecession level. However, the Labor Force Participation rate is lower than most estimates of its trend and wage greeting remain wage growth remains sluggish suggesting that some cyclical weakness persists. In short, considerable progress has been achieved in the recovery of the labor market, though room for further improvement remains. At the same time that the labor market situation has improved, domestic spending and production have been increasing at a solid rate. Real Gross Domestic Product is now estimated to have increased at a 3 3 4 annual rate during the second half of last year. While g. D. P. Growth is not anticipated to be sustained that the pace, it is expected to be Strong Enough to result in a further gradual decline in the Unemployment Rate. Consumer spending has been lifted by the improvement in the labor market as well as by the increase in household purchasing power resulting from the sharp drop in oil prices. However Housing Construction continues to lag. Activity remains well below levels we judge could be supported in the longer run by population growth and the likely rate of household formation. Despite the overall improvement in the u. S. Economy and the u. S. Economic outlook longer term Interest Rates in the United States and other advanced economies have moved down significantly since the middle of last year. The declines have reflected at least in part dispinting foreign growth and changes in Monetary Policy abroad. Another notable development has been the plunge in oil prices. The bulk of this decline appears to reflect increased Global Supply rather than weaker global demand. While the drop in oil prices will have negative effects on Energy Producers and will probably result in job losses in this sector, causing hardship for affected workers and their families, it will likely be a significant overall plus on net for our economy. Primarily that boost will arise from u. S. Households having the wherewithal to increase their spending on other goods and services as they spend less on gasoline. Foreign economic developments, however, could pose risks to the u. S. Economic outlook. All note pace of growth abroad appears to have stepped up slightly in the second half of last year, foreign economies are confronting a number of challenges that could restrain Economic Activity. In china, Economic Growth could slow more than anticipated as polymakers address financial vulnerabilities and manage the desired transition to less reliance on exports and investments as sources of growth. In the euro area, recovery remains slow. And inflation has fall tonen to very low levels. Although highly accommodative Monetary Policy should help boost Economic Growth and inflation there, downside trick Economic Activity in the region remain. The uncertainty surrounding the foreign outlook, however, does not exclusively reflect downside risks. We could see Economic Activity respond to the policy stimulous now being provided by foreign Central Banks more strongly than we currently anticipate and the recent decline in World Oil Prices could boost overall global Economic Growth more than we expect. U. S. Inflation continues to run below the committees 2 objective. In large part, the recent softness in the all items measure of inflation for personal consumption expenditures reflects the drop in oil prices. Indeed the p. C. E. Price index edged down during the Fourth Quarter of last year and looks to be on track to ridge stare more significant de ridgester a more significant decline this quarter because of falcon super Energy Prices but core p. C. E. Inflation has also slowed since last summer. In part reflecting declines in the pryce of many imported items and perhaps also some passthrough of Lower Energy Costs into core consumer prices. Despite the very low recent readings on actual Inflation Inflation expectations as measured in a range of surveys of households and professional forecasters have thus far remained stable. However, inflation compensation as calculated from the yields of real and nominal treasury securities has declined. As best we can tell, the fallen inflation fall in inflation compensation mainly reflects factors other than a reduction in longer term inflation takes. The committee expects inflation to decline further in the near term before rising gradually to a 2 over the medium term 80s labor market improves further and the transittery effects of lower Energy Prices and other factors dissipate but we will continue to monitor inflation developments closely. I will now turn to Monetary Policy. The federal open Market Committee is committed to policies that promote maximum employment and price stability consistent with our mandate from the congress. As my description of economic developments indicated our economy has made important progress toward the objective of maximum employment, reflecting in part support from the highly accommodative stance of Monetary Policy in recent years. In light of the cumulative progress toward maximum employment, and the substantial improvement outlook for labor Market Conditions the stated objective of the recent Asset Purchase Program the fomc concluded that program at the end of october. Even sox the Committee Judges that even so, the Committee Judges that a high degree of policy accommodation remain as popepope patriotpope patriot to promote a return of nation toward 2 over the medium term. Accordingly the fomc has continued to maintain the target range for the federal funds rate at zero to 1 4 and keep the Federal Reserves holdings of longer term securities at their current elevated level to help maintain accommodative financial conditions. The fomc is providing forwardguidance that offers information about our policy outlook and expectations for the future path of the federal funds rate. In that regard the committee judged in december and january that it can be patient in beginning to raise the federal funds this judgment reflects the fact that inflation continues to run well below the committees 2 objective and there is room for sustainable improvement in labor Market Conditions still remains. The fomcs assessment that it can be patient in beginning to normalize policy means that the Committee Considers it unlikely that Economic Conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of fomc meetings. If Economic Conditions continue to improve, as the committee anticipates, the committee will at some point begin considering an increase in the target range for the federal funds rate on a meetingbymeeting basis. Before then, the committee will change its Forward Guidance. However, its important to emphasize for the modification of the Forward Guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings. Instead, the modification should be understood as reflecting the committees judgment. The conditions have improved to the point where it will soon be the case that the change in the target range could be warranted at any meeting. Provided that labor Market Conditions continue to improve and further improvement is expected, the committee anticipates that it will be appropriate to raise the target range for the federal funds rate when, on the basis of incoming data, the committee is reasonably confident that inflation will move back over the medium term to our 2 objective. It continues to be the fomcs assessment that even after employment and inflation and near levels consistent with our dual mandate, Economic Conditions may for some time warrant keeping the federal funds rate below levels the Committee Views as normal in the longer run. Its possible, for example, that it may be necessary that the federal funds rate to run temporarily below its normal longerrun level, because the resideal effects of the financial crisis may continue to weigh on Economic Activity. We would expect the federal funds rate to move towards its longer run normal level. In response to unforeseen developments, the committee will adjust the target range for the federal funds rate to best promote the achievement of max maximum employment and 2 inflation. Let me turn to the mechanics of how we intend to normalize the stance and conduct of Monetary Policy when a decision is eventually made to raise the target range for the federal funds rate. Last september the fomc issued its statement on policy. It provides information about the committees likely approach to raising shortterm Interest Rates and reducing the Federal Reserves Security Holdings. As is always the case insighting policy, the committee will determine the timing and pace of policy normalization so as to promote its statutory mandate to foster maximum employment and price stability. The fomc will adjust the stance of the policy during normalization by changing its target range for the federal funds rate and not actively managing the Federal Reserves Balance Sheet. It has the tools it needs to raise shortterm Interest Rates when it becomes appropriate to do so. And to maintain reasonable control of the level of shortterm Interest Rates as policy continues to firm thereafter, even though the level of reserves held by deposit tower institutions is likely to diminish only gradually. The primary means of raising the federal funds rate will be to increase the rate of interest paid on excess reserves. The committee will also use an overnight facility and other tools as needed to help control the federal funds rate. As economic and financial conditions evolve, the committee will phase out these supplementary tools when they are no longer needed. The committee intends to reduce its Security Holdings in a gradual and predictable manner primarilyly seeking to reinvest payments from principal. Its the committees intention to hold in the longer run no more securities than necessary for the efficient and effective implementation of Monetary Policy and that the securities be primarily treasure securities. In sum, since the july, 2014 Monetary Policy report, there has been important progress toward the fomcs objective of maximum employment. However, despite this improvement, too Many Americans remain unemployed or underemployed, wage growth is still sluggish and inflation remains below our objective. The Federal Reserve remains committed to employing its tools to best promote the attainment of its objectives of maximum employment and price stability. Thank you. I would be pleased to take your questions. Madam chair, i want to get into measures of inflation. You touched on that a little. The Federal Reserve, i understand currently uses an inflation measure of core personal consumption expenditures, which ex cludes volatile food and Energy Prices. Several alternative measures of inflation exists including one called the trim mean p. C. E. Which strips out a larger basket of items from the calculation. I know you know all this. Do you think that the federal open Market Committee should incorporate alternative measures of inflation such as trim mean p. C. E. . And could you explain to us the risk of not properly gauging Inflation Expectations . So, let me first say that the federal open Market Committees 2 objective refers to the increase the annual increase in the total p. C. E. Price index that includes food and energy. Food and energy are very important components of every Household Spending basket, and i dont think it would make a lot of sense or be acceptable to americans to focus on a measure that strips out these important components of the consumer basket. So we focus on total consumer prices, including food and energy. At the same time, we recognize that food and energy are particularly volatile prices and in order to get a better forecast sometimes of the underlying trends in inflation we do look at socalled core inflation that strips out these measures. And in trying to understand trends in inflation and the factors impacting inflation, we look at a broad variety of measures in in inflation although our formal index is the p. C. E. Index. We look at the c. P. I. Which is well known to most americans and trim means and other measures that you cited. Are you you talked about the use of policy which would provide the feth with a way to conduct policy in response to changes in Economic Conditions. I believe it would also give the public a greater understanding of and perhaps confidence in the feds strategy. You stated and i quote, rules of the general sort proposed by taylor capture well a statutory mandate to provide maximum employment and price stability. You have expressed concerns, however, over the effectiveness of such rules in times of economic stress. Would you support the use of a Monetary Policy rule of the feds choosing if the federal had discretion to modify it in times of economic disruption . Im not a proponent of chaining the federal open Market Committee in its Decision Making to any rule whatsoever. But Monetary Policy needs to take account of a wide range of factors, some of which are unusual and requires special attention and thats true even outside times of financial crisis. In its original paper on this topic, john taylor himself pointed to conditions such as the 1987 stock market crash that would have required a different response. I would say that it is useful for us to consult the recommendations of rules of the taylor type and others and we do so routinely. And they are an important input into what ultimately is a decision that requires sound judgment. In a recent speech richard fisher, the president of a Federal Reserve bank has suggested a reorganization of the federal open Market Committee, specifically advocates for a rotating vice chair manship and a stronger role for Regional Banks on the committee. Do you support any of mr. Fishers proposals and why or why not . Senator shelby, i think the current structure of the federal open Market Committee and the voting structure was decided on by congress a long time ago after weighing a whole variety of considerations about the need for control in washington and the importance of regional representation. Its, of course, something that congress could have revisitted. But i would say it has worked very well. We have a broad range of opinion thats represented at the table and active debates. The decision to appoint the president of the new york fed as vice chair reflected the reality that the new york fed conducts open Market Operations on behalf of the system and has special and deep expertise pertaining to Financial Markets. And i think thats worked well and continues to be true that there is special expertise in new york. A recent article written by two economists for the think tank e21, proposes to reducing the number of districts from 12 to 5 and making all voting members of the federal open Market Committee. The article states that this would preserve Regional Diversity by giving more authority over Monetary Policy over reserve banks that currently voting members and could have safety and soundness and remove the uncertainty created by 19 independent fomc members. Do you oppose consolidation of Federal Reserve districts . This is a matter for congress to to decide. Restructure of the Federal Reserve reflects choices that were hammered out 100 years ago and i think the current structure works well. So i wouldnt recommend changes, but again, the Federal Reserve plays an Important Role in their communities but again this is up to congress to consider. My last question to you in this round, asset threshold for banks. A recent report by the office of Financial Research shows a large disparity and Systemic Risk between the largest banks and those that are smaller and closer to 50 billion in assets. All banks above 50 billion are under regulation. Do you think the findings of the the office of Financial Research should be incorporated considered or what kind of determination of whether a bank is systemicically significant . We absolutely recognize in the Federal Reserve that the largest banks and those closer to 50 billion are quite different in terms of their systemic footprint and we have many different measures that help us decide on the systemic importance of an institution and there obviously are large differences there. In doddfrank, Congress Gave us the ability to make it appropriate to the systemic importance and complexity and size of a bank and to the maximum extent possible within that legislation, we have tried to use the powers that we have toll appropriately tailor our supervision and regulation. For example, we recently proposed extra capital charges on the largest and most systemic institutions and higher lerge requirements and those requirements would not apply to the smaller institutions, but there are many other examples as well. Do you know of any community or Regional Bank that has caused Systemic Risk to our economy . There may have been episodes in which there were Bank Failures of Smaller Banks that did threaten systemic consequences. But certainly i believe you chose your words carefully. Could you furnish any of the record whether Smaller Banks or Regional Banks have caused Systemic Risks to our economy or banking system. Would you furnish that to us . I will look into it. Im trying to agree with you that by and large, that has not been the case. And i agree with that. Senator brown. I have one comment about your answer to your last question. About Capital Requirements that you have applied. There is no question as reports made pretty clear made for a Financial System. Senator vitter has had special interest and so has senator shelby. You mentioned in your opening statement, you gave a speech on income and wealth inequality and that is through a robust jobcreating economy. What steps ruin corporating to incorporate that into Monetary Policy decisions . We are very committed to both parts of the dual mandates price stability and maximum employment. We have been running a very accommodating Monetary Policy in order to promote stronger conditions in the labor market. We have been monitoring a wide variety of indicators of labor market performance, not focusing on any single measure and in particular, for example, the large magnitude of parttime involuntary employment, workers who want fulltime jobs. The decline in Labor Force Participation, part of which we understand to be or believe to be cyclical. These are things that were monitoring very closely. Were also looking at wage growth and the fact that wage growth is really not picked up very much during this recovery i take to be another signal that although the labor markets improving, we have further to go and we want to promote full recovery. Real wages tend to rise more rapidly in a strong labor market. So i interpret part of that phenomenon as a signal, a sign that the labor market is not yet fully recovered. That has been occurring for some time in a scene that occurred during the recovery. Real wages tend to rise more rapidly in a strong labor market. So i interpret part of that phenomenon as a signal, a sign that the labor market is not yet fully recovered. But i should also say, there are longer term structural factors that may also be affecting the shares of the pie that accrues to labor and capital. One of these factors, recent Research Points to the fact that many laborintensive activities in the Global Production chain are being increasingly outsourced and that phenomenon has tended to push down the share of income going to labor as opposed to capital over the last decade or so. There is research on this topic. So i think its a combination of structural factors, but also remaining cyclical. And that includes the labor of organization of workers of being organized . That could include that as a factor. I appreciate the steps that you and your predecessor made to bring Greater Transparency. There is a proposal to go one step further and audit the feds Monetary Policy deliberations. What are your thoughts on that . I want to be completely clear that i strongly oppose to audit the fed. I believe the transparency and providing congress and the public with adequate information to be able to understand our operations, our financial condition, the conduct of our meeting the responsibilities that congress has assigned to us is essential, but audit the fed is a bill that would politicize Monetary Policy and would bring shortterm political pressures to bear on the fed. In terms of openness about our financial accounts, we are extensively audited. I brought with me this volume which contains an independent outside auditors audits of our Financial Statements. For people to understand what auditing is about, the Federal Reserve is extensively audited. What i think is critically important is that the fed be able to deliberate on the best way to meet the responsibilities that congress has assigned to us to achieve maximum employment and price stability and that we be able to do free of shortterm political pressures. I would remind you that in the early 70s, when inflation built and became an endemocratic problem in the u. S. Economy, history suggested that there was political pressure on the fed that interfered with its Decision Making. It was in the late 1970s, that congress put in place the current feature of law that exempts Monetary Policy, deliberations and decisions for one area thats exempted from g. A. O. Audits. And i really wonder whether or not the volcker fed would have had the courage to take the hard decisions that were necessary to bring down inflation and get that finally under control something i think that has been very important to the performance of the u. S. Economy. I wonder if that would have happened with g. A. O. Reviews in realtime of Monetary Policy Decision Making. So Central Bank Independence in conducting Monetary Policy is considered a best practice for Central Banks around the world. We are one of many, many Central Banks that are independent and Academic Studies i think establish beyond a shadow of a doubt that independent Central Banks perform better. The economies perform better and have better performance in terms of inflation and macroeconomic stability. You mentioned your Community Advisory council. What are you encouraging Regional Banks president s to follow suit . Most of the Regional Banks are active in their communities. They have Community Development programs and are really trying to address special needs of their communities. But in washington, we also encourage and have oversight of those activities and strongly encourage similar practices. Senator crapo. I would like to use my time going over the process that we are in right now. The first Economic Growth and regulatory act or gripa review states, besides reviewing our existing regulations in order to get rid of burdens, they are getting ridding of burdens. The report submitted to congress specifically discussed financial consumer issues antimoneylaundering issues and recently adopted rules. However, included in the federal register put forward for this current process that we are now anywhere we are supposed to be having our financial regulators, by law look for outdated unnecessary and unduly burdensome regulatory requirements in the system there was a couple of footnotes included that said that the agencies engaged are going to back off. They are not going to review new regulations that have gone into effect and not review regulations that were considered and will go into effect in the process and have clarified that the c if fpb wont be in the process. The Consumer Financial Protection Bureau wont be in the process. Would you not agree that we should have a thorough process that reviews all rules and the Consumer Financial Protection Bureau should be a part of the process. Before i put that question to you, i would like to say, we had a hearing last week, which was dealing with Community Banks and Credit Unions and the regulatory burdens that they face. And i asked the witnesses and every one of them said that in the set of rules and regulations that they feel are creating unnecessary and unduly burdensome pressures are rules and regulations coming from the Consumer Financial arena and the antimoneylaundering arena and the doddfrank arena, which would be exempted. A couple of examples they gave were the qualified mortgage rule that needs to be reviewed. The volcker rule that needs to be reviewed and yet all of this is apparently outside the scope of the entire process that the agencies are now undertaking. Could you respond, please. So in the rules that have gone into effect or in the process under consideration and will go into effect related to doddfrank, we had federal register notice, took Public Comments and important part of designing those rules was considering the costs, the burdens and what was the most effective and appropriate way of designing regulations to meet doddfranks objectives. So in the sense, what it asks of the agencies is something that we have gone through very recently in the process of designing regulations, in some cases that have not yet gone into effect. Your answer be the same for the Consumer Financial protection because its new, we dont need to review its rules . I cant speak to we dont have that Rulemaking Authority and i cant speak to what rule the cfpb will play. I understand the argument. And thats the argument we got from the regulators two weeks ago. But its not what it is saying. It doesnt say lets review the rules and regulations that are old. It says lets review them all. Thats what the law that was passed to do. Recently been through the process and they have been through the process. The doddfrank legislation was 1848 pages long. But the page count of the regulations required by doddfrank has mushroomed to 15,000 pages so far and they arent finished and over 15 Million Words of regulatory texan to say the fact they are new and the implementation process has recently been completed on them, i dont think is a satisfactory response to them and they need to look at the relations and get rid of those that are unnecessary or burdensome. We will be Holding Public hearings and taking extensive comments. You mentioned Community Banks. We are focused on trying to find ways to reduce the burdens on Community Banks and during this process will be very sensitive to looking for ways in which we can reduce the burden of regulation and will be reporting back to you. My times up. I would encourage you and the other federal regulators to focus on the full intent of this and expand your review. Thank you. Senator reed. It has significant responsibilities in many areas, one is Monetary Policy. But one of the areas, regulatory policy, supervising large institutions. And it goes back to the new york Federal Reserve. And several of us have had proposals to help, we hope this Regulatory Oversight effort has been criticized, not only in the runup to 2008 but even recently. Can you describe what you have done for greater accountability in new york city . So in the aftermath of the hearings that were held here and the allegations that were raised about the new york fed, we have undertaken an internal review and that is in process. Now i should say that the question we think is important that was raised there. We have a process for supervising the largest banks that is a systemwide process and involves systemwide committees and is led by washington, by the board. The reserve banks that are involved with the supervision of the institutions in that large bank portfolio, take part in the process that is a groupwide and boardled process. So the question we thought that is important for us to look at is are we in that process, the board and the group that supervises these banks and makes decisions, is the relevant information being fed up to the highest Decision Making levels including the board of governors and to the extent that within a reserve Bank Supervision team, there may be difficult veering ent opinions. We want to make sure that dissident voices are heard and dissident views can reach the highest levels for consideration. So that is the question that was asked our internal team to look at. The review includes the new york fed, but other reserve banks that are also involved in large banks supervision, because avoiding group think and making sure that dissident views can be heard at the highest levels is really critical to sound supervision. Weve also asked our Inspector General to undertake his own independent review and these are in process and i expect them to be completed this year. We will certainly take any Administrative Changes that appear to be called for you would like to wait and see the findings of the reviews before deciding on the appropriate measures. You anticipate there will be ways to improve . When you look at some of the incidence of have taken place over the last several years some change has to happen. The question will be will it be legislative or administrative. We will certainly take any Administrative Changes that appear to be called for you would like to wait and see the findings of the reviews before deciding on the appropriate measures. My time has expired. One issue on the table and follow up with a question. We are acutely sensitive to Systemic Risk and in doddfrank we tried to minimize that risk by clearinghouses that would take bilateral transactions and derivative swaps and that introduces a degree of risk. And i just want to put on your screen or is the sensitivity that we have to oversight of these clearinghouses, both our own and others across the globe because of the potential systemic problem. Can i just put that on the table . Absolutely. And i want you to note that we are very attuned to the need to be careful in our supervision that weve taken the step forward, i think, as you mentioned in moving the great deal of clearing to clearinghouses. Financial market utilities and they have been designated as important, Financial Market utilities. And they are being supervised by the Federal Reserve. There are a set of principles put in place and agreed globally for what are best practices in terms of liquidity standards and other Risk Management standards for these Financial Market utilities and it is extremely high priority for us to make sure we enforce those standards and we are in the process of doing so because although these entities reduce risks that were previously present, they create their own risks if they are not appropriately managed. I agree. We are giving it a great deal of attention. Senator corker. Thank you for being here today. There is a push to add a provision addressing currency manipulation in the asiaian hifere pacific trade deal. You think trade negotiations or an appropriate place for these issues and what includes the Arbitration Panel under the enforcement procedures where companies or other nations could challenge future Monetary Policy decisions by the federal . So let me first say that i think currency manipulation that is undertaken in order to alter the Competitive Landscape and give one country an advantage in International Trade is inappropriate and needs to be addressed. But that said, there are many factors that influence the value of currencies, including differences in Economic Growth and capital flows and as you mentioned, Monetary Policy is a factor that could happen on currencies. So i would be concerned about a regime that would introduce sanctions for currency manipulation into trade agreements when it could be the case that it would hamper or even hop will Monetary Policy. Monetary policies, we have undertaken, the Federal Reserve has undertaken over the last number of years, have been designed for valid domestic objectives whose price stability and maximum employment. We have undertaken Monetary Policy to achieve those objectives and that is not currency manipulation but it affects the economy through many channels. Perhaps more importantly through Interest Rates, but Monetary Policy may have impact on currency values. So i would see that kind of direction as having the potential to perhaps hamper the conduct of Monetary Policy or hobble the conduct of Monetary Policy. Thats a long answer, but the answer i think you just said you would have a significant problem with that being part of a trade deal, is that correct . Yes, i would. I want to follow the fed auditor fed question a little bit and if you need a break that would be good. The first is with respect to the feds Lending Facility and the discount window access during the financial crisis. There is questions about how these facilities were questioned but congress addressed this issue through the sanders amendment to doddfrank. Can you respond to g. A. O. s ability to audit Credit Facilities . In response to that amendment, the g. A. O. Conducted a complete review of the use of our 133 emergency lending lending authorities and all of the programs that were created and conducted in audits that was concluded, i believe in mid2011. In addition, the g. A. O. Has the ability to audit open Market Operations and discount window lending and we now report regularly all the details the details of our open Market Operations and with the twoyear lag our discount window lending. They are fully transparent and fully auditeded, correct . Thats correct. The size and condition of the Balance Sheet. Does the fed disclose the type of assets that make that up . Yes. We have audited Financial Statements which i have a copy of right here. We report on a securitybysecurity basis all of the securities that are in that portfolio. They are reported on the new york feds web site. And we have a weekly Balance Sheet that reports significant details of our Balance Sheet. I hate to ask this question but i read some quotes lately and not by you but by audit federal advocates. How do we know the securities actually exist . We have an outside accounting firm, an independent auditor that does a thorough review of our Balance Sheets and thats whats contained in our annual report. Both the board and all of the Federal Reserve banks and the consolidated Federal Reserve system. So they do exist . They do exist. My last point, its obvious to me that the audit the fed effort is to not address aweding the feth because the fed is audited and every day you publish the numbers of the things that you own and the Credit Facilities that you put in place during an emergency. All of that is audited now. To me its an attempt to allow congress to be able to put pressure on feds members relative to Monetary Policy and i would just advocate that will not be a particularly good idea and would cause us to put off tough decisions for the future like we are currently doing with budgetary matters, do you agree with that . I strongly agree. As i indicated well, let me say more generally, if you look around the globe in modern times and you consider every country that has gone through a period of chronic high inflation or hyperinflation, what you will find is a central bank that was pressured to print money by politicians who are unable to balance the budget. I thank you, mr. Chairman. I do think one area that Greater Transparency could be utilized is in the regulatory area. I think that thats an area where we should focus and i hope that over the course of the next several months the fed will work with us in a constructive manner so we more fully understand how you go about that process. It does seem like a black box now and something should be more transparent and will be happy to work with you in that regard. Senator schumer. Thank you, mr. Chairman. Thank you for your hard work and dedication and sound judgment and timely Decision Making have been a driving force beyond the recover. Ry. You and other members have important decisions to make in the coming months. Let me urge you to act with caution before raising rates. While there may be some while there may be data points positive signs of Economic Growth, let me be clear. I believe the fed should remain committed to its policy until it sees clear evidence that shows a consistent improvement in wages. In the current environment, wage growth meeds to be a major factor and a loadstar for the fed whether deciding to raise rates. As i have said over and over again, to me, the single biggest problem is decline of middleclass incomes, strong expectations for growth of g. D. P. , wage gains have remained sluggish through the recovery, middleclass americans have not seen the benefits of this growth in their takehome pay. We know the statistics is declining by 6. 5 . 3,6000 hours lower than when president bush took office in 2001. It could reduce demand and hamper growth. Wage growth not only serves to benefit middleclass workers who have been asked to do more with less. Prior to raising rates serves the dual role towards the feds 2 target. Overall growth is rightfully a key factor in the decision, but i firmly believe the fed shouldnt raise rates until wages are back on a steady trend, steady upward trend. As you begin to consider the path towards normalization of rates, the fed must place a priority on seeing real wage growth prior to any Decision Making. Those who are worried about inflation, you always have to worry about it, but they should look at the last several years. There are a few signs of inflation and many economists believe that the chances of deflation are greater and concerns of deflation are further precipitated by the prospect of the fed raising rates too soon. I think it is prudent decision for our broader economy as well as middleclass families to wait until wages really begin to rise. So, first, do you agree its critical for the fomc to see evidence of consistent wage growth prior to deciding to rise Interest Rates and set that it is climbing above the 2 target and if it doesnt wait, what are the potential consequences . Senator, our objective is price stability, which we define as 2 inflation. And as i indicated before beginning to raise rates, the committee needs to be reasonably confident that over the medium term, inflation will move up towards its 2 objective. I dont want to sit down any single criterion that is necessary for that to occur. The committee does look at wage growth. We have not yet seen there are perhaps hipts but we have not yet seen any significant pickup in wage growth. But there are a number of different factors that effect the inflation outlook. And we will be considering carefully a range of evidence that pertains to the inflation outlook and will determine the confidence that we feel in our we forecasted that inflation will move back up to 2 . Certainly seeing continued improvement in the labor market adds to that confidence and it would add to our confidence also that over time, wages will pick up. But our objective is 2 inflation. And we will look at a wide range of evidence in deciding that. Do you feel that the worry of rampant inflation is any greater than the worry of deflation given the flatness of wages, 70 of the economy is wages, jobs, broadly defined . The committee feels i think anticipates the inflation is being held down by factors, particularly the decline we have seen in oil prices. We have also had considerable slack in the labor market and its diminishing over time. Wages tend to be a lagging indicator of improvement in the labor market. We have seen improvement and if we continue to see improvement, it would add to my confidence, especially as the impact of oil prices diminishes over time that inflation will go back up. Do you see any real evidence of inflation heading above 2 right now . I dont. But inflation, we need to be forwardlooking. The committee is forwardlooking in setting Monetary Policy. We see that the labor market similar proving and were getting closer to our goal of maximum employment. Its important to remember that Monetary Policy is highly accommodative. Weve held the federal funds rate at a zero to. 25 range and have a large Balance Sheet and these policies have been in place for six years now. We do have an economy that fortunately appears to be recovering and we do have to be forwardlooking in setting Monetary Policy. But i want to assure you we want to see that recovery continue. We dont feel the labor market is fully healed and thats a process we want to go on and we dont want to take policy actions that will hamper that. But Monetary Policy is very accommodative. Thank you. I urge caution. Thank you, mr. Chairman. Thank you, madam chairman, for joining us today. Let me share a completely opposing point of view from that of the senator from new york. Which will not be a shock to members of this committee. I cant help but observe what strikes me as a very obvious paradox here and that is, the financial and economic crisis is over. Its been over for years. At least six or seven years. And yet we still maintain crisislevel Interest Rates. Weve got no wave of defaults or massive bankruptcies going on. We have unemployment has gone from 10 to sub6 . G. T. P. Growth has been weak. I think thats easily explained by the avalanche of regulations. But its been positive for years. Consumer sentiment is relatively high. The fomc in january described the economic recovery as solid. Walmart interestingly has made an announcement that suggests we might even be approaching naru. The crisis has been over for a long time. And its not as though theres no price to be paid by having this unbelievably accommodative policy. Most immediately i see the problem incurred by my constituents who may have spent a lifetime working hard, sacrificing, saving, foregoing a vacation they might have taken foregoing a splurge here and there so they could save for their retirement and buy a c. D. , have some money on deposit at a bank, and use that to supplement a modest pension or Social Security payment. Of course their reward now is they get nothing. Zero. Thats what they earn on their savings year after year. Meanwhile, of course, we have all the risks associated with this. The risk of bubbles forming, i would argue the fixed income markets probably are a huge bubble at the moment. We have the inhibition of price discovery and financial sector. We facilitate excessive deficits because they look so manageable with zero Interest Rate environment. Credit is rationed. And what are the benefits of this . The benefits are at best a timing shift in Economic Activity. At best were moving Economic Activity that would otherwise occur in the future closer to the present, as we all know, if artificially low Interest Rates led to strong Economic Growth, then everyone around the world would have zero Interest Rates and everything would be booming and thats not the case. So i know you and i disagree on this, but i would just suggest the crisis is clearly long over. I think the time for normalization is well overdue. I hope we get there soon. I want to ask a specific question thats related and that is, youve said repeatedly that the goal of price stability is 2 inflation. Well, certainly theres a congressional mandate on price stability. But when the fed decides that its acceptable, and in fact that that is met by savers losing 2 of their purchasing power annually, and let me put that a different way, that means a 30yearold woman who is saving, by the time she retires, what she has saved at that point will have lost half of its value. Half of its gone. How is that consistent with price stability . The Federal Reserve is the fomc in carrying out congress mandate. Really does have to define how we understand price stability operationally. 2 inflation is an inflation rate that we chose largely for two reasons. First of all, its well known that price indices that we look at contain upward biases in part because their failure to adequately capture the benefits of new goods and quality improvement, so they are hard to measure, but nevertheless upward bias in price indices. And because inflation is so dangerous and because an environment of very low inflation and one of comparably extremely low Interest Rates makes it difficult for Monetary Policy to respond to adverse shots. We decided that in order to avoid damaging episodes of deflation, its wise to have a small buffer that gives greater room for Monetary Policy to operate. Thank you. Im going to run out of time here. I want to get to my second question. I would just urge you to consider the impact of savers losing their purchasing power. Historically of course we have changed a level of accommodation through open market activities, typically buying and selling securities to have corresponding changes in the level of cash. Youve suggested, if i understand you correctly, that in the process of normalizing assuming we get to that process, you intend to achieve that principally by changing the target level of the feds fund and youll do that by increasing the interest on excess reserves. And my question is, since that means over time, in a normalizing environment, the transfer of tens of billions of dollars from what would go to the taxpayers to big moneycenter banks, why are you doing that instead of simply selling the bonds, which is a more conventional way to operate in the open market operation . Remember that, first of all we will be paying banks rates that are comparable to those that they can earn in the marketplace. So those payments dont involve subsidies to banks. And in addition, remember that we have, in expanding or holding our provision of reserves, weve acquired longer term assets on the asset side of our Balance Sheet. And the spread of both what weve been paying in terms of interest on excess reserves is quite large. So although that will diminish over time, as Monetary Policy is normalized, the expansion of our Balance Sheet, even though we are even at present paying 25 basis points, interest on reserves, weve had record transfers to the treasury, close to 100 billion this past year and 500 billion since 2009. So there have been large transfers associated with that policy. That situation is likely to reverse if we get into a normalization mode . It is likely that our transfers to, our remittances to the treasury will decline as shortterm rates rise. We nevertheless expect the remittances to remain positive. Thank you, mr. Chairman. Thank you. I thank my colleague from virginia. Madam chair, thank you for your service. As you know, our economy continues to recover from the and damage inflicted by the financial crisis and the Great Recession that followed. G. D. P. Is growing, employers are hiring. Unemployments falling. So its only natural that some are starting to look ahead to a time when the Federal Reserve can start withdrawing the monetary stimulus that has been so critical to our recovery. But in my view we still face challenges. Most americans are still waiting for the recovery to show up in meaningful income growth. Longterm unemployment, while down, is still high. Inflation continues to run well below target. As it has now for an extended period of time. So from my perspective, its critical that the fed not put the cart before the horse and tighten too soon. Youve said on multiple occasions that the Federal Reserves timetable for raising rates will depend on the data. There are some who say the Federal Reserve should tighten preemptively based on unemployment or wage growth or at the first hint of inflation. Without waiting to find out if its a statistical blip. What would be the risk if the fed raises rates too soon compared to the risk of waiting