Transcripts For CSPAN Monetary Policy Report 20140302

Discussion about about inflation and concerns and i know senator shelby asked you some questions about quantitative easing. But we addressed in your confirmation process the concern about markets overheating and longterm zero Interest Rate policy. Maybe the threat on the front end isnt inflation. Maybe it is instability in the financial markets. Im wondering if youve refined any thinking about how you may address that should it occur. Well, senator, i agree that an environment of low rates, low Interest Rates, especially when it p prevails for a long time, and we have had a long period of low Interest Rates can give rise to behavior that poses threats to financial stability. And therefore we need to be looking at that very carefully. And we are doing so in a very thorough way, i believe. There are a number of things that we are monitoring. Measures of asset prices and whether or not they appear to be diverging from historical norms. Namely its hard but trying to spot any asset price bubbles that might be emerging. Were looking at leverage, which build up in leverage can be very dangerous to the Financial System and pose stability risks. Were looking at trends in leverage. Were looking at credit growth to see whether or not that has potentially worrisome trends. In addition to that were looking the particularly through the stress tests at Financial Institutions and a low Interest Rate environment. We have to worry about whether or not theyre appropriately dealing with Interest Rate risk ls. We have been looking at that and, in fact, our current stress test includes a special portion related to and as youre looking and im going to run out of time and our chairman is very punctual, have you found anything yet that gives you concern . Do you have a tool with the zero Interest Rate policy to address that if you do . I would say at this stage broadly. I dont see concerns. But there are pockets is of a few things that we have identified that do concern us. For example, underwriting standards and leveraged lending clearly appear to be deteriorating. E we have addressed that with supervisory guidance and special exams and will continue to be very vigilant in that area. Thats worrisome to us. There are a few areas within asset price evaluations, broadly speaking. I wouldnt worry. There are a few areas where i would be concerned. Many people have emphasized farmland prices. We have regulatory and supervisory tools. To me they should be the first line of defense. But i dont rule out Monetary Policy. Just if i could thank you very much for that detailed response. We were just in listondon meeti with regulators there. I know theres a concern about balkization in our markets, i know there was some discussion of trying to address that with the trade agreement but i think its an issue that does need to be addressed, and i realize the fed will take in majorly with that. And the final point, the orderly liquidation entitle was put together and a lot of us worked on together and im proud of that title too. And its not exactly the way any of us would like for us to be. Even though it was orderly liquidation, i think the federal fdic realized when they went through the process the entities are so intertwined theres really not a way to totally liquidate. Instead coming in single entry to the Holding Company. One of the things we all have concern about is making sure if were going to use the process, and i think its sound personally, that we ensure theres enough debt at the Holding Company level. Otherwise there will be holding distortions. Where is that right now, pane when will we come up with a ruling the that gives clarity so we know absolutely we have things in place should a Large Institution fail . So i agree with you that this is extremely important. It is high on our list. We have been working globally with other regulators and looking ourselves at a requirement that Holding Companies have a minimum amount of longterm debt that would be loss absorbing. That would permit an orderly liquidation. We would need enough long it have term debt both to absorb losses and also recapitalize a company in the title two liquidation, and were looking to come at with a rule that would require that were working with the fdic on this. Thank you, mr. Chairman, i hope its a very large amount of debt held at the Holding Company. Thank you. Senator menendez. Thank you, chairman. Let me ask you the number of long term unemployed americans has continued to go down but its still st exceptionally high by historical standards. As you know longterm unemployment can permanently impair the Growth Prospects for our economy if the workers are stuck on the the sidelines for too long and their skills become out of date doch. Do you feel that the feds policies have been successful in helping to reduce the number of longterm unemployed americans . Is there anything more that the fed can do, or is there congressional action you feel is necessary in order to meet that challenge . And is boosting demand the best way to reduce longterm unemployment right now bags based on our current economic conditions. Well, we are very focused on and concerned about the high term level of unemployment. Its really unprecedented the to see Something Like 37 of unemployed in long spells. What can we do . We can stri to foster a stronger labor market generally. We dont have tools targeted at longterm unemployment. But i in taking account of how much slack there is in the labor market and attempting to stimulate demand so that theres more spending. Theres more production and more jobs in the economy, we have seen longterm unemployment inch down. Very slowly. Its taking a long time for those people to be reabsorbed in the labor force. But our approach is to foster a stronger recovery and get the economy back to longterm unemployment and they will see gains. So is there anything else that you think the congress, maybe not the fed should do in order to achieve getting those numbers historically high numbers down quicker . Well, i think its also appropriate for congress to look at what some of the special needs of longterm unemployed are. These are spells that are very damaging to families, put great burdens on families both in terms of income and even health burdens that burdens on children and marriages. I think its certainly something that congress can look at. Is helping individuals with skill sets something we should be considering . Yes, sometimes longterm unemployed do need to acquire different skill ls norld to be reabsorbed into the job market. Now i know chairman johnson asked you a question on income and wealth inequality and i want to follow that up in terms of Monetary Policy decisions. And over the last 20 years the top 1 of earners has grown by more than 86 . While incomes for the remaining 99 have grown by less than 7 . And even during our current recovery from the financial crisis the top 1 have received 95 of the income gains over the last three years while real medium income remains 9 below 1999 levels. So of course we all applaud those who achieve Financial Success and we are thankful for that. But were concerned that the vast majority of people in our country feel theyre not sharing in the economic growth. When widening income and disparity make it harder for ordinary working families to make it up the ladders it creates a greater challenge to our Overall Economic well being. So my question is, how does the fed klt for income inequality . For example, the fed is looking at broad statistics like gdp but economic is accruing to a small share of the population p while the rest still feel theyre in a recession, recession, is there a broader range of statistics that the fed should be considering . Well, i think that the trends that you have described in detail are extremely disturbing friends with very significant implications for our country, and i am personally and the fed is very worried about these trends. The major thing that we can do is, as we try to assess the state of the labor market and appropriate policy to look at a broad range of statistics and metrics concerning the labor market. Not just the Unemployment Rate. But in particular other measures that suggest that the labor market is not functioning properly. The fact that we have seen very slow growth in wanls, for example, i take as one of many pieces of information suggesting the labor market has not returned to normal and has quite a ways to go, and its something thats appropriate for us to look at as we consider appropriate Monetary Policy. Youll look at la broad range of factors as you are making your decisions . Absolutely. All right. Thank you. Senator vitter . Thank you, mr. Chairman. Thank you, madame chair for being here and for your work. As you know, many of us, certainly including senator brand and i, are concerned about Capital Requirements at the biggest banks. Can you confirm u. S. Regulators are close to finalizing the supplement ratio that will impact that and if so when will that take place . This is high on the agenda for this coming year. We have out an initial proposal on this. And while i cant give you an exact time, we we will certainly be working with the other agencies to finalize this. Kp you give us a general time frame when you would expect the fed to act . In the not too distant future, i would say. According to the wall street journal, vice chairman kokoenig said the regulators are unlikely to trade the draft proposal against all large bank assets and a similar 6 buffer at their ensured deposit taking subsidiaries. In contrast to that, there has been concern that you might follow europes lead in watering down some other provisions from the initial draft concerning things like a weaker treatment of derivatives and valuation. Can you give us any insight into where those things stand in your discussions . So, i mean, let me see if i understand what you mean here. When we came out with the proposal for the 5 and 6 correct. Do you think theres any chance that will change in the final action . I mean, this is something weve been quite supportive of. Im not envisioning okay. And deeper in the weeds, if you will, theres been some suggestion that you could back off other elements other of the draft. Do you think that is any possibility . I would hope not. I think others on the panel would hope not. I would encourage you to not weaken any elements of your draft. Is that under discussion . Im not aware if it is under discussion. I would have to look into that. But my objective would be to come out with a strong proposal. We have increased greatly risk based Capital Requirements in light of that increase. I see leverage in this base. Capital is built in suspenders. It is definitely, in my view, appropriate to increase leverage requirements. More or less in line with risk based Capital Requirements. I will just encourage a strong final set of rules as strong or stronger than the draft. I would just encourage that. Let me move to one other topic i wanted to hit. And this is actually related to this too big to fail issue, which Capital Requirements are also about. A lot of us have a concern about the squeeze that Community Banks are getting in financial sector. That has been a historic longterm friend. Its gotten even a lot worse since the 0708 crisis and since, and i would argue in some cases, doddfrank. So its going from bad to worse in terms of a the trend. If you look at Federal Reserve Board Membership, theres also a trend. And its away from representation of Community Banking supervision experience. And this shows its a little busy. Its color coated. This shows the makeup of Federal Reserve Board Members over time. And theres been a huge growth over time in terms of folks with a pure economic and academic background. In particular right now theres one person with that sort of Community Bank or Community Bank supervision experience, and she is leaving. So soon there will be none. What will your thoughts be about a requirement to have at least one person in the future with that type of Community Bank or Community Bank supervision experience . So ive had the privilege of working with governor rasken and previously governor duke. I can certainly say they made huge contributions in the Community Banking area and the background that they were able to bring was extremely helpful to us in crafting regulations and approaching our ooup vision responsibilities with sensitivity to the issues the banks face. I hope the administration will continue an appointment with someone with that kind t type of experience. F i can certainly attest its very helpful for us in doing our work. Thank you. Thank you, madame chair. Thank you. Ma d madame chair, thank you. Were thrilled youre here. I thank senator vitter for his comments and questions about capital standards. I appreciated your answer. I urge you as quickly as possible with occ and fdic to move as quickly as possible. Thank you for your response to me at the real economy in your confirmation hearing. Last friday as the board released transcripts of the fmoc meetings the reading buzz interesting for those of us that find this stuff interesting. And they are maximizing employment. But according to the new york time times, thats september the crucial, probably most important of those in september meeting fmoc members mentioned, according to the minutes inflation, 129 times. And recession five times. You speak forcefully and have about the threats to the broader economy. This implies that the institution overlooked what was happening on main street during this critical time. Now that your chair convinced us that we wont see meetings like that, where the emphasis the is so much more on inflation than full employment. Because the focus will be on ordinary american who is bear the brunt of this economy. Well, i think as you know, the feds take the mandate very seriously. And believe we should be focused on inflation and unemployment. But to put the 2008 situation in context. If you think of what happened this months of that meeting where perhaps people didnt realize how serious it was about to get. Within days or months of that meeting the most incredible arrays of programs had been ruled out by the Federal Reserve to address deteriorating conditions. An alphabet soup to report the credit throughout the economy, to provide liquidity, not only to banking organizations, but to markets that were really finding themselves deprived of it. And by december of 2008, even with all the mentions of inflation that you noted. The fmoc had certainly changed its focus, and in december lowered the federal funds raise to zero. So i think i was one of those who was urging more, faster, we need to get on this, but within flooents a great deal had been done. Since then we have been trying to do it. And so in some sense i think the fed has responded. And you, i mean, to your credit you look better in those minutes than some of your colleagues did. Thats the past. You look to the future. I want to follow up on the too big to fail questions. In november you said addressing too big to fail is among the most important goals of the post crisis period. You mentioned the resolution authority, longterm debt requirements, supplemental ratio. You have living wills and the authorities to break up institutions if they pose a grave threat to this the Financial System. Your once fellow governor dan turillo said on tuesday that were, quote, not even close, unquote, to ending too big to fail. Do you have the tools as the new fed chair . Why is it taking so long, and when is this going to be resolved . Se when will the American People know that too big to fail has actually ended . Well, im slightly surprised he said were nowhere close. I personally think weve mad a lot of progress in putting in place regulations that will make a huge difference to this. Even in orderly resolution, i think its important we were just discussing the longterm debt requirement. There are very thorn any obstacles to resolving a failing firm having to do, for example, with cross border resolution issues. How to deal with the fact that laws in Foreign Countries could make it impossible, you know, could precipitate the ending of contracts that would cause a disorderly failure. But were working very closely where the counter parts to try to resolve these issues, and you gave a list of all the things or some of the things that we have on the drawing board that were hoping to finalize within months or during this year. Beyond that were working on shadow banking. Our stress test capital in the banking system. The highest Quality Capital has doubled since the crisis and i personally think we are making strides. And im completely committed to seeing this agenda to fruition. And im more encouraged about the progress that we are making, and im committed to completing this. Thank you. One last comment, there chair. I apologize. I think that the quick accelerating the rules on occ without diluting those rules is really important, not just substantive thing to do, but really Important Message to the public that you really do mean it and you mean business on this and you really want to end too big to fail. Thank you. Thank you. I agree with you. Madame chair, thank you for being here. Thank you for listening, being patient and taking our questions. I know as a former chair for the San Francisco Federal Reserve you have a pretty good understanding of the state of nevada and the the current economic conditions. Its been over five years now since weve had this economic collapse, and i want to take a quote from the president of the st. Louis reserve that said were a lot closer to a normal economy than weve been in a long time. And i would stress and i can tell you right now, nevada is nowhere close to a normal economy. Nevada is still at the unemployment second highest in the nation. And many homeowners are still underwater. Is this the Federal Reserve or a new economic reality . Well, as you know senator nov tar nevada was one of the hardest hit. One of the biggest boom ls in housing and about the the biggest bust of any market in the country and im well aware an unusually large share of homeowners is underwater. The recovery you know, the prices have come up. And theyre coming up in a way most rapidly in some of the areas like las vegas where its the most. Its still a long way ls before theyre back in the housing market. Prices are moving back up. We see investors coming in and buying homes and converting them to rental housing. Credit is really hard for many families to get the ability to have home equity loans when its been wiped out. Unfortunately nevada is one of the states thats been most badly affected. Any time frame for that new normal . Or a normal economy . Several years i think. Several years. Can you give me your definition of full employment . To me its the state of the job market in which people are able to find jobs for which theyre qualified, and theres no single metric to say when weve reached that. I would look at a broad range of indicator ls of the labor market. The Unemployment Rate, if i had to choose one metric, the Unemployment Rate is best. They generally see a range of 5 to 6 or a little bit in that area to be a state of full unemployment in the economy. But also job flows, whats happening is necessary. What is real unemployment today . Some of the broadest measures of unemployment, like u6, which includes margely attached workers and those who are part time for economic reasons or cant find full work, around 13 . 13 bank accouthe congression office reported president obamas proposal to raise minimum wage would add half a million jobs. Some believe theyre lowballing the figure. I know its your job at the fed to maximize unemployment. I would like to hear your thoughts. I think all economists think it has two effects. One is to give higher wages to those who continue to have jobs and work, earning the minimum wage. And second there would be some amount of employment as a consequence, and theres considerable debates about just what the employment impact will be. Cbo is as qualified as anyone to evaluate that literature and i wouldnt argue with their assessment. I mean, there are a rapg of studies, and they cited them. But i wouldnt want to argue theyre good at this evaluation and if apined on this, i think they also i cant remember the numbers involved, but indicate that had a large number of individuals would see their incomes raised as a consequence, i think thats the tradeoff. Doctor, thank you. My time has run out. Thank you, miss chairman. Senator tester . Thank you, mr. Chairman. I want to welcome chair yellen. Thank you for putting yourself forward and congratulations on a historic confirmation. We were able to visit about a number of issues. Were going to visit about them again. End users are one of the issues we discussed. Clarifying the end user exemption from the margin that was included in dodd frank. And as you know, we have visited chairman bernanke, your predecessor and governor trullo. Both indicated comforted with the intent of the extension given the lack of Systemic Risk posed by users. By concern about the fed to achieve that intent. Since 2011 theres been a number of additional developments including the finalization of the framework in september, setting for forth margin standards. Can you share with us where the feds thinking stands on this issue in light of those developments . So the fed continues to think that end users do not pose Systemic Risks and we will come back and well be crafting a rule in light of the international negotiations, and i believe that we will do our very best to plak sure that there are no undue burdens poses on end user who is do not pose Systemic Risk. I thank you for that. I know your plate is full and theres many issues youre dealing with every day and people are always asking you when is it going to come ut out. So ill do it . When is the timing on that front . Im not i cant give you a date certain. Before the end of the year . I believe so. Okay. The chairman talked about bans s as your regulatory policies and the final rule released last week, the fed declined to apply the rule to nonbank financial companies. It indicated a desire to tailor the rules. But can you tell me more about what the fed has in mind with respect to the tailoring. So we understand that the Business Models of Insurance Companies are quiet different than those of banks. There are a number of ways that asset liability matching, separate accounts, and so forth that require tailored design of capital and liquidity requirements so theyre appropriate to those Business Models, and were trying to take the time thats necessary to understand in detail the businesses of these companies and what is appropriate. I would say again, though, we do have some constraints in what were able to do. Could you give me some insight into what extent might the tailoring with respect to this rule, provide a road map for how the fed might seek to tailor other rule makings . I mean, i believe we in general try to tailor our rule makings im not sure what area in particular you have in mind. With insurers in particular, but others too, if you mind. Pi mean, generally we try to tailor our rules so that they dont pose undue burdens on companies that are not really the you know, dont pose risks to is system. I would say in the case of Community Banks well, i know Community Banks are under many burdens and its not easy to run a Community Bank. If our part, we are trying to avoid burdening Community Banks with the same level of regulatory complexity that we would impose on a systemically Important Institution and the same is true in other areas where we have the ability to tailor rules to make them appropriate. Thank you. In regard to International Insurance regulation i just want to say how much i appreciate the fed moving in the direction that you spoke of earlier. I very much look forward to working with you to ensure we dont force ensurers into a bank centric regulatory model. I also want to know how important the sentiment is that the fed is heading in terms of regulating insurers is fully reflected at any International Regulations regarding capital standards that you may be a part of in your capacity as a member of the stability board. I want to thank you for your good work. As have already expressed we were very impressed with your work and look forward to getting you in the future. Senator toomey. Thank you, mr. Chairman. Madame chairman, thank you very much for being here. Welcome on the the first visit in your new role. Thank you. You know, ive been very concerned about this, our Monetary Policy for some time. I wonder if you could, for the committee, give us a sense of how you would quantify the benefits that the economy has enjoyed, assuming you believe there are benefits, from this unprecedented environment that weve been engaged in. A lot of reputable economists look at traditionally understood mechanism to be asset priced inflation, translating to more spending and the quantification of that gives some very, very modest numbers. I want to know how you get the benefits for the easing that weve had. So i dont have a quantitative estimate that i can present to you today. There are a range of estimates in literature. You know, we hit the socalled zero in december of 2008. We lowered the feds overnight Interest Rate target to zero. Standard rules like the taylor rule would have called for more accommodation. Rules like that is said we should go to 4 or 500 basis points if we could. And we could not. And so we looked for other ways to provide the accommodation. Ch so asset purchases and forward guidance. I think thefz served the to push down Interest Rates. O we have seen some significant recovery in housing. The backup in rates we have seen last spring and summer clearly seems to have had a negative impact on housing, and so i think its fair to say that we were successful in pushing down longerterm rates in terms of these policies. We did see a positive response in housing. I think in the area of vehicle sales, interest sensitive spending i dont mean to i just have such limited time. So im aware of the changing in economic statistics, but the point is you dont have a quantification for how much of that is attributable to the quantitative easing. There are estimates of a number but theres not one that youve endorsed or that you subscribe to . I have cited some. And i provide details on some that ive cited. And on the risk side of this equation, i know you mentioned the things youre looking for. Many people believe that last decade the unusual Monetary Policy, including maintaining negative real Interest Rates for an extended period of time contribute ed significantly to e housing bubble that later burst, of course. Do you agree that that was an attributing factor and secondly, among the risks that you look as as we hopefully move to normalcy, which ones concern you the most . And then i have one last really short question . So i think it will take a while for scholars to decide exactly what role easing Monetary Policy had in contributing to the financial crisis. I would not argue the idea that a long period of low Interest Rates does contribute to the buildup of leverage and may have touched up a housing bubble. I think on the regulatory side. On the supervision side, there were also failings that contributed importantly to the crisis. Were watching very carefully for the development of any such excesses. We are very focused on not allowing such a thing to happen again. And twhil in might be a few areas where i have concerns, such as deteriorating underwriting standards and leverage lending, farmland prices, a few things, i dont see those excesses having developed at this point. Wrpt to housing prices, they have rebounded significantly, but remain not back to their peak levels by any means and price ratios and housing certainly remain in normal ranges. And so i dont think weve promoted those kinds of excesses. Certainly not at this stage. Thank you. My last question. You stressed a couple of times the importance that you attach to fulfilling the congressional legislative mandate to maximize employment. As well as the other portions of the mandate. My question is would the bhafr of the fed, would the actions and the policy of the fed by any different if the fed had only a single mandate, and that were price stability . So over this last several years i think the answer is no. Because at the the moment how about today . Well, inflation is running well below our objective. And the economy is falling short of unemployment. So both pieces of the mandate are giving us the identical signal. Mainly we need an a policy. There can be situations where there could be conflicts between the objectives. And in that sense, it would make a difference. It might make a difference to have a dual mandate rather than a single mandate. At the moment there is no such conflict. My personal view is this mandate has served as quite well, and most Central Banks even if they have an inflation target also have a mandate to take account of economic growth. Although the ecb does. That is true. Thank you very much, mr. Chairman. Senator, egin . Thank you, mr. Chairman. Welcome to the committee. I was so pleased at the beginning of the hearing to hear chairman johnsons introduction and welcome to you as the first woman to head up the Federal Reserve. So welcome. Thank you so much. My first question is during the january of 2014 federal open Market Committee meeting, the committee authorized the Federal Reserve bank of new york to conduct a series of fixed rate overnight reverse repurpose operations involving securities and securities guaranteed by agencies of the United Stateses. The authorization runs through january 30th of next year of 2015. And specifies an offering rate of 0 to 5 basis points that you have the authority to waive. The program, which has been steadily extended and expanded is being considered for use in supporting the implementation of Monetary Policy. So i want to ask you some questions about this. Can you begin by describing this program . Its scale, and then your vision for its expanded use, and also if you can talk about the dollar volume of these operations. So this fixed rate overnight reverse, repurchase facility is one where were essentially borrowing from nonbanking from entities other than banking organizations. Were offering the to pay a low, fixed rate and are offering our counterparties in return for their loans to us, collateral which comes comes in the form either of treasury or Agency Mortgage backed securities. And were engaging in this program. As you mentioned, this is something technical. But we want to be table to firmly control shortterm money market rates when the time ultimately comes, which its not. Its probably ha long way off, but when the time comes we do wangt to tighten Monetary Policy and raise our target for shortterm Interest Rates. We would like to be able to execute that in a very smooth way so that we have good control over the level of shortterm Interest Rates. And the paying interest on reserves, thats something that is one tool we will be using to boost when the time comes, the level of shortterm rates. But using this new facility can also help us gain better control, i think, than we could through interest on reserves alone. So at the moment we have been experiencing with developing this facility, making sure we can smoothly execute these transactions with a range of potential lenders. We have put limits both on the magnitude of loans that we will be willing to take on, and what were paying, as you mentioned, the limit so far has been five basis points. Were pleetzed by what were seeing about our ability to carry out the exercises and its part of prudent planning that the fed has been doing for quite some time. And what about the dollar volume . It varies from daytoday depending on how much interest there is in the markets. Its up to the markets to decide. Weve typically had limits on the amount that any one firm we lend to us overnight. It was 3 billion. Now its up to 5 billion . Yeah. I think there were days at the end of the year given the pressures that existed toward the end of the year when i believe the volume rose to 30 or 40 billion. But i can get you exact details on the quantities if you would like further information. What tr the Monetary Policy effects of raising this offer rate beyond other range set than the fmocs rez ligs . Well, these are very, very low rates. Right. And so were not raising rates by doing this. Were only going up to five basis points. Were paying 25 basis points on interest on reserves and theres really only any takeup at times when there would be, you know, pressure for unusual reasons for rates to fall to below that. But were not pushing up the general level of shortterm rates with this facility at this time. My time has run out. Thank you very much. Senator manchin. Thank you very much. Congratulations, madame chairwoman. Im so pleased i was able to vote for you. And we had nice conversations concerning the quantitative easing. I appreciate the job youre doing. Thank you. Let me say i sent you along with five other regulators a letter representing my concerns of bit coin. I think its being used for illegal activities. It allows scam artists and hackers to steal money from hard working americans and its a bad form of currency because it has a deflation problem. Most recently the major change for bit coin went dark, which led to 400 million in bit coins evaporation overnight. Im concerned other countries are ahead of the curve of already issuing regulations to protect their citizens, which may lead americans holding them back. I would like to know your view on the bitcoin and what actions does the fed have planned on regulating this unstable currency . So, senator, i think its important to understand that this this is a Payment Innovation thats taking place entirely outside the banking industry. And to the best of my knowledge, theres no intersection at all, in any way, between bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the Federal Reserve simply does not have authority to supervise or regulate bit coin in any way. I think my understanding is that fence and the department of justice have i mean, one concern here with bit coin is the potential for Money Laundering. I think they have indicated that their Money Laundering statutes are adequate to meet their own enforcement needs. But it certainly is appropriate. So the fed doesnt have authority with respect to bit coin. But it certainly would be appropriate, i think, for congress to ask questions about what the right legal structure would be for, you know, Virtual Currencies that will involved nontraditional players that arent regulated. Let me just say, and im so sorry, you know how our time is around here. If theres a new American Exchange for bit coins, theyre going to use banks. If this exchange is using banks you all will have. If they use banks. My understanding is the bit coin doesnt touch banks. Why did other countries belief they that had to get involved . Well, you could get involved if Congress Wants to get involved and set up a supervisory regime. Its not so easy to regulate bit coin because theres no central issuer or Network Operator to regulate. What well do is i think probably if we can, further explore this and get recommendations and see what our ramifications would be. Sure. And we would be happy to work with you. Were looking at this and will be glad to talk with you. My other concern is Community Banks. A new Study Released this morning show that doddfrank is having a negative impact on Community Banks. Just came out this morning. Most Community Banks have had to hire at least one additional Compliance Officers and many have had to hire two. It doesnt seem like much. But former fed governor iz beth duke who i know you know very well has said hiring one additional employee would reduce the return on assets by 23 basis points for many small banks, and in other words, 13 of banks with assets of less than 50 million would go from profitable to unprofitable. Which is very concerning. And in West Virginia the Community Bank is our life blood. And its really caused a problem here. So based oen the new study 13 of banks may be unprofitable simply because they had to hire that new Compliance Officer to deal with the burdensome doddfrank. What can the banks do to protect the banks other than asking us to do our job . So we have tried in all of our rule makings to tailor regulations so that changes that are really meant to reduce Systemic Risks, that these banks dont contribute to, that were not burdening them. I mean, we have thought it appropriate that even Community Banks have appropriate capital and appropriate quality of capital and so there have been some new standards that have applied to Community Banks, but what i can pledge is that we will, in all of our rule makings, do our very best to minimize burden on Community Banks and listen very carefully through the contact of the Community Banks to understand what the burdens are and to minimize them. That report just came out and my time is up. I have more questions i will submit for the record and one thing i would like to say i hope you will consider. Yesterday it was reported that China Central bank engineered the countrys currency which is another violation of currency. Ill submit. Thank you. It is good to see you. Back at your confirmation hearing you said you thought the regulatory responsibilities were as important as the Monetary Policy and responsibilities, and i agree. But i think current fed practices dont reflect those values. So while the feds board of governors votes on every important Monetary Policy decision, the board rarely votes on issues like whether to settle enforcement actions. Last year the fed reached its largest settlement in history, 9. 3 billion with mortgage servicers affecting more than 4 million families but it was the fed staff that worked out that arrangement and the fed board didnt even vote on it. So two weeks ago congressman cummings and i sent a letter to you recommending that the fed change its rules so the board would have to vote before any major settlement. Do you support such a change . Senator i think you have raised very important questions about this and i do think it is appropriate for us to make changes and i fully expect that we will. So in principal support what weve asked for in this letter that is clear and concrete evidence that the board is supervisory and regulatory policy . It is completely appropriate for the board to be fully involved in important decisions and voting is a good way to do that. And i fully intend to make sure that we are. Thank you. Thank you. Now i want to ask about another aspect of the mortgage settlement. When the deal was struck, the fed had a big press release to announce a 9. 3 billion settlement but it turned out that of the 9. 3 billion, 5. 7 billion was in the form of credits for what the fed described in the press release as, quote, assistance to borrowers such as loan modification and forgiveness of suppressency judgments and it didnt say how the credits will be calculated and later it came to light that Mortgage Companies could get away with only paying a fraction of the 5. 7 billion. Now the fine print in this settlement could reduce the direct relief to borrowers by literally billions of dollars. So senator coburn and i introduced a bill, truth and settlements act that would require every agency to publicly disclose their settlement agreements including the method of calculating the agreements and whether it is tax deductible and so on and the disclosure would be required up front at the time this is announced. Now the fed doesnt have to wait for congress to do that, you could voluntarily adopt that Public Disclosure now. Will you do that . I agree with you, it is important for us to disclose more and to disclose as much as we can. And well look at that very carefully and try to provide for mfgs. So in principal were talking about more disclosure here. Correct. I think this is really important because this is about accountability. We want to hold our Financial Institutions accountable but it means accountability for our regulatory i agree. And i want to follow up onp senator browns question about too big to fail. You said we have made significant progress but much work remains to be done and i agree. But since the financial crisis in 2008, the five largest Financial Institutions are 38 larger than they were back then. So my question is, what evidence would you need to see before you could declare with confidence that too big to fail has ended . So im not positive that we can declare with confidence that too big to fail has ended until it is tested in some way. I mean i do believe that there are demonstrable improvements in the amount of capital and liquidity that we have put in place through stress testing and dod frank testing and there is more to come in surcharges and there is a whole agenda here of minimum debt requirements. I think it is important to feel that we have solved to big to fail and that we have the confidence if an institution were to get in trouble that we could actually resolve that institution. And im over time so i will quit mr. Chairman, he is strict with us. But i want to draw in on this a little bit. So long as the markets believe that too big to fail has not ended and they demonstrate that by reducing capital costs for the banks that are perceived to be those the government would rescue, do we still have a too big to fail problem . The markets may think we would rescue such an institution and not end up believing us until we put it through resolution so we cant guarantee that they have an appropriate view of how we are going to handle such a situation. But i do think it is appropriate to look at estimatesch s estimates of subsidies and what progress we are making. I dont think it is definitive but it is appropriate to keep track of those Market Metrics and we see that rating agencies are changing their methodology, diminishing the amount of their estimates of the amount of support that would be forthcoming and i think as we complete our work on orderly liquidation, putting in place minimum debt requirements and working with foreign supervisors to feel we could effect an ordererly liquidation if it came to it that estimate of market sub suddenies subsidy would come down. Thank you very much. And i look forward to talking about that more. Thank you. You are in the home stretch senator brown has raised this but i came at this at a different perspective. If you go through the tools that dod frank gave you that might help make the case is in in your blessing of the resolution plans, as you are, i know, well aware, you have the ability if there is an institution that such a behemoth that it has tebtsicles everywhere could not be put through orderly resolution, you have the ability to use that power to disentangle or take away part of that institution which might be a great signal because i think there are i dont want to say this with sherrod not in the room, but he continues to make a point that it would hate for us to wait until we have the moment of crisis to fully feel whether we fully got it right. I think showing strong evidence along the path, because i do think you have ive been concerned about arbitrary asset caps, and you have tools that you could use in advance of a crisis might make some of us more assured. One edit oriole comment. Second edit oriole comment. And following up on what senator manchin said, i think we felt strongly as we went through dod frank but putting the 10 million cap on the regulations that didnt fall below on the smaller institutions, i think it was good in theory, the challenges has been as best practices get built into the regular mindset even though there may not be a legal requirement for additional regulatory obligations for the smaller institutions, i think it has become kind of best practice model. So i know earlier on when sheila bayer was head of the fdic, there were job owning efforts and others and i would encourage you and your colleagues at fdic and other regulators, this is the Fastest Growing area in the finance industry and that should be a concern and in some institutions it needs to be and in some of the smaller institutions it we are affecting the market in a way, at least from this standpoint, was not what we hoped to do in putting our Smaller Banks as such at such a disadvantage and there may be ways in regard to regulation and part of it may be just a mindset that you could come back to. My time is going quickly. Let me just ask two questions totally unregulated so i can get them out before the chairman gavels me out. One is, and i know you have been hit on every subject and these are going to be completely maybe not out of leftfield. But student debt now, a trillion dollars north of our Credit Card Debt and i feel this may be the next looming financial crisis and ideas on how we get about it. Part of that has been is because of decreasing direct federal and state assistance to Higher Education and we made this addiction to debt amongst our students. I would like a comment on that and then also i would like a comment on an issue that ive raised before and i know you have not you felt i perhaps overstated but with our Financial Institutions have 2. 4 trillion in reserve deposited at the fed and i know that 25 Interest Rate that you pay isnt that much. But when you have other Central Banks like denmark which is negative and has pushed the institutions to get the money lent out which might asuede senator shelby if the banks were going more to stimulate and get that capital out into the market place. I hope youll comment on the excess reserves. Thank you very much. And i got that all out with seconds left. So clearly the student get the standing volume of government supplied student debt has escalated. On the one hand i think it is a good thing because there are these huge deferentials between what more and less educated people earn and we want people to have access to education to be able to improve their skills. But on the other hand, it may be that sometimes they dont quite know what they are buying and what the education that they may be acquiring it is important for them to understand what are the placement rates and job experiences of the schools that they are paying to go to. It is not obvious that that is always readily available. And then again because student debt is something that you cant get rid of in bankruptcy, individuals who take it on can really be faced with very substantial burdens if they ep counter encounter Financial Difficulties and that is really of some concern. On the interest on reserves, i recognize the argument you are making. I think that lowering that rate would have very limited it goes in the right direction but would have a very limited effect on bank lending. We have worried about what impact it would have on money markets that we operate in and not wanting to disrupt completely disrupt money market activities. It is something we have considered and could consider going forward. But there are conflicting things that are going on there. Senator merkel. Thank you very much mr. Chair and thank you for your testimony before our committee. I want to focus on a report that was released yesterday by senators carl levin and john mccain, a bipartisan report that chronicles how credit swiss helped wealthy americans evade taxes by stashing their money in swiss banks and highlighted flagrant abuses where employees of the bank came to seek clients at golf events and saying they were here for tourism. And set up rooms at airports and destroyed account statements that were being reviewed. Billions of dollars of u. S. Tax dollars were dodged and it is doing business in the u. S. Under the supervision of the u. S. Forward reserve board. This report very thoroughly researched, and it is critical of our own department of justice for failing to prosecute a Bank Operating in the u. S. The senator pointed out, if the swiss bank doesnt want to or comply with u. S. Law maybe it shouldnt do business in the u. S. This case has reminders or echoes of the hsbc base we saw just a year ago, flagrant violations through transactions to keep u. S. Officials out of the loop and once discovered an unwillingness by the Bank Regulators and the d. O. J. To held anybody hold anyone accountable. And senators levin and john mccain asked the ceo to admit yesterday and he did admit to, not one person was fired for flagrant willful violations of u. S. Law from the ceo on down. It is the same story for hsbc and any other banks that were involved in predatory transactions that hurt american citizens. So i guess my question is this we have a situation where the government refused and this is the government of switzerland, refused and blocked the identification of the folks who were stashing their money in switzerland, were talking about 22,000 u. S. Customers with swiss accounts of which less than or about 1 , the names were shared with the u. S. If they are not going to share the names for these illegal activities, should the forward reserve board be using its Regulatory Power to say if you cant play by the rules, you cant bank in the u. S. . Well, you know, certainly in our work with institutions it issin couple bent to make sure they comply with the law and when there are violations of the law we will refer it and have referred it and will refer it to the department of justice if there is criminal behavior that is involved. And the department of justice should be pursuing that and i think that the behavior that senator levin uncovered with respect to this institution is both illegal and highly unacceptable and it should be pursued. So certainly a criminal action being referred to the department of justice is appropriate. But you also have powers. You have powers for how banks operate in the u. S. That are separate and independent of the department of justice. Should the Federal Reserve being used these powers in reaction to this type of criminal behavior . Well our obligation has to do with safety and soundness, and to the extent that these practices are illegal and we have an institution that is discovered not to be complying with the law, we have we have an obligation to act to make sure that it comes into compliance. And if we dedekt behavior detect behavior that is criminal it is our obligation to refer that to the Justice Department for prosecution. So one of the powers you have directly is to remove executive of banks when they misbehave and is it your intention to pursue this situation and to explore whether that type of action is appropriate in this situation . I will discuss with my colleagues what is appropriate. I dont have a definitive answer for you. Thank you very much for pursuing that, ill certainly want to follow up with you because when we are talking over a billion dollars of tax evasion and of 22,000 americans engaged, we cant even get more than 1 of the names of folks and yet it is up to our regulatory agencies to decide whether and how a bank participates in the u. S. Economy. And if we are holding u. S. Banks to one standard and letting foreign banks operating by a completely different standard, thats a fundamental unfairness and it is also an unfairness to ordinary americans. If ordinary americans are engaged in tax evasion, they can serve a lot of years in jail. In this case we are talking massive facilitation of tax evasion by a bank now well documented by mccain and levin and it seems there should be some accountable and accountability and my folks at town hall say why is this, the hsbc, they facilitated terrorist and Drug Networks and violated sanctions important to us, to prevent iran from obtaining Nuclear Items and this is another chapter and new opportunity to change the story of fundamental justice and fairness and i would just ask that you tack a very serious look at it. I will. Thank you. Senator shelby has a brief point to make. Madam chair, thank you very much for sticking around with us. I pose, is the fed inconsistent. Let me explain. On one hand there are gs securities on the face value and under the other hand under sg i mean under [ inaudible ] regulation is asking Financial Institutions and our banks that hold the same gse backed securities that the fed has to take a 15 hair cut when risk weighting such aspects for basil three calculations is my understanding of what is going on and in the approach by the fed to its own portfolio as opposed to the portfolio of the banks that it regulates, it looks like on Monetary Policy you have one thing, your own stuff, and then the banks who hold about 40 of gses prudential regulations looking a different way. Well, senator, you mean they have Capital Requirements . That is right. That is exactly right. Liquidity. They call it new liquidity recovery under the baz ill three. Why would the fed have a liquidity . The banks. Go ahead. You mention we carry these on our Balance Sheet at face value. That is an Accounting Convention that we use in fed accounting. We also report when there are Price Fluctuations for these securities. We report that in our financial account so the market value of these securities is i understand that. But at the same time arent you on one hand treating as a regulator, your banks say they have to take a 15 hair cut on gse holdings and the fed is different. I know you do different things. The approach should be consistent or should it not . I mean we want to make sure in the liquidity coverage ratio that banks have adequate liquid assets to be able to meet potential withdrawals that they can face over a period of about a month. Sure. And while Mortgage Backed securities are assets that can be sold, they are somewhat less liquid than treasuries and the most liquid and cash, and so in computing this we put on place a 15 hair cut. But to say that the same requirement should apply to the fed, im confused about that because we dont have the possibility of having runs on the forward reserve. Maam, i was raising the inconsistency in the approach. Is there an inconsistent approach or do you say one is good for the banks and the fed doesnt need that . Is that what you are saying . I believe that the fed doesnt need that and we are not in this area of liquidity in the need to maintain liquidity that the forward reserve is quite different than an ordinary commercial bank. We are not subject to liquidity runs. And to me, it is different. But in the same you are treating securities differently. You are treating the gse backed securities in a different way you are basically weighing a hair cut of 15 discount of a value of those securities, is that correct . Well because we think they are somewhat less liquid than, say, treasuries and because they are somewhat less liquid the markets in which they trade, there needs to be some hair cut that they arent quite as good as cash or treasuries in terms of meeting potential runs on a bank or liquidity drains and to me that is an prooptd recognition appropriate recognition in the difference of liquidity between Mortgage Backed securities and treasuries or cash. 15 is a pretty good number though, isnt it . It is something. Does it seem like a high number. Is that an arbitrary number that has been brought forth to risk weight something at a discount of 15 . There are judgments that have been made throughout about what the appropriate rates of discount a lot of the Smaller Banks are concerned about this because they have bought a lot of gse securities and if they are going to be risk weighted adversely in their portfolio, it could cause them a problem, as you well know. So we put this proposal out for comment and we will certainly look at all of the comments. Well look at it closely is all im saying. We will look at all of the comments that come in and try to take that into account as we craft a final proposal. Thank you, mr. Chairman. Chairman yellen, i want to thank you for your excellent testimony. This hearing is adjourned. Reco gentlewoman from florida, ms. Roslehtinen, distinguished members of the Security Council. Deputy secretary general. The media. Thanks for having this meeting on such a short notice. Thank you for your comments and presenting the statement of the secretary general. What i am going to state the situation continues to deteriorate. Russians have you legally entered the territory of you legally russians have illegally entered the territory of ukraine. The counsel has authorized military force against ukraine. The troops already there and their number is increasing every hour. This constitutes an active aggression against ukraine. It threatens the sovereignty and territorial integrity of our country. The Russian Federation does not comply the buddhist test the past budapest memorandum it is dangerous to the principal. Russia rejected the proposal on august 7. The federation violated the principles of charter of the United Nations. Time, in this fluid situation, the government of ukraine has quested to hold this meeting. We call upon the Security Council to do Everything Possible to stop aggression against ukraine. We are calling for the international monitors we ask all Member States of the United Nations to demonstrate solidarity with the ukraine to protect the very basic principals of the United Nations currently brutally violated by a permanent state, a prominent member of the Security Council. Thank you, madam president. Thank you for your attention. I thank the representative from ukraine for his statement and i now give the floor to members of the Security Council. I give the floor to the representative of the Russian Federation. Thank you, madam president. First of all, i would like to thank my i would like to express my sympathy to you. Under your presidency in just the two hours we wasted on discussing the format for this meeting, and we agreed that in an open format only three people would speak. Mr. Ellerson, my ukrainian colleague and the Russian Federation. As i understand, some of the colleagues of the Security Council already intend to break with this, but what can you do . There is a game without rules. I would like to thank him for his briefing and support the idea he ended on, the yad that the idea in this situation cooler heads must prevail. Unfortunately, you must note that my ukrainian colleague did not go for that and in his speech what i heard was a number of terms we cant agree with. Thats characterizing the situation in ukraine and the actions of the Russian Federation. The colleagues we discussed the crisis, a crisis which should not have taken place. In order for it to occur there was no objective reason for it to happen. There was and there still is a fraternal country of ukraine, our neighbor. If you talk about this in terms of the last fall situation, the legally elected president yanukovych he is relying on a democraticallyelected parliament. Truly the country is dealing with a serious economic challenges and with the leadership of ukraine, they have serious decisions to make. In particular, they need to make a decision whether they will join or they will assign an agreement of association with the eu. This is a complex decision. One of the mistakes of the ukrainian leadership maybe was the fact that at the last minute they realized that that agreement on association that was being proposed by brussels could have economic consequences for ukraine. In these conditions, the ukrainian leadership, the president took a decision that is fully constitutional and it fully meets the paw roughing prerogatives of any state to refrain from signing an agreement with the eu. That didnt mean as many have said that there was a full reputiation. Just that he had to weigh the circumstances that had come together at that time. I repeat that was a decision which was fully within the legitimate prerogatives of the ukraine. I have a question, why did this problem need to be result in street manifestations . Why these street demonstrations need to be encouraged from abroad, encouraged by people from the eu . Why did the speakers of several countries of the eu, why did they need to appear at these meetings that were ignited by protests against the decision by the ukrainian leadership . Why did officials need to talk about bringing the working up the public and whipping up leaders of the opposition . Why is it that why did there have to be such crude interventions in the internal sovereignty of the ukraine . And then another question to be asked, during the crisis reacting to these protests, the president yanukovych and i dont want to condone his actions. Many things could be said. I will just repeat the facts. That the leader a leader of the opposition was offered the pm. Why not accept that proposal . Why continue to ratchet up the situation . He could have created a government if he wanted to sign an agreement with the eu. He could have, and then he would have been responsible for the catastrophic consequences, economic consequences for the country if he signed that agreement. And then in 2015 there will be president ial elections in ukraine. If people dont like the opposition to mr. Yanukovych, let them elect another one. That happened before. Yanukovych lost elections and other president s came into ukraine. Why continue to whip up the situation . Have some why some of our western colleagues are trying to spur on a situation of confrontation. Why these militants need to throw things at the police, molotov cocktails . Why go after the police . One of the scoldings or one of the terrorists one of the criticism have been made against people. There is no criticisms of people fending for democracy. Why do they why do they exist if they are going to react to this type of manifestation . Why should they exist . As a result of the development of the crisis in this way, an agreement was signed, the 21st of february, and president yanukovych and the opposition signed it. In it there were signatures of three Foreign Affairs ministers. Ministers of germany, france and poland. It was an important agreement reached. At a later stage of the crisis, it gave an opportunity to get out of the crisis situation. You under under this agreement there will be a government intended and should be constitutional reformed undertaken and the constitution being adopted 2015 and there will be president ial elections. The opposition and authorities of the opposition said they would not use force. They were to give over their weapons to who ever was supposed to keep them. Why was this agreement not complied with . Why was it not implemented . Why did we hear threats against president yanukovych as a result of which he had to leave kiev. Why is it that the parliament with its new membership, the ukrainian parliament, with the dramatic changes why did it first off the top make a decision to take away the language legislation which says that people have the right to use specific languages, minority languages of not only russian language, but other minority languages. Why the first day was that decision made to take those away. It was not a political process they were talking about. One of the leaders of the opposition was called was trying to push his call themselves a victor and trying to force his will on people. I am not talking about whether there are a lot of them or not a lot of them, but there were a number of groups. Among these groups there are radical extremists. Activists who work on ukrainian security, work in that area. Now, what has taken place the last few days which is really why we are meeting today, well it is a very difficult situation the last few hours has not happened in crimea, but in the eastern part of the ukraine there has been a lot of concern and particularly in crimea and we have seen the emergence of people of kiev with the intention of repeating what is in kiev, what has been happening in the western part of the ukraine. They want to replace the regional government. So that is a great concern in the eastern part of the country. Especially in the republic of crimea. In these circumstances, the head of the ministers made statement and today this is referenced. I will quote the statement, in spite of the agreement that wags achieved by the central authorities, there cannot be a change of the security without the agreement of the council and the republic of crimea, the violation of the constitution and the violation of laws on the police yesterday, the 28th of february and the beginning of the Police Action has meant that in this interim with with the people that are there that are trying to control the situation in the territory because of the situation there has been disorder and with use of weapons. So then the statement i will quote now that was issued today by the minister of Foreign Affairs in russia, on the night of march 1st, some unknown people sent from kiev made attempts to take over the ministry of internal Affairs Building in crimea because of these publications there were casualties. There was an attempt to take over other buildings. The attempt they tried to block it. There were some politicians in kiev trying to stir up the situation on the peninsula with upon orders of kiev. It is very irresponsible to try to rip up the situation in a situation that is already very tense already in crimea. What i mentioned from the Prime Minister of crimea he went to the president of russia and requested assistance to restore peace in crimea. At this information is in appeal about mr. Yanukovych, his removal from office we thought was done done in not a legal way. As a result of this statement or appeal the president of russia under constitutional procedures sent to the council of the federation the following request, that due to the extraordinary situations taking place in the ukraine, threats to the lives of russian citizens, the military people, the Russian Federation that are there would have been sent there under the agreement we have with ukraine and crimea under the parts of the constitution, the russian we have gone to the parliaments and asked for the use of force by the Russian Federation on ukraine until there is a normalization of the civic and political situation in ukraine, end of quote. I would like to draw your attention to on the territory of ukraine and not against ukraine as my ukrainian colleague said, but on the territory of ukraine until the normalization of civic and political situation in this country. On the recent reports that i have including on the statement by the representative of the president of the Russian Federation for the press, a decision on the use of armed forces on ukraine, the president of the Russian Federation has not taken that decision. Now how to get out of this situation, i repeat as said correctly, we need cooler heads to prevail. We have to get back to the political constitutional path. We need to go back to the agreement of the 25th of february and establish a National Unity government and we need to put an end to attempts to converse with opponents, ethnic opponents, political with force and International Events of interest in ukraine that we need to sideline the radicals. And we have to with those opponents in kiev, they have to get away from the radicals. They have to get back to the territory of ukraine because such actions that they are taking could lead to a very difficult developments which the Russian Federation is trying to avoid. Thank you very much, madam president. I thank the representative of the Russian Federation and i now give the floor to the representative of the United States. Thank you, madam president. The United States renews our call for the International Community to support the newly formed government of ukraine and to prevent unnecessary violence. Id like to take a moment to respond to the comments made by the representative of the Russian Federation. Actions speak louder than words. Early this morning the russian duma authorized the use of force in ukraine. This is as dangerous as it is destabilizing. We are deeply disturbed by reports this morning of Russian Military intervention into crimea. This intervention is without legal basis. Indeed it violates russias chit meant to protect the sovereignty, territorial integrity and independence of ukraine. It is time for the russian intervention in ukraine to end. The Russian Military must stand down. The aspirations of the ukrainian people must be represented and political dialogue must be allowed to continue. We applaud the remarkable restraint and commitment to the dialogue that the you Ukrainian Government has demonstrated. We recognize and respect russias historical ties to the ukraine. Instead of engaging the government of the ukraine about its concerns of ethnic russians it ignored both and acted unilaterally and militarily. It is ironic the federation goes out of its way in this chamber to emphasize the sank tau tee of National Borders and sovereignty, but russian actions in ukraine are violating the sovereignty of ukraine and pose a threat to peace and security. Russia alleges various actions against and threats to minority groups in ukraine. We see no evidence of these actions yet, but russias provocative actions could easily push a tense situation beyond the breaking point. Russias incitement of groups to colt out to protest is not responsible behavior in the present situation. There is a clear way forward that would preserve ukraines sovereignty and territorial integrity and address russias concerns. First, russia should directly engage the government of ukraine. Second, international monitors and observers including from the u. N. And osce should be sent to ukraine. Thats the best way to get the facts, monitor conduct and to prevent any abuses. Russia is a leading member of both institutions and can participate actively to ensure that its interests are upheld. The immediate deployment of International Observers from the osce or United Nations to crimea would provide transparency about the movement and activity of military and Paramilitary Forces in the region and diffuse the tensions between the different groups. We are working to stand up an International Mediation mission to begin to de escalate the situation and facilitate peaceful political dialogue among all ukrainian parties. Our paramount concerns are to end the confrontation and to find a solution that allows the ukrainian people to determine their own destiny, their own government, their own future. That must be the goal of this council and the International Community. The United States will work with ukraine, our allies and partners in europe and around the world, and here at the United Nations to uphold and protect the sovereignty, unity and democratic future of ukraine. Thank you. I thank the representative of the United States, and i give the floor to the representative of the United Kingdom. President , as the panel presented that some eu Member States were involved in making the crisis worse i would like to set out my governments position. The United Kingdom is deeply concerned about the tensions in the crimea peninsula and by the fact that the Russian Parliament authorized action on ukrainian soil against the wishes of the Ukrainian Government. This action is a grave threat to the sovereignty, independence and territorial integrity of ukraine. We condemn any act of aggression against ukraine. We have therefore sought an immediate and full explanation from the Russian Federation for the decision to authorize military action on sovereign ukrainian soil and the basis of it under international law. Earlier today my Prime Minister called on all parties to think carefully about actions and think to lower and not escalate tensions. Yesterday my secretary spoke to the ukrainian acting president and made clear the United Kingdom support for the new government. He urged him that the government takes measures to unify the country and protects the rights of all ukrainian citizens including those from may north groups in the spirit of inclusiveness and assured him of the United Kingdoms commitment to the territorial integrity, unity and sovereignty. Madam president , the United Kingdom Government Supports the Ukrainian Government request for urgent consultations in accordance with a 1994 budapest memorandum signed by the United Kingdom, the United States, russia and ukraine. We see no reason why these consultations should not take place immediately. Yesterday, this council expressed support for ukraines unity, sovereignty and territorial integrity and agreed all political actors should show restraint. It is critical the Russian Federation respects the independence and territorial integrity of the ukraine and takes immediate steps to calm this dangerous situation. Thank you. I thank the representative of the United Kingdom and now give the floor to the representative from france. Madam president , since the beginning of the crisis, france has worked toward a solution which would allow for the stablization of the ukraine and democratic ukraine that respects the rights of all communities and members of the great european family. This was the meaning behind the mediation of poland, france and germany. This was the sense of the 21st of february agreement to which the federation at the time refused to give its support. It is not an issue of a geo political argument of another time. Today we cannot ask the ukraine to choose between east and west. That would be contrary to all of the values that have founded the European Union. I would remind you that its existence is based on the refusal to go back to those practices of another age which led our continent to two disasters in one century. The organization given by the Russian Federation to deploy troops in ukraine, if followed up by facts could be a threat to the territorial integrity of the country and would be a Dangerous Development for peace. In the ukrainian crisis, france will attempt to provide a political solution that will serve the interests of the ukrainian people and will preserve the territorial integrity and unity of the country. We call for all parties to show restraint and responsibility. We ask the ukrainian authorities to take all necessary measures to ensure civil peace, coexistence between communities and taking into account the legitimate concerns of the Russian Federation. We expect from all of ukraines neighbors that they help ukraine in that difficult endeavor. France and the European Union are ready to make a contribution to a peaceful end to the crisis. The it will be decided on the third of march at the council of foreign ministers. I thank the representative of france for his statement. There are no more speakers on my list. I would now like to invite members of the council to informal consultations of the issue. The meeting stands adjourned. [captioning performed by the national captioning institute]. [captions Copyright National cable stat light corp 2014]. The ukraines ambassador to following the emergency meeting of the United Nations Security Council, the uns ambassador to the when spoke for about 25 minutes. I have a lots of questions. The first question is, the Russian Federation decided on peacekeeping how they could explain the next question. It was stated that today the parliament took the decision on military intervention today. But never said it was never explained in terms of international logic why Russian Troops appeared. I give you the facts yesterday of what happened. Which means there is no explanation why they are there. I cant comment on the statement that it is a direct intervention. We have not had the answer. Why do they refuse to uphold the agreements with ukraine. We advised the Russian Federation to work with the existing bilateral agreement. He was not ready to answer my question why they refused to act and fulfill their obligations of the budapest memorandum. Many important matters were sent by some of the speakers as to the Immediate International international occupation. This is what we stated yesterday before the Security Council. Now we are getting the reaction. You had the suggestion of the british delegation. Why not to immediately convey the consultations the guarantors of sovereign territory. I think that the address was very constructive focusing on the role of the government to face the problems and address all the existing problems. As for the language problem, i told you that the government stated clearly that the parliament would be back with the decree on the language issues based on the charter of the minority languages. Which was absolutely in 2012 when the parliament adopted the previous law. That is why they listened. Now they can compare. They have more questions than answers because we have not explained why aggression has started. And is continuing. We have the decision as to the intervention which was not taken. The troops are there. The number of them is enlarging. If you go to the recent facts we tried to give you before the meeting, the facts that is why we would like to have more Media Presence in crimea. To stop any lies and any falsified information from their, which is not helpful. Including what we had from the distinguished head of the russian delegation. He called to the minister of the interior. What happened in the office . Nothing. No invasion. Why to bring this information it came from ukraine or somewhere. That is why you are badly needed there. To spread the truth and stop the violence. Can i speak . Somebody is lying here. What you are saying it is completely different on three issues. Including the claim that the interior ministry was attacked. And there are extreme rightists in the government. The other issue is how this happened. You claimed that president Viktor Yanukovych ran away. The opposition leaders said they could not control the people on the streets and he left because his life was threatened. That is a contradiction. Can you address that . And the issue of whether there are extremists in the government. I can repeat it now. As to Viktor Yanukovych, he left his constitutional duties. The agreement started with the demand to bring to the parliament the old constitution. And then to start amending. It was provisioned that immediately after the decision, the president would sign it. He disappeared. Why . A lot of questions which have come from his own party. They called him a person who betrayed them. He even failed to come to the rally. He promised to come but he did not. Then he disappeared. We discovered he was in russia. Now he gave the press conference and stated that he is legally the legal president. He left his constitutional duties. That is why the parliament took that decision. They could have announced impeachment or do what they did. To state that he left his voluntarily, his constitutional duties. No. No threat. What is being spread around that allegedly the people demanding to bring him to the tribunal cash it happened days after. This is lying. What happened . The aggression you are talking about. Are these acts of war by russia . Are you at war with russia . No. We are not at war. As i said yesterday. We are trying to avoid any clashes. We are returning to the resolution of the General Assembly of the United Nations. 314, this was dated december 14. There are several provisions. Any of the following acts, regardless of the declaration of war, shall be subject to the provisions of article two. The blockade of the ports or closing of a state by the armed forces of another state. The ukrainian fleet was blocked and they closed the ports are blocked. The invasion attempted by the Armed Forces Just to, you may find these the resolution yourself. The use the forces of one state which are within the territory. We have the navy base for the russian fleet. With the agreement of the receiving state. In contravention beyond the termination of the agreement. This is exactly what we stated yesterday and keep stating. They have their military presence of the black sea but it is limited. Now they are enlarging their presence. Look at this provision and you will understand they refer to acts of aggression. That is why i made in a statement these are acts of aggression. The timing, the troops moved before the vote of the duma. What is the significance of that . I have been looking at the budapest memorandum. It prohibits economic coercion. Are the guarantors required to come to your defense . Unfortunately, in history since 1994, the Russian Federation tried to suppress us with economic tools. We use the arguments of these agreements. It did not work. As we have today, the European Union and United States, the guarantors they are ready to provide assistance and Financial Systems. Your first question we have had no clear answer for my statement. The troops appeared long before the duma took the positions of today. This action has been prepared long before. It was a wellprepared action. That is why my feeling and position is that the provisions of the charter, the mechanisms and principles of the Security Council were violated severely. They destroyed without any consultations with anybody. They decided to protect it was a mistake in the statement of one of the colleagues. The decision was taken not to protect the at make russians but the russian speaking population. If you speak russian, you are to be protected by the Russian Federation. Because the deputy harry secretary says this is the time of cool heads, calm, you were asked if the government might be put the clock one week have a conversation with the former president or still the president. You say Viktor Yanukovych is crazy and you do not talk with people like this. This is in contrast with what the deputy secretary said. No. It was one of the first recommendations stated by the american ambassador. She asked russian colleagues to launch immediate consultations with the new government. We consider the composition of our power in the parliament and cabinet as legal. Absolutely legal. We wish to speak with our russian colleagues on that level. Viktor yanukovych disappeared not supported by his party. The states around the world decided to recognize the legally elected government. The sent messages they decided to send a message recognizing the legality of parliament. The parliament had changes in their membership. That is why what we demand, asked the Russian Federation long ago and told you yesterday i stated it. We propose to them the consultations but they refused. We have this possibility for this address. We are ready for consultations. We demand all those troops to be withdrawn immediately. They are illegally present there. They are to move back. Can the eu play in honest broker part . And second, your government has called for maximum alert for the armed forces. Do you feel the Russian Forces may move further than crimea . It was stated today, the decision of the Russian Parliament was not focused on crimea only. The decision contains the full name of ukraine. This is something which would like to not even guess it could happen. The European Union did a great job mediating this crisis. They demonstrate solidarity to help us economically which is important. The eu focuses on all the problems in ukraine which we have had since long ago. Demanding that we be inclusive and find solutions for any group of people in any region. Any ethnic minority. This is important. It means we need good advice. And also we need good support from them. One more question. Thank you very much. Thank you. That you very much. Their party is different. The leaders made some statements for some people, but it does not reflect the majority. In the Western Region very constructive. Will there be a National Unity government . I explained the effects in our history yesterday. The opposition stated that that the new government would be the government of the peoples trust. The people on the streets demanded permission to bring the candidates before the voting in the parliament to the street. They agreed. They were even refused. Some of them were fused because the streets demanded no former people from the administration of the former president. No people who had suspicion of corruption. They demanded professionals. So it means that the community could keep an eye on this government. At least what we got from all these processes, revolution of dignity. Someone from the media it was a priest, today i read his statement. A revolution of dignity. It turned to the defense of the dignity. We have a meeting. Can you confirm one thing . Your spokesperson said there are 15,000 more Russian Troops in crimea. Can you confirm that . What i know exactly, what i spread it among you this is official calculations. We know it is growing. We know. The black sea presence. Most probably. Thank you. How many countries have sent notification of recognizing the new government . Starting from the United States, european states, it is coming. I am not arithmetic majority . Or qualitative majority . They need changes in our country. These people corrupted because of huge corruption. Unemployment and poverty. It happened a long before. People were suppressed during the last regime severely. Thank you very much. [captioning performed by the national captioning institute] [captions Copyright National cable satellite corp. 2013] coming up in a moment on cspan, todays news and headlines on washington journal. Followed by tom harkin on newsmakers with a look at the minimum wage and 2014 midterm elections. Then bob corker speaks to reporters at the Christian Science monitor breakfast. Later, a hearing on military sexual assault, posttraumatic stress disorder, and suicide. Told, both as students and a nation, in terms of imagination, is that there are all kinds of marches and demonstrations that occur. They are really done by these famous, iconic people. Arks was so tired that she refused to get up from the bus in montgomery, alabama and sparked a bus boycott. A young preacher, who even the president referred to during the election as a young preacher from georgia, which was dr. Martin luther king jr. He let africanamericans from racial oppression. Rtin theynd ma could do this stuff and barack could fly. They sound good, but they simplify a more complicated history. Really involves so many africanamericans, women and men, who proactively dismantled racial segregation. Including rosa parks. She did not just refused to give up her seat by accident. It was a concerted, strategic effort, to try to transform the constitution. Joseph specializes in africana and black power studies. His latest book will be in stores march 9. He will be live, indepth at noon eastern on book tv. Coming up on washington journal, your calls and todays headlines, followed by john fund on the growth of the tea party. Than the president of the American Federation of teachers and issues facing organized labor. The future of the u. S. Military in afghanistan and the troop draw down. Journal is next. Host good morning. When Congress Returns this week, Foreign Policy will likely be front and center. Overnight the Ukrainian Government was mobilizing troops in crimea. This following the actions in new york. Also, a series of phone calls between president obama and putin and others in the russian government. Place with taking 15,000 Russian Troops now in the country. It is sunday morning. The head, we will get your reaction to a