Political action necessary. What do you think we and you can do to raise the alarm that the biggest and Fastest Growing cost must be addressed . I will follow the path of my predecessor to say, not become a regular commentator on fiscal issues but limit myself to a couple of overarching points. The first is we need to get on a sustainable fiscal path. It is time to be doing that now. The second thing is when fiscal changes are made, it is important that to the extent possible they be directed at enhancing the economy. We cant effect productivity other than keeping prices stable and regulation on a balanced basis. Run risecomes to over time. You have much more authority over that. To the extent fiscal policy can focus on ways to increase attachment to the labor force and create incentives for more skills, to have greater investment, that is a healthy thing. Thank you very much. The chair recognizes the gentleman from new york. Mr. Powell, welcome. The Treasury Department is currently undergoing a review of cra and will be recommending changes to the banking agencies, including the Federal Reserve. My question is do you believe that a Financial Firms demonstrated pattern and practice of racial discriminating and lending should be considered during a cra examination . I am familiar with that process and take the point of it whethero inquire into cra policies are in fact providing benefits to their intended beneficiaries. We are providing our own input into that process. In terms of the answer to your question, i think it is currently the practice that such considerations are considered in cra exams. It is currently but i am concerned someone to defang cra and take away as part of the process the history as far as discrimination practices and patterns. Mostis why i am asking you since the treasury will be looking at the new i am a fan, i think we need to update but you should take into consideration Racial Discrimination. I am asking you, what is your position on that . I have not taken the position on that. I want to see the overall work that comes out of this and evaluate it on that basis. I may will come to the view that you have. I want to remind you that the response toress Racial Discrimination and redlining. That was one of the primary reasons of the implementation of cra. If you are even thinking of stripping up practice and patterns of discrimination you are getting the Reason Congress did cra in the first place. Noteems to me that should even be part of the dialogue. Fact, we have an article lending discrimination plaguing st. Louis. We can go from city to city across america. I have real concerns about your answer just now because to even think about removing that from the cra as much is im and advocate of renewing, when you look at where we are now and how thinking is done, it is completely different than when we initiated, but the essence of it was to stop Racial Discrimination. That we take a serious view of any kind of Racial Discrimination and look at it through a variety of consumer affair tools. This. Me ask i would like to followup with you on this matter. We can talk about these tax cuts. Taxmuch of corporate savings you think will actually go toward wages as opposed to stock buybacks, Capital Investments and mergers . I want to let you know before you answer Morgan Stanley announced 43 of Corporate Tax andngs will go to buybacks dividends which enriches the top 1 of those major investors. 19 would go to mergers. 17 would go to investment. 13 would go to onetime bonuses and raises. Nine pharmaceutical companies have already announced over 50 lawion in buyback since the was passed. How much of these taxes will go into salaries or wages and help the income disparity to increase and grow wider . We have powell particular responsibilities. We do not have estimates of that kind of thing. We dont have a fed estimates what that number would be. The chair recognizes the german from minnesota. Thank you chair powell for being here. I want to go back to something i think was touched on when you began your testimony. You spoke about the importance of tailoring regulations to fit the specific scope and practices of a Financial Institution. Your quote was even as we have been working to implement improvements, we have also sought to tailor regulations supervision to the size and risk profile of banks, particularly community institutions. I want to make sure your view on continuing to tailor regulations to the specific institution has remained the same. You are still committed to doing that . Is at theowell it heart of what we are doing at the moment, focusing on smaller institutions and make sure that regulations are no more burdensome that it needs to be. We need everyone in the Financial Services food chain from the largest banks in the world to the small Family Community banks on main streets around the country. Chairman powell indeed. Small banks creating a lot of the jobs and have a disproportionate share of Small Business lending. We really want that credit to flow and we dont want regulation to inappropriately create too much burden. Earlier, the secretary of mnuchin testified and expressed his commitment to make changes in statute to the way regulators taylor regulations based on the size and complexity of a Financial Institution. Would you also support this legislative effort where necessary to put these tailor regulations in statute . Yes. We would and we have. The devil is in the details but as a general matter we could see law changes that would enable us to tailor regulation to smaller institutions. I want to move on to another topic. On the importance of getting regulations right to benefit main street and rural america, minnesota sixth Congressional District is home to the finest and most productive farmers and manufacturers in the world. Many of these individuals making a positive Economic Impact on my district are calmed by the current formulation of the supplemental leverage ratio that fails to recognize the exposure reducing nature of initial client margin. This bank capital role is increasing, making it more the clearto use derivatives market. I hope as you and your colleagues review the slr you ame to the same conclusion coalition of republican and Democrat Members on this committee have that we must recognize the exposure reducing nature and a revised bank capital rule. You commit to working with us on the committee who want constituents to have access to affordable and competitive clear derivatives markets . Chairman powell i will. We think we need the leverage ratio as a high and hard backstop to riskbased capital and we think the current calibration is not appropriate. We are yet recalibration that would address that concern. I want to move on to one other topic before my time runs out. Five of your Monetary Policy report, february 23 refers to the labor market. There a couple of specific entries with respect to numbers of people unemployment. It is essentially full employment. I believe on page five it erences the percentage of ablebodied working aged does that are actually in the workforce. 62 . This is still abnormally low. Dont you have concern about that number . You talk about retirement being part of this. Baby boomers leaving the market place. Doesnt this have something to do with the disincentives created by our rail far system in terms of giving people an opportunity to get into the job market . We focus onell labor force per dissipation all the time. Certainly worthy of a longer discussion which i would be delighted to have. The chair recognizes the gentleman from massachusetts. Thank you for being here, and welcome. Some of my colleagues of talked about where we are. The economy seems to be getting better. I personally think a lot of the goods we are seeing today is a result of the actions we took several years ago to stabilize secure and improve the economy and it is working its way through the system. I believe that debate for another day. Comments associate my with the cra. I want to expand it in little more. I presume the fed would not be interested in an economy that just worked for wall street and did not work for main street. I assume the fed would not be interested in an economy that just worked for taxes and did not work for new york. I presume the fed has some degree of interest in at least of thestribution benefits of a good economy. Is that a fair assumption . Chairman powell i would say i think we want prosperity to be high and broadly spread. We dont have a lot of tools. I respect that. You have limited tools for a lot of things. That is obviously one of the things. Thank you for that. Are you familiar with a relatively new british law that has been enacted that requires companies of 250 employees to report income and wages on the basis of gender . Chairman powell no sir. The first to do that was barclays. That report pursuant to british law shows women at barclays earned 26 less than men and received bonuses that are 60 lower. I know some of those reasons toht have reasons as position but it goes towards the idea of equitable distribution of benefits of the economy. Are you familiar with a rule proposed by the equal Employment Opportunity commission in 2016 that was supposed to go into effect in march that would have required similar reporting by American Companies over 100 employees, on the basis of race and ethnicity . Chairman powell knows her. The Term Administration stopped it. It was proposed in 2016. Companies were given two years to work their way in. Last august the Trump Administration said no. We dealt want to know how you pay women, how you pay people of racial groups or ethnicity groups. I personally think that is her renders. I would say again, if you are interested in an economy that there is some degree of equitable and the Community Need statistics and numbers. Numbers make for good paul commentary but they dont help us address the problem. Thatmething like that doesnt seem to have impacted barclays in any particularly bad way but provides us the information we have to go forward to argue for pay equity across the board. I am a white male. I am not interested in my success being at the expense of people who are not white men. I would ask is the fed interested the would you be interested in pursuing that . You oversee 7000 entities. Mosttty large parade pretty large. Would you want some investigation . Chairman powell i am not at all familiar with the british bill or the eeoc proposed rule. These are the kind of things that congress should consider. E have an important job to do for now we are going to stick to that and achieve that. I respect that. Some degree of equitable distribution of the benefits of a good economy is your job. Not perfect equity but in the one aspect you can control, overseeing 7000 Financial Institutions. Dont you think it is a fair women,o ask how they pay africanamericans, hispanics . You dont think that as a fair thing for you to ask . Chairman powell i dont think it is a question for the fed. Boy. That is a great answer. The time has expired. Thank you. Thek you for coming before committee. Chairman powell, it is my understanding the fed has been developing an alternative to , has there been a robust costbenefit analysis conducted regarding the impact to shifting relative to to this . Say the powell let me situation with libel is such that the Financial Conduct Authority in london is said they will not compel banks to submit submissions to the panel after the end of four years. The fca can no longer guarantee the continuation. Beingwere to stop published, there are contracts in the world and that is that as the potential of being significant problem. Solving it is a high priority for us. There will be cost to doing so but they would be trivial in comparison to the failure to be ready for this change should it be necessary. What is a result of the impact . We are seeking impact from businesses that will be subject to this at the moment. Honestly though, the cost of failure to act would be potentially quite high. Rates go the opposite anticipatedo you anything that arises . Do you expect any Systemic Risk in moving . I do. Systemic risk would be increased. Think a riskfree rate, which is used to price the vast derivative markets and not so much the bank lending markets, it is more derivatives based now, which would be an improvement to have. When it was selected through were Community Banks and regional banks part of that process . Chairman powell some of the regional banks were. It is principally affecting the derivatives business in the first instance. We had a lot of different groups around the table and at this point we are broadening that to include other Financial Institutions. Do you anticipate any potential cost relative to committee banks . I dont think they should not be meaningful full costs. Likes if things continue to participate would you encourage a multiple rate approach . Yes. We have always said if people that iskeep using libor fine. What we are doing is preparing for the risk that it would not be published. We are not saying that is what would happen but we need to be ready. Of what do you anticipate will be the change that you will bring to the fed relative to transparency . Arerman powell we committed to being as transparent as we possibly can about Monetary Policy and regulation. If i remember the fed didnt even published a statement and now you look at the massive number of things we publish. I think we can continue on that path. In regulation it is important we be transparent. We are working across a broad range of issues including stress testing. In general i think it is appropriate for us to always be working on that. 50 fewer banks in North Carolina than in 2010. Do you see fed policy that would assist committee banks . A brief answer from the witness. Aairman powell it is longrunning trend. We dont like to see it and dont want to make it worse. The chair recognizes the gentleman from missouri. You for holding this hearing, thank you chairman powell for your testimony today. The u. S. Ree that housing is in a recovery mode as and theransactions Housing Market in general . Powell it is ongoing. Along those lines, i want to questionhere mr. Meeks you. I have shared with your staff a recent article from my hometown homebuyersbout black continuing to be denied conventional Mortgage Loans at a higher rate than whites, even when controlling for income alone amount and neighborhood. In the st. Louis metropolitan area africanamericans who applied for conventional mortgages are two and a half times more likely to be denied than nonhispanic whites. That is according to two years of recent data. As you know, where there is loan activity, houses have a chance to sell. Warehouses sell people move in. Where people move then restaurants, Community Centers and Grocery Stores are built. Of that is happening in low to moderate income neighborhoods in st. Louis or elsewhere in this country. My question is, what can the Federal Reserve do to ensure africans for home mortgages are treated equally, and the bad are eliminated from this process or change their policies . Can you give me any direction in that area . Gladman powell i would be to. Racial discrimination in mortgage lending is unacceptable. Wherever we have authority we will use it to stop that and punish it when it does happen. We have some of authority here. Where we have it for the banks supervisepervise, we carefully and aggressively to try and find these problems. 1968, Fair Housing Act of prohibited those practices of redlining. I share with you this article because i wanted a more extensive response from you on what action we can take against bad actors like u. S. Banks who have cited in that article the fifth largest Financial Institution in this country, who have denied mortgages across the board in the community that i represent. Activity. Es economic it doesnt help it. I would love to collaborate with your office on how we stop these policies and practices that are discriminatory. Hopefully you will be willing to work with me on that. Chairman powell yes. Well President Trump tried to take credit for december unemployment numbers showing africanamerican unemployment at its lowest recorded level, this is part of a longterm trend that started under the obama administration, which has steadily declined for the past seven years. Racial disparities continue to persist with the Unemployment Rate for whites currently at 33 point 5 . Unemployment for africanamericans at 7. 7 . But africanamerican unemployment more than twice as high as white unemployment, clearly more progress is needed. Share with us your vision for persistentacking unemployment among africanamericans. Chairman powell what we can do on that front is we can take seriously our obligation to pursue maximum employment. We understand while the national Unemployment Rate is low and in many regions the unemployment is even lower than 4. 1 come you come from places where unemployment is in the numeral twos. The chair recognizes the gentleman from oklahoma. Thank you, thank you for being here. Question i think you are my fourth chairman to be able to visit with in this environment since i have been a mem