Okay, thank you at that end, i mentioned that im supportive of the provisions you have include in the recent treasury report. I hope that the Federal Reserve is taking some recommendations seriously. Have you read the report yet or are you aware of it yes, i have read the report and there are many very useful and productive suggestions that mirror things you have been thinking and doing ourselves with respect to tillerian the rate we are always looking for ways to reduce the burdens that are very useful there are a few points where we have a different view, but a lot in it that is very useful. I look forward to working with you on that while our branch of the government is a check on the executive branch and agencies, we want to work with you to try to improve the ability of our banks to be able to do the job of helping our communities grow. Ive worked with the committee in the past. My district has been caught in purgatory for the last five years. The agency has blocked the merger and acquisition and is concerned over certain products, the same products that have been encouraged by the fdic and the state of missouris finance. Your staff has forced this bank through the years to produce document after document, which they have done the bank has made several offers to remediate, but the fed has rejected them. Midamerica has spent more than 2 million legal fees, and this is a small bank that cant afford to do this, and this process has to stop. The Federal Reserve after five years owes this institution a determination of whether they can get this done. The first question is, are you aware of this case i am aware of this case okay. What can be our expectation and w resolution of this well, im not prepared today to comment in detail on what is confidential super advisory matter but theres a set of complicated issues pertaining to consumer i understand where youre coming from. The bank on my side is very open about what their problems are, the concerns are we have an elderly individual who has medical problems who wants to divest in themselves of this bank. They have a very viable wealth, structured well financed capitalized bank that wants to take them over basically what is happening is a punitive way of punishing the bank for a product that is something the fed didnt like, quite frankly. So the five years this has gone on, and that is enough, and so the opaque rules and unwillingness of the fed to work cooperatively with the banks and the attorneys and the regulators is not something we can continue to go on and support and so this is why theres a treasury report. The treasury report has solutions to some of the problem that is the Regulatory Committee has. And that is the punitive action of some of the actions taken by the agencies including yours i think we have to stop to increase the variability in the banks and improve their communities and help the economies grow and we look forward to that. I yield back time of the gentleman has expired. The chairman recognizes the man from minnesota, mr. Elson. Good morning, chairman yellen thank you for being here today let me start out by saying, im really happy about the appointment of rafael bastic as Federal Reserve president in atlanta. He meets the legal mandates and has great expertise. Ands, he increases the number of africanamerican Bank President s from 9 to 1. A lot of the cause of Slower Growth over the last few years you have been exposed to some peoples theories as to why we have Slower Growth but i was intrigued by this book i read recently called makers and takers. I dont know if youre familiar with this book, but its a book that really talked about the financialization of the economy. And i want to get your take on it the author notes that the reason for lower wages is from those in the Financial Services sector, banking and real estate hedge funds and wall street. In effect, the author has a stat up there on the screen i would like you to take a look at she says, that while the Financial Sector is a little less than 7 of the economy, it provides about 4 of the jobs but earns a whopping 25 of corporate profits. 25 of corporate profits, thats a lot of money and so, as a result, you see money flowing into those sectors rather than, you know, plant and equipment and other sectors of the economy that may lend themselves to greater employment do you have any take on that do you have any impressions about that particular theory so the Financial Sector has grown in importance relative to the u. S. Economy but my sense is that if we look at the plight with respect to wages and jobs of middle class families that have seen diminishing opportunities and downward pressure on milt waddle wages, we have to take effect of the technological changes that have eliminated middle income jobs and globalization that have reinforced the impact of tech non logical change and those things have to be an important piece of understanding what has happened. Im sure the technology does play some role, but we have always had technology, havent we i mean, when we went from horsedrawn carriages to cars, people who made horseshoes has to find Something Else new to do so im always a little skeptical when i hear people Say Technology we have always had technology and always had more employment but we have kind of the slow growth period and had some people say, its because people dont want to supply labor because they are living too good on welfare and we also is it possible the Financial Sector is channeling investment into financial, you know, activity and not into agricultural if you look at clothing stores, hundreds andhundreds of communities are losing retail access of course, you know, you can point to technology, im sure thats part of the explanation, but can you share some ideas or point to some analysis to explain why the Retail Sector is being hit so hard . You could say amazon, but im doubtful that explains the whole problem. Do you have any specific information on the role that finance may be playing in part of these Decisions Companies like sears need to sell real estate to have returns on financial equities. I dont have any specifically for you on that. I would be happy to take a look. I mean, i would point out that for many years, Many American companies have been sitting on a lot of cash. And have been unwilling to undertake investment and plant of equipment on a scale that we would ideally like to see. So there are a number of Different Things going on. Thank you very much i yield back my time time of the gentleman has expired. The chair now recognizes the gentleman from michigan, mr. Huizenga thank you, janet yellen sorry, im hiding behind a couple of my colleagues here thank you. It is good to have you, janet yellen i appreciate having you here i want to touch briefly on something that chairman barr talked about the Labor Force Participation. These are u. S. Bureau labor statistics, civilian Labor Participation rate this is a Study Released by the st. Louis fed. Im sure you are familiar with it it was june 17th and it clearly shows that what i heard you say are the disappointing levels of participation that are unavoidable because of an aging demographic. And i wish i had the chart that i was able to put up, but it seems to me, what is most concerning is the drop in participation really comes from youngest americans and, in fact, that chart again released by the fed of st. Louis, shows the highest levels we have seen since the 1960s for americans age 55 and older and it seems to me this argument that our economy hasnt responded the way that it has, you we talked about this the last time you were here. And i think i labeled it flimflam, not in a disrespectful way, but it was clearly not what some of those statistics are showing what i want to talk about, though, quickly, is that during your semiannual testimony before this committee in 2015, you were asked about concerns regarding a lack of liquidity and certain fixed income markets and you stated that its not clear what it, quote, its not clear what has happened in these markets and what is causing what you continued that, quote, we dont see a problem, but that it was something that you needed to study further. So my question is, has there been additional study and followup on the fed by that particular issue that is something that we continued to look at we provide this committee with regular reports, particularly pertaining to corporate bonds. We have the fed and outside of it, there are no clear patterns. Some suggest that regulations may be negatively impacting liquidity, but other studies reaching different conclusions so you dont believe theres problems in the fixed income markets . So the inventories of bonds held by some of the largest banks and Market Makers have declined on the other hand, the ask spreads are low. Corporate bond issuance is healthy. Dont we know if the ask spreads are there. Theres a lack of transparency. It is hard to draw conclusions purely based on that we are going to actually be exploring this in my Capital Market subcommittee on friday. We have a hearing on fixed income markets really just trying to find out what is going on so maybe we can help you with some of that analysis with some of the testimony from here, but i we need to have thats investigative effort by the fed on this as well. I quickly want to move on, former fed governor tarulo said, new paradigm is needed to expand regulatory of Banking Institutions he wanted this to be modified by the judiciary rates of Financial Firms to obtain regulatory objectives specifically, he believed that there is a special Corporate Governance method needed as part of the regulatory system and traditional duties focus on shareholders inadequate for Banking Institutions we are not talking about the Banking Institutions do you agree with his recommendation those are his personal recommendations. Is that a no . Im not prepared to say that i agree with all of those recommendations. We are focused on trying to clarify expectations for boards of directors to distinguish what the Important Role that they have in a Banking Organization and what is the job of Senior Management versus a board of directors. That would be a concern that i have here is, what expertise the fed has on Corporate Governance issued like fiduciary justice for boards and what Corporate Governance requirements there are and a number of things so i appreciate your answer and thank you for being here time of the gentleman has expired. The chair now recognizes the person from colorado good morning, madam chair thank you for being here and for being a steady hand at the Federal Reserve. And you must be doing an okay job because because i have listened to my friends and my republican friends who generally have very crisp, sharp, piercing, probing and accusatory questions. They dont have those today. Because things are doing pretty well in colorado, i want to thank you. We were in real dunks eight years ago. 10 unemployment, housing crashing, foreclosures through the roof, were, in my district, were at 2. 1 , unemployment is generally at 2. 3 . Thats not the same, some of the parts of my state a little tougher and i know across the nation, but generally things have been steady and i want to thank you and the policies of the fed in helping us get out of what was a very bad situation. Thank you for that. So a couple questions first, theres a guy who has been prettydogged in telling m that we need to shrink the feds accommodative policies and pretty much, hes in the audience today so explain to me, hes right directly mibehind you a couple rows and hes been very firm over these years in wanting me to press you on this. So would you explain to me how you plan to shrink the accommodative policies that we took back in 2008, 2009 and 2010 so the Federal Reserve was filled with many years of very high unemployment and inflation running below our 2 objective we did everything that we pole could to achieve the goals that were assigned by congress, namely maximum employment and price stability. We were constrained in our ability to use shortterm Interest Rates as a tool and so we used our Balance Sheet and undertook other measures to try to stimulate the economy and i believe we have been succeeding while inflation is still running below our 2 objective. The labor market as you pointed out is much healthier. The Unemployment Rate is now even running a little bit under levels we regard as sustainable in the longer run. I think thats entirely appropriate given that inflation is running below our objective so as the economy improves and we come closer to achieving our objectives, we see it as appropriate to begin to gradually remove accommodation and move to a neutral stance as ive said on many occasions, the new normal with respect to what level of Interest Rates is neutral appears to be rather low. So we have raised the federal funds rate target. I believe policy remains accommodative, but given how low estimates of the neutral federal funds rate are now, namely levels of the funds rate that we just need to be consistent with sustaining the strong labor market over time, perhaps we have some further moves that we envision making if the economy proceeds along the path its on. We will anticipate that neutral may move up some although remaining at low levels. And that generates a view that over time we may want to increase the funds rate a bit more but that will really depend on how things evolve. Let me change the subject real quick and on page 12 of the report, there are two words that ive never seen in any of your reports, its a bismol performance. And its asked to productivity developments in advanced economics. Thats the section and the combination of technology and advances in science and Everything Else coupled with labor, were seeing something so its in the second column a number of potential explanations have been put forth for the bismol performance of tfp. That theres a waning oh, well, im out of time. I thank you for your service youre doing a heck of a job thank you very much. Thank you very much time of the gentleman has expired. The chair now recognizes the gentleman from wisconsin, mr. Duffy, chairman of the housing and insurance. Thank you, mr. Chairman my friends across the aisle seem to be excited about the low unemployment, the economy is picking up excited the stock market and peoples 401 k s are improving and they want to give you a lot of highfives and back slapping. You get all the credit what changes have you made since november 8th to kickstart this economy and make it grow that you werent doing before november 8th we have continued on the path of normalizing the Monetary Policy. You havent changed anything since november 8 the real change is having a new president in the white house i just make that point to my friends across the aisle to not get too excited on who should get credit for an improving economy. But i do want to followup on what my friend, mr. Huizenga was asking about, the gentleman from michigan, in regard to the role that the fed is playing on Corporate Boardrooms and our Financial Institutions you acknowledge you do have a role at the fed in these boardrooms what role do you have . What are you doing well, its our have job to m sure that Banking Organizations are operating in a safe and sound manner and have policies in place that ensure both our safe and sound management and compliance with federal laws and regulations and Corporate Boards play a Critical Role in ensuring the performance of Financial Institutions. Isnt it fair to say, though, that virtually anything could fall under the umbrella of safety and soundness i mean, who is hired and who is fired and who is disciplined within a Financial Institution could fall under safety and soundness, right well, i think it is important to, and were going to try to do this that could fall under safety and soundness, right yes, it could. And help capital flows. Who a Financial Institution lends to could fall under the office of safety and soundness, right . Yes, it could. In essence, in fact, under the office of safety and soundness could replace the board of directors who have a duty to shareholders and actually take over boards all under the presentation of safety and soundness. Well, we believe the Corporate Boards play Critical Roles in ensuring the what falls outside the scope of safety and soundness . In a Financial Institution probably anything that you mentioned would have you cant give an answer because everything falls under that scope and that is our concern. The fed doesnt have a fiduciary duty to shareholders and actually, Board Members have potential civil and criminal liability in their service on a board. Does the fe