The economy. It will come as no surprise to you, chair yellen, that improving Economic Growth is a key priority for congress this year. 2016 was the 11th Consecutive Year that the u. S. Economy failed to grow by more than 3 . One way to improve our Economic Growth is it to study and address areas where regulations can be improved. Since the financial crisis regulators have imposed thousands of new pages of regulations. We all need to better understand the combined impact of these rules on lending, liquidity, cost for small Financial Institutions, and broader Economic Growth. It is time to reassess what is working and what is not. Im encouraged by President Trumps executive order on Core Principles for regulating the Financial System. Directing the treasury secretary in consultation with the heads of the other member agencies of asoc including you to report on how well existing laws and regulations promote or inhibit Economic Growth will be a helpful step as we move forward. Financial regulations should strike the proper balance between the need for safe and sound Financial System and the need to promote a vibrant growing economy. I expect the vice chairman for supervision once confirmed will play an Important Role in striking this balance. We want our nations banks to be well capitalized and well regulated without being drowned by unnecessary compliance costs. This is especially important for the Community Banks and Credit Unions in america, which lack the personnel and infrastructure to handle the overwhelming Regulatory Burden of the past few years. Yet in many ways are treated the same as the worlds biggest institutions. At the last hearing, you stated that simplifying regulations for Community Banks continues to be a focus for the fed and i hope that remains the case. Our Regulatory Regime should be properly tailored and avoid a one size fits all approach. The fed recently took an encouraging step in that direction when it finalized changes to exempt certain banks from the qualitative portion of ccar. I appreciate that. Another area i would like to address is the 50 billion civvy threshold for regional banks. In prior hearings we discussed whether 50 billion is the appropriate threshold and i hope we with cork together to craft a more appropriate standard. My goal is to work with senators of this committee and financial regulators to better strike the balance between smart, thoughtful regulation and promoting Economic Growth. It is also been nearly a decade since fannie mae and freddie mac were put into conservatorship. Reform remains most significant piece of Unfinished Business following the crisis. And it is important to build bipartisan support for a pathway forward. For many years the fed expressed concerns about fannie mae and freddie mac and i encourage you, chair yellen, and the fed to work with this committee to help find a solution. With respect to Monetary Policy, it now has been nearly a decade since the fed began easing Monetary Policy in the fall of 2007 in response to the emerging financial crisis. Today the fed still holds close to 4. 5 trillion in assets on its Balance Sheet, which includes approximately 35 of the Outstanding AgencyMortgage Backed security market. I look forward to hearing from you on how the fed plans to normalize Monetary Policy and wind down its Balance Sheet. The Banking Committee has a lot of work to do this congress. My goal is to work with Ranking Member brown and other members of the committee to identify bipartisan approaches that we can quickly get signed into law. At the same time, we plan to start working on Housing Finance reform, flood insurance, sanctions and legislation to boost Economic Growth in the country. I look forward to working with you, chair yellen, the Federal Reserve and other members of the committee to attack the Critical Issues i mentioned this morning as well as others. With that, we look forward to your comments today, but first i turn to Ranking Member brown. Thank you, mr. Chairman. I appreciate the hearing today. And chair yellen, thank you for it is an honor to always to have you here and a pleasure in your insight as always helpful to all of us. Thank you for that. Since your appearance, madam chair, last june, the economy improved enough as we know that the fed raised the federal funds rate in december for only the second time since the financial crisis. Businesses continue to create jobs op s on a slow but steady some 70 plus months in a row, and finally is some wage growth. Yet there are concerns. Too Many Americans who want full time work still cant find it, many workers have left the labor force, the gains have been not large enough, and been uneven. Foreclosures and job losses hit africanamerican and latino communities particularly hard during the crisis. One study found that the average wealth for white families has grown three times faster as the rate than the rate for africanAmerican Families and 1. 2 times the growth rate for latino families over last three decades. These rates will take hundreds of years for those families to match where white families are today. For affluent american stock portfolios have recovered nicely since the crisis, but for most of ohio and most of our states the story is very different. The states job growth last year was the lowest since 2009. We actually went backwards five out of 12 months. In many places one in four homeowners is still underwater. As you heard me say, and as members of the committee have heard me say in the zip code, my wife and i live in in cleveland, first half of 2007 there were more foreclosures than any zip code in the United States of america. For ohio, manufacturers, the strong dollar continues to hurt exports. And there is uncertainty, much injected into the economy by this administration already, and by the majority party. Can americans continue to count on having Health Insurance . Will u. S. Manufacturers and exporters have a continued have continued access to foreign markets . Will importers have to pay a 20 sales tax . Will immigrants to this country have access to jobs . And to our universities, they dont even know what to expect tomorrow, let alone to do any kind of long range planning. All of that, our country and our economy is dependent upon. Americans elected the new president based on his promises to drain the swamp, to take on wall street and bring in and bring manufacturing jobs back to the industrial heartland. Were all concerned, though, when you look at some of the nominees confirmed with virtually every republican, virtually every time voting for amazingly ethically challenged nominees, nominees that would have stepped aside eight years ago or 16 years ago with new president s, were all concerned about that instead of focusing on infrastructure and real job creation and tax cuts for the middle class and education and workforce development, we have seen the new administration target working americans, furthering a billionaire special interest agenda and threaten wall street reform based on the false promises that banks are not lending. False promises some might call them lies. I think everyone in this dais can agree there are parts of wall street reform that could be improved and steps taken to help small banks and Credit Unions. Thats an ongoing process for both congress and the regulators. I applaud the fed decision, madam chair, its recent decision to remove banks below 250 billion in assets from part of is ccar process. Many of my republican colleagues are dead set beyond going beyond the reasonable adjustments and seeking to repeal reforms that are key to preventing next devastating financial crisis. Working americans lost trillions of dollars in the Retirement Savings after large wall street firms, made risky bets with other peoples money, either failed or were bailed out during the crisis, thats why congress put in place higher Capital Requirements for large banks, a mechanism to identify and regulate risky nonbank companies, and to make sure Financial Firms can fail without bailouts funded by taxpayers. Recent statements by top officials in the white house indicate they are specifically targeting these important safeguards, even though these parts of the law were supported by both parties back in less than a decade ago. Now, the administration is putting wall street bankers in charge, steve mnuchin, every single republican voted for him, was confirmed by the senate last night. They are going after the rules that their former employers dont like, theyre trying to take away the financial regulators freedom to make difficult decisions that will keep our Financial Systems stable. These priorities are wrong. American voters agree, 80 , 80 of one poll, thats republicans and democrats and independents, 80 agree we need tough rules and stronger, not weaker, penalties for wall street. I want to take a moment to recognize one person in particular who has been one of the chief architects of the stronger rules that have been put in place over the past several years to rein in wall street, misbehavior and excess. Last week governor trillo announced hes leaving the board of governors, i want to thank him for his service to our nation. Over the last eight years hes one of a handful of dedicated Public Servants who have made our Financial System safer for a generation to come. I also want to recognize scott alvarez, in his 36th year at the Federal Reserve, he is seated right behind, if he would put his hand up for a moment, hes in his 36th year at the fed, hes been general console of the fed for over a decade. Thank you for your service, mr. Alvarez. I look forward to hearing more from you about the current state of the economy, the importance especially the importance of strong rules to guard against economic calamity. I know youre not going to be there forever, though i wish you were, and the importance of the strong rules that you have put in place, and you will continue to put in place over the next dozen months or so, more than that, and what congress can do to help the economy create jobs and make it easier for all americans. And i underscore all americans to accumulate wealth to buy a home, to pay for college, and to have a decent honorable, dignified retirement. Madam chair, a pleasure to see you. Thank you, senator brown. And, again, madam chair, we appreciate you being here. We look forward to your Opening Statement at this point and then we will engage in some important discussion. You may proceed. Thank you. Chairman crapo, Ranking Member brown, and other members of the committee, im pleased to present the Federal Reserves semiannual Monetary Policy report to the congress. In my remarks today i will briefly discuss the current Economic Situation and outlook before turning to Monetary Policy. Since my appearance before this Committee Last june, the economy has continued to make progress to our dual mandate objectives of maximum employment and price stability. In the labor market, gains averaged 190,000 per month over the second half of 2016, and the number of jobs rose an additional 227,000 in january. Those gains bring the total increase in employment since its trough in early 2010 to nearly 16 million. In addition, the Unemployment Rate, which stood at 4. 8 in january, is more than 5 Percentage Points lower than where it stood at its peak in 2010, and is now in line with the median of the federal open Market Committee participants estimates of its longer run normal level. A broader level which includes the marginally attached to the labor force and people who were working part time but would like full time jobs is also continued to improve over the past year. In addition, the pace of wage growth has picked up relative to its pace of a few years ago. Further indication that the job market is tightening. Importantly, improvements in the labor market in recent years have been widespread with large declines in the Unemployment Rates for all major demographic groups, including africanamericans and hispanics. Even so, it is discouraging that jobless rates for those minorities remains significantly higher than the rate for the nation overall. Ongoing gains in the labor market have been accompanied by a further moderate expansion in economic activity. U. S. Real Gross Domestic Product is estimated to have risen 1. 9 last year. The same as in 2015. Consumer spending has continued to rise at a healthy pace, supported by steady income gains, increases in the value of Household Financial assets, and homes, favorable levels of consumer sentiment, and low Interest Rates. Last years sales of automobiles and light trucks were the highest annual total on record. In contrast, Business Investment was relatively soft for much of last year. Though it posted some larger gains toward the end of the year, in part reflecting an apparent end to the sharp decline in spending on drilling and mining structures. Moreover, Business Sentiment has noticeably improved in the past few months. In addition, weak foreign growth and the appreciation of the dollar over the past two years have restrained manufacturing output. Meanwhile, housinging construction has continued to trend up, at only a modest pace in recent quarters. While the lean stock of homes for sale and ongoing labor market gains should provide some support to Housing ConstructionGoing Forward, the recent increases in Mortgage Rates may impart some restraint. Inflation moved up over the past year, mainly because of the diminishing effects of the earlier declines in Energy Prices and import prices. Total Consumer Prices is measured by the personal Consumption Expenditure, or pce, price index, rose 1. 6 in the 12 months ending in december. Still below the fomcs 2 objective but up 1 percentage point from its pace in 2015. Core pce inflation which excludes the volatile energy and food prices moved up to about 1. 75 . My colleagues on the fomc and i expect the economy to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to 2 . This judgment reflects our view that u. S. Monetary policy remains accommodative and that the pace of Global Economic activity should pick up over time, supported by accommodative monetary policies abroad. Of course, our inflation outlook also depends importantly on our assessment that longer run Inflation Expectations will remain reasonably well anchored. It is reassuring that while marketbased measures of inflation compensation remain low, they have risen from the very low levels they reach during the latter part of 2015 and first half of 2016. Meanwhile, most survey measures of longer term Inflation Expectations have changed little on balance in recent months. As always, considerable uncertainty attends to the Economic Outlook, among the sources of uncertainty are possible changes in u. S. Fiscal and other policies, the future path of productivity growth and developments abroad. Turning to Monetary Policy, the fomc is committed to promoting maximum employment and price stability as mandated by congress. Against the backdrop of head winds weighing on the economy over the past year, including Financial Market stresses that emanated from developments abroad, the committee maintained an unchanged target for the federal funds rate for most of the year in order to support improvement in the labor market and increase in inflation toward 2 . At its december meeting, the committee raised the target range for the federal funds rate by. 25 to. 50 to. 75 . In doing so, the committee recognized the considerable