spirit just in december there were 4 million brits on a waiting list and the cancer treatment is not the general practitioner then but under the who brits are at the bottom of the wrong in most industrialized countries.

[inaudible conversations] the committee will come to order. high remain very concernd

about the president's efforts to interfere with the independent monetary policy. a recent news story noted that trump has tweeted several times about your nomination. many of those appear to be exercising pressure on the fed. chairman powell, you must not be swayed by these aggressive tactics. in upholding the independence you should also be mindful of public perception. of course trump continues to try to claim credit that was put in motion by the policies of president obama. congressional democrats and the federal reserve is irresponsible trade for and the gop tax scam have blown up the national debt, slowed economic growth and harmed hard-working american families. it continues to squander this

inherited economy. let me note that i am however disappointed in the efforts to regulate by recently proposing to further rollback the role. the act made our financial system safer, but it depends on agencies like the fed could potentially use the tools available to monitor and advocate threats to our economy. the committee is carefully monitoring the development in the repo market and the fed response. the fed shouldn't arbitrarily reduce liquidity requirements in response to the repo market disruption. as some on wall street have asked for. instead, the fed should make appropriate adjustments to promote a well functioning markets while ensuring we have strong capital rules that can't be gained through window

dressing. the practice where banks alter the balance sheet to appear less risky and reduce their capital level. in addition, the riskiness of the various financial assets is increasing its climate change and poses a serious risk to our economy. the fed and other regulators should utilize the financial stability tools under dodd frank such as incorporating climate related losses in two supervisory stress tests to address the growing risk. i'd also liki would also like te development involving the community reinvestment act as a cra. we've had a series of hearings on this and the harmful proposals to turn cra into the community disinvestment act and allow banks to escape their obligation to make responsible investments in the communities where they are chartered.

i urge the fed to take a careful deliberate approach to any changes to the implementation of the cra and not join the outings, misguided efforts. the statement com statement comg "-end-double-quote, it's important to get the reform done right than to do them quickly. it's absolutely correct. the occ and fdic should he need that as well and in the public, to cover as community banks, state regulators, community civil rights groups as well as committee democrats have called for so that all stakeholders have the opportunity to voice their concerns. i also encourage the fed to keep a watchful eye on facebook efforts to launch a crypto currency into digital wallet which as we discussed at the last hearing could have profound implications for monetary policy and compete with our own u.s. dollar in light of the risks they plan to create with other

democrats but called on facebook to halt their plan until congress can examine the issues associated with the big tech company developed into digital products and take action. i look forward to your testimony today and discussing these matters. i now recognize the ranking member of the committee, the gentleman from north carolina, mr. mchenry for four minutes for an opening statement. >> thanks for appearing before us once again. under the trump administration, we had the best economy that we have had in decades. the numbers are irrefutable. we've had 225,000 new jobs in january and the rate is essentially at the lowest level in half a century. this is being shared by all americans from african-american and hispanics where the unemployment rate has reached record lows in the last year and the anticipation has reached

2.2 million people and not surprisingly consumer confidence has increased dramatically since the month before the president election. remember, congress should celebrate these remarkable outcomes, which have resulted from republican leadership on pro- birth policies of tax reform and regulatory rightsizing. but, the economic prosperity also hinges on the federal reserve having good policy. the bank is currently undertaking a review of the policy framework to develop the tools they may need in the future. chairman powell, i raised the concern that we have regulatory policy on your capacity to make proper monetary policies. that is why i think it's important that we have a regulatory review on the limitations that the regulations can put on your broad monetary policy decisions.

that includes risks that i've raised as well as open market operations, especially the open market operations and the repo market. i thank you for your proper response to my questions about the market operations. this is what caused the spike in the first place and it's troubling. i've also voiced my concerns with the transition from the reference rate. we have nine months later i am still concerned consumers will be impacted by the transition. we still have contracts with into the reference rate and i think given the recent volatility in the market, i'm concerned about the subsequent volatility consumer facing products like mortgages, auto loans, business loans and other consumer loans as this arrives from secured overnight financing. at previous hearings i spoke about the cyber threats posed to

the financial institutions in your institution and china in particular. yesterday's news about the data breach is deeply troubling and is a wake-up call to every single policymaker that we need to take this threat of china and the regime quite seriously. if we are not taking them seriously, have no fear, they are taking us very seriously. and now they have basically all of our data. the spillover effect of the chinese policy is significant not just for cybersecurity but what we are seeing with the corona virus and the destabilizing effect it has on global health. i know you are not a global health expert, but you can give us a sense of your measurement techniques and response to these economic changes that are being driven out of the virus and of a

spillover effect as to the neighbors and supply chain as well. the nature of china's regime may not fit neatly into the risk assessment they acknowledged in the report cyber risks don't fit neatly either. but the risks are real even though the data is limited coming out of china and unlimited data that we have with western style we reflect appropriately upon what we know and how we respond as american government and to the rest western world and to these threats both cyber and health risks into the spillover effect it has. so again, thank you for being here and for your openness and approach as the chair of the federal reserve to be in the language of the people rather than simply the language of the phd. with that, i will yield back.

>> i now recognize the chair of the subcommittee on national security, international development and monetary policy. mr. cleaver for one minute. >> mr. chairman, first of all i appreciate your willingness to travel around the country to do those sessions. for most people to get the chance to sit down in a room and discuss economic with the chairman to thank you very much. when you came together today, people were sitting around a table with you and giving you a picture of struggles and strive and trying to make it in the economy, and people are also

they are concerned about inflation and they believe that it's like toothpaste once it gets outside it's hard to get back in so we are concerned about it but also appreciative of your work and i look forward to getting into this as we proceed in the committee hearing. >> thank you, madam chair. >> i now recognize the ranking member mr. hill for one minute. >> thank you, chairman powell for being here today. we appreciate your willingness to field our questions and provide your insight. i want to take just a moment to echo the comment of the ranking member of the community reinvestment act. i notice received a lot of attention and i read the comprehensive views on the topic and we had mr. audie recently to discuss the point of view as a former community banker is my view we should have ultimately one approach among the financial services regulatory agencies.

i've had 40 years of dealing with inconsistency and delivery of the regulatory proposals, so i do think that ultimately it would be productive for us to have one approach to that regulation and modernize it for the digital world that we live in today. i look forward to your presentation and i will yield back. >> thank you. i want to welcome to the committee that distinguished witness, chairma chairman of thd of governors of the federal reserve system. he served on the board of governors since 2012 and as the chair in 2017. mr. powell has testified before the committee, and i believe he doesn't need any further introduction. without objection, your testimony will be made a part of the record. mr. powell, you are recognized to present your oral testimony. >> thank you very much, chairwoman waters, ranking member and other members of the committee, i am a theist to present the federal reserve's

momonetary policyreport. i called and i strongly support the goals of maximum employment and price stability congress has set for monetary policy. congress has given us an important degree of independence to pursue these goals based on the data and objective analysis. this brings with it an obligation to explain how we pursue our goals. today i will review the current economic situation before turning to the monetary policy. the economic expansion is well into its 11th year. it is the longest on record. over the second half of last year, economic activity increased at a moderate pace and labor market strengthens further as the economy if you are resilient in the global headwind that intensified last year. inflation has been low and stable but has continued to run below the fomc to the objective.

job gains averaged 200,000 per month in the second half of last year at an additional 225,000 jobs were added in january. the pace of the job gains has remained above what is needed to provide jobs for new workers out of the labor force and allowing their rates to move down further over the course of last year. it was 3.6% last month and has been near half-century low for more than a year. job openings remain plentiful, and employers are increasingly willing to hire workers with fewer skills and as a result the benefits of the strong labor market have become more widely shared. people who live and work in low and middle-income communities are funding opportunities. employment gains have been broad-based across all racial and ethnic groups and levels of education. wages have been rising particularly for the lower paying jobs. at a moderate rate over the second half of last year the

growth in consumer spending moderated towards the end of the year following earlier strong increases, but the fundamental support in householfundamentalsg remained solid. residential investment turned up in the second half and business investment and exports were weak and largely reflecting sluggish growth abroad with trade developments. the same factors weighed in on the activity of the nation's factories of the declined over the first half of 2019 and as little changed on that since then. february the monetary policy report discusses the recent weakness in manufacturing. some of the uncertainties around trade diminished, but the risks to the outlook remained in particular we are closely monitoring the emergence of the coronavirus which could lead to disruptions that spillover to the rest of the global economy. inflation ran below is a symmetric to 2019. over the 12 months through december, overall inflation based on the price index for

personal consumption expenditures rose 1.6%. core inflation which excludes volatile food and energy prices was also 1.6%. over the next few months we expected it to move closer to 2% as unusually low readings from early 2019 dropped out of the 12 month calculation. the nation faces important longer run challenges. labor force participation by individuals in their prime working years is at its highest rate in more than a decade however it remains lower than the other advanced economies and there are troubling disparities across the racial and ethnic groups and across the regions of the country. in addition, although it is encouraging that productivity growth, the main engine for raising standards over the longer term has moved up recently. productivity gains have been subpar throughout this economic expansion. finding ways to boost the labor

force participation and productivity growth would benefit americans and should remain a national priority. i will turn out for the monetary policy. over the second half of 2019, the fomc shifted to a more accommodative stance of monetary policy to cushion the economy from weaker global growth and trade developments and promote a fast return on inflation to the symmetric 2% objective. we lowered the federal funds targeting range at the july to september and october meetings, bringing the current target range to 1.5 to 1.75%. subsequent meetings with abuse surrounding trade having diminished in the global growth may be stabilizing, the committee left a policy unchanged. they believe the current stance of the monetary policy will support the continued economic growth and a strong labor market and inflation return to the committee's symmetric 2%

objective. as long as it remains broadly consistent in this outlook in the current stance of monetary policy will likely remain appropriate. of course, without preset course of the developments emerge with the outlook we would respond accordingly. taking the longer view there's been a decline over the past quarter century with a level of interest rates consistent with the prices and the economy operating at its full potential. this low-interest rate environment an we may limit the ability of banks to reduce public interest rates and thought to separattoseparate the downturn. with this concern in mind, we have been conducting the review of the monetary policy strategy, tools and communication practices. public engagement is at the heart through the events we've been hearing from representatives of consumer, labor, business, community and others.

the february monkey park to monetary policy shares some of what we have learned and the insight we've gained have engaged the free-market discussion as reported in the minutes of the meetings. we will share our conclusions when we finished the review, likely around the middle of this year. the correct low interest rate and the environment also means that it would be important for fiscal policy to help support the economy as it weakens. bring the federal budget on a sustainable path in the economy iand the economyis strong wouldt policy makers have a space to use this to assist in stabilizing the economy during the downturn. a more sustainable federal budget could also support the economy's growth over the long term. finally, i will briefly review our planned operations to implement monetary policies. the february monetary policy report provides details of our operations today. last october by the fomc announced a plan to purchase treasury bills and conduct depot

operations. these actions have been successful in providing an ample supply of reserves to the banking system and effective control of the federal funds rate. as our bill purchases continue to build reserve towards levels that maintain ample conditions, we intend to gradually transition away from the active use of repo operations. also as reserves reached directly ample levels we intend to slow the purchases to the peace that will allow the balance sheet to grow in line ie with trinity man for the liabilities. thesthese support the effective implementation of monetary policies and are not intended to represent a chance, sorry, a change in the stance of monetary policy. as always we stand ready to adjust to the details of the technical operations as the additions warrant. thank you and i look forward. >> i recognize myself for five minutes of questions. in december, 2019 when the fdic issued a notice of proposed

rulemaking on the comptroller alan's proposal, the federal reserve did not join in this proposal. fdic board member voted against the proposal describing it as, quote, a deeply misconceived proposal that would fundamentally undermine reinvestment act and in remarks last month federal reserve board governor said that, quote, given that reforms to the cra regulations are likely to set expectations for decades is more important to get a refund on right the than to do them quick. that requires external stakeholder is sufficient time and analysis to provide meaningful feedback and range of options for the regulations. he also suggested in the speech

last month the federal reserve created a database of 6,000 public cra evaluations looking at how the barriers the investment support low and moderate income communities. they use this to evaluate how the bank activities would be assessed under the occ and the fdic proposal. >> if i understood the question is whether we use our database to evaluate their proposal? >> that's right. >> i'm not totally sure. maybe i can provide a little context if that's appropriate, if i may, which is we do agree that this is a good time to update cra in light of the changing demographics and we agree on the goals. we put a lot of work into this and we tried to get on the same page but were not able to do

that. we have some different ideas. >> does the fed intends to do this assessment? do you intend to do the assessment that i referenced regarding database to evaluate bank activities? and how they would be assessed under the occ and th fdic? >> the plaintiff the database was to create our own set of metrics. we want to be very, very sure that what comes out of this is a proposal that from us will leave all major participants better off so we think it's important that each change we make is grounded in data and the purpose is to help us develop our thinking and proposal and that is essentially what we have been using it for. >> given the magnitude of the regulations, do you think the

comment period should be standard to allow the public to weigh in on such an important undertaking? >> that is a decision for the -- >> it isn't our role to comment on their proposal. we have our own work and our own ideas we would be happy to share, but it's up to them to make that decision. >> so, are you completing your assessment and continuing to block until you come to a final decision? >> we are. >> don't you think the public should have an opportunity to have more time to do that also? >> they will, when the time comes. for the time being we are looking forward to reading the comments on the proposal. i think we are all learning quite a lot from those comments and we will be able to incorporate the thinking and whatever changes are made. there will be substantial changes made to the existing proposal coming out of the

comments. so, i think that we are -- our view is we want something that will leave everybody better off and have broad support and that is what we are going to be working on. >> all the democrats on the committee urged regulators to provide a comment period of at least 120 days on any major reform instead of the 60 days the fdic has provided to the community banks, state regulators, community groups that have called on the agencies to extend the comment period. you said it is not your place to comment on whether or not it should be extended. i wish that you would think about this and as you are doing the assessment and as you've said, it's important for the public to be able to comment. and if you change your mind, let us know about commenting on whether or not we should extend

the other comment period. you don't have to respond to that. thank you very much. the gentleman from north carolina, ranking member mchenry, is recognized for five minutes. >> when somebody else has a negative comment about the federal reserve, that's bad. but when i as a policymaker has a negative comment, it's good, right? so it's all about the eye of the beholder when it comes to the political debate here in washington. congress made a decision over 100 years ago to outsource monetary policy to the federal reserve. your construct of law o are givn independent operations and you have a set term of office. anand as a comedy so, the indepe monetary policy is appropriate and is long-standing. every president in the last 100 years has had some private criticism coming if we found out

at some point about the criticism either through press reports at the time or later or some biographers work about the president. but here on the hill we can make comments about the fed and attack the president for having negative comments about the fed. so, all this stuff is just rich politics. let's get down to the essence. you are the biggest regulator in the talent and there are concerns i want to address that are individually in nature that i think indians are common -- that i think intense upon the policy. these operations use that are temporary in nature. is that still true? stick our expectation is we will continue our bill purchases at least through into the second quarter and continue the operations at least into april.

we are building up a level of reserves that will mean if we don't have to be involved in the open market operations on an ongoing basis that's going to take that period of time. it will reach that level of reserves on the capital requirements for the financial institutions that should be participating in the repo market. >> i think we have reviewed the supervisory and regulatory practices that may be affecting the flow of liquidity. it's of course the federal funds market and the ability to transmit our policy decisions smoothly into the money market in federal funds rate.

we attribute that what appeared to be ample levels of liquidity didn't flow where they might have. so, we are doing two things. we are raising the underlining level of liquidity by raising research to a level that is higher than we thought we needed it at that process -- >> part of it as a supervisory assessment to make sure the policy is being driven. we've been doing that since september. >> i raised this in my opening statement about china. we've spoken publicly about your assessment and thinking on what's happening with china's response to the coronavirus. we wish them well and have high hopes that they are going to be able to tackle this crisis that

they are facing. walk me through your thinking and assessing the situation in china in terms of economics and the potential spillover effect. >> they will quickly start by saying again we find the u.s. economy and a good place performing well with global growth and reduced trade policy uncertainty. overall we see strong job creation continuing. it's the context of a strong u.s. economy and into that picture comes the coronavirus and soap how we think about that of course we observe the human tragedy which is terrible to watch. will it be persistent or will it be material.

i think we know there will be effects on china with some part of the first year and china's close neighbors and we know that there will be likely some effects on the united states. i think it's just too early to say. will these be persistent effects that can lead to a material reassessment. >> for a length of time whether or not this is a temporary distraction. >> the gentleman from new york is recognized for five minutes. >> thank you, chairwoman. chairman powell, i would like to follow up on ms. waters question on the cra. what of the proposed changes do you find most troubling?

>> it's not so much comment directly on the proposal that we talked about how we are looking at this and i will mention the areas of difference. >> if the fed is unable to reach an agreement with the fdic with respect to issue the bond proposal. >> we haven't made a decision on that. right now our focus has been on trying to get to the same page. we haven't been able to do that. nobody's going to bnobody is gog from the process. >> are you meeting regularly with the fdic on this issue? >> we did for a long time. >> would you agree on the comments that's more important to get the rules right and to do that quickly?

spinet that's been our approach. >> chairman powell, as you know, we have been concerned by banks reliance for the data storage means does the fed have all the access authority that it needs or are there any contractual limitations restricting the ability. >> i do think we have the legal authority that we need. we are not able to look into the third party service providers and we are doing that more and more because as you mentioned. >> thank you. i yield back.

>> the gentleman from missouri is recognized for five minutes. >> i think the chairwoman. we are all interested despite the repo site. could this market turmoil be symptomatic of deeper difficulties of the financial system fa the >> it doesn't appear to be at all. really over the year and we haven't had any return to that it's pretty clear that the measures we took directly address the problem.

we have a confluence of things happening i know at that time. i think o around 78 billion. is that the function of this fluke? >> we knew about and what we have done is it's still suggested that there was plenty of reserves in the system. in december of last year i asked the vice chairman for an update on the status of updating the

surcharge and plan for finalizing the capital buffer proposal which i understand will require a proposal in the comment period. in january, vice chairman delivered a speech where he spoke about bringing reasonable transparency to several aspects of the federal reserve supervisory and regulatory framework. last week the fed released the stress test scenarios. to my knowledge, there has been no progress or update on the status of * capital buffer apart from continued assertions from you and the vice chair that aspects of the proposal would be incorporated in the 2020s he card.

when can we expect progress on the proposal that has been in process i think now since april of 2018. >> we do continue to expect that the capital buffer will be incorporated in time for the 2020 stress test. we are moving along on that and on track to do that. >> committee republicans have underlined the importance of cyber threats as a potential systematic risk. we have recently seen malware attacks undermine government infrastructure, and according to research last month by economists at the new york fed, the simulated cyber attack on just one major u.s. bank could have spillover effects impacting 38% of the wholesale payment

network. what can the u.s. do better in order to prioritized these constant flows of cyber risk and strengthened the resilience of the financial sector? >> we have to keep doing what they are doing whicweare doing s a top, if not the top for institutions across the american landscape. we have the ability to fend off cyber attacks and we are constantly meeting insid insteaf the government to make sure that our system is resilient and redundant and strong against cyber attacks, but there is never a feeling that you've gotten to a place of comfort. we just have to keep working and it's learning what the new attacks are and making sure the banks are doing basic

housekeeping and all of that is very much for a long time. >> thank you for being here again, chairman, and i will yield back. >> the gentleman from california who is also the chair of the subcommittee on investor protection, entrepreneurship and capital markets is recognized for five minutes. >> a couple of responses to what the ranking member had to say, yes the stock market is not, wages are up more than 1% after inflation. wages at the bottom have risen. chiefly in those states where we have raised the minimum wage and when we have a democratic majority in both houses they will raise the minimum wage nationwide and they effectively with those states that haven't seen such an expansion of wages at the bottom.

i've grown and have spent many decades in this room. i've seen predecessors and every time they come in and the republicans attack them for expansionary monetary policy both traditional and newfangled and now we have a new president could all of a sudden they are pushing on the other side. all i will say is i have consistently from the days of mr. greenspan pushing for lower interest rates and expansionary policy particularly quantitative easing because you returned $55 billion to the treasury last year and i know that is not your purpose, but think of the kids that will get an education because we couldn't find a local

vegetation. think of the medical research anand lives that would be saved because we were able to fund medical research. i don't think that the 55 billion should be regarded as an irrelevancy or embarrassment and finally, as to the jobs growth we've seen recently, i do need to point out the jobs grew much faster the last three years of the obama administration and the first three years of the trumpet administration. it is as if trump inherited a plane as he inherited so much else. it was on automatic pilot and was going in the right direction and he hasn't managed to completely screw it up. we've got an issue that i think ought to be completely bipartisan and it's going to get in a couple of years. chairman powell, should we give the fed the right to prescribe

backup rates what can we do this year and actually solve a problem 12 months in advance? >> as you know the process is ongoing and we are committed to having a thing is ready by the end of next year to switch over in case it is no longer published and -- >> they need to know what to switch over to and we want to avoid the multibillion-dollar lawsuits when somebody can say that it should be this instead of that. they not only have to have the technology they need to know legally what they are supposed to do. we will let you know. >> we have less than two years.

there are people that want to wait around until two or three months before things go up and then come to congress and say now fix it. two years is too short of a time because we are entering the economy today because you and i are talking about this and there is a risk of litigation and uncertainty and we ought to take that off. that's one of the things we can do to help the economy so i hope that you can act within a month to help us know what you propose rather than wait until next ye year. the other thing is the wire transfer system. we have seen $150 million lost to scams and they arrived because when you wire money there is no payee identified.

the british have gone to a confirmation system and the international standards organization has prescribed changes that would require at least identification of the payee. we don't. i know that you've raised issues of state law. i've analyzed it and i can't see what would prevent the fed from prescribing what the wire transfer system would be. and it looks like i will have to ask you to get back promptly for the question. >> to provide an answer in writing a com the gentleman from oklahoma is recognized for five minutes. >> thank you madam chair. chairman powell, during your testimony before the joint economic committee last year, you were asked about what steps the federal reserve i is takingo assess the impacts of climate change on our financial system. in her testimony, you make the distinction between the imperial stress test risk that the bank

of england does it for the u.s. stress test regime does which is intact capital requirements into distributions. my understanding is the bank of england is conducting research and asking financial institutions to think through their portfolios and how they could be impacted but they are not currently integrating those measures in the capital requirements. would you outline some of what the fed is doing in terms of research and engagement on global climate risk? >> sure. congress is assigned to other agencies into does play into our work as it relates to the public's reasonable expectation we are in a very earl the very f understanding what that means

and there is work going on around the world have central banks to figure that out. you talk about the bank of england stress test. those are not intended to inform current capital requirements but more to understand what might be the effect on big is. >> are you planning on joining the network for the financial system fax >> we haven't made a decision about that. we've always attended their meetings. my theory is when you join an organization like that, you are not necessarily signing up for everything that everybody believes you can benefit from the work that's being done. we haven't made a decision about a membership. >> vice chair recently outlined the changes that woulchanges the supervision transparency and accountability. i was encouraged by those comments and will be following this closely of course. one change the vice chairman outlined as the federal reserve should restore supervisory

observations which would allow the notice of a supervisory concern without it rising to the level of a better requiring attention. can you tell us the fine line that you see on the proposals to include supervision? >> with the vice chair did as you pointehepointed to the tenst exists between very fundamental expectations of due process, transparency and fairness and breakineverything the governmens and should, but also with supervision which by its nature is private and somewhat discretionary, so he pointed out the tension and the need to shed more light on it and ask whether there are places where supervision needs to incorporate more of that due process. that is something we will be working on. >> in light of the coronavirus, i can't help but think about as a young man, as a boy i spent a

lot of time around my parents, my grandkids i should sa grandpd my great aunts and uncles board just before or after the previous century so they have the first-hand experiences of the pandemic of 18181819 that were very graphic as they rolled through western oklahoma. the description of this particular virus and periods in western oklahoma and my mother's family my father's family were very fortunate. the reason i ask that is with 43,000 cases worldwide and the impact, could you describe for the moment how china and its neighboring countries are responding to the economic impact of the coronavirus and from central bankers?

they are responding to containing it and the government is taking very strong measures on the. uc physicists closing down in affected areas. in terms of the economy as you asked, the peoples bank of china has done a number of things to support economic activity and i think you can expect the chinese government to do lots of things to support economic activity and are open to cushion the effect. i think that they will act to offset those. >> the gentleman from new york who's also the chair of the subcommittee on consumer protection and financial institutions is recognized for five minutes. >> thank you, mr. chair.

>> a question on asymmetrical growth has been discussed at length and in my community and others that 40% of americans don't have adequate savings similarly one in five americans skip healthcare or fail to pay important monthly bills due to the lack of funds. so, finally, a large share of the population is also under banked or unnamed. we talk about that talked aboun the committee which i chair. so, my first question to you is why haven't the circumstances improved in the last few years given the state of the economy? >> the pattern was at the

beginning it was people that just left the labor force. what we have seen in the last two or three years is the wages at the bottom edge of the scale so we do see during this long expansion significant effects now and it's great to see a as i mentioned whether the federalists we've been hearing quite a lot about the that's very positive. during the ninth, tenth and 11th year is a strategy we do see the listings now because of the way the market is strong. >> so also during this peer code of time, would you say none of us have been arguing and silent, we are moving towards a 15-dollar an hour minimum wage for individuals, would you think

that that has something to do with the fact many states have adopted a minimum wage? >> we don't take the position on minimum wage. there is a noticeably higher increase but it's much broader than that and a factor that is low unemployment and a strong labor market. that is the main driver. >> it remains nearly doubled

that. are there any signs of how we closed the gap but have them between the african american community and whites in the economy? >> there are persistent gaps that are very troubling and they are not in the long run something that monetary policy can address. it is up to other policies by governments, state and local governments. what we have is an interest rate of total and what we can do is support the goal for the stable crisis and we see positive effects but in the long run it means broad policies in education there were some

questions that came up that maybe you can answer. is that the same framework of the federal reserve board, some say it's just her opinion and not that of the board maybe you can clear it up we haven't taken a proposal to the board yet, but that represents the thinking. with the head of the committee for quite sometime and very comfortable with the thinking that is in that speech and to support that idea and approach but it's not at a place that we can say this is a proposal because we haven't taken it to the board yet.

the world is experiencing a dramatic growth in the space economy many are marveling at the expense of civilian space launches. i represent the kennedy space center and we are really excited about all that. the current level of the space economy at well over $400 billion a year with a growth rate of 8% from 2018 to 2019. in thand the bureau of economic analysis announced the space satellite account and then in the collaborative effort for the importance of th% of the u.s. economy with a special emphasis on the commercial space and use

input from industry experts and multiple government agencies obviously. i recall they applied expertise to report on the economy and the space district. first question, can you work with me to ensure the federal reserve joins this effort with an eye to avoid financial bottlenecks and keeping this space energy on task to a healthy growth rate. >> i'm sure we would take a close look a at that and if it's something that would be productive, would take part. >> over the years we've developed a rather expensive policy of the reserve and i believe in assuring the freedom of the fed to act on the day-to-day basis to manage the economy and the critical payment system.

it's into the decision by the federal reserve chair into the board and the open market committee or fed monetary poli policy. congress also doesn't direct, nor should we. however they routinely conduct policy audits of the defense policy and strategy and the gao is restricted from conducting policy audits from the federal reserve. i'm challenged to understand how the policy audits of the national defense strategy is okay but policy audits and the fed are off-limits. i would like your thoughts on that. >> the gao does audits on the fed to constantly all over the place with one exception, and that is the specific monetary

policy. it's to create one step of distance from the gao in order to undermine our independence i think there was a wise move and changing that would be seen, would clearly be seen by the public as a diminution of our independence. we do look to this committee and thto the equivalent committee on the senate side for oversight, monetary policy and our system of government and in the road to oversight and transparency runs right through the committee and the banking committee as well. that is what i would tell you about the gao. >> is thwhat is the rationale bd that? stick everything we do on payments, financial regulation, everything we do is subject to

the audit. these are policy audits, it's not like a financial audit. we are audited and a business model is as simple as that. we are constantly audited it prevents them from coming in and looking at assessing individual monetary policy decisions which congress saw fit and you saw fit to carve out of the wall and again i think it was an appropriate thing to do and i think that it would be unwise to take a step back from the. i don't see any harm that it's doing. >> the former chairperson of the fed indicated they didn't want to be second-guessing their decisions but the public doesn't have the right to know. quite frankly that is why i asked you these questions.

we were very transparent and we published minutes into transcripts. >> we publish everything but, and i think that is overdue. >> the gentleman from missouri was also the chair for the subcommittee on housing and community development and the german is recognized for five minutes. >> thank you madam chair and chair powell for being here today. for most in my district that they are not focused on maintaining the 30,000 level but simply trying to make ends meet. in fact, in an essay as part of this demographic of wealth examines between race or ethnicity and wealth

accumulation. .. leading the hispanic and black wealth levels are about 90% lower than the median white wealth level yet median income levels of hispanics and blacks are only 40% lower. the larger racial wealth gap could be hispanics and blacks investing in low return assets like housing as well as borrowing at higher interest rates. hispanics and blacks can also feel less of a need to save for the future because societies

progressive old age safety net programs will replace a relatively larger share of the normal incomes they earned during their working years. could you comment on why many communities continue to lag via is monetary policy might seek to address some of the underlying factors that have led to growth inequality. >> what we can do, what we have been doing is to take seriously your order to us to seek maximum employment. that's what we're doing, we have learned -- we just learned because we have been watching what's happening the unemployment can be lower than many unexpected without raising inflation or any other concerns. that is what we can do. and we will continue to do.

i think that showing up in the communities everywhere. i think other governmental and other tools are necessary to address longer run problem. >> how do we address the pay in equity, how do we address corporate america that it does this country no good to have a persistent pay in equity among the workers especially when you look at the disparities in the races and the pay. >> i will say it's important that those issues be addressed, it is really not for the fed to prescribe the measures to address them, we need to stay in our land, we have independence including the d.o.j. and what you've given us to do which is

stable prices, supervise the banks, look after financial security. >> on another subject, will the federal reserve release the own proposal on the community reinvestment act, one takes into account the needs and low and moderate community. >> we have not made a decision on that yet, our focus right now is on the ongoing process of the other agencies proposal in comments, we will learn a lot from the comments and i suspect they will be changes to the proposal coming out of the comments, we have not made a decision about our own proposal. >> traditional monetary policy works through single economy wide variable single interest rate of perhaps the money supply of credit. credit policy fine contrast aims at directing credit and specific

forms for specific groups of borrowers. credit policy consist of a central bank operation targeting specific segments of the private debt and security. what is your view of shifting from monetary theory to one that involves the use of more tools in order to enhance borrowing segments of society? >> i think that has historically not been a function of the fed and central banks generally. as you pointed out, one tool which is an industry policy, when you are talking about affecting different sectors of the business community or the population, that really should be another agency for congress itself and fiscal policy -- >> the witness requested to continue. >> i yield back. >> the gentleman from missouri is recognized for five minutes.

>> thank you, madam chair and welcome chairman powell. always good to see you sir. >> i'm sure you saw the speech or heard the speech by chairman quarles on the need to reform banking supervision. one area needs clarity on supervision regime is the role of guidance, push regulators to clarify the use of guidance in 2018 with the interagency statement on guidance, it urged an additional step doing rulemaking of the role of guidance. the trump administration actions out of the office of management and budget, my question is do you believe we need an official role making out of the fed on the role of guidance? >> we have not made a decision on that, like the other agencies who are evaluating the omb memo, as you know guidance is not enforceable, we do understand guidance is not a rule. >> he was here recently and made the comment that he intended to

look at all the guidance and separate out what he believe need to be under rule and the recipe clarified as a guidance and i think that's a great approach but the question is doing to submit a role to be able to do that in the future? you look in a tragedy that. >> that something were looking at and looking at our guidance in asking of some is more like a rolrule. >> he also discussed how they have a framework under the proceedings act, there's no real framework for that and it was conducted without appropriate oversight, and that does not have the specific guardrails in fact gao says it was non-remaking purdue you believe we need to change and what should we do to the firms under this regime? >> i would agree it is appropriate that we draw brighter minds around that and as he mentioned in his speech

recently that's a path that we are on. >> very good. something that is concerning to me is we have a lot of aches that are in the lending space, nonbanks in general were roughly 250 billion in 2016, this next year they anticipate it to triple to $750 billion, in 2019 nonbanks originated 85% of all loans, 53% sold to freddie. >> and 60% sold the framing may and non-bank mortgages make up the portfolio. in a most recent report non-bank mortgage originators were systemic risk. remember that, can you explain that, would you like to talk about that a little bit, do you have any concerns. >> as you mentioned, we have

looked at that and i believe it was part of the recent annual report, these are very important channels through which mortgages are originated and in the case of a downturn the banks have high capital and lots of regulation in liquidity and perhaps in a place pre-but these institutions are operating sometimes underfunding themselves with credit lines which might not be available. there is risk there and were in the process of assessing that in determining what to do about it. >> to have a timetable? when you might come out with a statement which you say you will or will not do and what a wavy. >> i can come back it's something that the treasury has a lead on. >> very good paid one thing that concerns me in regards to home lending is a stack of forms you have to go through. we had a gentleman who represented a credit union at the time but the stack was as

tall and i asked him honey pages and he said we don't measure by the page remeasure by the pound. and this is how off the charts we have gotten when you have a stack of papers as talk to do a home loan. i talked to the cpp and hopefully will engage you in a way to reduce that down to where it's manageable to where there is protections to the consumer and enough information that allow the bank and the regulators to see but this has got to change, this cannot continue to grow. this is crazy give an opinion on that. >> to the extent it is not legally mandated. a lot of it is legally mandated by the state law. we do try to make assessment about what is necessary and what is not. it is a big challenge i would agree. >> for the record i did not ask a question -- [laughter] thank you.

>> the gentleman yields back. the gentleman from georgia is organized for five minutes. >> welcome chairman powell. good to have you. the alternative reference rate committee is pursuing in new york legislation to address legacy contracts in new york state with the fed support federal action in that regard? spook actually it's some numbers, the committee itself is not seeking legislation but some have approached the new york legislator. in terms of the need, we have not reached a point where we think it is going to be necessary paid we have plans to do that, if we do believe the federal legislation is necessary, we will come tell you and we understand that is on something you can do in 24 hours, we know the time for that is sin.

>> let's move over to great britain for a moment. the uk regulators have been very direct with their financial institutions only recently established a goal for their institutions to seek lending by the third quarter of 2020. so why has the fed not been so direct and you have plans to set clear goals and guidelines for your regulated institutions? >> yes, we will do that at some point, you may have seen that they said they will not accept the mortgages after some point of this year, that thing will begin to happen now well in advance of the deadline which is the end of 2021. >> chairman powell, you are fed

board recently finalizes the rule on tearing the hopes of providing work clear and well defined risk indicators to determine the regulatory requirements that are placed on firms based on the size and risk. but the board has never disclosed nor provided clear and quantitative criteria under which firms are placed under a supervisory regime that is called large institutions, supervision committee and even your vice chairman mr. corals recently gave a speech where he said that he would like to align the portfolio with the tailoring category and make the designation transparent. and you even recently indicated that you agreed on the need for

broader lines. could you outline what changes they are considering to make in this supervisory framework? >> we are just in the process of working on specifics. but i would agree we should provide more clarity around what is the firm and that will be the category. >> thank you. >> you are a great man, good man, good friend, i respect you tremendously but chairman powell, the fed is the axle of our financial system. you are the most powerful regulator and i want you to stand back up to mr. auditing on this business of him coming with this rulemaking change to the

community reinvestment act. let him know that you not only have a mandate for inflation for monetary policy, you have a dual mandate, employment, jobs and here's the other thing, you need to remind him that this piece of legislation, this law, the community reinvestment act is precious to the nation but is precious to african-americans or than anybody. because when the civil rights act that dealt with the big issue facing african-americans, financial stability and the two anchors for that is a home,

owning a house and having a job. and this bill was the bill that outlined redlining that kept african-americans out. he needs to back off of that, you need to insert your power in this and let him know we are serious and to back off the rule change. >> the gentleman from ohio is recognized for five minutes. >> thank you, madam chair i appreciate you holding this hearing. good morning mr. terman how are you doing today? >> great thanks. >> thanks for being here, i want to do yes, sir no questions. you'd cover them in your testimony but just to remind everybody the labor petition is 83.1% which is increased in the last three years is that correct. >> i think that is prime age adults. >> has increased or decreased. >> i do believe you have.

>> and wage growth has outpaced inflation for workers in the last three years. >> it is currently. >> yesterday. >> and wage growth has actually gone out by about 3% in the last two quarters in an annualized rate is that correct. >> over the last few years if you look at a range of majors you would see wages moving up 3%. >> and we have record low unemployment rate for african-americans and hispanics is that correct. >> that is correct. >> so the fundamentals of the economy in good shape. >> i would and i did. >> thank you for that testimony. your colleague stated recently that economic expansion does not go with old age, the economy is

strong, do think many businesses and investors are trying to talk themselves into recession? >> i don't think so and i certainly hope not, there is no reason why the expansion cannot continue. there's nothing about this that is unstable or unsustainable. >> i think the fundamentals are strong but i think people are worried and i hope they don't talk themselves into a recession. given two thirds of all indignant capital formation occurs in the capital market, i'm curious to hear what the federal reserve is doing to coordinate and exchange commission in the cftc as potential regulators for the capital markets to make sure that his coronation on the capital markets. >> the sec really has primary regulatory authority for those markets and we have supervisor regulatory authority over the bank, where we overlap is financial market utility where

we regulate some and the fcc regulates him in the cftc regulates some and we collaborate on all that, we collaborate closely on that. >> i would urge you to increase the collaboration because the lines between security is banking and capital market are more than ever before and i would ask you and vice chairman corals to redouble the efforts for the coronation because i hear from some of the firms that feel like it is not coordinated. if you could redouble the efforts i think that would pay dividends to the american investor in the american economy. a couple other quick questions. >> what do you think the most significant risk to the financial system today? >> i have distant bracing i think the financial system is strong and materially strengthen

since the financial crisis, particularly the bank, high capital, liquidity, keep them on their toes and they have a real resolution plan none of that was in place before, it is generally in a good place. the thing that the we worry about a lot is cyber attacks. i think we have a great game plan for traditional issues like bad loans and things at that. cyber attacks is the frontier where you worry and we work very hard on that and all the agencies do, we all work together, the institutions themselves were card but that is a major focus. >> thank you an interesting note, you are in line with the ceos of the biggest institutions, i asked them the same question and the consensus although not complete an agreement was that cyber attacks were the issue. i think congress needs to focus on that and our regulators need to focus on that. two quick things because i'm running out of time. i know you're focused on the

transition and people have asked that question, i hope you will pay particular quote attention to the impact on small businesses in the community banks as we make the transition. they are vulnerable with the repo market. i hope you will continue to focus on the origins of the problem, some are regulatory and some are market-based and i know you're focused on and we have private discussions but i would like to see that solved in a way the you don't have to provide federal reserve capital at the end of every quarter and end of every year. if you can stay focused on those things i am out of time. >> thank you, mr. chairman. >> the gentleman from texas, mrp oversight and investigation is recognized for five minutes. >> thank you, madam chair. >> thank you for appearing today mr. powell. mr. powell this is an observation not a criticism. you indicated that the fundamentals are strong however,

you also indicated that the last conference you were a bit surprised that wages have failed to move out despite being well into an expanding economy. sustained levels of historically low unemployment, increased labor force participation, fundamentals are strong. strong yet nearly half, 42.4% of working americans in 2019 made less than $15 an hour, fundamentals are strong, the people in my congressional district are more concerned about the supermarket prices than the stock market, when they go to the star supermarket there concerned about procter & gamble products of the stock market price of procter & gamble

itself. it means nothing to them, it's what they have to pay for products in the supermarket. this brings me too my question. has there been a study to give us some sense of what 15 a dollar hour wage will do for the economy a study of what $15 an hour wait will do for the economy. have they done such a study? >> that is not something we would do. >> let me address the fma. don't mean to be rude and crude, but let me just call to your attention a study that i found interesting. the disclosure project. the project based on thousands of the disclosures the market

capitalization are exposed to trillion dollars in risk. someone could argue that that is probably not something you ought to do although i understand climate change is something that is important to the fed because it would have an impact, a global impact. but i think you can take a closer look you the alternate authority on price stability on wages let's have a study to determine what impact $15 an hour minimum wage would have on the economy of wage disclosure project if you will. give me some thoughts. can you help us please. >> there's a great deal of research that has been done on minimum wages and i don't know her particular one but there has to be some research on what a federal 15-dollar wage increase.

>> i agree i read a few but they don't come from the fed. they don't come from the entity that has a dual mandate. price stability. , unemployment or employment. it would mean something to working people if we could get such a study, notwithstanding what others have done. these are observations not criticism. this would be meaningful to working people, by the way i think $15 an hour is not enough as a minimum wage. i think it ought to be at least 20 now. but i'll still settle for 15 if we can get that. but can we work with you and discuss the possibility of a wage project. >> all go back and talk to her labor people who know this issue well and many have published on

the issues so let me come back. >> i will thank you for, i have 46 seconds and i will applaud you for. [applause] a personal applause. madam chair, i will yield back the balance of my time. >> thank you very much. if the gentleman is requesting to have a rating for the record on this question to the chairman. >> yes madam chair. >> the witness has requested to provide an answer in the record. i. the gentleman from kentucky is recognized for five minutes. >> thank you madame chairwoman, welcome back to our committee. in general what would you say is the lifetime associated with a major change in fiscal policy? >> it content to be long as you know. with monetary policy we can go into a room and change interest rates and obviously fiscal

policy tends to take a lot of work and time. >> let me ask the question, fiscal policy has changed profoundly in the past three years, tax cut the regulation energy sector pullback from dodd frank, the individual mandate, new trade deals, or any of these policy changes impacting current economic conditions? >> i'm sure they are but we don't try to assess that, that's not what we do when we look at the economy but yes it would be affecting. >> you noted u.s. economy is exceptionally strong since the 2016 election, 7 million jobs have been traded and unemployment is at a 50 year low, more americans are employed more today than ever before wage growth highest in income workers have been seeing the hous passey increase grade 15% since 2016 election. just over the weekend the headline of the wall street journal which i'm sure you

follow the reporting, a tight u.s. labor market is drawing americans off the sidelines at a record rate. despite this after last week's date of the union, speaker pelosi said it was appalling to hear the president try to take credit for an economy he inherited. i will not ask you to weigh in or arbitrate domestic political dispute but when the f1c conducts monetary policy given what you said about the lag time of fiscal policy, is it fair to say that this president's policies are impacting today's economic conditions? >> at a high level of course there. >> let me follow-up on her question about the surcharge. in your response to our letter, you maintained your aim to have the key components of the stress capital finalized in time for the 2020c car, can you describe what the key components are in a

more precise timeline given the fed announced the 2020c car. >> i think the timeline, we do believe and intend and will put into effect the core of the stress capital for the cycle. that is coming right up. i prefer to leave the details, there still being worked out but it'll happen in a timely way for the 2020 cycle. >> let me get a little more to go. those activation of the buffer of suitable replacement for the dividend add-on in light of the stability report from november which stated the vulnerability had not significantly change? >> we have not made a decision on that. we have not made a decision on the. >> thank you for that. we were looking forward to that decision.

the business roundtable as you probably remember announced it was redefining a corporate purpose to elevate stakeholders ahead of shareholders a large investment firm announced its intent to dives divest fossil ey for clients to a subset of sectors for the environmental social government box. i am concerned that firms which arbitrarily limit investment offerings based on social and political pressure may choke off capital to perfectly legal productive and profitable sectors of our economy. they need to fund for the futures. as a leading voice on the financial stability oversight council, will you commit to raising this issue with your colleagues and urged them to examine the extent to which a misallocation of resources away from shareholders to serve under related political errands might stifle capital formation,

compromise investment return and undermine financial stability? >> i don't know that i totally understand your concern but i'll be happy to discuss. >> the concern is that shareholders are not a prime concern of corporate boards and directors. if stakeholders who have no ownership in the company are the focus of a corporation, then i would submit there's a tremendous risk of misallocation of resources away from shareholder returns. >> i would like them to take a look at that. >> the gentleman yields back. >> i will bring that to the authorities. >> the woman from ohio is also the chair with the subcommittee on diversity in conclusion is recognized for five minutes. >> thank you to the chair in the ranking member and thank you chairman paul for being here

today. let me also acknowledge the advocates bringing teachers for being here today. thank you for coming to my office yesterday. ensuring what i thought was valuable information with my team. i appreciate you sitting through the hearing. chairman powell in the latest edition of the federal reserve, consumer finances that was published in 2017 and gave the breakout between white, black, hispanic related to the network. we've heard the statistics, i think my colleague talked about it and i'm sure some others out there will going to those details. what is very interesting to me is the data seems great for those who are researching the issue, is there any way your office can break it down by region or city because when we

go back home, this is the number one thing that i'm hearing, people are coming into my office when she gets her healthcare and jobs in education, there thing is, we look at the wealth gap that is getting wider, not coming in and while were talking about unemployment rates being better many people have to work two and three jobs to try to survive, someone talked about the minimum wage and certainly as we advocate for higher number it is not enough, in my district you would have to make somewhere between $18.70 -- $20 to have a livable life. can this information be localized to a region or to a city to help us as members of congress when we go back home?

the second thing is, i introduced a bill closing the racial wealth gap which requires the federal reserve to further break down the data. this is something i did not realize until studying the federal reserve and listening to the individuals like here today, they have some really good ideas so my second question, could you tell me if you were entertained having your folks looking at wage as a major because often times when you have a full-time job i have a wage, can we be creative and looking at the data based on what some of the things i am hearing from the group they came in. i'm sure they met with your

folks and you know some of their issues. , can we entertain looking at some of the things that they think we should look at when we calculate or prevent all the good news that is not the good news for many of the individuals sitting here or in my death. >> i think you're making the data people happy of the board of governors. , they love to cut the data different ways and we do learn every time we do that. i don't actually know the precise answer to your question and whether we can do it regionally but we would be happy to look into that for you. >> what about the individuals ideas about looking at wages in your calculation? >> i think we can do that. >> your folks would be willing to work with them to a starting point of discussing?

>> because now were marrying the people with the power, what a good when when that would be for all of us as were talking about all of our lives and especially those have to work a little harder than some of the rest of us. , the next thing will your agency work with my office. i'm so excited about this deal and if i understand it, part of the reason for asking for the data is the federal reserve actually collects the data the sets of policies that then get married with allocation that come back. i want to make sure i'm on the right path when i go back home and say i have a bill asking the federal reserve to collect data that can help us in the end.

>> is that in the ballpark? >> we should get the experts to talk to you in your staff and tell you what you do and how we do it and that might be useful. i don't know that we need legislation at all but we certainly have excellent sources of data and we do cut them different ways. when we tried to follow-up with you on that. >> the gentleman from colorado is working eyes for five minutes. >> thank you monitor and chairman powell thank you for taking time to be here. i wanted to follow up on the cra. we had a fair amount of conversation on that and just wanted to have the clarity that the fed has been involved with the process, the occ and fdic, is that correct. >> from the very beginning. >> i want to get clarity, were you comfortable not only with the governor making a speech but the content of her speech regards to the cra? >> what extent has the fed done. i know you're talking about

doing the analysis, but to be able to work on cra modernization? >> from the very beginning we said yes, that sounds like a great idea, it's a good time to update cra. let's make it more transparent, objective and effective with the beneficiaries. so we went around the country, 29 events where we talked to different groups of people and their experience of cra and it turned out in a particular direction, we had a bunch of ideas and it's unfortunate, we were not able to get on the same page or agree completely with their approach and they were able to agree with ours. but we continue to push and continue to learn and i would agree with mr. hill's earlier, ideally you would have one set of standards. >> i would agree with that as well. i think that is something we

have a lot of stride for an well encouraged reading your comments and statement that people who live and work in lower communities are fighting opportunities, wages are rising for lower paying jobs. that's an area i have a lot of concern, my state of colorado i represent the rural areas and we often time have two economies were the roo resort areas are dg well in rural areas continue to struggle, we're starting to see some of the movement and were looking at the cra reinvestment and talking about the community bank. i really would encourage you to look at those proposals, i believe they do reach further in to rural america and you talked about policy, have you done in assessment and the opportunity zones including the tax cut jobs act, we are seeing benefits in

investment coming into rural areas in my district, those are some of the policies we need to be looking at. >> i am not aware of any research but we probably have truthfully in the system i would imagine when we did research on that and be happy to share. fannie mae and freddie. >> took steps talking about so for, to be accepting sofer-based mortgages and i noticed other agencies haven't taken a step separately, is there any uniform effort at the high level to be able to cornet the adoption of sofer? >> there is very much so and we are doing that, were court needing with the other agencies in the participants as well. you will see more of that you'll see more instances in which it will no longer work or be usable in a particular context. that is what fannie and freddie did this week or announced this week. to follow up on his question i

think it is really a problem in the sense that there's no guarantee the rate will be published after the end of 2021 but there's a question of having it because it sensitive rate in addition to sofer, it'll be the main substitute for libor but we are working with regional and the larger banks of the idea of having a credit sensitive rate, that something ongoing. >> we have had some conversation about the coronavirus, the impact on the economy, the president signed into law the usmca, do you see that as creating a runway for further economic expansion in the u.s., job opportunities and wage growth?

>> i would say this that we are signing in the enactment of implementation of usmca will be a positive in the sense it removes uncertainty around trade policy and that has been the issue over the last year or so, not knowing what the rules of the game are going to be in getting those settled is certainly a positive thing. thank you my time has expired. >> the gentleman from illinois mr. foster is recognized for five minutes. >> chairman powell, i would like to thank you for facilitating our reading with representative hill and i on digital currency. we really enjoyed that as well as the meeting with the staff it's great to see how plugged in they were with the issue. in a speech the governor highlighted the role of central bank digital currency ensuring

they stay at the center of each nation financial system. do agree with the characterization in particular do you think establishing the digital dollar would ensure it continues to serve as a core of the u.s. and world financial system? >> to take the first part, i think having a single government currency at the heart of the financial system is something that has served well and it's a very basic thing that has not been in question and i think before we move away from that we should understand what we are doing. i think preserving the centrality of a widely accepted currency that is accepted and trusted is enormously important. i think whether a digital currency moves us is an open question, as you know every major central bank is currently taking a deep look and we feel like that's the obligation pre-technology has made this

possible the private sector is doing it, is very much in common and other central banks to understand the cost and benefits of trade-off associated with the possible digital currency. i want to characterize your state of progress compared to other countries. the swedish central bank developing, the chinese, the reason there was so much concern about the labor project, they would immediately have scale if they rolled out the project. another entity and physician is the chinese government to rollout the scale using already established payment by cell phone system. they would immediately have the scale comparable to facebook if they rolled that out. so how would you characterize the ability to respond to this potential competitive threat.

>> we are working hard on it and a lot of efforts going on. we have not had the problem that many mentioned, a lot of the northern european economies have moved away from cash to a remarkable degree. it is not happened in the u.s. economy even though seemed like it must've happened with her kids not using cash free much. nonetheless the amount of cash the u.s. economy continues to grow. >> if you look at the curb of adoption of payment by cell phone start slowly and then it just happens. it seems like the transition can happen in a couple of years and you have to be able to respond, that's a driving factor and we have to be in a position where we can respond by really not a digital dollar and on the timescale, i completely agree with that and libra lit a fire

under that in a bit of a wake-up call that this is coming fast and could come in a way that's widespread and important fairly quickly if you use a big tech network like they did. we are working hard on it and we appreciate the importance of making quick progress. we have not decided to do this, i think there are many questions that need to be answered around the digital currency for the united states including issues of cyber issues privacy issues, and many operational things himself. we will work through that and do that work early and responsibly. >> do you feel you have adequate visibility on what the chinese are doing? do you have a working level context that gives you some idea of what the rollers likely to look like?

>> we certainly have that but they're in a completely different institutional context, for example the idea of having a ledger where you know everybody's payments is not something that would be attractive in the united states context and the problem with china. but nonetheless -- >> they are claiming they will rollout in the countries very quickly. and i urge you -- >> the gentleman from texas, mrr five minutes. >> they give madame chairman and thank you for coming back to committee chairman. we appreciate it. with baseball season slowly approaching, i wanted to make sure one thing before i continue that you are still on team capitalism. >> oh yeah. >> i appreciate that.

experian released the 2019 consumer credit review and i want to read a section from the report because i think it accurately depicts the state of our economy. i'm a mainstreet business guy in the economy is really good. the u.s. economy exceeded expectations, record job growth caused unemployment rate to drop to his store close while the stock market flexed throughout the year, consumers show their confidence as they continue to borrow and spend evidence by the strong 2019 holiday shopping season. the report goes on the hall time high in 2019 the average 703. this translates to people to get better money, a buyer house or business loan whatever they need financing to live out the mckendree. what should we be focusing on to continue for jobs that we have

seen the past few years? >> honestly the focus for me too be -- whatever long issues that can be addressed like. one is labor force participation, what are the things that you can do that we cannot do that will help people stay more attached to the labor market. we still have lower rates compared to our economic competitors. the other one is productivity, it's a legislative and administrative environment that supports growth and innovation in investment. that would be my main focus. >> i know your aware that is being developed for the world. i had my reservations about entering into a national agreement that does not conform with the current state based approach to regulating insurance companies. one particular piece of the

standard i want to ask about is the flexibility our government was given for solvency standard that would better fit our insurance ecosystem. my question to you, how does the fed ensure the standards being developed will be deemed equivalent by the international group given the continued resistance you are facing from the europeans? >> i say, we will not be part of approving any national standard that does not accommodate our own american insurance framework. >> we are leaders not follower. >> some of my colleagues on the other side have called for a financial transaction tax. i think this is an extremely short side approach to raise revenue that will impact the amount in ways that americans save for the future, additionally the thought that adding an extra layer of tax to other assets is redundant since capital gains taxes are already

in place and should be lowered. and take away money from successful investment. if we want to expand economic growth, we need to focus on lowering the personal and corporate tax rate so americans can keep more income and businesses can invest back into the operation. can you explain how implementing the transaction tax would impact the u.s. economy? >> i think i need to stay in my lane. we don't do fiscal policy, if i comment on particular taxes and wondering where that would go. >> i understand. from a mainstreet standpoint it would really hurt the economy and extra layer of tax, we actually need to cut taxes proved looking a being over in business 50 years, one that catches my negative interest rates, can you help me

understand economics by negative interest rate and talk about the potential threats that it poses to financial stability? >> the number of countries around the world as you know, some of them went below 0, the united states chose not to, we chose not to with the feds, we use other tools when it comes with the large-scale asset purchases per going forward are in commission would be to rely on the tools that we did use as opposed to negative rates. that is our instinct. the question about intermediation, your breaks and windup creating downward pressure on brink possibility which is expansion. there's some evidence in many cases we were watching other institutions around the world that have done that and we will

have to see what the results are. >> thank you for being here. >> the gentlewoman from michigan is recognized for five minutes. >> thank you, madam chair. i don't know if you know 2013 for chapter nine bankruptcy. it was marked as the largest municipal bankruptcy filing in the u.s. history. and while you were here we asked you if the federal reserve is willing to back it up or support big banks and corporations during periods of credit market distress that we would want to make equally sure that state and local governments had access to credit. you mentioned you do not have the authority, i would like to submit for the record section 14 of the federal reserve act that the feds actually do have the

authority to buy municipal debt. >> without objection such as the order. >> given that you do have the authority, can you explain why shouldn't the federally serve ensure state and local have access to times of stress? >> as you know we have limited authority to buy short-term obligations. we did do that in the 1970s briefly and have not done it since. i think a series of fed shares in all kinds of different political environments have thought of that as something that's not appropriate for us in the sense is government finance that's to be dealt with by fiscal authority rather than monetary authority. we focus on the job you gave us which is maximum employment and stable prices into some extent working on bank supervision.

>> yes, sir no the federal reserve retains ability to open emergency lending facilities? >> is accurate in stabilizing the economy? >> yes to financial institutions reduce. >> when the fed stepped in to rescue banks in the crisis, is because the role is vital. >> we had no choice to prevent him from collapsing. >> filing bankruptcy was devastating. so many retirees, 40 - 50 years they worked for the city of detroit, but the pensions, completely diminished and gone. do not believe that the government of detroit in puerto rico also play a role that should be preserved even if the financial crisis makes it hard for them to borrow money? >> i believe that's not a job for the fed, and the particular

role and authorities in lending to state and local government in supporting the mother in bankruptcy is our mandate. >> were gonna strongly disagree. you mentioned in the face of another financial crisis you would use the same tools of purchasing long-term bonds and more of the same. >> correct. >> i'm afraid that is not good enough. i think your predecessor seems to agree on remarkable to give last month. for instance chairman suggested a fiscal program might be helpful during the next recession. do you agree with that? >> i think that's an untested and not widely supported.

another spin a group of people that push the idea but i don't think included the former chair. you've seen something out of nothing. >> the federal government is supposed to be about people. i don't see that we're treating pensioners in the city like the city of detroit which is currently community that has been hit hard by the financial recession. they see a teacher is coming back, if i show you neighborhoods they'll say we don't know you're talking about because poverty has increased, all of those things. >> we reflect and understand that i believe the federal reserve act gives us authority to help and treat, just like we build out big banks that we can do for people for the city of detroit. i thank you for that and again, i will actually asked to look this from a different lens versus the same old process which i believe has not worked

for working-class people. >> thank you so much a yield the rest of my time. >> thank you the gentleman from arkansas, mr. hill is recognized for five minutes. >> thank you, chair waters and welcome back to the committee. i want to thank you for your discussion that you had with doctor foster a few minutes ago, i want to thank you for your work with governor brainard in our discussion on the digital dollar in the work being done at the treasury about that. i want to labor some of the points that representative foster made but some comments on, would you advisor committee or asked the fed to advisor committee what legal authorities considering the digital dollar. >> that is a good question and one we are looking at, longwood depend on the design. >> exactly.

one thing we talked about and had a lot of discussions on the task force is about europe's approach true payment provider which is part of their financial services code. part of the open banking movement and one would have a regulatory, might be in a bank or non-bank. is that the feds looking as well? >> i would not say were specifically focused. but more broadly, we think it's a good idea to look at the whole landscape of oversight over payment system. that would be a piece of that, and nadja heard governor brainard talked about that in a number of her speeches. >> thank you. last night the chinese regulators build out, $14 billion loan that they arranged, the chinese banking

act set at $41 trillion, 47% of world gdp. his instability in chinese banking industry pose a financial threat to the global financial system, is a financial virus like they were to contribute in, a physical virus? >> generally they have had very high debt and that includes the banking system. the government is actually for several years now, been taking measures led by the central bank to control the growth of that and they start to that through the last couple of years even though those were challenging years economically it was something they were adjusting but it's safe to say they have plenty of physical space.

they have plenty of power to respond to downturn. i would not go as far to say as their debt is suspended. >> i think it deserves review, we talked about the misallocation of resources. at 47% of global gdp seemed like an over allocation in the banking sector in china. . . .

handful of large issue verse which were downgraded and the idea is that some holders are not permitted by the terms of their agreement with investors, so that's an issue we've been monitoring for sometime now. some time now. with the leverage when he more generally, yes we are monitoring it very carefully. we see low compensation for the risk-taking and high leverage. they are not on mutual funds and exchange funds rather than bank balance sheet in the sense that

the liabilities are longer than expected. hispanic financial concerns commend you for noting it in the report and thank you for your continuous attention to the. >> the gentleman from illinois is recognized for five minutes. >> a.q. madame chair and chair manpower. i appreciate you sticking arou around. if i get elected eight times, fingers crossed, i will have as much experience in this line as the energy sector. i still come here primarily as an energy nerd, and i have a concern that we are not dealing with the reality of climate change scientifically. we understand viscerally but we haven't thought about what it means to have an accelerating change.

compounded changes in the environment think about it as well as they should. a couple of data points. the first evidence is ushered into the industrial revolution and 50% of all of that which we ever admitted as a species this is a massively accelerating shift and if we went from zero tomorrow we are looking at it coming up and more realistic trends is $23 trillion of economic loss in the system. there is some serious systemic risks to the economy if we get those on addressed and i just want to understand how you do

our thing i being about those risks. given that the exposed to climate change exceed the entire subprime mortgage market how is the fed thinking about climate change as a risk to the economy. >> one is the elected representatives to assess the overall production in society and how we will respond to the climate change. nonetheless we have a job to do and that is to think about the potential implications i of the financial system for the economy and we are at the very early stages of filling in what exactly that means in terms of things like particular assets these are long-term considerations and the we are essentially concerned with business cycle issues and that is what we are focused on

climate change is a cycle. >> part of the concern is the actors in the space do not have planning horizons. they may plan with the sea level rise coming. they typically have a one-year holding period, so even if the u.s. is successful at reducing the carbon emissions there is a reallocation of capital. >> it's the beginning stages as you obviously know there's a lot going on in the financial markets into public disclosure happening in expectations around disclosure are changing.

our banks have to be getting that taken into account the risk of the weather events and potentially i suppose a rising level -- >> let me give a specific one that's been bugging me lately. if you look at the fossil fuel companies and the debt they hold relative to their assets, given that they are so heavily dominated by the fossil fuel reserves if they were to extract, things are going to be way worse than the $23 trillion i just told you. have you considered stress testing to see whether the failure to monetize the reserve might effectively make them fiscally insolvent because that sounds like a material adverse event but i wouldn't want to bet

that it's going to commit suicide. but if i look at the financial statements of a lot of the companies, it isn't clear to me that they can monetize those assets. that is a meaningful effect on the risk held today with $700 billion would in the last couple of years. if you consider that a systemic risk? >> it is a risk to the financial system, and we would be stress testing banks, the bank of england is doing some of that now and we are going to be watching that. >> they will yield back my time. >> the gentleman from georgia is recognized for five minutes. >> thank you, madam chair. thank you again for being here. first of all, i kind of want to touch back on this we've touched on the subject and as you know several weeks ago the vice-chairman anvicechairman gae outlined a number of changes in

would like to make in the regulatory process. he said he intends to bring transparency to the regulatory regime by developing a clear transparent standards for designating firms. he also proposed the designation with the categories of limiting only category one firms. so, my question is at a press conference after last month by the federal open market committee meeting using the generally agreed with the vice chairman and what he articulat articulated. appreciate that. can you give an idea whe of wheu expect it to be confirmed with new rules? >> i don't have a sense of where that is in terms of the timing of it. at any given time that is certainly one of them. >> hopefully sooner rather than

later. i don't want to commit to something there are a lot of things we are working on that of the vice chair gives a speech about it i expect we will be moving forward. >> that is good to hear. quickly, i would like to touch on all three banking agencies need to have the framework and i know you are hesitant to speak on behalf of the other agencies. if you don't want to comment on that, understand your ideas for the modernization. >> we kind of agree on the overall goals and our thinking was to try to get to a set of

improvements, so we are looking at ways to make the assessment clearer. in our thinking there is a separate test for community development and retail lending. also, the other thing we are seeing is let's make sure that it's very grounded in data, so as th the chair mentioned earli, we've got 6,000 data sets that we look out, so i think that we know when we make a change in the metrics we know what the effects are going to be unless we try to develop a proposal around that. there are a lot of overlaps, but they are a handful of differences that prevent us from getting to the full agreement. >> and the overall objective, do you believe we can remove some of the ambiguity on the projects

do and do not qualify clark's >> absolutely. transparency as to what qualifies as a player, more objectivity. all of that should help to encourage banks to do more if they really know what is going to qualify and what isn't. i think that is reconstructive. it's about how you implemented and we want to have a high level of confidence that with the change is going to have the desired effects and that i affes what we are focused on. >> i appreciate that because i would like to see us make changes to where it is in financial institutions just checking boxes to get credit but investing in projects that do help revitalize the communities. the study whether any changes and thinks regulatory capital requirements are needed because

if the study concludes that is the case are you open to modifying the requirements accordingly? >> i think that we have said we are going to be monitoring very carefully what the implementation is showing because of some of the concern that have been raised. >> thank you. probably don't have time to get into other questions, so with that i will yield back the balance of my time. >> the gentleman from california is recognized for five minutes. >> thank you. chairman powell, you frequently have spoken about your belief and importance of maintaining the independence of the federal reserve. do you still have that belief and has anything changed in the new year? >> no. >> we don't want the fed to be making decisions on interest rates and any factors other than the best interest of the country, and i know you've had experience with the president

publicly and aggressively attesting to lower interest rates and appreciate your continuing to affirm the independence of the fed. but it's not just the president, there are a lot of people out there that would love the opportunity to weigh in on the federal decisions. what other kind of people might want to influence you in regards to the decision-making? >> potentially a wide range. >> you say they might want to intervene. the answer is i don't really know the answer. we respect what they do and people often when i need them they shy away from giving advice. they feel like they don't

presume -- >> so you do not feel unduly pressured by the special interest. what you say that someone like the ceo of amazon could benefit from having influence over the decisions is what about kelly ann conway and has the president expressed his public views does she have an interest in amplifying the message that is overall her job. >> that is a party after the dinner i went to.

>> where was it held? >> besos's home. saturday night after the alfalfa dinner. >> and january, 2020, recently? can you imagine how attending a lavish party at the $23 million home along with chairman ivanka and jamie diamond might get to the public that they were not immune from external pressures? >> i would certainly hope not. >> what did you talk about at the party? >> i didn't talk to any of the people you named it. >> can you tell me who you did talk to? >> i escorted my son and his brand-new wife and introduced them to general mattis. >> i would just suggest this

attendance of this kind of event with these kind of people is inconsistent with what i would otherwise commend you on forgiving a very good job of reaffirming to the public and the public's mind to see this is counter to what you have been doing. the biggest atomic drivers, what has been making our economy grow, with factors? >> factors that have been making it grow, the hard-working american people. what you have seen is tremendous growth in some sectors and less in others. of course the big technology companies were not around so you've seen lots of growth in some areas than others less so. >> 38 million women join the

work force and without those the economy would be 25% smaller so when you talk about the health of the economy and gdp growth, but i don't hear a lot about and i would like to hear more about is the economic effect of things like child care availability. it grew 25% and the cost of childcare showed up 2000%. you are an economic expert, can you put a number on that? so many colleagues at the federal reserve just to address

the comments that came from my colleagues recently come is it unprecedented for the chairman of the federal reserve to attend a party or reception? i don't know that we want to say just because you are at an event somehoandevents somehow this is nefarious. you might have actually talked to a russian on a subway or something. the way that these things are linked is embarrassingly partisan. what i'm concerned about is the co- market. back home of a lot of people don't know if there is such a thing as rico but it is a factor for the economy and some of the warning signs have given rise to

the fed with a blend between regulatory action and monetary policy to inject a lot of cash into the market. can you explain the process of how they are going about receiving factors that are contributing to this spike in what you've learned from a few? >> in early september, there was a spike in their rico rates and the federal funds moved outside of our band and the target range for the paper so. it's on the cash deposit reserve banks needs to be higher than we

thought. we have immediately sent forth a plan and executed to create -- to produce an outcome it's odd that our action is to inject cash from the federal reserve to grow the balance sheet at the fed instead of looking at the underlining regulatory things. what have we talked about and because the board talked about in terms of regulatory factors injecting cash to fix the problem. the supply demand for cash for basically banks that need to have a certain amount of liquidity purposes. without undermining safety and

soundness we would look at ways in which regulation might have interfered with the otherwise free flow of cash to where it was needed. the vice chair hit on a broad theme which is important and it is the idea of making the treatment, the supervisory treatment of cash the same as that of treasuries. you could achieve a better flow of liquidity without affecting the overall level of liquidity in the system which is what they are looking for so that is a very profitable line. >> thank you for that. one of the changes as the market forces are coming we are talking about replacing the benchmark rate and of course it includes 250 entities, but there is a concern is you have done this,

the best rate isn't necessarily. isn't the fed taking the best proposed rate offered in these deals or are we getting it out at a special rate for the top ten? >> when the liquidity is injected, -- >> i'm sorry. i missed that. the rates that we have been offering won't be a persistent issue. >> when it's at the highest rate isn't paid to the best availab available? >> anybody is eligible to.

>> what the gentleman like to ask the witness to provide more answers in writing for the record of? >> i appreciate the suggestion the gentleman from north carolina is recognized thank you for your testimony. if the board member voted against the controller proposal describing it as a deeply misconceived proposal that was fundamentally undermined and weakened in the community investment act. can you comment on the deficiencies of the misguided attempt for the civil rights and banking law? >> our goal isn't to be commenting on the proposals. the public is getting at now and

we look forward to seeing the comments they make. i can talk about how we are thinking about this but it's not for us to be publicly commenting ocommentedon the other agency's. >> will the federal reserve release its own proposal on the community reinvestment act that takes into account the needs of the low and moderate income communities? >> we haven't made a decision about whether or when to make a proposal that the whole effort was undertaken with a view to create the modernization proposal. >> they have maximum employment so will they set up a goal for the wage growth and are you considering this approach as a part of the framework review?

>> those are the two objectives and those are the things we target. i don't see is targeting a particular level of wage growth. >> have you considered adopting a wage growth for example once we set a percentage. >> we have said we want to nick the 2% more credible and we have been missing it for a decade now on the low side. we want to resoundingly achieve 2% inflation.

why has the fed decided to support the changes to the rule given that the banks enjoy certain benefits to the discount window and that the rule was intended to limit the banks on engaging in risky behavior and a. >> we did put out a proposal on part of the rules and of course we think that proposal is consistent with the letter and the spirit of the law and it's up for comments now and we will be looking forward to reviewing those comments. >> i understand that you've collected a large number of metrics from the bank subject to the rule yet it's never been made clear exactly how these metrics are used to determine whether the bank is complying.

is that true? >> we published the first i want to say six or seven years ago and very widely the regulators and financial institutions found it to be a bit unworkable so we set out to provide a simple set of metrics and ways that they could conduct illegal activity and add more certainty that they were doing so without having to prove every single trade it was in the heart and mind of every trader said there's going to be trading activity around about legal activities that were not covered by the rules so i think that is what they are doing and we are trying to make it more efficient in a way that is consistent with the letter and the spirit of the law. >> the gentleman from north carolina is recognized for five minutes.

>> thank you for your insurance regulations into collaborative work with the u.s. state injured commissioners on solvency regulation of also the pushback against the efforts to try to force their system of insurance regulation onto the unique and sound insurance regulatory regime notwithstanding the progress today many are telling us that the europeans are still resistant and ultimately seek to change our regulations that they mirror dares. will you commit to reaching out to your peers to call them exclusively the u.s. will not be adopting a european centric international capital standard and that we have our own rules that work pretty well? >> we have a state-based

insurance regulatory system and the federal role is what it is and it's not something we are seeking to change and we are committed to that going forward. >> they are seeking to change us. have you had any conversations with any readers on the international capital standard? >> know i have not. >> is there any reason why not or is it something that has been avoided? >> i'm not involved in the insurance. >> i would encourage you to continue to press back. we have a great system that continues to work well. also, as a part of the finalization efforts, and other changes to the capital rules will have the effect so can you discuss your views on the level of capital markets related

activities such as market making or underwriting? >> that is in the functioning of the economy they do need to be appropriately capitalized. i would say that overall it is about right and i don't see the need to further raise capital so we are pushing forward in the fundamental view but i don't see them as needed to raise overall levels of capital. >> can you share your views on the capital requirements in things like market making and underwriting how they could affect the balance between the bank driven and market-driven finance in the u.s. system? >> to the extent you raise the capital requirements they move

to less regulated and supervis supervised. >> there's been a lot of discussion and others monitoring the market. in fact you have a couple of questions on the topic today when people discuss the issue sometimes i think they are referencing different thing so to help us get on the same page in your opinion how would you define leverage loan? >> typically they would have the leverage of maybe six times cash flow. there's different ways to think about it but the best way is probably not investment.

>> do you think there's a difference in the banking sector? >> i think there's been a trend over time for the leverage loans to be held outside of the banking system and that has accelerated so there are far fewer than are on the books of the banks with deposit insurance and safety net as opposed to collateralized loan obligations extremin exchange driven funds r mutual funds or pension funds in. that's where those are going now so it's more like it's become a distribution as opposed to a traditional lending business where they would be clumsy and put it on the balance sheet. you have a bank performing a function on behalf of a sophisticated investor and in

this case it is but that's something we need to keep monitoring. >> thank you madam chair and thanks for being here. i would like to return to the topic of climate change. on the working class communities likworking-class communitiesliko district they are often the hardest hit. climate change is also a risk to the financial sector. jim cramer on the host on cnbc in a discussion last week said the nature investors want nothing to do with fossil fuels because of concerns about climate change to guard against climate change impacts the bank of england has decided to stress test the uk capital banks

against the risks associated with climate change or the federal reserve follow suit and develop climate related stress tests. >> we are monitoring what the bank of england is doing and by the way, those are stress tests that are not like ours and the ability to distribute. it incorporated in climate change into economic forecasts would become more important. climate disasters such as the wildfires that swept through last year are currently labeled transitory risk by the federal reserve, but we know the weather events will become more frequent and severe end of the island of which the communities of color.

it would shift from being considered a transitory factor to a structural factor they are not for the longer term, it's what's important is the next year or the next two years and three years. climate change just operates on a longer cycle than that. of course as severe weather becomes more common that's connected to climate change and you will see those things in the forecast period and certainly the supervisory practices as well as the economic forecast. >> in a recent speech on the economics of climate change,

they said they participated more actively in climate related research and practice, the federal reserve can bfederal ree effective in supporting a stable financial system. do you agree with the governor's statement if yes, what more will the fed do in the future to identify and mitigate the financial risk of climate change? >> i do think it's incumbent to do the research and understand the implications of climate change over our supervisory role looking after financial stability. i think it is in the early days for that, but the public will expect that we do that and that we take the measures we need to take to make sure the financial system is resilient. >> do you agree with her statement? >> the big bank mergers and market concentration, three months ago the federal reserve approved a merger that created

the sixth largest bank in the u.s. with more than 450 billion total asset and difficult reserves own research suggests the failure of a single 250 billion bank would be far worse for the economy and a 50 billion-dollar bank. they warned that the fdic would be able to wind down a bank the size of the combined trust without imposing significant losses on the deposit insurance fund destabilizing the financial system. for the conclusion that this transaction would not appear to result in meaningfully greater or concentrated risks to the stability. >> i think we can and do it.

we don't think the mergers under the statutory framework very transparently and with a number of public hearings and we looked at all the statutory factors and essentially you have the banks coming together to perform a regional bank at ten to or smaller than many of the other regional banks. >> thank you, i will yield back. >> the gentleman from tennessee is recognized for five minutes. >> i heard your statements and opening remarks in regards to some of the questions that we've had today. i've noticed this morning in a report that the traffic at a u.s. port is expected to climb

in february almost 13% in march between nine to 10% year-over-year. assuming those numbers are, what impact if any would that have on the retail sector an and what if any would it have on the overall economy? >> i think there's a lot of uncertainty about what the effect would be outside of china and the united states. the question we expect it consistent that there would be some effects. the question would be the size and scope of. the bottom-line question does it represent a material change into something we should react to as a monetary change it is too early to say will b where we be monitoring it like everyone else

and that is where we are. >> along the same lines, and also they quoted from the bank of america security reports of a survey of 3,000 companies about the global supply-chain and many companies around the world are looking at relocating and cold to report a quote on quote tectonic shift looking into other areas of south asia, india, also north america. i don't know if you are familiar with the study of the bank of america security study is reported or not. or those numbers are anecdotal statements consistent with anything the federal reserve has

seen? >> i'm not familiar and therefore i can't comment. there are a number of channels through which this could have an effect, first of which is just tourism. second is our ability to export its list because there will be less going on so there are exports that could go down. you mentioned are really supply-chain, so many u.s. companies by intermediate goods as part of the final product, so the supply-chain issues we don't have any evidence on the net. we will have to wait and see. there's no way to be confident about anyone's assessment or range assessments. >> i think that i know your answer but i will ask anyway.

the report mentioned between our country and china and the impact that it's had but also automation and the increase in automation. does that sound consistent with relocating the supply-chain? >> separate from the questions about the virus, the quickly has been on the part of the american companies a lot of activity in moving to other jurisdictions like vietnam as just mentioned quite a bit. i saw a report last week and a number of others that had american businesses moving in the production activities out of china to others and that certainly has happened. >> along those same lines, i represent part of methodist and

it was made to three weeks ago that the relocating a new facility and incidentally have questions on the minimum wage. they start at least $15 an hour plus benefits that talked about the new jobs in combination with automation in terms of packing and shipping. you talked about your concerns with automation and the effect that woulit would have on emplon the future. can you see the two coexisting? >> over the last two and a half centuries we have seen advancing technologies. if there's been a concern that it would replace human labor, and that has happened but what has happened is it's made it more productive so there's a displacement of current workers overtime the advancing technology has led to rising

incomes but that doesn't mean there won't be disruptions in the left pane for people in the short term but nonetheless the process over time has led to rising incomes. >> the gentleman from florida is recognized for five minutes. >> i would like for you to explain to me for the past almost three hours or two hours and 45 minutes when you were talking in memos on the committee speaking in terms of how well the economy is doing and how we have more opportunity for jobs and the economy. when you started speaking it was up 125 points. while you were speaking it went down. can you tell me why something like this occurs, was listening

to your speech this morning in front of the financial service committee is it because of constant interest rate, how cano you explain that? >> i'm not following as i sit here listening to the questions. >> i know the president tweeted something similar. do you react to that or does it not mean that much to you? also about how it went down, the cutting of interest rates, do you react to that or is it just something that happens? >> my colleagues and i are completely focused on using the tools to support the american

people and the achievement of the goals and that is all we are focused on. >> explained to me from a staff report, it was stated that starting in july of last year that from about three different times, the interest rate was cut by a quarter%. how do you make the decision when you made this all the way through september to the interest rate. >> we were looking at confusing is whewhen we did that and yes s definitely to support the economy. part of that was to offset the effect of global factors into their eye would say trust the slowdown in growth in the global economy went on and on and we felt it needed to offset a antique insurance against the effect that might have on the u.s. trade policy uncertainty was weighing on the economy and we tried to offset any potential

effects and take out some spare. the third reason is that we wanted to do what they could guard against a more prolonged shortfall of inflation from the 2% objective such as inflation moving back up, those were the reasons why we did those three things and that is the thinking that we had and announced. >> could there be a correlation between the student debt crisis and the slowdown of the housing market which we talked about a great deal in the last couple of months? many are not able to get homes because of the high debt to income ratio. could there be a signal that there is a great need to addre

address? >> the rising student debt there is increasing evidence that shows students that can't pay or service that debt have difficulty having normal economic lives. i haven't seen any evidence that would suggest it's an important factor driving the housing industry in the last seven or eight months and just overall good labor market showing up in more housebuilding in housing sales. >> i have a lot of students at my district and many of them are coming out of school. the concern going into the job

market how can they best to shae in the american dream without getting help from their parents so with that i would yield back. >> the chair wishes to remind members we have a hard stop at 1 p.m. and the gentlewoman will be the final member to ask questions and with that of the e gentleman from indiana mr. hollingsworth is recognized for five minutes. >> i appreciate the time into both in private and public have been complimentary of the work that you and your colleagues have done not only in calibrating the conditions to match the current economy but also the frame work by which you make many of your decisions and present it in public. i know a cornerstone of what you have been trying to say is to bring more transparency and it's one of the decision-making sand press conferences that you have added a lot of transparency to

so it's hard for me to understand some of the challenges in the capital buffers into the inability to pin down changes to the expectation of changes especially when it's already started. i know ms. wagner also asked about this and i think i sent a letter to you signed by every member on this side of the aisle to get a feel for the changes that are going to be made and what is the timeline for those that would undertake these stress tests. they are trying to make decisions with the multibillion dollar balance sheet. this time is now upon us and we are still being vague about what is coming down the pike and when we can expect even when we could expect it to arrive before this so i wonder if you might get some more reason to buy you and

your colleagues have been more hesitant to answer the. >> i cannot give more clarity than exists so we do expect it will be in a stress test this year and we will do that in a way that is timely. >> some of the aspects of this need to be calibrated. we put a lot of in the place you and thought we were doing the right thing in doing so but perhaps we have the unintended effects that were not as great as we thought they would be or maybe perhaps this wasn't the area we needed to focus on and i think we would agree this requires significant calibration going forward. do you expect there will be a further review of the tests to reflect either current conditions and what we have learned since the crisis about what works and doesn't may be adding to significant reserves in the same positions.

>> my strong view is that the levels of capital particularly in the largest institutions are about right and there's no intoe need to lower them. >> helped me understand what you look at to sahave to say this mt right. they are higher in the quality of the capital. >> that is undoubtedly true that we all agree that during the crisis or the pre- crisis they were not adequate as it does say they are higher is that the amended terms of our day to high or too low word about right and what do you use to indicate? >> the stress test for one and you throw out ththey would throe scenario that is the equivalent were stronger tha than what hapd in the global financial crisis since they denzi do these instie

the wherewithal to remain reasonably well capitalized enough to continue to have the market. that is the question to be about certain minimums in that the int by a giant barge and suggests capital is too high. the stress tests are a great test for that. >> you can see how it might be caught in a circular logic we can btheycan be caught in these independent we believe that's right without going forward and changing some of the underlining factors that go into the stress test you can always say that as long as they trim the bar that it's about right, no matter what the bar is they want to go back and look underneath the hood and say why are these correct the way we've done these is that the right way to do that so maybe it's as they've indicated that absolute to the question is if

testing the right thing or are we doing the test correctly doesn't include the right variables that is what they are looking for is clarification on how to expect that review as we talked about that >> we had a conference last summer with experts and academics, people from the banks. we are doing that all the time, everything is a stress test and transparent and things like th that. >> you are recognized for five minutes. >> i also want to thank the activists in the room that has e been organizing for the more responsive that i know having been raised by a human rights organizer that activism can be a full-time job.

the decisions you make to impact everyday working people. your decisions impact how many jobs we have, who has both jobs, how much they are being paid and who is most harmed when unemployment is high. now some said we want this to be shared and we need policies to make that happen. however, the approach has never successfully ansuccessfully ensh well-paying jobs are available to everyone who wants to work even for smalltime. in may 1944 address them if they are called for a second bill of rights, which included the right to a useful and financially rewarding job. justice thurgood marshall argued the right to a job is by the 14th amendment. and martin luther king called on the government to guarantee of job to all people who want to work and are able to work. and the legacy has often refused

to just one speech at the march on washington often mischaracterized the march on washington was the march on washington for jobs and freedom. it was a march for economic justice. doctor king and coretta met in boston and i don't think she gets enough oxygen for the role she played in the movement. so after doctor king's assassination, he picked up the mantle to adopt a full employment mandate and was actually standing behind president carter as he signed the act into law and that's the reason you are here today. in the interest of time if they would indulge me yes or no, given persistent concerns about inflation, do you believe the federal reserve can achieve full employment, and bifold employment i mean anyone who wants to work and can will have

a job available to them. >> first, thank you for that history. i didn't know that. that is what we are working to do at all times and we are never going to say that we have accomplished the goal but they certainly mention progress. >> can a federal job guarantees succeed where the federal reserve has upcoming yes or no? >> that's a hard one to answer. guaranteeing the job that is the history that i was providing. >> by all indications the economy has had output well below for eight of the last ten years and most of the decades prior. is it true that most of the period has seen unemployment well above target while we almost never see inflation above target? >> that is true. >> so meanwhile, black unemployment remains double

that. the fed began raising rates in 2016 even though inflation was still below target and when the rate goes up, unemployment tends to as well. do they consider how raising the rate would disproportionately impact those that are already struggling to secure employment like communities of color and individuals that were incarcerated? >> i would say it's continued to go down quite significantly as we begin to raise the rate at the end of 2016. >> did they consider how raising rates would disproportionately impact of those who were already struggling to secure employment? >> the right thing to do is get monetary policy back towards the place where it's reflected in an economy that have recovered quite a bit for the benefit of all people including low and moderate income people.

>> there's a lot of people still recovering. but in the interest of time given that there've been no sign of the economy overheating since then and you are now cutting rate is at the possible you began cutting them too soon? >> we have to make the decisions in real time. we've learned something since then and that is that it can be lower than most people think. >> severe minimum, knowing what you know what you still have supported raising the interest rate when the fed did? >> hindsight is 2020. the decisions are what w on what the time. >> with more americans have jobs today if they didn't increase over the past three years? >> i don't know. we are at a 50 year low. it's a good question. >> thing you. i would like to thank chairman powell for his testimony today. without objection all members have five legislative days with which to set it additional

written question for the witnesses to the chair which will be brought to the chairman for his response. i ask you to please respond as promptly as you are able. without objection, all members will have five good as that of days with which to set it extraneous materials to the chair for including in the record. thank you all and this hearing is adjourned. ..

>> thank you very much. we are redesigning the support in veterans it's a big deal the people behind me have been so involved senators and congressmen we are missing a few great senators because we are approving five judges today and marco rubio was involved in this