this weekend we are live it from the sabina book festival. our coverage is editor of the savanna is editor of the savanna at 11:30 the 20 year legal battle against dupont. dupont. at 12:45 p.m. they recounted the journey of 18 black men admitted to harvard in 1859. her experiences growing up in puerto rico. on leadership and philanthropy. live starting saturday at 9:00 a.m. eastern. and watch our live coverage of the tucson festival of books next month on book tv.

i will start with that right now.

welcome kevin foul today the federal reserve chairman will update the committee on monetary policy developments and the state of the u.s. economy. it continues to expand in 200019 exceeding 2% growth for the third straight year. as the american people enjoy the longest economic expansion and history. the labor market is strong.rd with the unemployment rate at 3.6% remaining near half century low. wages also grew in january by 3.1 percent from a year earlier. making it 18 consecutive months that pay has grown.

according to gallup trends. nearly six in ten americans are 59% now say they are better off financially than they were a year ago up from 50% last year. that reform in 2017 and rightsizing regulations including under the economic growth and regulatory release have undoubtedly helped fuel the strong economy and labor market. americans are set to benefit even more when considering the effects of the u.s. embassy a.t despite the substantial progress there are several external factors that could have a meaningful impact. they need to be better understood. including its recent decision to purchase treasury bills in response to volatility and short-term borrowing rates.

including potential structural market-based fixes. finally the potential impact of the coronavirus on global commerce and growth. the fed and other financial agencies recently proposed amendments. in 200019 expending to improve market liquidity. we had raised serious concerns in the past with the agency's supervisory examination

processes including the use of guidance as rules. in january instead of vice stead vice chairman offered a roadmap to foster transparency in bank supervision. putting significant supervisory guidance out for public comments and submitting it to congress under the congressional review act. other commonsense improvements to the supervisory process such as rulemaking that would cover the agency's use of guidancey in the supervisory process. this roadmap is greatly encouraging and i urge the steps to go forward. reduced friction and payments and increase that the delivery of financial products and services.

a new stable currency and leveraging block chain technology. to does explore the development of the currencies especially amid rumors that china's launch of a digital wand is imminent. the numerous applications of technologies. identity verification and cross-border transactions. and some financial institution adoptions.se as i hadad stated in the past it seems to me that technological innovations are inevitable. they should be leading and developing what the roots of -- rules of the road should be. we look forward to hearing your thoughts in about the work that the fed is engaged in to appropriately address them. again, thank you for joining us today.ur

>> senator brown. >> thank you for your assess abilities in the conversations that you head with all of us. before we start i want to say a few words about what happened last night when we got word that the nomination had been withdrawn. when president trump withdrew her nomination she was good at appear in front of the committee. the president would be chastened by impeachment. some of you told mele you knew what that know what that the president did was wrong. you also said publicly that wasn't enough to rise to the removal of office. many of you asserted. he would not do these things

again. it is pretty clear the president of the united states did learn a lesson he can do whatever he wants whenever he ants. he will never be held accountable by the senate. that was a lesson. since acquittal has gone to retribution. the prayer breakfast mind you, continuing through the east room where many of you were in the audience and applauded him as he personally attackedth he removed a patriot and purple heart recipient who spent his life serving our country. he mocked his accent his ukrainian accent.

after he testified to the quid pro quo. and yesterday and the reason i bring this up today as he continued the two are interfering at the department of justice strong-arming political appointees to overrule career prosecutors. those attorneys withdrew in protest. they withdrew in protest from ese case and at least in one case resign entirely from the department. you all know it is happening. a personal vengeance operation. no one should be about the law. his behavior will get worse.

now onto the issue at hand. i welcome chairman foul back. earlier this week they reported on a profitable and fast-growing spanish company. they've opened up branches in 36 states americans who are were struggling to make ends meet. or trying to put food on the table. it's hard to think of a better metaphor to the trump economy on monday to the s&p 500 and nasdaq both reached record highs. jp morgan chase have the best year. $36million in profits. big corporations are spending hundreds of billions of dollars on stock buybacks and dividends.

the growth the last three years. has been greater then the growth of the first three years. but if you talk to the vast majority of people who rely on paychecks not investment portfolios you get a very different story. they had been bleeding for years. most families don't understand thethe harder they work harder it gets to afford pretty much everything childcare, healthcare, rent. the people in this room may remember it last september when a financial industry went into panic. wall street face uncertainty. smart government employees came up with a plan.et in the financial markets through a mechanism that has not been used since the financial crisis. let me be clear i don't think it's wrong for the fed to be creative and make sure the economy keeps working. it is in everybody's interest

to have credit keep flowing. consumers can buy houses and cars.so no one jumps back or get creative. the president doesn't criticize by tweet. the chairman of the federal reservege when he said he does not demand that they raise workers. as hard for families to understand why wall street gets worked up about 10% interest rate. if the payday lender down the street charges the more than 4%. they don't had access to reach themrg -- retail funding. it doesn't take action when that's owned researchers found that 40% of americans don't have the cash. they go to the payday lender and then things spiral

downward. no one raises alarms when 40 million americans admit that they will you lose that. it will flow from the pockets of the struggling families. serious people haven't dropped everything to bring down the wages. one thing goes wrong in their life in their lives turned upside down. they see different economies and different responses. there's a lot about the different divides in this country. people who walks -- watch fox and people who watch nbc. the real divide i see as those whose problems are considered an emergency and those whose struggles decided they can't

ignore. the fed needs to get to creative for the people that make this work.st the president and the majority leader are simply not about to. now they want to pay for the tax cuts. i heard at the state of the union that night. manufacturing jobs are stalling compared to when he took office. and now in his budget after e.promising workers don't tell your home -- sawyer homes. that was giving the community.

you and your highly capable staff. have been protecting wall street. i'm glad you have. what i hope to hear from you today is how you are to be proactive and use that same level of creativity to make this economy work for everyone else. there are tremendous resultsat that i expect you will discuss with us today. you will make your statement and then we will proceed.i' >> thank you very much. i am pleased to present the federal reserve's semiannual monetary policy report. my colleagues and i strongly support the goals of maximum employment. congress has given us an important degree of independence to pursue the goals.

this independence brings with it an obligation to explain clearly how we pursue our goals. today i will review the current economic situation before turning to monetary policy. it's well into the 11th here and it is the longest on record. economic activity increased at a moderate pace. on as the economy appeared resilient to the headwinds that it have i intensified last summer. inflation has been low and stable but it has continued to run. they averaged 200,000 per month in the second half of last year. an additional 225,000 jobs were added in january. it has remained above what is needed. allowing the unemployment rate to move down even further.

it has been near half-century lowsws for more than a year. job openings remain plentiful. they are willing to hire workers entering them. people who live and work and low and middle income communities are finding new opportunities employment gains have been broad-based across all racial and ethnic groups in levels of location. gdp rose at a moderate rate over the second half of last year. the fundamental supporting household spending remains solid.is residential investment turned up in the second half. they were weak, largely reflecting growth and trade developments. those same factors wait on their activities.

there has been little change since then. the february monetary policy report discovers a weakness.de they are closely monitoring the emergence of the coronavirus which could lead to interruptions in china. over the 12 months through december. it was 1.6 percent. core inflation which excludes the volatile food and energy prices was alson, 1.6 percent. they expect inflation to move closer to 2% as unusually low ratings from early 200019 drop 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 in most other advanced economies into their are troubling labor market disparities across racial and ethnic groups and across regions of the country. in addition although it is encouraging that productivity growth the main engine for raising those over the longer term has moved up recentlyly productivity gains have been subpar throughout this long economic expansion. finding ways to boost labor forces.pa i will now turn to monetary policy. over the second half of 200019 f once he shifted to a more substantial shift. there was weaker global growth. to the 2% objective. we lower the federal funds rate target. at our meetings meeting to bring the current target range

to one and half toge three and a quarter percent. at the subsequent meetings. trade diminished in amid some signs that global growth may be stabilizing the committee left the policy rate unchanged. the f once he believes that the current stance of monetary policycy will support continued economic growth a strong labor market and inflation returning to the 2% objective. as long as incoming information about the economy remains broadly consistent with this outlookn the current stance will likely remain appropriate. of course, policy not on a preset course. that caused that material the material reassessment. we would respond accordingly. taking a longer view. there has been a decline over the past quarter centuryre with the economy operate at its full potential. the low interest rate environment may limit the interest.

with this concert in mind we had been conducting a review of our monetary policy strategy tools. public engagement is at the heart of this effort. through our events we had been hearing from representative of consumer labor in business. the february monetary policy report shares some of what we've learned. the insights had been formed. the framework discussions. we will share our conclusions when we finish the review. likely around the middle of this year.th the current low interest rate environments means that it would be important for fiscal policy to help support the economy if it weakens.wo it's on a sustainable path when the economy is strong. policymakers have the strength to use it.

a more sustainable federal budget could also support the economy's growth over the long term. finally, i will just briefly review our plan and technical operations to implement monetary policy in and the february monetary policy support. they have treasury bills and those actions. effective control of the federal funds rate. as i built purchases continue to build reserves. we intend to gradually transition away from the active use of repo operations. also, as reserves reach durable levels. we intend to slow our person -- purpose is to allow the balance sheet to grow in terms of trend demand. all of the technical measures support the implementation of monetary policy that are not intended to represent a change in monetary policy. we stand ready to adjust the details of our technical opportunities. thank you, i'm happy to take your questions.

>> as i said before i won't use my five minutes for questions. in fact, i will try to set a standard for the rest of the committee. t t before i turned the time to senator brown however, and yield my time i want to indicate that it's been brought to my attention that senator shelby who unfortunately is not able to be here right now recently became the longest-serving member of the senate banking committee in history. he began his service on the committee , on january 6, 1987 and has now served approximately 33 years one month in three days. that surpasses senator sparkman also of alabama who previously served on the banking committee. almost 32 years. senator shelby has seen dramatic change.

and himself has have a meaningful impact on financial institutions. during his tenure on the committee included as chairman..th i take this opportunity to thank him for his service on this committee and congratulate him on a significant milestone. [applause]. we will clap again when he comes. thank you mister chairman. when the fed said it is nearing maximum employment and the labor market is strong it could mean workers had one good paying job or can mean that they are working under 40 hours at three part-time jobs. i think this highlights how the economic recovery has not benefited nearly everyone. you hear the statistics. 25 percent of people pay half of their income in rent.

clearly, it is it's not reaching everyone. if you have to work three jobs. and one of the ten fastest-growing professions seven out of ten of those jobs are this. you still can't afford rent. something is wrong. i appreciate you listening to and looking forward to report. i want to know who do you head at the fed working on bold and creative ways to use the authorityy some tools we probably don't know about using your authority to help working families that aren't benefiting from economic growth. make sureou do to that most of our economic growth not a sliver of it but most of it ends up in workers pockets? >> our tools are not focused on those effects. other agencies do. it's really the power to

address those issues. the thrust of our review of monetary policy is to assure that we have the tools to carry out the mandate that you have given us. in a world where inflation is trending lower. the connection between inflation and tightness. it's very low now. it creates a very challenging environment for us to carry out the job you have given us. that's why were doing a deep dive on issues. as senator mcconnell and the president have refused to

raise the minimum wage. under $8. they took away overtime we know congress is not just doing its job to redistribute income. hundreds of millions of americans. this list quickly. the fed has been very creative to that country's and fits. when wall street has reached it. sometimes of their own making. i ask you to be as creative and thinking of ways that this wealth is shared beyond one or two or 5%.

we are were thrilled with the economy the way it is. one other question mister chairman. we are seeing the financial system get more and more exotic. that mean it could likely own on a new power plant. they want to form an industrial loan company.nt and recently he voted with other bank regulators. in the 2013 rule allowing for more risky investments. the financial system is getting more complex. things people don't understand.

should we be focused on exemplifying it. much higher capital and liquidity requirements. they do address in a timely way. the resolution planning. those are the big four important measures that we put into place after the financial crisis. >> thank you very much mister chairman welcome back mister chairman, good to see you again. i have several somewhat technical questions some of them we've we discussed to varying degrees in the past. you may recall i was never convinced this was a great idea for the fed to pursue this since we have a private sector system in place.

here's my question for you. a number of constituents have expressed concerns to the extent that employers in financial institutions and other participants would be plugged in to different systems, if they are not fully operable there is a real concern that that is going to at a minimum innovate. just briefly. i do have several other topics. just address the question. whether it is a priority of the fed that it will now be in operable with the other system. it will be challenging to reach it. it is high on our priority at something we are very focused on in the design stage. as i'm sure you're aware.

is committed to having flat fees. it does not provide this kind of discounts. can the fed to commit that it will have uniform pricing on this. the banks that really wanted us to do this are looking for. this is often cited as a reason why they need to do this. they might discriminate on the basis of price. i think it is important that they had volunteered. to ensure that this would occur. it would be really ironic in ashamed ifseys it turns out that in fact is the fed that makes it more expensive for small banks participate. to silver as we have discussed one of the libornges of replacing

is that it is embedded credit risk element. the banks are finding themselves in an interbank market. you may have suggested that there is a thought of trying to introduce our credit component. some kind of credit risk component. either as a compliment or an alternative. libor at southe we can't assume it will be published past the end.

it will be the rate that a lot of derivatives go to. they have wanted to work on a separate rate which would not replace so far. they are doing that now. and we are working with them to support that process. we are open to that but it doesn't mean that your transition away will stop. it has to go forward. the last thing on my list here. the glitch in the repo market. as you and i discussed briefly. my concern as when banks turn and lose that when they could be using up to 10% in the repo

market. it suggests, that there is something going on here. they could have put their money into the repo market. i'm not aware of an explicit rule that required that. nevertheless it happened. i wonder. there might be some kind of unspoken pressure on the part of regulators to favor cash over the liquidity in the form of repo transactions. it goes beyond what is actually in the rules. and i'm wondering if you share that concern for what you whink about it.de that works in a given moment. but if there is an underlying problem that has not been than isn't there the risk that the spike could reoccur. and then you have to provide liquidity again.n. there is not a preference for reserves over treasuries but there is in the liquidity

stress test in the sense that it takes one day to turn on the treasury. i think the idea of putting treasuries and reserves on an equal footing in terms of the treatment so that they can't -- can achieve equipment. it's at the appropriate level. they talk about the issue.. one of which is to assume the discount is available in that stress test. it's a reasonable assumption to make. and the reason is as you mention. there was liquidity but it did not flow. the question is why not. we are looking at ways to address that. we will make the up markets operate better.

let me think you is it is a wonderful evening. it's important for them to ensure the federal reserveen without an a appendix our national policy making is not needed. keep up your efforts please buy my account they would be eight years under president obama. they indicated middle income families have been falling by roughly 20 years. i presume i would like you to comment whether it continues to fall despite the economy and in addition to that they

point out income and inequality has increased. it is still increasing please comment on that. it's greater in other countries. if we are seeing a shrinkage of wealth in the middle class and income inequality poser social and political and economic trends that i don't think our substitutable over time.in those trends continue. and what policy can we adopt. those are longer-term trends. many of them global. i assume the data will continue to move in that direction. what they show is that incomes had been moving up. if you look at benefits and after-tax effects.

it has been a particularly good time to be at the top of the income spectrum. two key problems i thought we would address. we actually had lower mobility from the bottom quintile. in many other advanced economies. this is not our self-image as a country. and something that we need to address. the relative stagnation of those come from the middle in the low end. we want prosperity to be broadly shared when it comes down to really education and training and things like that that enable people to do well in the modern economy which is a globalized economy that is lessened up with manufacturing. they are more technical than they were. we need a workforce that will benefit. they are policies at the fed does not had their hands on.

we just sit back those trends will continue. and it will cause even further divergence between the vast majority of americans in a very small group of americans. it's incumbent upon congress, the executives to start taking steps. is that fair. i think u.s. businesses get this very much now. they see the workforce and the need f for widely shared information. you hear that all the time from business leaders and certainly from government leaders as well.blve i think it's an important national priority. just switching gears here. the community reinvestment act is being massaged by some banking institutions. they are not doing a proper course in a fit those are discouraged revitalization.

that really do need it most. can you let us know what role you might play in how you and how you can help get it right. a first of all when i can to comment on their proposal. i think all of us including l.that. are there looking for to that. we do is share the goal of modernizing changed this. it has not been done in 25 years. i think we agree on the goal. it would be more effective if it was more transparent. we share objectives with those agencies and we work closely with them for a long time to try to get completely on the same page. we developed our own approach. and we were able to get together in the end.

were thankful for your work. raising warning bells. you talk to many of us in private about cyber issues. over on the house side. i don't like it's breaking through. can you summarize for us why you are awake at night. they implemented it over the course of ten years. we have a plan that is meant to address those kind of things. what is new in the environment is the ongoing of the ongoing

level of cyber threat. that's where we were. the treasury department is really been taking the lead on that and i think, we are very focused on it. were focused on making sure the financial institutions that we supervise are doing the best they can to stay at the state of the art good cyber hygiene. a lot of these things are just people failing to implement in updating their software. that's where a lot of breaches happen.en also by non- regulators. and companies that are in all kinds of businesses are having this now. we will never say that we've done enough. it's something we keep trying to get better and better at. all of the agencies and companies.

give us maybe two examples of a way you think this attack could have spillover effects. you have talked in private a few times about ways that this could cause a bigger consequences than 2008 and nine. how would that happen. >> i would just say that confidence in the financial system is really important. the public has to have confidence in the financial system. a cyber attack on a payment utility for example would be challenging. we could address that we could isolate it. you would want to avoid the broader blows to confidence. they will take their money out. uncertainty and lack of confidence is the enemy of economic activity and growth. i think we also need to recognize that many different conversations that we have with the chinese government

tend to have a benign diplomatic flavor. i thing we should think we should underscore what has happened this week with the echo facts hack having new headlines. 35 percent of all americans. they indicted for chinese communist party officials affiliated with the military intelligence in china. this is not an accident. it is the same communist party that hacked the opm records. they have now moved on. we need to be resilient against all cyber threats and certainly state actors are a big part of that. we are well aware of those. with help from the intelligence agencies and others in the government in keeping our eyes out for that.n

>> shifting gears a little bit. the president's budget came out this last weekend and some of us are gonna be on the finance committee later today discussing the larger budget. we tend to head headlines that focus on whatever the discretionary programs are that tend to be more hot button and current in the news. you talked consistently about the entitlements. we have very mediocre health outcomes.hohocu athen can you talk a little bit about the consequences of health on the larger economy. >> i should start by saying we don't do a it fiscal policy.in since you asked. the budget, and the issue of our federal budget ist healthcare spending. it's not that our benefits are too generous it's that we deliver them in a way that is

measured by the outcomes. the outcomes are perfectly average for first world nation but we spent six or 7% of gdpav more than other countries do. it is is about the delivery. that's a lot of money every year that you are spending and getting nothing and i have tong leave it with you there. it's not up to me to prescribe fixes. but i think really that's what it's about. the discretionary things of course are very high profile. they get a lot of reporting. ultimately that is what is driving it. it's not that they are fabulously generous it's just what people get in western s onomies but we deliver them at the cost of 17 a or 18% of gdp. others do it at 11% of gdp. >> thank you mister chairman and ranking member brown. thank you for your work. i did not hear all of senator reid's questions. count me on that block also.

i think it's critically important that you maintain that independence. i applaud you on your efforts thus far. both the fed through lower rates into congress through injury spending. have been taking actions to boost the economy during a long stretch of growth. that if we do approach a downturn and there are a number of indicators out there that are concerning to me that our options to address a downturn are limited i want to hear your perspective on what the fed has the ability to react to an economic downturn. >> our traditional tool of course as interest rates and low rates are not really a choice anymore. they are a fact of reality. we will have less room to cut. it's much more likely that we would have to turn to the tools that we use when we get the lowerse boundaries.

it is forward guidance which says we will keep rates low. and it also is large-scale asset purchases to drive longer-term rates down and support to the economy. we will use those tools aggressively should the need ariseeol we will use those tools aggressively. the review that we are undertaking right now in which that well have our conclusions in midyear. were looking to make sure that in this low rate environment in difficult environments for central banks and those who we work for we are using our tools the best we can. we've explored every possible way to find this wrap a policy space that we will to support the economy. it's important that it is in a position that it always has been to support the economy in a downturn as well. >> let me ask you this.

the data is at $23 trillion right now. is that about right. at what point in time do you get concerned.. i think the budget puts out another trillion dollars to the debt. >> it's very hard to say at what level you have concern. what we need to do is have the debt grow slower than the economy. if the economy is growing faster than the debt than it effectively leverages that. other countries have managed to get to very high levels. twenty years from now we will be spending those tax dollars. on servicing the debt rather than on the things they really need. we are sending them those bills.we

rural america and urban american . what you see that challenging. the housing industry is doing better and building more houses. i think from a standpoint in public you have a squeeze going on to do with difficulty in doing lots. they are keeping the quantity of housing down. many places not just in big cities. you see housing affordability challenges.

i just want to ask this really quickly. there has been a lot of debate for a number of years. the lack of gse reform does it have any impacts on the housing situation. it's very important then it happened. and moved forward. it's not really ideal to have the financial system were lying on relying on the federal government. it would be better to move forward. they suggested the rounds. welcome. i just want to echo what some of my colleagues have said about the independents. i think on both sides of the aisle you will find strong

support. i would like to begin by asking you about a rule i filedd a comment letter on. that is the building blocks approach. as i mentioned in my letter and doesn't seem to make sense for them to resurrect the original section 171 calculation. insurance savings and loan holding companies. which are totally different business model. congress spoke very clearly about that. it's intent was for banks to be regulated like banks. given the congress why had they chosen to revisit section 171 how does the fed intend to move forward? >> we have with a number of comments on the issue

and were looking at it. we are looking at the law change. the question is whether there is something with the nature of that. does it apply here. we will be reviewing those comments in considering them in getting a view on that. one of the reasons for having the open discussions. any questions that may be lingering out there. >> i would like to talk about vice chair corals recently remarked that the business investment continues to be weak having declined over the course of 2019. do you think it's fair to say that a large part of this is driven by uncertainty with regards to trade in that businesses are waiting to see how trade tensions are resolved before they are

prepared to make further investments? i would say there's a bunch of factors that we need to look at. another is lower oil prices. it is a big swing factor. our work in that of many does suggest that there is also a role for trade policy and uncertainty. a short answer to your question would be yes. i do think there is upside there. having uncertainty around the trade situation. >> just think. recently, i understand there was a discussion about groupthink. and how they are approached within the medians. do you think it's important for the board to reject groupthink and consider a variety of different viewpoints.

>> i very much do. i'm strongly inclined that you need to hear all sides of the case. when i was a private equity investor i used to speak against my old deals. i would really get a sense to believe in things. i really do think we do though. with the reserve bank system guarantees from an thattutional standpoint we will always had diverse perspectives. and from the group of people who are on the board. a number of us have a primarily private sectorv backgrounds. we bring that to the table. people from varying points of view that can have very lively discussion and then at the end of the day be very strong part of a team. i think it just makes you

stronger. i really do. of course we've had w plenty of conversations about this in the fed over the years. see messed. >> when the board voted on itsen rule for tailoring resolutions and plans last fall. they gave a statement saying there is more and that that could be done when it came to tailoring from a supervisory standpoint. can you elaborate on that? .. ..d

>> there's many, many different ideas. the key thing is he highlight this, the tension between the right to due process and clarity that we depend upon from our government. but also with supervision is also role for discretion and for confidentiality so think it's a very thoughtful process of looking at that and asking how can would make it more transparent with more due process but still effective because supervision has to be firm but fair. >> eighty. thank you, mr. chairman. >> thank you. senator warner. >> thank you, mr. chairman. chairman powell, great to see again. i want to make a couple comments echoing what senator rounds and senator reed and others said. i think there's a lot of our institutions, independents are under assault these days. i share some of the concerns of the senator brown about the independence of the justice department. i write on a regular basis to make sure the intelligence community can maintain their independence. i would ask frankly lead with

you if you see efforts made to undermine the feds independence that you keep this committee fully apprised. the feds independence is more important at this point. i want to follow on my good friendpr comments about equifax. i share with you the belief, the challenge that china poses, i also think particularly and the case of equifax and the credit rating agencies broadly, not of us choose toeq be equifax custor or any credit rating agency. that cyber attack wasn't due to sloppy behavior by equifax, and the fact that we have not put in place any, frankly, enhanced rules of liability around his credit reporting agencies is something i hope, i know i talk to the chairman, i hope we would

come back to because i think while we have to be on guard if we don't have at least the minimum standards and they can make this obscene break into the cost of business, i don't think that's good for anyone. and again i will be able to come back to that. i have a bunch of questions for you today. yesterday in your testimony you talked about this movement towards digital currency,, something i'm very interested in. you indicated it was possible that might be a united states backed digital currency. question is, with that be desirable? i get the component parts around a digital conservancy might provide convenience and potentially even lower friction costs in terms of credit to consumers. but how do we wait and privacy and cyber concerns?

-- away in p -- how would that deal with our retail banking system and do think that that has the capacity to do this without congressional approval? give us -- i have one less question about china's role in this space but talk to me first about the domestic implications. >> you listed the potential costs and benefits. the benefits would include perhaps greater financial inclusion, lower cost, more convenient and all those things. the risks orti cost would inclue cyber risks and fraud risks and privacy risk and things like that. there's a lot to way and a lot to work there. every major central bank in the world right now is doing it, , a deep dive on digital currency. we think our responsibility to be at the very forefront of knowledge and thinking about the central bank digital -- >> would you take positive action on that without congressional input?

the fuel you have that authority? >> it would depend a lot on the design choices. it's a good question. i would say we're working very broadly, including with other central banks around the world on this. there's just a lot of thinking and extreme edition and understanding that we are gaining, and if there's a need, if we conclude we need more authority and this is something appropriate towe do, then we'll ask for the authority. >> one of the things you mentioned yesterday, a number of us were on the intel committee chair concern about, the rise of china in a series of areas. it iss clear china may move quicker than us on a digital currency. usage of some visibility into what china might be doing on digital currency. i'd love you to spell that a little bit. do you think theyy will use ther influence to their belt and road investment strategy and a number of countries that have bought

into that system that they might be then all buying into that chinesell digital courage to? with to do in terms of cross-border, in terms of dollar supremacy? any for the guidance you might have on your insight into china's action in the space would be helpful. >> i would just say we have to assume that what would that mean? left to ask what we mean a child had it digital currency that had wide adoption including to other countries. we also have to ask what if a private sector entity, a large company with a large network of users has a digital currency. that's already popped out and we had a bipartisan concern on that one. >> that's why we're doing all this work. we understand it. i would>> say libra with somethg that lit a bit of the fire. something we focus on digital currency for ato couple of decas but it's lit a fire around the world right now. we are doing a great deal of

work. >> i just want to say i would urge having seen china's ability to move aggressively in a series of other areas that you start forging that coalition of the willingness among other central banks sooner rather than later. thank you, mr. chairman. >> senator perdue. >> thank you, jeff. mr. chairman, thank you for being here again. good to see. just oneve quick question in lit of the time. where to make dynamics right now that are driving the economy in different directions potentially. labor is not a limiting factor in terms of where roughly 7 million job openings at about five main people looking for work with the phenomenon right now that is a limiting factor. on the other hand, we have low energy cost. since 2007 we have doubled our output07 of oil such that now we are a net exporter of oil and gas, , largest producer in the world. 8% of our economy is energy come 15% of our affects is going to that today..

we produce 80% more barrels of oil a day than saudi arabia and about 8% of the world output. my question is are we in a low energy price environment and what assumption over the next decade and what impact do you think that will have on inflation, deflation? i i know you talked about deflationary concerns in the past. where are we today on that big economy, energy? >> it's been transformational if you think back when we were in college, if energy spikes, inflation went up, people got out of work. there were long lines at the gas pump. we now have very large domestic energy industry which amounts to a shock absorber when that happens. u.s. julie goes up with the price of oil, puts people back to work, the controls prices, controls inflation. we are in a situation where that particular mechanic for inflation going up is just not happen anymore because the

supply response of u.s. industry is quick and large. you won't see that having sustained a fix on inflation and also you won't see it having sustained negative effects on growth because it offsets, roughly offset the effect of lower energy prices at the pump. that will slow the economy down a bit but the new supply that comes on will put people to work. different people but overall it's a very different and better place to be. >> are you concerned about the workforcee participation rate with the growth of jobs in the last three years? or workforce participation recently hasf bumped up but it hasn't moved as much as one might have thought. >> it is greatly surprise to the upside which is a great thing. remember, the prediction come basically the labor forcep, just because a demographics, participation should drop by about one quarter percent mac of your biggest been flat since 2013. we think there's more upside. what's happening is labor is tight everywhere but there's a

supply response from the public which is a positive thing. we never thought we'd see 63.4% labor force participationth aga. nobody had that in the model seven years ago but that's what we have and it's a very positive thing. >> thank you, mr. chairman. in light of time, mr. chair, i yield back. >> thank you. senator schatz. >> thank you, mr. chairman. thank you, chairman powell for being here. how does income inequality impact economic growth? there's a lot of talk on policymaking side of the impact on families. how does it hit your analysis and what can be done on your side of the shop? >> obviously, people who are at the bottom of the end of the spectrum whose incomes are not going, the consumption will be constrained. p? >> obviously, peo are at the bottom end of the income spectrum whose incomes

are not growing, consumption will be constrained. consumption will be constrained and their marginal propensity to consume and add new dollars will be high to the extent gains are going to the people at the top. they will not be hitting gdp, it will be going into savings. those are effects that will show up quite gradually over time. inequality is a gradually moving phenomenon. >> talk to me about the relationship between productivity and unemployment. is there a relationship that is emerging? is there new thinking along those lines? the traditional analysis is productivity goes up. that is basically good for the economy. but it seems to me the way people perceive it is those things are decoupled. i'm wondering if that is a change or if that is a political overlay to say, things may look good, but we are still on the bottom eating your scraps. i'm

wondering if it is more than that and that there is actually a change in the way you have analyzed this. chair powell: we are always learning and we have seen relatively low productivity in the wake of the financial crisis. it appears to be persistent. that means lower rates. you need rising productivity to create higher standards of living. it does not mean in any given year you will see that, but you see a tight connection between if you add benefits, not just wages, but look at the full cost of employment, you see a connection between >> are they no less correlated than they used to be? i would not say

that. if you look at the moment, wages 3%, productivity growth has been low. it has just moved up. inflation is 2%. >> if most of the increase in total compensation is just that the employer absorbed a 7% increase in health care costs, that is not really an increase in wages in the traditional sense. from your standpoint it seems like an increase in wages, but if you're trying to maximize compensation, it means nothing to a regular person. let me move on to climate. i have a couple of questions. what is the fed doing in regard to climate related financial disclosures? >> i think like others, other central banks, we are at the beginning of the process of understanding how climate change affects our work. one way we know it will

affect our work is that the public will count on us to make sure financial institutions we regulate central counterparties will be robust to the risks from climate change. we are at the beginning of understanding what all that means. in terms of disclosure, it is an fdic's issue. they regulate disclosure and they have been doing work on this lately. >> you had an exchange with a member of the house, i think it was yesterday, the question was whether we ought to be stress testing for climate risk. you said you are watching the bank of england. i'm wondering if you can elaborate. >> they are doing stress tests which are not at all connected to the process that relates to the amount of dividends and distributions

that a company can have. this is more just exploratory. we are very closely monitoring that. we have good relationships with the major central banks, especially the bank of england and others. it is something we will be thinking about. these are early days. we are actually doing a fair amount of work through the federal reserve system on understanding this emerging risk. >> thank you. >> thanks for being here. our labor force participation rate is much better, but compared to other oecd countries, we lagged. why?

>> that is a great question. it is a combination of things, no doubt. the educational attainment which was once the highest has fallen relative to our peers. particularly among lower and middle income people, the level of education attainment has plateaued. that is the key thing. >> what else? >> i would say the opioid crisis is not helping. i would say, globalization in technology, advantaged people of relatively higher education and people in manufacturing, you think about what has happened to the manufacturing base in many countries, a lot of those jobs have been automated or moved abroad. the manufacturing we have now is very efficient and does not use as many people. >> what else? does trade have an impact? >> i

would say trade tariffs through this period, we really have had declining tariffs since world war ii. we have had increasing labor force participation. >> does the richness of our social programs play a part? >> it is very hard to make that connection, and i will tell you why. if you look at real terms, the benefits people get, it has declined during this period of declining labor force participation. it is not better or more comfortable to be on public benefits. it is worse than it was. >> it seems to me, and there is going to be a question, i promise. i know sometimes you never get one. >> that's ok. >> it seems to me

any fair-minded person would have to conclude our economy is better. i am biased, of course, but i think the tax cuts and jobs act worked. we have seen wage increases, including, but not limited to, the bottom quartile. we have seen unemployment go down. but we still have a problem in america. i think the root, this is one person's opinion, but the root of a lot of that anger is that we have we still have too many people in this country who are not participating in the great wealth of this country. not economically, not socially, not culturally. i think sanders supporters and trump supporters have more in common than they realize. the american dream has become the

american game. they think it is fixed. the elites are doing fine, but i'm talking about ordinary people. what, if any, role do you think the fed should play in helping us address that? >> there is a lot in what you said. the single most important thing we can do is take seriously your order to us to achieve maximum employment. that is what the law says and that is what we are doing. we are using our tools to keep an eye on maximum employment. there is no reason why the current situation of low unemployment, rising wages, high job creation, there is no reason it cannot go on. there is nothing about this economy that is out of kilter or imbalanced. that is the main

thing we can do. we do other things in the nature of convening we do a lot of research in your state and others. the federal reserve bank will have an operation where they are trying to convene resources around issues of education and poverty and things like that in poor communities, but we do not have the ability to spend money on it. we get community people around a table and try to organize things that help the community, as i'm sure you know. it is not something we can do a lot about other than research and do our jobs on monetary policy. >> if i could have another 10 seconds, mr. chairman, i was distracted because you were talking. stay independent. i think you're doing a great job and all of us in politics are going to give you plenty of advice, but call them like you see them. thank you. >> chairman powell, it is

great to see you again. thank you for being here and always being responsive, but let me follow-up on this line of discussion of maximum employment. you keep talking about level of educational attainment that is so important. what do you define

as education? >> it includes the kind of training people are getting out of high school. it is not meant to be limited to college as such or getting a liberal arts degree. the acquisition of skills in society. >> do you think we have changed in society it is very difficult to just graduate from high school and get a job that pays a decent wage for your family without getting some sort of additional education? >> yes it is that very much. for people with high school degrees, incomes have stagnated badly. what happens with technological changes is that it wants higher and higher levels of skill. if society provides those people and those skills, incomes can go up across the board and inequality can go down. that was the american story for a long time. >> isn't part of that this is why i'm curious. part of that also has to do with wages, the increase in wages, and the level of wage you are paying. are you saying because you graduate from high school and

you want that job, whatever that job is you are able to do, it should be a minimum level of wage that should never increase even with gains in productivity we have seen? chair powell: i am not saying that at all. >> good, because i agree with you. there are people in this country and i am pleased with the high unemployment rate, but they live in my state, they are working two jobs. they are actually working two jobs because the wages are so low. there is a disparity that we have to do a better job of understanding. i was looking through the monetary report you gave. i'm curious, do you identify those individuals who are actually working two jobs? >> those are identified in the data collected by the bureau of labor statistics. >> is that data you can provide that gives a better understanding of how

many americans across this country are working two jobs? >> a very high level right now. >> that's what i would like to see. let me just one final question. votes have been called. you note in your opening remarks there are troubling labor market disparities across racial and ethnic groups and across regions of the country. can you go into more specifics with that statement? >> we had a box in the monetary policy report a year ago about the rural and urban disparities which are just getting wider and wider. it talked about what might be causing that. you have a long-term trend here that is challenging for people in rural areas. in terms of racial and ethnic disparities, the african-american unemployment rate is roughly twice that of the overall unemployment rate. you see different groups so it is troubling these things persist this way. we don't have the ability to operate directly on that other than by carrying out our mandate of maximum employment and stable prices. >> why is there that disparity? what can you point to? >> what

disparity? >> the racial disparity you up just talked about. >> it is tied into history, our history. there are higher levels of poverty in the african-american community, as you know. that is because of our history, but we would like to see those gaps declining more than they are. not tools that we have, tools that you have. >> what i'm looking for is the data. there are no data sets you are collecting that help us identify that racial disparity and how we can collect it corrected. chair powell: there's lots of research on that. >> that's what i'm looking for. thank you. >> senateor tillis. >> i have a few questions. the first i want to talk about we have seen in the fdic, a real stepped up effort to take a look at guidance and other actions short of apa promulgated rule to revise or rescind. can you give us an idea of how that is going at the fed? >> we have for rightly said josh forthrightly said it is not the basis and we have made that clear to our supervisors. you may have seen

the vice chair's speech where he addressed these issues. we are working on that as well. >> i know you are aware of the gao ruling. there's a lot of talk that you need to remain independent, but there is something that concerns me that came out after you received word from the gao. it relates back to i think a letter your general counsel wrote in june of last year, which, i have it into front of me now. it says you are continuing to assess the scope of the federal

reserve's obligation to send supervisory guidance documents to congress. does that mean you are exempt from oversight? >> the question is whether we are required to send guidance. we do send some guidance. this is another one, >> what is the current stance? >> what we are going to do is articulate clear standards for what firms should be in the sick. the vice chair has laid out an approach that i think makes sense. to really try to tie the whole approach more to the tailoring of categories we set up. >> to the

other cra, that is the community reinvestment act. one question. rumors swirl around this building the way they do in the fed and all of government. the question i have is it relates to the fed's plans for either joining with the fdic and the occ on rulemaking. some have said you provide an assurance that without governor brainard's support, you would not join. is that a rumor or an assurance you have given chair waters? >> that is not how we are looking at it. what we are doing is trying to develop our own thinking on cra reform, as did the occ. they took a lot of our ideas but we were not able to get on the same page. >> what would be the rational basis for

two standards? >> there are going to be two standards under the fdic's occ proposal. 70% of institutions will be able to opt out, so there's going to be the existing standard and the new standard assuming they go forward with it. there will be two systems. if we don't do anything, it will just be like the 70% of institutions they supervise. >> is the vice chair on point for this? >> is he on point for this? >> with the community reinvestment act be within his lane? >> we all have to vote on this. this has always been handled by a different group, dcca, which governor brainard chaired. i am very comfortable with where we are on this. >> i was going to ask questions similar to senator toomey's. i will not. i'm only going to send out some questions for the record which

are about the mechanics of implementation. thank you. >> senator jones. >> thank you mr. chairman. chairman powell, thank you for being here. let me echo other colleagues on both sides of the aisle regarding the independence of the fed. i concur it is extremely important that we maintain that independence. i want to ask you about homeownership. it follows up a little bit with what senator kennedy was talking about, wealth gaps between so many americans. nationwide, homeownership is relatively stable, but there is also massive disparities in homeownership by age, race, ethnicity. african-american homeownership rates fell to a 50 year low. it remains 30% 30 points below white

homeownership hispanic homeownership. millennials are less likely to own a home by age 34 than their parents or grandparents. i am concerned that if trends continue, i mean to some extent, we have relatively wages are rising, but they have not been raising as we would like. homeownership rates are increasing. i'm concerned if trends continue, a growing number of americans are going to get locked out of homeownership. what are the economic consequences in terms of wealth building for minorities and a broader economy of leaving this disparity in the realm of homeownership unaddressed? do you have suggestions of how we in congress or the fed can address homeownership? >> let me say first, i would agree with you there is there are pressures on affordability which are very widespread to do with difficulty in getting land is owned and difficulty in

acquiring workers and costs, regulatory costs, material costs, putting pressure on house prices, upward pressure. it is quite widespread around the country. in terms of the level of homeownership, i think we don't want to be back in a situation where we push the idea of homeownership passed what is financially sustainable for people. we kind of did that in the pre-crisis era. what has happened is credit is much less available now for people without spotless credit records. that is a lot of what is behind the data you cited. i think it is a good question. did we move too far? i do not have a view that we did, but it is a good question to make sure people who should have access to credit and can handle borrowing that size get it. >>

i know senator cortez has asked, i would like to get some of that same information about the racial disparities. i assume there is some connection with that and economics as well. let me go back to the lower rate of labor force participation. how can we encourage that? how can we get more participation and get those numbers up? what can we do to get more folks in that participation in the market? what we can do is continue to use our tool for a strong labor market. it's great to see that participation rising, economist and think we would see those items again. that's a really positive thing. but that is a longer term, that is not really a strategy. we need policies that will ultimately, they have to have

skills an app to push to keep them in the labor force. ways they can take part in the labor force. that's where other government policies come into effect. it's a lot of education and training and also policies that will support attachment into the labor force. there's a lot would be happy to sit down and talk to you about. that's important. other countries that have leapfrogged us, have done more of those things. and i've had more rising educational entertainment. >> thank you for, that i look forward to a discussion about that. thank you mister chairman. >> thank you senator mcsally. >> thank you mister chairman, on february 2nd, the american banker published an article titled. when a small town lose its it's only bank. the article mentions duncan arizona, which at one bank, and recently closed its doors. the residents are now forced to

drive 40 miles to conduct any banking. local businesses no longer have a place to deposit, make daily deposits, or get change. and a customer service issues, require driving long distances. the article states, the economic implications, are enough of a concern the federal reserve has been studying what happens in areas where people don't have access to a local branch. what has the fed learned that study, and it's not happening in duncan arizona, but across rural arizona in rural america. >> we published a study, we had meetings all around the country, and did research. i think we did find the loss of a branch, in these rural communities, can be a serious blow. it's the availability of financial services, but it's also a bank is an important civics citizen, and contributes in many ways to that town.

i think dunkin'i think we had an event in duncan, it was one of our events when i think of it. we learned that you see it happening the price they're going down and have been reduced in a number of jurisdictions. you see it more rural. also the people in rural areas, or more likely or more inclined he is a brink branch rather than an electronic branch. the facts are significant. we saw that it's quite a negative effect. >> so, these are banking deserts, how does the fed define a banking desert. is it about distance, or the number of customers, or any other economic statistics for this. you are absolutely right, more people in urban areas are using online banking. we will areas have two challenges. one is there possibly less inclined to do that, it's not part of the culture, also we have connectivity challenges with rural broadband.

those things further hurt rule communities. how do you guys the fine banking desert, and what can be done to address this issue? >> they're actually there is no except a definition, it's one of those things where you know when you see it. it's a place where people don't have access to basic banking services. duncan is a classic example. effective to drive 40 miles to get there, at the banking desert. a lot of them are in the high desert, that's another indicator. there's a real issue in rural america principally. >> do you have any ideas within your roller our role how we can address this issue? >> we cannot be in the business of ultimately telling banks that they can close branches, but we can find incentives for them, to support rural areas. cra reform may be one vehicle for that. where we can move, there's a

constructive aspect of the other agencies proposal. moving to support more activity in the cra nation nature and rural areas. that's one idea. it's challenging. as you know, for quite a while now people have been leaving rural air isn't going to the city but these are longer term demographic pressures. >> i appreciate it, i look forward to following up with you. i also want to touch on the labor force participation and wage growth issue. i know not as many members asked about it. it's really great to see so many americans coming off the sidelines, and coming back into the workforce. we are starting to see wages go up as well especially for the lower levels of the economic spectrum. can you touch a bit more of the dynamics you're seeing, the positive effects of that, and where you are seeing people coming off the sidelines, and

how wage increases are impacting. >> sure it's a combination of people not leaving as much, and people coming back in. as you may have seen unusually, at this point, most of the people who are newly employed in, do not come out of unemployment they come from out of the labor force. we break everyone out indifferent labor categories. the biggest flow is out of the labor force and into unemployment. there's also just people outside the labor force, or having job opportunities. that's very positive. the thing is, we did not expect this, it's very positive. we just want to do whatever we can, to continue to foster this trend. is nothing like a job to get people's lives right. and to get them on the right track.

it's good to see this were using our tools >> senator van hollen. >> thank you, mr. chairman. and thank you, mr. chairman. like my college i want to thank you for your accessibility and always appreciate the opportunity to have fact-based conversation. before i get to my questions, i just want to thank you and the fed for moving it on the fed now system. it will save millions of americans billions of dollars when it's implemented. we passed a huge tax cut back in december 2017. itit dramatically increased the annual deficits and a long-term debt. and at that time in december december 2017 years what president trump tweeted out. he said his tax cuts were going to rock the economy the growth rates of 4%, 5% 5% and maybe even 6%. mr. chairman, the economy hasn't gotten anywhere near 6% growth

in the last three years, as it? >> no. we've had continued moderate growth over the 2%. >> we haven't had growth at 5% or 4% and in or 4% and, in fact, the trump administration has not ever hit 3% annual growth, as it? >> 2018 was marked at 3% but then got marked down to 2.5%. you never know. >> the answer is no, right? it did not hit 3% come right? >> according to current statistics. >> if you look at the budget that was just submitted by the trump administration, they are predicting 2.8% growth for the coming year. very far from what president trump was talking about five, 6%. but even at that number, , 2.8%, that's higher than the most optimistic projections for the 2020 gdp from the 17th 17th foc members, right? >> we don't have a unified

forecast. we don't adopt a vote on a forecast but we17 do show a pot plant for close data. the median forecast would be in the low to for this year. >> if i look at the median forecast its 2% and the most optimistic was 2.3%. still a full half percentage below the president's projections. let me now turn not from the aggregate numbers but to the real wages because there's been a lot of hype lately, but i want to get a sense of what people really are. obviously it's good news the unemployment numbers have continued to come down. on the trajectory there followed when president trump was sworn in, but if you look at real -- compensation. i recall from an earlier hearing, your review is the employment cost index is

probably the best measure of compensation, is that right? >> it is and a sense they all of their little purchase. >> i'm just looking at the numbers and compensation grew by an average of .94% per year during president obama's second term, andnd that compares to .6% per year. per year. this is an inflation adjusted term, so .63% growth in compensation under president trump. so in fact, the real compensation that workers are the workforce was actually higher during obama's last term compared to now. is this a reflection of how difficult it's been to translate overall economic growth into higher real wagesto for america? >> it is.

part of that really is inflation has moved back up a little bit. something we've been trying to accomplish, but i think more broadly though wages have moved up from about 2% to about 3% now. if you look at other expansions, even. adjusting for productivity you would've expected them to move higher than that. it's a bit of a surprise that we haven't seen real unit labor costs move up, which is to say that people are getting paid more than productivity and inflation in what should be a tight labor market but it isn't showing up as tight. >> exactly. you say inflation went up and that was the intention but, of course, when it comesay to real purchasing power for americans, that's what they care about whether wages are able to make purchases. we don't have time to get into it, but the budget, the chairman of the senate budget committee has announced he does not want

to have a hearing on the budget. i hope you will change his mind, but a lot of the cuts that were made include cuts to student loan opportunities and some of the things that can lead to higher productivity in the economy. i will follow up with written questions on that. thank you. >> thank you. senator cotton. >> thank you, mr. chairman. i want to speak today about coronavirus as potential impact on global and u.s. economy. yesterday senator menendez and i and a couple others introduce resolution honoring the chinese doctor who died last week of coronavirus, what makes him unusually notable among the more than thousand victims is he was one of the first persons to blow the whistle on the coronavirus in early december. he was silenced by the chinese calmness party. in fact, he was somewhat of the dark of night signing a statement announcing his a forgery he contracted it and died leaving

behind ass understand a a wifea small child and another child on the way. another example i want to site is a chinese lawyer and journalist who was known for reporting on the conditions there. here since disappeared. i raise-- these examples and ai could multiply them at great length about, just a simple illustration of chinese dishonesty and lack of transparency and trying tot this outbreak.of obviously, it's most important impact on our ability to understand the virus and develop effective test and vaccine. what kind ofd effects does it have on you and the fed's ability to try to understand the economic impact of it keeping with such on transparent conditions coming out of beijing as you get a grasp of what the

possible impact could be for china come for the united states and the global economy? >> as you point out the real question for the fed is what is the likely effect on the u.s. economy, and to think see it in economic data coming out fairly soon. it's too uncertain to even speculate about what the level of that would be and whether it will be persistent or whether it to material change in outlook. we dole expect there will be soe effects. the effects could be substantial in china, important but maybe less substantial in their immediate trading partners. we will be looking at the economic data and i can't really comment on the other kinds of data we are looking -- we look at that, too. >> of course i i wouldn't expet that from the federal reserve, hhs, cdc and other agencies like that. our chinese economic or central bank officials in contact with the federal reserve or other

counterparts around the world to try to help you understand that economic impact? recognizing the dishonesty lack of transparency that health officials and political leaders? >> on i'm absolutely sure that would be the case. there have been some conversation but it's too early to say. no one reallyle knows. they ared focused on, big focus is containing thens outbreak. of course the central bank and the government itself, the rest of the government, have been undertaken lots of measures to support economic activity. certainly as they know more, we will know that, too. we of course have that kind of relationship with their central banks. >> okay. i want to commend the trump administration for taking decisive action to stop travel from china and other steps in terms of contact tracing and try to get testing kits out to the front lines. right now we'll have 13 confirmed cases in the united

states. we can be confident there's more than that but hopefully not many more. if that remains the case, if there's not a widespread outbreak in the united states because of actions the united states government took, is the main economic risk to the united states the fragility of supply chains that originate in china and what happens at the very beginning of those chains in factors which may not have any or sufficient workers? >> you're right, supply chain is an important issue. we do get -- we import a lot of immediate goods from china, and that will be an issue. i will also be our own exports of course would be suppressed during this time. we won't get as much chinese tourism. the other channel i would mention hiss financial markets which can create their own transmission into the economy to the extent that are really strong reactions in financial markets. we will be looking at all that and again we do expect to start to pick it up relatively soon. >> thank you, mr. chairman.

of course far and away the top card of our government must be the health and safety of our people, but we don't want to lose sight of potential economic harm to our peoples well-being and prosperity. i appreciate your attention to this important matter. >> senator menendez. >> thank you, mr. chairman for your service. let me ask you something. the northeast corridor where i come from, new jersey, new york, that region generates about 20% of gdp for the entire nation. if we had a major infrastructure failure, for example, the closing of one or both of the trans hudson toddles into new york city, -- tunnels, the end of the bridge which takes boston to washington throughout the northeast corridor, with that not create a significant economic risk? >> if it was sustained, yes. your talk about assisting

closing. things happen every fix them and they don't show up much in gdp but if there sustained and yes. >> let me just share with you something i would like to bring to your attention as you look at these issues. amtrak estimates that a a shutn of the northeast corridor for a single day, for a single day, talk about sustained issues, would cost our economy $100 million here again that's just in one day. so if we cannot get this infrastructure to ultimately be sustained, and we saw from super storm sang the tremendous damage to the trans hudson tunnels. they're both a century old. we have a century plus bridge that doesn't close correctly. that stops entire traffic across the northeast quarter so every lawyer, every medical patient, every business that does intercity rail travel across

from boston to washington get stopped and loses time, and if you can't be closed successfully, they take sledgehammers to close it. that has a significant economic impact and i would urge the fed to look at that as a question about our infrastructure needs. that's why i'm so frustrated by the administration not seen the importance of what we call the gateway project, the new trans-hudson toddles, the rebuilding of a 109-year-old bridge. we just got some good news on that but over all this is a project of national significance in a region of the country that generates 20% of gdp from which traffic is important. let me turn to the committee reinvestment act which i think is an essential tool is one of the minority members of this committee and in the senate against discrimination about curbing redlining the meeting the needs of low and moderate income families. instead of strengthening this importantat civil rights law, a

proposed rule relies heavily on a dollar ratio metric for measuring all of the banks cra activities and gives little about you to community input. mr. chairman, what is it important for an update cra will to focus on loan count rather than dollar value of a loan? >> in our thinking loan counts are important because they go to the very purpose of the statute, which is to ensure the provision of credit to low and moderate income individuals and to their communities.w so we think loan accounts are important aspect of that. >> do you agree with the government of focusing on loan value as he updated occ at fdic proposalgr does, quote, runs the risk of encouraging some institutions to meet expectations primarily through a few large community development loans or investments, rather than meeting local needs? >> i think it's a risk.

as you know we work to try to get aligned with the proposal. we were not able to get there. they were not able to get to our proposal either so people look to see the comments on all of those provisions whichth will be coming in. we will be carefully looking at those. >> when you say that, did you, the reserve, share its concerns aboutt emphasizing metrics that placed too much value on loan volumes and not community input. >> was yes. they took many of our ideas. they incorporate a lot of our ideas. >> are you able to send us what items were incorporated that you shared with them? >> sure. the comptroller has identified many of them in his testimony in the house a couple weeks ago ideas incorporated from our wor work. >> but the key concern seems to have been ignored in particular.

>> i think the proposal looks at both counts, and dollars. but there are number of differences, and -- >> final question. either you or governor brainard taken the cra proposal to the federal reserve board jet. >> was no, we haven't. our focus was on trying to get on-sitee around one proposal wih the occ and the fdic and now we see ourselves as waiting to learn more from that process. >> for those in the community of color, this is critical important and help the federal show leadership in this regard and make sure that the committee participation continues to be a hallmark of what the cra is all. although i am going to come back and ask one quick question that wasn't a list to start with. you have been asked a lot, mr. chairman, today about wages and want to ask, i want to verify a statistic with you that i am

familiar with. my extent is that wage growth was 3.1% last year. >> that's average hourly earnings for the 12 months ended december 31. >> and did that make 18 straight months that the wage rate was about 3%, the wage growth rate? >> i would have to check that. it takes you back -- you were looking at each month, looking at over the last, the levels, 3.1% higher. we can fact check. that sounds right. >> if you would fact check that i would appreciate it. that does conclude the questioning of for the senators who wish to submit questions for the record those are due by wednesday, a green 19. chairman powell we asked to respondst as promptly as you ca. again we thank you for being here. i'm late for a vote and i'm sure your other business to conduct soso this committee is adjourne. >> thank you, mr. chairman.

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> they say the panhandle is your place you can watch your dog run away for two weeks. >> the majority of the towns and cities in the panhandle would not exist if wasn't for the coming of the railroad. they note ♪ ♪

♪ ♪ >> the c-span cities tour is on the road exploring the american story. this week and we travel to amarillo, texas,. >> amarillo is in the center of the texas panhandle. we affectionately call ourselves the capital city of the texas panhandle. i really think our superpower here in the city of amorello is we think regionally. >> with help of our cable partner we've learned about the history and literary life of the city and the surrounding areas as a talk with local authors and visit historic sites. >> the state park to be as lot like it has been for thousands of years. all of a sudden you come across this huge drop into the earth. the second largest gain in the united states after the grant.

>> she lifted twice between 1912-40. she was in amorello teaching for the publics will system of amorello and then in 1916-1918 she came back and got a faculty position here at west texas state normal. sometimes artists don't write so we don't know if he thought it said. she wrote politically this letter book can teach us so much more about this artist. she struggling with the think you can imagine yourself struggling with. she's so relatable so she's not his grumpy antiwar figure. >> joint as of this saturday at 5:30 p.m. on c-span2's booktv and then sunday at two p.m. on c-span3's american history tv as the c-span cities tour takes you to amarillo, texas. >> students from across the country told is the most important issues for the presidential candidates to address our climate change, gun violence, dean vaping, college affordability -- teen vaping,

mental health and immigration. we're awarding $100,000 in total cash prizes. the winners for this year's competition will be announced march 11. >> we are live on c-span2 for an event with the defense advisory committee on investigation, prosecution and defense of sexual assault in the armed forces. .. [inaudible conversations]