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tv   Federal Reserve Chair Testifies on Monetary Policy  CSPAN  July 16, 2021 1:57am-4:17am EDT

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among other things. >> reporter, editor, and publisher peter osnos on this episode of books notes plus. listen wherever you get your podcasts. >> c-span is your unfiltered view of government. we are funded by these television companies and more, including mediacom. >> the world changed in an instant but mediacom was ready. we never slowed down. schools and businesses went virtual and we powered a new reality. because that mediacom, we are built to keep you ahead. >> mediacom supports c-span as a public service, along with these other television providers, giving you a front row seat of democracy. >> federal reserve chair jerome powell testified earlier about
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the u.s. economy, inflation, and u.s. labor shortages. he took questions from the senate banking committee.
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senate committee of banking will come to order. today our economy is growing because of the american rescue plan. in the biden-harris administration's leadership. putting shots and money in pockets families have extra to pay the bills. beginning today, july 15th, most parents will see a $250 or $300 monthly payment in their bank account for each child. in my state 92% of children are eligible. small businesses are re-opening their doors. workers are safely going back to work at higher wages. last month we added 850,000 jobs to the economy since biden took office. we gained 3 million more jobs, more than in the first five moves any presidency in modern history. not only the jobs numbers but theuality of these jobs. for the first time in decades workers are starting to gain some power in our economy, the
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power to negotiate higher wages, the power to get better working conditions, the power to have more control over their schedules and stronger benefits, and more opportunities for career advancement. "the washington post" reported in the past three months rank and file employees have seen some of the fastest wage growth since the early 1980s the. think about that. the fastest wage growth since ronald reagan said it was morning in america. that's what happens when we invest in our greatest asset the american people. instead of hoping money trickles down from large corporations, it never does and pretty much everybodyry senator sitting on both sides of the aisle here knows that. we invested directly in our workers and small businesses in our communities. when workers win our economy wins. when everyone, one of senator smith's predecessors used to say when everyone does better, everyone does better. chairman powell you said the the fed can help make the economy work for everybody with a strong
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and competitive labor market where everyone can get a job, where employers compete for workers. i agree. those efforts combined with biden's recent actions to increase competitiveness or increasing working power the economy. we must build on this progress with investment and infrastructure that creates millions of jobs, increases our economic competitiveness spurs growths in communities of all sizes all over the country. i've been all over my state in the past few weeks talking with local leaders, seeing mayors in bolt parties in big cities and small towns. i heard the same thing from all of them. they need more investment and infrastructure like housing and transit to build a stronger local economy. these are the places often overlooked or worse preyed on by large corporations and wrs banks. many communities watched for decades as investment has dried up as store front are empty. companies close down factories and move good paying union jobs abroad. from pennsylvania and ohio two states especially.
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private equity firms big investors buy up the houses and jack up the rent. small businesses struggle and compete against big box chains. big banks buy up smaller ones only to close branches leaving check cashers and payday lenders as pams only options the. take about the opportunity and growth we can unleash in this country if we gave these communities investment to fulfill that potential. we know what happens when the my starts to grow. largest corporations and banks throw their efforts and resources in finding ways to direct those gains to themselves. last year during a global pandemic and deep recession ceos paid themselves 299 times what the average worker made and even a bigger gap than before the pandemic. imagine the kind of windfall they will try to rake in during this boom. we've seen it over and over. consumer spend driving up on
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revenue. big banks spend it on executive compensation and the fed usually allowed them, to mr. chairman. instead of lending in communities or increasing capital to reduce risk. the fed should be fighting this trend, protect our progress from wall street greed and recklessness not making it worse. during your tenure, chairman powell the fed rolled back important safe guards making it easier for banks to boost their enormous power. wall street would have you believe that removing those protections has increased lending and support the real economy. we're assured banks have plenty of capital to with stand the crisis but during the pandemic it was community banks, credit unions not the mega banks that increased lending. fed supported the biggest banks to the tune of hundreds of
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millions dollars. we have to try something different. we need a banking system that works for everyone. we can't let the biggest banks to funnel their funds in to stock buy backs. we can't let big banks merge into bigger and bigger banks and making small are banks harder to compete. we need banks to serve communities still scarred, still scarred by the legacy of black codes and jim crow and red lining. we can't allow repeat performance of the years during the last recession. wall street destroyed our economy. cost families their jobs and their homes and their savings and them came roaring back. families limped along behind them. for the vast majority of americans who get money from a paycheck and not a brokerage account the economy never looked that great in the years followed. long term interest rates are not enough if every decade a
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financial crisis hits and strips away what people worked so hard for. low unemployment is not enough if the jobs pay rock bottom wages and workers have no power. gdp growth isn't enough if it only benefits those at the top and not the workers who made point. we need to create a different system one that's stable for the long run. one where workers not wall street reap the benefits. charman powell you're in charge of ensuring financial stability and overseeing the biggest banks. those jobs are he equally important. they affect workers jobs and paychecks. as public servants our responsibility, your, mine, toomey, our responsibility is to the people that make this country work. it's up to us to grow an economy that delivers for them not just those at the top. >> thank you, mr. chairman. welcome back chairman powell. the company has come roar back from covid. gdp is above it's pre-pandemic levels now and the fed forecast
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gdp will grow by an amazing 7% this year. the unemployment rate is already at 5.9% which the fed expects to paul to 4.5% by the end of the year. to put that in context the average unemployment rate for the last 20 years before the pandemic was 6%. with these conditions, the fed's rationale for continuing negative real interest rates and $1.4 trillion in annual bond purchase is puzzling. the fed's policy is especially troubling because the warning siren for problematic inflation is getting louder. inflation is here. it's more severe than most including the fed itself expected. it is more than offsetting the wage gains so leaving workers worse off despite their nominal wage increases. for the third month in a row, consumer price index was higher than expectation, core cpi which excludes food and energy was up 4.5% in june.
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the highest reading in 30 years. to be clear this is beyond the so-called base effects. two year change in core cpi was at a 25 year high. with housing prices soaring to unaffordable levels i have to ask why is the fed still buying $40 billion in mortgage backed bonds each month. the fed assures us this inflation is transitory but its inflation projection over the last year have not inspired confidence. last june the fed projected pce, one standard measure of inflation would be 1.6% for the 12 months ending 2021. then in december the fed raised that figure up to 1.8% and now the fed's most recent forecast for 2021 year end is 3.4%, more than double what the fed thought inflation would be a year ago but in coming months the fed is almost certain to revise that projection up yet again because so far this year pce has already
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risen by 6.1% on an annualized basis. for the rest of the year inflation would near to be nearly zero for the fed's latest projection to be proven correct. i'm very concerned that the fed's current paradigm guarantees it will be behind the curve if inflation becomes problematic and persistent for several reasons. first, as i pointed out the fed has consistently and systematically under estimated affiliation over the last year. second the fed has announced it will allow inflation to run botch its 2% target level. it's already well above 2%. third, the fed insists the inflation rate we're experiencing is transitory despite the fact that recent unprecedented monetary accommodation has driven the inflation. since fed has proconvenient unable to forecast the level of inflation why should we be confident that the fed can forecast the duration of inflation. and after all you can only know something is in fact transitory
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after it's ended. what if it doesn't end? if it's wrong by the time the fed knows and acknowledges that it's gotten it wrong we could have a big problem on our hand and past experience has shown it's very difficult to get the inflation genie back in the bottle once it's out. the fed may have to respond by raising interest rates much more aggressively to rein in inflation. the fed's current monetary approach seems it need to prioritize maximum employment over price stability despite the fact that employment policies enacted by congress are clearly impeding our ability to get back to maximum employment. ivt not the fed's job to offset flawed congressional policies at the expense of its price stability mandate. when the fed subordinates its price stability mandate to maximize employment the fed
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risks failing on both front because you need stable prices in order to achieve a strong economy and maximize employment. this is not a partisan argument. prominent democratic persons and many others have expressed their concern about the risk, the risk of rising and persistent inflation. lastly, i just want to acknowledge the unique and crucial role played by the fed in our economy and some of the responsibilities that attend to that. the ability to direct interest rates and control the money supply is an extraordinary power, and congress has given the fed a great deal of operational independence in order to isolate it from interference, but congress also gave the fed narrowly define mission. i'm troubled by the fed especially some of the regional banks misusing this independence to wade into politically charged areas like global warming and
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racial justice. i would suggest that instead of 0 piping on issues that are clearly beyond the fed's mission and expertise they should focus on the mission that's controlling inflation. if it doesn't the fed will find its credibility and independence may also have turned out to be traditioncier to. thank you, mr. chairman. >> we have an 11:00 vote. i informed the ranking member and chair we'll work straight through and not break during that 11:00 vote. we'll just figure that out. today we'll hear from jerome powell and the state of u.s. economy. under law he comes before us twice a year at a minimum. federal reserve plays a key role in making sure our economy and banking system work for all americans. chairman powell thank you for your years of government service and for you testimony today. you're recognized. >> thank you. chairman brown, toomey and other ranking members of the committee i'm plan to present the report.
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at the fed we're strongly committed to achieving the monetary policy goals that congress has given us. maximum employment and price stability. we pursue these goals based solely on data and objective analysis and committed to doing sign clear and transparent manner. today i'll via the current economic situation before turning to monetary policy. over the first half of 2021 ongoing vaccinations have led to a re-opening of the economy and strong economic growth supported by accommodative fiscal and monetary policy. real gdp is on track to post its fastest rate of increase in decades. household spend is rising at a rapid pace. loosed by fiscal support, financial conditions and re-opening of the economy. housing demand remains very strong and. overall business investment is increasing at a solid pace. ascribed in the monetary policy report, supply constraints have been restraining activity and
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most notably in the motor-vehicle industry where the worldwide shortage of semiconductors has sharply cure tailed production so far this year. conditions in the labor market have continued to improved but the there's still a long way to go. labor demand appears to be very strong. job openings are at a record high. hiring is robust. many workers are leaving their jobs to search for other ones. employers add 1.7 million workers from april through june. however the unemployment rate remains elevated in june at 5.9% and this figure under states the short fall image employment particularly as participation in the labor market has not moved up from the low rates that prevailed for most of the past year. job gains should be strong in the coming months as public health conditions improve and some of the other pandemic related factors weighing on them diminish. as discussed in the monetary policy report the pandemic induced declines in employment
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last year, the largest workers with low wages and african-americans and hispanics. despite financial improvements for all ethnic groups, the hardest groups have most ground to regain. inflation has increased and will likely remain elevated. inflation is being temporarily boosted by base effects as the sharp pandemic related price declines from last spring dropout of the 12 month calculation. strong demand in sectors where production bottlenecks has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind. prices for services that were hard-hit by the pandemic have also jumped in recent months as demand for these service has surged with the re-opening of the economy. to avoid sustained periods of unusually high or low inflation, the foic monetary policy
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framework seeks longer term inflation expectations that are well anchored at 2%. measures of longer term inflation expectations have moved up from their pandemic lows. and are in a range that's broadly consistent with the foic's inflation goal. two box in the july monetary policy report discusses recent developments in inflation and inflation expectations. sustainably achieving maximum employment depend on a stable financial situation. while asset valuations have generally risen with improving fundamentals as well as increased investor appetite household budget are quite strong. business leverage has been declining and institutions at the core of the financial system remain resilient. turning now to monetary policy, at our june meeting the foic
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kept the fun's rate at zero and maintain the pace of purr -- maintained the purchase. these measures along with strong guidance on interest rates will assure monetary policy will continue to deliver powerful support to the economy until the recovery is complete. we continue to expect that it will be appropriate to maintain the current target range for the fed fund rate until labor market conditions have reached levels consistent with the committee's assessment of employment and inflation has risen to 2%. we'll aim to monitor inflation above 2 force sore inflation averages 2% over some time. as always, in assessing the appropriate stance of monetary policy, we will continue to monitor the implications of incoming information for the economic outlook and would be
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prepared to adjust the stance of monetary policy as appropriate if we saw signs path of inflation or longer term were moving materially and persistently beyond levels consistent with our goal. in addition, we're continuing o increase our holdings of treasury securities and agency mbs securities at least at their current pace until substantial further progress has been made towards our maximum price stability goals. these purchases have materially eased financial conditions and are providing substantial support to the economy. at our june meeting the committee discussed the economy's progress towards our goals since we adopted our asset purchase guidance last december. while reaching the standard of substantial further progress it is still a ways off, participants expect that progress will continue. we will continue these institutions at coming meetings. as we've said, we will provide advanced notice before announcing any decision to make changes to our purchases. we understand that our actions
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affect communities, families and businesses across the country. everything we do is in service to our public mission. the resumption of our fed listens initiative will further strengthen our i don't know going efforts to learn groups about how they are recovering from economic hardships brought on by the pandemic. we will do everything we can to support the recovery and foster progress toward our goals of maximum employment and stable prices. thank you, i will look forward to you are discussion. >> thank you, chair powell, for your testimony. our economy looks a whole lot better today than it did last year. we still have a long way to go, yet many of my republican colleagues have been stoking inflation fears, demand that go we pump the brakes on our economic recovery, complaining that we are just investing too much money in the american people. if my colleagues are suddenly concerned about the costs that have been rising for workers and families for decades them join democrats in the fight to raise wages, to lower the cost of health care, to make housing
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more affordable, to pass the american jobs plan. of course, most of them won't say aloud what all this inflation alarmism is all about, it's simply they don't want workers to have more power. in reality the biggest risk to our economy, mr. chairman, is not doing enough to empower workers and not doing enough to curb wall street greed in excess. so, chair powell, my question suf' supported vice chair corals as the vice chair his efforts to weaken capital requirements through the largest banks through the stress buffer and oversaw weakened stress tests which decide how leveraged the biggest banks are. governor brainard has pushed back against your efforts to weaken financial regulations, president rosengren of the boston fed made the case that strong regulation enables the fed to be more aggressive in its full employment mandate. the president of the cleveland
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fed and the president of the minneapolis fed are outspoken on the need for the board to keep its eye on financial stability, weakening financial safeguards doesn't help working families it just increases the risk of a financial crisis wiping out everything they've worked so hard for. we're finally making progress as i had said earlier and workers are getting a better seat at the table. we can make the economy safer and fairer with higher capital requirements of the biggest banks. my question, mr. chair, is why have you been against stronger capital requirements and using the countercyclical capital buffer in curbing run away executive bonuses and stock buy backs? >> so i guess i would say with the stress test -- the severity of the stress test has very much been maintained, the effect of the stress capital buffer overall was to raise capital requirements for the largest firms and they did manage to get through the recent pandemic and the acute phase of it and the
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recovery and did their jobs during the -- so i think our -- i think that by and large our financial institutions are well capitalized. we limited their distributions during the pandemic and their capital levels rose quite materially during the course of the pandemic. so financial system is strong and the banks are strong. i have felt and i've said on a number of occasions that the level of loss absorbing capital in the system is about right. i think the experience of the pandemic bears that out. i would be prepared to deploy the countercyclical capital buffer if i thought that the conditions we laid out were triggered, but i haven't so far felt that way. >> every time the fed -- thank you for that answer. every time the fed has taken action to lower capital standards it claims that doing so would increase lending in the economy and otherwise promote economic growth. that hasn't been what's happened, instead buy backs, dividends, executive compensation have continued to
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go up even during the pandemic. we empower workers by maintaining tight labor markets and strong financial regulations, i believe strong financial regulation enables the fed to be more aggressive in helping workers and that should be your mission. it's time, mr. chair, respectfully, you changed the way you think about regulating the biggest banks. one other question, mr. chair. in addition to adopting pro-worker financial stability policies the fed can further help communities of color by leading the push for a strong update to the community reinvestment act, we've seen some good developments there with a different controller of the currency. last year the fed unanimously released a framework for modernizing cra that was well-received by representatives of the civil rights community and by banks. my question, mr. chair, is the federal reserve still committed to full, not piecemeal, full cna modernization with an inner agency approach and what is the
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timing? >> we're very much committed to that outcome and i feel good about where we are on this. we're resuming our interagency discussions on it and i'm optimistic we will come out with something that has broad support among the community of intended beneficiaries and also among the financial institutions and that it will be a good solid updating after many years into the more technologically enabled era that will help the intended beneficiaries quite a bit. >> and the timing, mr. chair. >> yorking on it now. we're reacting to a very large quantity of comments and discussing that with particularly with the occ, but also the fdic it's not clear what their role will be at this time but we hope they will join in. i think we will be making visible progress in coming months, i can't give you a finished date yet but i think we're moving now. >> thank you. we will be watching. senator toomey. >> thank you, mr. chairman. chairman powell, in your testimony you said that
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substantial further progress is still a ways off for the economic recovery and i think you cite that as a justification for the extremely accommodative policy that you have. i don't think you are referring to the need for substantial further progress in gdp growth, i think it's employment that you're thinking of, the unemployment rate has declined dramatically but it hasn't reached the pre-pandemic lows. i think you've also made references to the workforce participation rate. i guess my question is isn't it entirely possible that for a variety of factors not the least of which is legislation that we've passed the labor force participation rate may not get back to the record highs that we recently saw and we've made it more difficult for the unemployment rate to get back to the record lows that we were at before, and do you take that into account when you determine how much progress we've made towards full employment?
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>> so what was happening toward the end of the very long expansion, longest expansion, was that people were staying in the labor force later into their careers and so labor force participation consistently remained above all estimates of where it was going to be. then what happened in the pandemic was a lot of those people retired. so there have been really significant amounts of retirement. so the truth is we don't know where that's going to settle out and it will take a period of years for us to really understand what the new trend is. i don't see that as a problem for the standard we've set forth for tapering asset purchases which is substantial further progress. we are not going to need to know the answers to those questions to make a decision that we've made substantial further progress, it will be more of a consideration for raising rates where we've set a higher bar. >> okay. i just -- i just hope there is a focus on the distinct possibility that we are just not going to get to those levels anytime soon. let me turn to housing prices a
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bit. the home price index showed housing prices across the u.s. as a whole increased in may by more than 15% from the previous year and that wasn't a base effect, there was no big decline in may of last year. 15% clearly is making housing less affordable, more out of reach for more people. so the number of voices within the fed seem to be increasingly concerned about this. the st. louis fed president james bullard said this week that he is, quote, a little bit concerned that we are feeding into an incipient housing bubble. dallas fed president kaplan said that the fed should begin tapering to begin offsetting, quote, some of these excesses and imbalances, the boston federal president raised alarms that the if he had's mortgage backed security purchases may be contributing to the current boom in real estate prices citing the potential financial stability implications. i guess you know i've been clear for a long time i've been very skeptical about the ongoing
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mortgage backed purchases. are you at all concerned about the unintended consequences that are associated with $40 billion of mortgage backed security purchases that continue month after month? >> so housing prices are going up as you mentioned around 15%. this is a very high rate of increase. a number of factors are contributing, monetary policy is certainly one of those factors. there are also other factors, people have very strong balance sheets so they're able to make down payments, there are also supply factors that are constraining the supply at least temporarily. you know, our best -- my best thinking is that the difference between treasury purchases and mbs purchases for this purpose is not a large one. probably mbs purchases are somewhat -- somewhat more supportive of housing. that's not their intent but it may be the effect. really the larger point is that monetary policy is supporting this and that is something -- that's a special we are going to be having on an ongoing basis. we talked about some of these things at our last meeting and
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we will talk at the next meeting in a couple of weeks. >> i think that's important. let me close with a question on a central bank digital currency. during your testimony yesterday i sensed what i wasn't sure but thought might be a change in your tone about the virtues of a central bank digital currency being issued by the fed. one of the things you said yesterday is that one of the stronger arguments in favor of a cbdc is that, quote, you wouldn't need stable coins, you wouldn't need cryptocurrencies if you had a digital u.s. currency. isn't the reverse also true, if you have stable coins, cryptocurrency is in use maybe there is no need for a central bank digital currency. i guess two points. one sths my view that the development of a central bank digital currency by the fed would require congressional authorization. i'm wondering if you share that view. and secondly it is still not
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clear to me what problem a central bank digital currency would solve and i wonder if you think there are problems that only a central bank digital currency can solve. >> first i'm legitimately undecided on whether the benefits outweigh the cost or vice versa on a cbdc. yesterday i was answering a question and i said in favor that would be one of the stronger arguments. i would agree that the more direct route would be to appropriately regulate stable coins, which were not -- we don't do right now and that's going to be a very important thing that we do do. so in terms of congressional authorization, you know, there are different views on that. i've said publicly and i think this is right that we would want very broad support in society and in congress and ideally that would take the form of authorizing legislation as opposed to a very careful reading of ambiguous law to support this. it's a very, very important initiative and i do think we
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should ideally get authorization. in terms of what the problem is to solve, i think that is exactly the right question. i think our obligation is to explore both the technology and policy issues over the next couple of years. that's what we're going to do so that we are in a position to make an informed recommendation, but my -- again, my mind is open on this and i honestly don't have a preconceived answer to these questions. >> thank you, mr. chairman. >> senator menendez of new jersey is recognized. >> chairman powell, as the federal reserve seeks to fulfill its mandate of maximum employment i want to ask you with you the tremendous impact that immigration has on the labor force. isn't it true that over the past ten years the immigrant labor force participation rate has been consistently higher than that of native-born workers? >> i believe that's right. >> yeah. let me help you verify that. the st. louis fed noted in their
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study that as of june 2021 the foreign-born labor force participation rate is 3% higher than the native-born rate and that gap hasn't ever been lower than nearly 2% for the past ten years. an important but often overlooked characteristic of these immigrants is their youth. according to the bureau of labor statistics 71.8% of foreign-born workers are between 25 and 54 years of age compared to 62.2% of the native labor force. so as the american labor force ages, will immigrants and therefore immigration policy play an increasingly important role in maintaining a healthy u.s. labor force therefore a healthy economy? >> senator, i'm going to stay away from making any recommendations on immigration policy, it's not in our wheelhouse. i will say that labor force growth is one of the two things that can drive the top line, the other being productivity growth. you know, in recent years
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immigration has been a significant part of -- accounted for a significant part of growth in the workforce. >> well, i appreciate that. i'm not asking you about immigration policy. what i am saying is that one of the newest studies shows that nearly one in four americans is projected to be 65 years of age or older by 2060 so while america gets older the overall population is growing at a slower rate than it has in almost a century, leaving unfilled job openings in a future american committee. i think we should be looking at our immigration policy, whatever that might ultimately be, i have my own idea, the u.s. citizenship act, as a source of dealing with the labor market. now, let me continue on the question of the labor market. one part of the fed's dual mandate is to maximize employment and understanding what factors inhibited people's
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ability to work as a key to helping achieve that goal. on page 7 of your monetary policy report and i will quote directly from it, the effect of the pandemic on employment was largest for workers with lower wages, workers with lower educational attainment and for african americans and hispanics and these hard-hit groups still have the most ground left to regain. and the pandemic seems to have taken a particularly large toll on the labor force participation of mothers, especially hispanic mothers. that's very much true. so have disruptions in child care due to the pandemic had a negative effect on employment? >> yes, they have, and also schools being closed. caretakers generally are having a hard time getting back into the labor force for that reason. >> the federal reserve's data shows that the pandemic's effect on child care caused 9% of all parents to be unable to work
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late last year and an additional 14% of parents had to decrease their hours and this affect was especially pronounced among black, hispanic and low income households. is the effect on child care, unemployment, associated only to the covid pandemic? >> sorry? >> is the effect of the availability of child care that is affordable on employment isolated only to the covid-19 pandemic? >> i'm going to guess really that the answer to that would be no. >> yeah, and it is no. studies have shown that working families pay for child care 35% of their income on average, five times more than what the department of health considers affordable. it seems to me that increasing the availability of high quality affordable child care like what president biden proposes in the american family's plan has a
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positive effect on employment, enables businesses to more easily find qualified workers and ultimately helps address supply bottlenecks. the same fed study i just cited notes that reducing or offsetting the cost of child care has a particularly strong employment effect on black, hispanic and low income families. the pandemic showed all of the inequalities in our nation highlighted in a way so dramatically and particularly communities of color. now the employment challenges we all talk about wanting to get people to work, the employment challenges that people have in being able to work and they as i have shown in the fed -- st. louis fed statistics more -- more gainfully employed the native born. it seems to me we should be working on making the pathway easier so that businesses can have qualified workers. thank you, mr. chairman. >> senator rounds of south
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dakota is recognized for five minutes. >> thank you, mr. chairman. chairman powell, once again it's good to see you, sir, and i have most certainly appreciated the time that you spent trying to not only educate us, but also to work with us. i understand that clearly you've made it your mission to adhere to the guidance for the fed in which you worked to maintaining 2% inflation over a period of time as well as full unemployment -- or full employment. when we talk about it it's always a combination of which one you're more focused on and how you maintain that, while at the same time responding appropriately in a nonpolitical way to the actions of congress and the administration. i'm just curious, with regard to today's position, we're coming out of a pandemic, we've put a lot of fuel into the economy with direct payments and so forth and people are trying to
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get back to work right now and yet we've got inflation which right now in this current state seems to be above a 2% rate. can you talk a little bit about the measurements time period that you believe is appropriate for shooting for a 2% goal and if there is a concern that you would express or that you follow up with when we talk about overinflating or perhaps putting fuel in. what concerns you would have and how you would respond to congressional activity. >> so the inflation that we have today, what we said is that if inflation runs below 2% for an extended period we want inflation to reason moderately above 2% for some time. this is not moderately above 2% by any stretch, this is well above 2% and we understand that. it's also not tied to the things
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that inflation is actually tied to. this is a shock going through the system associated with reopening of the economy and its driven inflation well above 2%. of course, we are not comfortable with that. in in terms of the tests we articulated. we didn't tie ourselves to a formula. what we really want a inflation expectations to be anchored at 2%. if they are not there is not much reason to think inflation been at 2%. the challenge we're confronting is how to react to this inflation which is larger than we or anybody had expected and to the extent that it is temporary then it wouldn't be appropriate to act to it, but to the extent it gets longer and longer we will have to continue to reevaluate the risks that would affect inflation expectations and will be of a longer duration. that's what we're monitoring. >> you've been very careful and i have appreciated the fact that you have done your best to be
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apolitical in this regard and yet at the same time we're going to have a debate about whether or not we need to add additional fuel to the economy in terms of additional payments to individuals. as we make that discussion, recognizing that you are going to do your best to be apolitical and simply to respond based upon your goals of the long term goal of 2% inflation and full employment, how do you see this right now with inflation right now being the focal point and yet the possibilities of more dollars being put into this economy in this recovery stage. what concern would you express if any? i know your job is not to give us advice. what are the tools available to you to try to maintain that long term goal of 2% at a time in
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which congress may be adding additional fuel to the fire for inflation. >> so the way it works is we watch what congress is talking about and then it reaches a point at which our staff will say that looks like it's got a good chance of happening and we will put something into -- the staff will put something into the forecast and all of us will make our own judgment about whether that was the right thing to do, whether it's too big or too small. he never take that into the public sphere and say please don't do that for this reason or that reason. >> but the tool that you would use would be within monetary policy of price of money. >> always the tools we have are, you know, in monetary policy is to raise interest rates to tighten financial conditions more broadly, to slow demand down and that's how you get control of inflation. and that's what you do.
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at a time like this policy is so accommodative, will be accommodative after we slow asset purchases, ultimately stop them and raise interest rates, it will be accommodative for quite a while but that's what we do and what we will do when and as we need to. in the meantime we're trying to understand this particular inflation is just unique in history, we don't have another example of the last time we reopened a $20 trillion economy with lots of fiscal and monetary support. we are humble about what we understand but we're trying to both understand the base case and also the risks. >> mr. chairman, thank you very much for your response and, mr. chairman, thank you. >> senator warner from virginia is recognized. >> thank you, mr. chairman. chairman powell, good to see you. thank you for your good work. one of the issues we've spent a lot of time talking about over the last year plus has been access to capital issues and as
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we know covid disproportionately hit businesses of color and as we've discussed in the past i've been a big advocate with many on the committee to promote investment into minority institutions, community development financial institutions and actually working with former secretary mnuchin we got $12 billion into the relief package back in december. some of that will go into -- as you know, capital into the cdfis which can increase their lending capacity by 50%. getting that access to capital to low and moderate income communities is really, really important. is there more that the fed can do? let me give you a two-part question -- the fed can do to support cdfis and is there anything similar to programs like the fed's paycheck -- ppp
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prg, liquidity facility which can be used. i'd like to see what your current thinking has been on this issue. >> we do see and we saw particularly during the pandemic the good that cdfis and minority deposit institutions can do and were doing. we try to provide whatever resources we can and a lot of it is just engagement and things like that and also including the cdfis in the ppp liquidity fund and doing everything we could to incorporate them in a way that was useful to them. all of those things are good. i think if we could think of more things to do within our mandate given our authorities we would do them because we do see the good they would do in reaching communities that are not necessarily reached by other banks. >> and i do hope beyond cra that
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we can look at -- i have a lot of community banks that want to get into this market and i have some ideas that i'd like to come back to you and the fed on. i think sometimes there is a feeling there is not enough regulatory discretion if they want to lean into lending. i think we all know housing prices are up dramatically, as a matter of fact, the federal housing financial agency's house price index showed that house prices were up #.9% over the 12 months ending in march 2021. i know a lot of discussion around inflation here, obviously if the housing market is overheated that poses is huge issue. how overheated tuning the housing market is and what tools do you have that could help deal
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with that problem? >> price increase right side very strong in housing and it's right across the country and we see that and hear that everywhere. as i mentioned, there are a number of factors that work there both demand and supply. there is demand because household balance sheets are very strong in the aggregate money strong place. money tear policy is supportive of people wanting to get mortgages now although most of the people getting mortgages have very high credit ratings. supply constraints -- and this predates the pandemic, this problem will still be there whenever other problem is solved which is difficulty in getting zoning and getting trained workers the raw material shortages and high prices and bottlenecks will probably abate over time but it's not -- i have heard from many of you that this was a problem before the pandemic and i think that that's
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probably going to remain the case. >> i agree. i think the supply issue is something we have to address. chairman brown has been working on this, i've been working on some ideas. i also think one of the things we have to grapple with if we go back to the wealth gap issues, particularly racial wealth gap, black versus white families, that goes to homeowner ship but i think it's also a challenge not only for black families but first generation home buyers everywhere. i've been working on an idea that swbls brought to me that it we using ginny may also provide for the same payment you would have on a 30 year mortgage a 20 year mortgage product. we've called it the lift up program. i'd love to share more of that with you as i will with my colleagues. >> senator kennedy from louisiana is recognized for five
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minutes. >> mr. chairman, i'm going to begin by thanking you once again and your colleagues, some are whom are sitting behind you, we all remember well spring of 2020 when the world economy almost melted down. it didn't in substantial part because of the actions that you and your colleagues took. you kept this thing in the middle of the road. now, some days you had to do it with spit and happy thoughts, but you kept it in the middle of the road. i remember particularly your currency swap lines. didn't read a lot about it, but i can understand when the world is melting down if other countries seek out treasuries, but when they don't like
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treasuries they want hard, cold, american dollars. that's scary. so i want to thank you. this is my question. we have spent not just during the biden administration but during president trump's administration, we have spent an enormous amount of money. i mean, it's breathtaking. now, some agree with us, some disagree with it, but some say you shouldn't have done t some say we had to do t it's probably a little bit of both. a lot of it wasn't paid for. and i look around and president biden is asking us in the next, i don't know, six months to spend, what, another $5.5 trillion, and there's a lot of talk about pay for's but it won't all be paid for. we know that.
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at what point do these deficits matter? are we living in a different world? i mean, i know you will probably say, well, deficits always matter, but at what point does the marginal benefit of the extra deficit spending become less than the marginal cost. >> i don't think there is a precise point that i can identify. i will say that we are not on a sustainable path, with he actually haven't opinion for a long time, that just meaning that the debt is growing substantially faster than the economy and in the long run that is not sustainable. we're going to need to -- the laws of gravity have not been repealed. we will need to get back on a sustainable path at some point. i think the time to do that is when the economy is strong. unemployment is low. taxes are rolling in. that's the time to do it and to do it, you know, with a longer term plan that matches up our spending needs and our revenues.
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>> what do you think that will be? >> that's what we will eventually have to do. >> when do you think that will be? >> the dollar is the world's reserve currency, people are buying our paper around the world. i don't think there's, you know, any issue of being able to fund our deficits in the near term, in the medium term, there is no evidence that there is, but, you know, we shouldn't wait until the urgent need arises. >> yeah. it's too late then. well, i mean, everybody seems to be a kanesan now, he was brilliant, they said you deficit spend, stimulate your economy, but you pay it back. none of us wants inflation. but it's not just inflation,
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it's inflation expectations. i worry if we spend this extra $6 trillion or $5.5 trillion that president biden wants to spend that the private sector is going to say, you know, we're going to have more inflation. i don't care what they say at the fed we're going to have more inflation and we're going to start raising prices. you don't have to be einstein's cousin to figure that out. don't you think that's something we have to consider? >> i would agree with you that inflation expectations are really central to what we think are central to what create actual inflation. with he see them now being -- they've moved up -- they've moved down at the beginning of the panned, moved up to where they've been at recent years but it's something we will be carefully watching. >> last point, i'm not expecting a response. resist the pressure. you're going to be asked by a
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lot of people to get involved in social policy, in cultural matters and what some will call economic policy that really has nothing to do with the fed's mission it's not just happening here, it's happening all over the world. don't let us become turkey where the whole central banking system has been politicized. resist it. >> the senator from minnesota is recognized for five minutes. >> thank you so much, chair powell, for being with us. i appreciated the chance to have a longer conversation with you earlier this week. i want to try to touch on two issues that are important to me. the first is just following up briefly on senator brown's questions around the community reinvestment act and then i want to go to the systemic risk that climate change poses.
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so earlier this week you and i had a chance to talk about this and, you know, i see the community reinvestment act as the main rules that govern how banks provide services in low and moderate income communities and communities of color which have experienced a systemic and severe lack of access to capital and lending and financial services due to discrimination. i'm glad to hear you think that you will be seeing some updates in the coming months and i wonder if you could tell us a little bit more about what the fed has learned from all the comments you have received from the cra proposal that you released last year. >> so quite voluminous comments as you can imagine from all corners and, you know, i think we're learning a lot and we're going to incorporate improvements, but broadly speaking this proposal, this approach has the support of the intended beneficiary community and also to a significant extent
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the support of the banks who want -- you know, they want cra to be effective, they want it to be well-measured, they are committed to having it be an effective program, i believe. generally, you know, we are in the middle of setting up to try to write something that reflects those -- you know, the appropriate comments and then we will publish that again, but it will take some time and we do hope to get all of the banking agencies on board for that. as i mentioned i'm optimistic that this is going to a pretty good place. >> that's great. i'm glad to hear that. i think that a well-functioning and modernized cra is crucial to making sure that all sectors of our economy for all people are growing and working, and as senator brown says we fulfill that promise that we all do better when we all do better which is i think at the heart of the cra. let me just ask you this
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question of the risks posed by climate change. yesterday in your testimony before the house you indicated that the fed is in the beginning stages of working on a program that will engage with financial institutions on climate risk. the last time you came before the committee you said you believed it was important longer term for firms to publicly disclose their climate-related risks and since then the sec has received hundreds of comments, vice chair corals has eye lighted the importance of climate risk disclosure and i believe chair genz letter has signaled his indication to begin rulemaking around climate disclosure. can you comment on how you see the role of the fed on climate risk disclosure for financial institutions. >> i guess i would start by saying that really the foundations of all of this are that we need to get good data on the implications of climate change and how to think about
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that in terms of the risks that the financial institutions and other parts of the economy are running. so that's a very basic exercise. we don't have that yet. once you have the data then disclosure is going to be important because markets are going to work. markets are going to be very, very important and the world investor community will be very interested in this. those are -- the fed can help with research and data collection, things like that, the disclosure issues are really squarely in the province of the sec and i know they're working very hard on those. around the world there is a lot of progress and focus on these things and i just think they're quite central to anything that we are ultimately able to accomplish here. >> so i think it's fair to say that the crp and central banks have led the way here. what can we learn from the approach that they have taken? >> i think one thing i would point to is the climate stress scenarios that have been developed by the network for creating the financial system and a number of the major
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european central banks are running climate stress scenarios very distinct from stress tests. what they're trying to do is with financial institutions look at what the effect over a long period of time on their business and on their business model could be from, you know, reasonably plausible, you know, outcomes for the evolving climate. it's proving to be i think a very profitable exercise both for the financial institutions and for regulators. that's one thing. we haven't decided to do that yet. we are in the process of looking very carefully at that. my guess is that's a direction that we will go in that we are not ready to do yet. >> thank you. mr. chair, i realize i'm out of time. i want to note that i think some would say that climate risk is a political issue i see it as a systemic financial risk just like other systemic financial risks that big bangs and medium sized banks have to address. i think that it's extremely
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important. i urge the fed to continue to look at these impacts and move with owe electric writty because i think as you say, chair powell, i believe that the markets are look for latery about how to measure and assess these risks for the good of investors and everybody. thank you. >> senator haggerty is recognized for five minutes. >> thank you. i appreciate your holding this important hearing that has to do with our critical job of overseeing the federal reserve. chair powell, i want to thank you for being with us again. today i'd like to talk about inflation, the insidious tax that the pooid is imposing on every day working people here in america and it's of great concern. back in february i discussed with you about how the u.s. economy at that point was forecast to see 6% growth this year and at that point i expressed serious concerns about the democrats' nearly $2 trillion of additional partisan spending on an economy that was
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already recovering rapidly thanks to the effects of operation warped speed and also thanks to the policies that have been in place during the previous four years that have put our nation on a solid footing in terms of tax cuts, fair and reciprocal trade and deregulation. the federal reserve's challenging and dual mandate is to realize price stability and maximum employment but run away democrat spending and policies that they are imposing are making your job harder than it already is. the bill that democrats ran through in march spent roughly 10% of our gdp and now they're looking to spend maybe another 20% of u.s. gdp op a purely partisan basis. they're throwing around trillions of dollars like it was simply monopoly money. when really what it's doing, it is taxing americans' hard earned paychecks. it's very irresponsible, it's creating inflation outcomes that many of us haven't seen in our adult lifetime, certainly not
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since jimmy carter was president. echoing what ranking member toomey has said, the concerns that he has raised about inflation, i worry, too, that things may spiral out of control if we don't show some restraint. at the same time president biden and the democrats are imposing policies that work against maximum employment. they're giving appointment, raising taxes on job creators, throwing away our energy independence and freezing american investment. the fed has more direct control over inflation and price stability than it does over employment. businesses create jobs and price stability allows american businesses and families to make business decisions and to plan their every day finances, but now americans have a sense of scarcity and i believe a sense of panic over inflation. the policies that are being imposed are causing families in my home state of tennessee and all across america to make financial decisions with soaring
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inflation in mind. price stability is not a 12% annualized inflation jump like the one we just saw from may to june. people in tennessee are seeing their buying power eroded like never before and they don't see this anz transitory. i'm sure people in chairman brown's home state of ohio and ranking member toomey's home state of pennsylvania are feeling exactly the same way. as you know inflation expectations can be self-fulfilling. inflation and pricing stability at this level is bad for america. chairman powell, then viermt suggests to me that the emergency posture that i understand the fed adopted back during the depths of the pandemic seriously needs to be reconsidered right now. i'm very worried that the fed's continued level of asset purchases and balance sheet expansion is facilitating this run away spending that the democrats are imposing upon us and adding to the inflationary
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pressures that these trillions of additional dollars will continue to add to our economy and continue to add to the debt that our children are going to continue to wear. it's amaze that go not one democrat in congress is willing to speak out about this. chairman powell, why is the fed maintaining its emergency monetary policy posture right now and why do i understand that it may continue well into 2023? >> so we are we are is we're watching the evolution of the economy. we are noting that there is still an elevated level of unemployment, we note that inflation is well above target and we have discussed that and we've said that we would begin to reduce our asset purchases when we feel that the economy has achieved substantial further progress measured from last december. so we are in active consideration of that now, we had a full meeting last june, last month to discuss that, we've got another meeting coming up in two weeks, so we will be making that assessment. as we assess the progress of the
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economy toward that goal we will begin to reduce our asset purchases. we have set a separate test for raising interest rates which is a higher test and so that's how we're thinking about this today. >> the policy positions that have been undertaken by this administration go far beyond the trans fore nature that you described. again, if i think about the expectations of the people in my home state they're very, very concerned about inflation so i'd lick to pass that along. i'd also like to ask you a simple question. does continued government stimulus spending at this point make your job in terms of sustaining price stability more difficult? >> so we -- we are not in the business of giving congress advice on fiscal policy and i just have to leave that to you. we take whatever you do and we put it into our considerations of policy but we don't comment on it one way or the other. >> thank you, mr. chairman. thank you, chairman powell. >> senator warren from massachusetts is recognized. >> thank you, mr. chairman.
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so the chairman of the federal reserve has two basic jobs, monetary policy which everybody likes to talk about and regulatory oversight which is often way down in the weeds but keeps our economy safe from another banking meltdown. you've been chair for four years now and have gone through the process of what you describe as, quote, tailoring the regulations put in place after the 2008 financial crisis. now, there were a lot of changes but i want to talk about a couple in particular. to prevent taxpayer bailouts banks are required to have living wills. this means that banks must be able to show every single year how they could be shut down without wrecking the entire economy. in 2019 you changed the rules so that the 13 banks with $250 billion to $700 billion in assets could submit full living wills only once every six years instead of every year.
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so that test is now weaker. chair powell, has the fed done anything over the past four years to make living will requirements stronger? >> to make living will requirements -- we've done a lot of things to strengthen regulation in capital -- >> yeah, but on living wills. >> no, i can explain -- >> okay. so let's move to another regulation, the vulca rule, the rule that works sort of like glass/steagall light to separate commercial banking from wall street risk taking. in 2019 you exempted more short term trading holdings from the rules so banks could take on a little more risk. now, that weakened the rule. then in 2020 you eased up the rules to let banks invest more of their assets in high risk private equity and hedge funds. so the vulca rule got weaker again. so let me ask, mr. chairman, during the past four years has the fed done anything to make
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the vulca rule stronger and limit risky trading for the largest banks? >> i think by clarifying it we made it more effective at what it's supposed to do, which is just what you said. >> well, i have to say it's whether or not did you anything to make it stronger not just whether or not you made it clearer. it's whether or not you made it stronger or harder for banks to engage in speculative trading. i'm taking it that the answer here is no. i've highlighted two examples of weakening regulations but there are a whole lot more, reducing capital requirements, easing liquidity requirements, shrinking margin requirements, scaling back on supervision, weakening the stress test. it's a long list and i realize that you think these are good changes, but i'm trying to look at this from a regulatory perspective. is the chairman of the federal reserve making banking rules
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stronger or weaker? so tell me, mr. chairman, is there a big rule change that i missed? can you name a change that strengthened the rules and made the actual rules tougher? >> well, let me say we did not weaken capital requirements for the largest banks and i actively resisted any move in that direction and, in fact, the stress capital buffer which we implemented quite recently after years of consideration raises capital standards for the largest banks, by the way, stress tests they're really bound by the stress tests. we maintained the very high string ensy of the stress tests during this period. >> what i was asking about anything tougher. look, what i'm looking for is that the fed's record over the past four years, i see one move after another to weaken regulation over wall street banks and that worries me. there's no doubt that the banks
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are stronger today than they were when they crashed the economy in 2008, but that's the wrong standard. the question is whether or not they are strong enough to withstand the next crisis and whether the fed is tough enough to protect the american economy and the american taxpayer. in 2020 the giant banks that are the beneficiary of these weakened rules made it through the crisis, but the researchers from the minneapolis fed found that the banks would have faced up to $300 billion in losses if not for fiscal stimulus from the government. in other words, the current fed rules were not strong enough for the banks to withstand the pandemic without once again calling on american taxpayers to back them up. and that's the heart of my concern. i understand that the next crisis may feel far away, but like the pandemic it may come at
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us fast and from an unexpected direction. it is the job of the federal reserve and specifically the job of the chair of the federal reserve to use the regulatory tools that congress has created in order to make sure that banks remain strong and that taxpayers will never be called on again for a bailout. thank you, mr. chairman. >> thank you, senator warren. senator tillis from north carolina is recognized for five minutes. >> thank you, mr. chair. chairman, thank you for being here. i wanted to go back and maybe give you an opportunity to respond to one question, you were going to explain the work on living wills. would you like to explain the work you've done there? >> i would just say that was an incredibly labor intensive and taxing issue that we went through cycle after cycle after cycle and really the marginal gains from doing it every year diminished white a lot. so we concluded for the largest
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banks we wouldn't require a full resubmission except every other year, but they have -- anything that's material they must -- i don't think in any way we've weakened our understanding of the resolve ability or anything like that. i would also say we raised capital standards on the largest banks, full stop, in the stress capital buffer. they are higher now than they were. i would say that. >> with respect to the vulca rule you were talking about clarifications. i mean, is the fed fully enforcing the vulca role based on congressional intent? >> absolutely. i think it's important -- more broadly i would completely agree that our job is to maintain the strength of these large financial institutions so that we never have to worry about baling them out again and i'm strongly committed to that. we need them to be very, very strong so that they can perform the roles that they're supposed to perform even in a severe crisis. and i think by and large they did, admittedly with a lot of fiscal support and light of
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monetary support, too. we can always -- you know, we can always do better, but we are -- i am commit to that. >> thank you. i have to beat the inflation drum for just a minute here. the fomc members insist inflation is transitory but it hasn't inspired a lot of confidence. i mean, there was a statement -- a couple of statements by president mary daly, in february she declared the measures on inflation are downward. in may when inflation readings were at 3.9% she said the higher inflation readings would be -- would mean 2.4 to 2.6%. in june she was predicting that inflation could go above 3% and despite months of relatively loi ball projections in response to tuesday's high inflation readings she confidently declared we expect a pop in inn lags like this. i hope from our perspective you
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could see that we are skeptical about some of the inflation projections and i've heard -- i've spoken with a number of people in the financial services industry and when i ask them the question about transitory i'm getting more of a response now of transitory-ish. so can you give me a reason why you believe the fed's position on it being transitory that it will snap back, why that's still well-founded? >> sure. let me start by saying that no one has any experience of what it is to reopen the economy after -- after what we went through and so all of us are going to have to be guided by data and have -- you know, our views -- >> mr. chairman, let me interrupt you for a second. i'd also like for you to answer that question in the context of the flow of money that's been passed in the prior covid relief packages and we heard an announcement this week from the speaker of the house and senator schumer that they have an agreement on another $3.5
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trillion. i'm a part of a working group for infrastructure that could add about another $600 billion. so answer the question in the context of how that future according to the leadership of congress outcome is going to occur. how does that all fit into the credibility of future inflation projections? >> so when we look at inflation we look in the basket of things and we say which of the 100 plus things in the cpi basket are causing the inflation, high inflation, and it comes down to really a handful of things, all of which are tied to the reopening. it's used, rented and new cars, airplane tickets, hotel rooms and a handful of other things and they account for essentially all of the overshoot. and we think that those things are clearly temporary. we don't know when they will end but they will go away. we don't know when they will go away. we also don't know when there are other things that will come forward and take their place. what we don't see now is broad inflation pressure showing up in
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a lot of categories. the concern would be if we did start to see that. we don't see that now. we will be watching tafl flee and we won't have to wait a tremendously long time, i don't think, to know whether our basic understanding of this is right. we will know because we will see other -- other -- if we see inflation spreading more broadly, that will give us information. >> i just want to get one more in. i appreciate that and i will listen to your responses from some of the other members. with a lot more transition i think you stated ameribor is reasonable for community institutions. do you stand by that? >> we don't like to bless individual rates but i would just say market participants have the freedom to choose -- to choose the rates that they want to choose, we are not forcing them to use -- this is for -- this is for just use -- >> but i'm confirming in some public comments you have said it's an appropriate rate for banks and funds through the financial -- american financial
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exchange. do you still stand about i that statement? >> i saw that. i don't remember saying that, but it was in a letter, i think. >> okay. >> i must have done it. >> thank you, mr. chairman. i appreciate your work. >> thank you. >> thank you, senator tillis. senator tester from montana of recognized for five minutes. >> i want to thank chairman powell for being here today. a lot of chairmans around here. look, i have appreciated you and i have appreciated your work during your tenure and especially as we look back over an incredibly difficult period of time where you were having to take a lot of issues that we hadn't seen in, you know, 80 years under consideration, getting attacked, trying to politicize the fed. i just want to thank you. i appreciate it. i think your expertise and your knowledge has shown through, the cream has risen to the top, so to speak. so thank you. look, there is a lot of talk
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about infrastructure needs and i think that you would probably agree that china is trying to take over our role in this world of being the economic super power and i'm one that believes that infrastructure and investments in infrastructure is critically important if we are going to maintain our position as an economic worldwide power -- the world bike economic power. my question is as you look at infrastructure investments and how that affects our economy, where would you put your focus? >> i -- i don't have any -- i mean, i would just say that well-spent, well-invested infrastructure money does have the ability and it's really up to you to make those decisions, but, you know, it's the kind of thing that can actually raise the growth rate, the potential growth rate of the country over time. i guess i need to leave the details -- >> so i think that there's -- there's several proposals out there, there's proposals to invest in roads and bridges and
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broadband and grid, which some of us in this room are a part of that i think is really, really important. i think there are other proposals that are also very important but they're investinge invested in other departments like child care and housing and those thing, and i don't want to put you on the spot, but i do value your opinion, and where do those things fall? are they equally important or is the economy fine without any investment like those things like housing and child care and that kind of stuff? >> well, i would not get into the debate over whether those are infrastructure or not. >> no, just from the economic standpoint. >> and from the economic standpoint and take child care and we used to have the highest female labor rate participation of all economies and now we are closest to the bottom of the pack. and research points to that this
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is just a different approach on child care. it is up to you to look at that, and see if it is makes any sense in the u.s. context. we don't have an opinion on that, and that is the basic economic trend where we used to lead and we don't anymore. okay. >> let me ask you this, and i know that many in the fed have done some work on issues in indian country, and one of issues in indian country is housing. they have a different issue because of the sovereignty and not having the kind of collateral that folks who own property have, and on the indian reservation, i am talking about, and any thoughts on that what we could be doing outside of the whole infrastructure conversation, but what to do to impact the housing industry, when it comes to housing, because it is woefully bad. >> that is a hard question, and
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as you know, we have four or five reserve banks involved in minneapolis and other indian territories, and we are not allowed to spend taxpayer money like that, but there is a housing issue in indian country and i'm not sure that i have the answer for you. >> look, if you have any ideas that pop into your head about how we can incentivize is the right word, but how the incentivize the private sector to do some housing, and i know it is not traditional to have the collateral that they would have with the fee property, and so it is an issue. look, i appreciate what you are doing, and i'm about out of time, but i want to thank you for the work, and ape appreciate your being in front of the committee today, and good luck.
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>> thank you, senator tester, and senator shelby of alabama is recognized for five minutes. >> thank you. chairman powell, we have been talk about the inflation, and it is not going to go away for a while, and we will continually talk about it, and you will be interested in it. we have talked about the consumer prices increased by 5.4% from a year ago. americans are now paying higher prices for many of the goods and services that they cannot do without. the buying power of the dollar has diminished over the 40 year, and i will give you some xals. you know all of this. according to bureau of labor price index, one dollar today is seven times less valuable than 1970, and 3.5 less valuable than in 1980, and half as valuable as
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1990, and 1.5 times less valuable than 202020 with scenes like yesterday. recently the price of commodities as you know, has increased swiftly. the price of agricultural goods has increased corn by 50 cent a year ago and wheat by 17%, and soybeans by 54%, and the price of metals has increased for example copper by 40%, and steal by 40%, and crude oil by 50%, and in the automotive industry,
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used cars by 45%, and 10.5% in june alone, and airline tickets are up 45%, and the cost of milk is up 7 1/2%. all hoff this is on the rise. at this point, the biden administration continues to claim that the increases in inflation are temporary. i along with others believe that this could be the sign of things to come. we hope not. for instance, economists surveyed by "the wall street journal" forecast higher than usual inflation. and as you know, high inflation crippled the consumers with rapid and high price condition. many of the conditions occur today with high monetary policy and significant government spending. if we fail to take inflation
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seriously, mr. chairman, i am concerned that the nation could be faced with the challenges of years ago. yetd, in the -- yet, in the midst of the increase of the prices that i have stated the biden administration is proposing trillions in more fed spending. the fed's inability to maintain price stability is threatened by a inflation or the expectation of inflation. chair powell, my question is this, taking all of this into consideration which you have data that we do not have, do you feel that the nation is facing a real problem with inflation, and if not, how do you justify? >> i think that we are exexperiencing a big uptick of
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inflation bigger than many expected and certainly bigger than i expected and we are trying to figure out if this is something that will pass through quickly or if in fact that we need to we need to address, because we do have tools to address them, but we don't want to use them in is not unnecessary or in a way that upsets rebound of the economy. there are a lot of people not back to work yet. but, let me say, well aware of the risks of inflation, and watching very carefully, and if we see the inflation expectations or see inflation moving up, we will act appropriately. >> are you concerned about all of the things that i listed the price increases that unprecedented in recent years or just put it aside.
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>> of course. we are night and day, we all thinking about that, and really asking ourselves if we have the right frame of reference, and the right framework to understanding this. >> lastly, do you understand with the conference that the wall street yourm pole who forecast high interesting rate? >> well, that a headline there, because the actual forecast showed that the median was 2.3%, and for 2002 is 2.2% which is not that difference of the people on the federal open market committee, and so they are higher than for last 30 year, but they are not that high. and so thoo forecast was not, was not as problematic as the headlines suggested. >> thank you, senator shelby,
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and senator cortell-mastive is next. >> have you included all of these items that you were asked to consider? >> yes. >> and where are we? >> it will cap the increase and the decrease, and you will get much lower numbers, because you have a lot of people doing that, and you have inflation of mid-2s which is the target, but on an annualized basis is 2, 2.5% but not 5%. >> for the purposes of the covid relief package, and including the recent one, the american
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rescue plan, is that the sole cause to what you are seeing to the minimum increase in inflation? >> i think that a lot of things go into it, and the main thing is that we have demand rebounding very, very strongly, and partly monetary policy, and fiscal policy, and what we see on the supply side is that it cannot keep up with this demand, and all of the bottlenecks, and by the way, it is happening everywhere in world. so it is a combination of factors. >> unthe last recession that we lived in 2010 to 2014, and i am curious, that when the economy opened up from that, it was a gradual reopening, and this is more of the light switching on with the economy reopening quickly, and this is why we are seeing the concern with the supply and demand on so many different areas, and we see
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highly needed demand? >> this is my fiscal orders of magnitude than what has happened in the past. so we are back to pre-covid inflation. >> and you know, in nevada, we are below, and as i watch the economy open up again, and we have talk about this again, and this is tourism, and the travel industry which is starting to rebound again, which is fantastic. last more than 130,000 people apply for 6,000 positions at a new report in las vegas.
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part five of the federal reserve monetary policy notes that, and i quote, payroll employment increased by 2.5 million jobs in first half of 2021 driven bay 2.6 million jobs gains of the leisure and entertainment job losses of last year, and the 2021 federal research paper foufr however that the extra job benefits that were provided in the pandemic had very little impact on the unemployment rate. can you elaborate on that. >> that is bank of america accounts, and it is little to say what the facts are going to be here. and we will learn something because many states have stopped the additional benefits, and see
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if it had any effort of people going back the work, because there is no data >> and that is my of whether the businesses who kept it going, and those who are opening early, and if there is a meaningful difference. >> yes, i will. >> and touching on the housing, the home prices are up more than 15% from last year, and you are hoping for the mortgage backed securities garst the supply answer. >> it i think that our purchases of the treasures and. >> and the interest rate is low, and the cob mop dae tave and i think that mortgage-backed securities are reporting more than treasury securities, but it
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is roughly the order of magnitude. is that your question? >> that answers my question. thank you very much. >> senator cortez is recognized to question chairman powell. >> thank you for being here and keeping a steady hand in these tumultuous times. i want to start with echoing my colleagues with the economy. and we are seeing the highest inflation than we have seen in a decade, and this is what is every montana voter is taking up which is the worst in ten years, and yet, lieutenant -- a tax and spend package and it threatens
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the prosperity of the country, and i hope my colleagues will reverse course. with that, i want to return to the questions. chairman powell, the employment rate has fallen from 5.9% from a 14.20%, and no doubt more americans getting back to work, and i know that you are no doubt grateful to see it falling. and you have no concerns about the labor remaining. it has remained in a narrow band betweenf 61.4, and 61.7, and now it is inflation rates that is lower than prepandemic 2020. and a significant percentage of the folks who dropped out of the labor force are over the age of
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55. data shows that they are not re-entering the workforce. a lot of the folks as they are already nearing retirement age may never enter the workforce and so my question, chairman powell, do you expect the labor force participation rate for those 55 and older to recover to prepandemic levels, and if so, why? >> so you ark rattly describe the situation, and people towards the end of the expansion, people were staying in the labor force longer and as a result, we were seeing the higher expansion. and the u.s. has a low participation rate compared to peers surprisingly, and the question is what is this -- and then a lot of the people retired. 3 million people left the labor force and it tended to be older people, and actually retiring,
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and whatis equilibrium. unemployment tends to lag recovery, and so it tends to lag. so first of all, i would say that a lot of humility is appropriate here, because we don't know what the labor force participation is. we went through eight years of watching the labor force participation being higher than i expected to put that on board, and the u.s. labor board can do better with that. and i hope that we can return. >> and i thank you for the thoughtful answer, but if the permanent participation rate stays below that level, how do you think it going to impact the economy to get back to full employment, and what impact for full inflation? >> less labor supply, you will hit full employment earlier, and
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we consider a number of things like wages and if there is lower supply and labor pay structurally, you will see it in the wages of high inflation, and higher prices. >> and i want to ask you about the federal reserve $8 trillion which is double than what it was before the pandemic, and when if ever do you think that fed ooh -- fed's balance sheet is going to fall below $8 billion, and what do you project if it stays that level for an extended period of time? >> so we have an example of the last time, we slowed the pace of the asset numbers and froze the balance sheet for a number of years, and as the economy grows,
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you can look amount and look at that for a number of years. the securities matured, we let those mature and shrink at the margins, but we have not made those decisions yet, but it is a reasonable supply to think that we would hold it constantly and then allow it under 8 trillion. >> thank you, mr. chairman. >> and the senator is recognized, senator holland. >> i have heard the term unprecedented to be described to describe the economy. and i have heard the descent of
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jobs other than any president in history as we defeated the pandemic, and the rescue plan to help those in the u.s. economy, and i wanted to dig deeper, because you believe it is a temporary projection, it is closer to your arguments with the expectation marngs -- markets, isn't that your expectation? >> yes, it is. >> and looking at the remarks of may 2019 when people were afraid that the inflation rate was too low and below the targets, and at that time you made the point that it was transitory, and you were right. and you used the different measure of trimmed mean cpi to describe your thinking.
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can you talk a little bit about what that measure is? >> sure. one thing that people do at times like this is that they chop off the tails, and look at the middle of the distribution, because sometimes the overall inflation measure can be distorted by a couple of categories, and so if you did that here, and this is the dallas trimmed mean, and cleveland does a version of this to show the inflation in the low 2s, because you are getting rid of a small group of categories and the risk is to shop for whatever inflation measure that is appropriate at the moment, and we try not to do that and trimmed mean is sending a signal that this is more idiosyncratic than broad across the economy. >> and isn't the case of the price of used cars rose by 10% in june alone and accounted for more than one-third of the entire increase in the cpi in june? >> yes, it is. >> so those are the kind of anomalies that you are referring
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to, right? >> it is new cars and used cars and rental cars and airplane tickets and a hotel and things that are a story clearly related to the pandemic at least now. >> so, look, rather than create an alarm about inflation, maybe we should all be together to focusing on the important increases in job growth and wages that we are seeing. i know that you said yesterday that you expected to be part of the 3.5% unemployment as we are moving forward and secretary yellen has talked about this time next year. i am worried, and we have discussed this in the past about the persistent long term unemployment, and if you are looking at the june numbers, the long term unemploy and these are the individuals who have been jobless for 33 weeks more, and from 33,000 to long term
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unemployment in may. so my question is, is there any way to get back to 3.5% unemployment if we don't get this number down when it comes to the long term unemployed? >> well, we saw what a strong labor market does is to pull the people n and pulls people in from the sidelines or keeps the people from leaving. so there is so much to like about a strong labor market. >> and i agree with you, mr. chairman, and if you are looking at the before the pandemic in 3.5% unemployed long term, and we are hoping that the economy is going to be magnet, and i'm sure it is going to bring people into the job force, and all of us are concerned about the lay bor force recommendation, and a lot of you will show that the
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longer that you are unemployed, the harder it is to get back into the workforce and then you get in at a lower wage which is going to stay with you throughout your career. do you believe it is worth the congress considering deliberate policies like wage subsidies which we used successfully back in 2008, and those kind of deliberate policies to make sure that the persistently unemployed get back into the doors. >> with nothing in particular, we lag all of the peers in labor force participation which is not where we want to be as a country, and that is classic supply side policies, and that is a way to connect people to give them some help to connect them to the labor fost, and they need a strong market and a job
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to keep them there. >> thank you, mr. chairman, and i hope that we will. mr. cramer of north dakota is recognized. >> thank you, ranking remember toomey and chairman powell, and let me add my voice of the chorus to thank you for the cool head through this process, and particularly for resisting the pressures to lower the rates so it was not necessary so we had room when it was very necessary. i appreciate that very much. now, i am interested in a lot of the discussion going on, and particularly interested in listening to the exchange with senator haggerty where he used to line that i have heard several time when you asked what congress should be doing, and you said, we are not in the business to give fiscal advice
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to congress. and that is similar to what you said. i did a quick search of fed chair urges congress. this won't surprise you, and by the way, there is not a person in the room who doesn't have some sympathy over headlines that are not quite accurate or even quotes, but one report says that the fed chair asks congress to consider more stimulus, and last year october, jerome powell is putting out the call to congress, more money now, and last year, powell still believes more stimulus is needed for recovery. and last one, congress asks for a stimulus bridge, so in other words, you have not always requisted this tim cool advice. we look back and say, we did too much. but we were in crisis, and there
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is not a lot of regret about that. some of the colleagues have pointed out to what is going on lately and what is suggested going forward and in addition to $3.5 trillion package includes a lot of tax increases like seven times more increase than this cuts in 2017 that built the foundation for the quick recovery, i might add. yeah, you added in the 1.9 trillion earlier this year which is not part of the 2.2 package being discussed. and you can get there really, really fast, but what people are not talking about if we get to the passing a cr which is similar to another resolution, we will spend another $6 or 7 or 8 trillion and $3 trillion
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deficit spending. now, my question to you is very direct and that's simply, does the economy need another 6.8 trillion spent this year to, to enhance the recovery, and is there not a detrimental, and call it whatever you want inflationary time, and it is uncertain if not an alarm. >> if i may ask that by answering that i did a lot of things last year that we have never done before, and that one in particular had a lot of encourage from the at ministration, and put cashes in both sides that not ta like it was at the time. i have been trying so far this
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year in not giving fiscal advice. whatever you do, we take it into account in the policies but we don't then come out to think that this is a good idea or bad idea. sorry. >> okay. appreciate that. maybe one other quick question. we noticed that the fed is continuing to pour in some liquidity of the mortgage purchases, and obviously fannie and freddie and do you consider that being necessary, and obviously, you are doing it, but why? >> we are looking at that right now, and my colleagues and i are looking at second meeting in couple of week, and we will talk about the composition of the
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uses, and i would add this is on the table. >> in addition to the climate uses that you have heard about today, and whether it is political or true risk, i would want to remind my colleagues that when we assess climate risk in terms of the u.s. economy or the u.s. investment, do not forget that every time we don't invest in energy or climate manufacturing issues in the united states, another country who does not do it as well as is not going to do it as well, so think about risk in a global context. >> thank you, chairman. i am going to go vote, and we think that senator lummis is coming back, and senator ausoff is coming back, but over to you. >> basically in the last 18
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months covid pandemic has been the most significant shock to the financial. what do you consider the most systemic threats to the financialability is of the mediate term either u.s. or globally? >> i would have to say that the thing that worries me the most is cerberusk. you know, it is a constant concern, and we spent lots of time and resources on it, and so does the private sector, but it is one that we have a playbook for, you know, bad lending, and bad risk management, and we have a lot of capital in the system. and you know, the cyber as you can see with the ransom wear issues, that it is a ongoing race relationship, and i have not had the financial stability,
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but that is the thing that i worry the most about. >> in terms of cyber, what next occupies your attention or concern? >> well, the economy is come out of this globally, and coming out of the pandemic, and so i would worry about if we don't succeed in vaccinating people all over the world, we are creating time and space for the development of new strains of the virus which can be more virulent and difficult to fight. that could underline the economy and the fablt -- fact cycle, and people are looking out, and the highest gdp in seven year, and this is when risk-takers are not
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realizing that there is a risk out there, and take too much risk so from the supervisory and counsel, that it is time for people to be focused on the risk segment. >> that is given the extraordinary cautious, and hoy consider how other entities are acting prudent with access to capital. >> conditions are highly competitive, and things like spaks and things like that is going up in valuements and so you do worry about that. and at the same time, we are
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focused on price stability and financial stability, but we have a long way to go, and so we want to be careful about, about, you know, tending to our main mandate while we also think about, you know, the financial stability issues. >> what is your level of confidence that there are not others? >> based on the regulatory taking place in those institutions. >> so there is regulation that is taking case of itself? we know that from the last crisis, and the one that you cow -- that you know needs more better structures and that is money market structures that needed bailed out twice in the
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money market financial crisis. in the financial crisis, it lost functionality twice. so we are doing analysis and thought about whether there needs to be clarity there and other aspects as well. >> the fed's most recent report cited climate change as a potential threat to stability, and the national oceanic and atmospheric agency states that impacts from the climate change are happening now, and they cite risks to water resources, other increases in water born diseases that put them at greater risk and identifies critical threat and what is your assessment of the risk that poses to financial stability or full development and stability in the long run?
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>> it is implications for all of those things in the long run, and we are focused on the long long risks that they are running and address them in their business model, and more broadly in the financial stability and markets generally, and nonbank institutions it is much the same, and we know that, you know, the transition for example to a lower carbon economy may lead to sudden repricings of assets or entire industries and we need to think about that carefully in advance or to be in position to deal with all of that. and we are doing all of that work as are all of the other researchers and banks around the world, and a lot of work going on in the senatea and higher priority, and a financial stability. and the manifestations of climate change are here now, and the financial stability issues are really coming.
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>> thank you, chairman powell, and i yield mr. chairman. >> thank you, and on behalf of chairman powell, let me recognize senator lewis. >> thank you and welcome, chairman. my first question as you may guess is about digital assets. you had testified in front of the house committee that oneof the challenges is to stabilize virtual coins as necessary. but in march, you acknowledge that bitcoin and ethereum are a substitute for gold rather than the dollar. so i want to talk about the difference of the two. so it is pretty clear that bitcoin, and ethereum, and other
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virtual instruments are commodities and not financial instruments. and the fcc has said as much in regulatory actions, and i think that what you were trying to get at is that one of the best arguments for a central bank of virtual currencies and stable currencies are not synonymous, because stable coins don't increase in value generally, and are used as substitute payment instruments where as bitcoin and other ethereum coins are investment assets, and research from fidelity and ethereum and deutsche suisse. and goldman saxe has said the same about ethereum that it is
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not an investment piece, and so because the central banks and the digital currency is more synonymous with the dollar as an instrument of payment, bitcoin, and investment are more of an investment commodity like gold, when you spoke to the house resource committee, did you mean that stable coin would be unnecessary if we had a single bank and digital currency. >> you are basically right, but with the cryptocurrencies, it is not that they did not aspire to be a payment mechanism, but they have failed to become one, except for people who deser -- desire anonymity, and so money
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coins are like bank deposits, and they are goe, or something that looks like a money market account or a bank, we need to have appropriate legislation, and today we don't. thank you for that. i would assume that some common definition, and the clear legal framework would help us to understand the opportunities associate and the risks associated with financial innovation? >> yes. i can certainly agree with that. >> thank you. thanks so much. now i want to turn to monetary policy. i'd lick to draw your attention to this chart. federal reserve and bureau of economic m2 data show that households have generally averaged 51% of the gdp from 1952 to 2021, and then data from
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the end of quarter one of 2021 are showing that households are sitting on deposits and close substitutes of roughly 28.9% of gdp, so going back, that is the highest percentage of gdp to households. and monetary policy has been highlige accommodatetive over the 16 months torque the tune of 63% increase in the money supply. so when households start to spend this cash with the enormous liquidity out there, it seems real potential for the inflation to continue to overshoot. we've already seen it this week as the core consumer price index
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number was doubled what the economists had predicted. so it is wise to continue to have an accommodative when you >> so the main factors of driving this up are people sitting home, and to spend money at restaurants, and combine it with the major fiscal transfers that congress made, so there is a lot of cash, and as you know, a great deal of cash on the household balance sheet, and that what this is representing. is it appropriate for us to continue to accommodative policy, we think it s but as you know, we are in the process of evaluating when it is going to be appropriate for us to taper, and that is to say reduce the asset purchases, and we will
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have a meeting to address that topic in a couple weeks, but i think that we should be appropriate and accommodative and supportive of economic activity for now. >> thank you for your responses. thank you, mr. chairman, i yield back. >> thank you, and i recognize myself and at the conclusion of my comments, i will yield to senator warnock, and at that time, senator brown will be back to conclude the hearing. i will ask first. so, first of all, thank you, mr. chairman, for your remarkable service over the many challenging months and i appreciate it very much, and one of the results of the pandemic has been a displacement of the
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technological workers, and we are all familiar with zoom, and it is blessing, and a curse simultaneously. as you are looking forward, how are you focusing in this technological deterrence of the workforce and employment? >> we have begun the hearing very early in the recovery period that companies were looking at ways to use technology to really more aggressive and people who lost their jobs were in service industries and relatively low paid customer facing businesses and travel and entertainment, and thing likes that, and so we are going to see, and that is by the way, the technology coming into the industries has been a trend, and we will see it accelerated and more technology and fewer people, and the implication of that is that we need to be, and we need to work
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as a society to make sure that people find their way back into the labor force even if they can't find their way into the old job. >> and i think that what it does is to stress the need for improving human capital so that they can be competitive in jobs, and might not otherwise be, and this is education, and i know that you dobtd commend on the fiscal affairs, but a lot of aspects of the president's family care plan, and postsecondary education, and pre-k and in the future, we have toic ma those investments or my sense is that we are going to have a lot of people who want to work, but whose skills are not up to the new technological
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opportunities. is that fair? >> it may well be, and it is a long-term trend, and if people can keep up with the technology, then it lifts all incomes, and if they can't, they tend to fall behind. >> and also another illustrations for the pandemic is that many particularly women were unable to continue in the workforce because of the child care responsibilities. have you and the fed looked at the labor force relation, and is that a factor? >> it is a factor and if you include caretaking broadly and include children and schools being close and caretaking at home and that kind of thing, it is still a medium-sized factor for participation.
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>> so if it is a reasonable day care, that should contribute to increased labor force participation. >> it is day care coming back and reopening and being available, and schools reopening in the fall which should help as well. >> all right. >> and we have all, and all of us have been touched one way or another on inflation issue, and some of these seem to be one off effects of the pandemic. lumber went out of sight, and people sitting home decided to redecorate and renovate, and lumber futures are down now i believe, so we can see that leveling off hopefully in thean chip shortage causing new cars to be expensive to drive up the price of new cars.
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and so my thought is that these are transitory to the pandemic. is that fair? >> yes, they look very much like a temporary factor that will abate over time, but what we don't know is if there are other things coming along to replace them, and we hear about the pressures of the economy, and we don't see the price pressures moving up broadly across the economy at this point, and watching carefully for it. >> an echoing something that senator ausoff said that the impact of the economy is something that is not transitory. it will be with us and the simple things like food when there is no water for irrigation, and more complicated things like the displacement of the homes because of rising waters at war or a lack of food or water rather.
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i am pleased that you are beginning to focus in on that, and everyday, there is going to be another challenge, and the news is going to be upsetting, let me put it that way. as i hope that it is a fair comment. >> thank you. >> thank you, mr. chairman. >> thank you, senator reed, and thank you for presiding. senator warnock is recognized for five minutes. >> thank you so much, chairman brown, and thank you chairman powell. i'm a strong advocate for working families and successfully pushed along with senator booker and others with the expansion of the child tax program in the american rescue plan, and the expanded child tax credit essentially provides a
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tax cut for middle-class families cutting the poverty in half nationwide and generally available to most american families with children, and including the families with little to no income. today is a great day because many of them will see that tax cut hit the bank accounts today. i'm happy to see hard working families across georgia and across the country see the benefit of this to help with the rising costs of raising our children. in my home state of georgia, little more than 1.2 million famiies will have relief for 2.5 million children across the state. and chairman powell, you stated that the widespread vaccinations along with unprecedented fiscal policy actions are providing
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strong support to the economic recovery and with the families beginning to receive their child tax credits today, how does the direct financial support to families help to sustain the ongoing economic recovery? >> of course, we try not to comment on the fiscal policy measures, and especially the one that you have mentioned, and generally from the policy, it did step in strongly and support people in their time of need, and the record will show that. >> thank you. i have a quick question about a housing bill that i am currently work on which i hope is a bipartisan bill, and one of the other challenges that i am working on is the widening racial wealth gap in our country, and a wealth gap that is further exacerbated in the
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pandemic, and in particular focusing on the further disparities of the underevaluation of the black and brown homeowners within our appraisal market which as we all know is a key factor for the wealth in people's homes and directly tied to the value of their homes, and thus the ability to pass on wealth to their children. i am pleased to see the biden administration and the federal housing agency to take participation and leaning in together with others to help solve this long-standing issue. it seems to me that it is time for congress to join the effort. chairman powell, do you agree with that addressing the racial disparities within the appraisal market can help our closing racial warfare?
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>> well, i believe that there is no place for racial discrimination in the banking sector or the housing sector, and a big focus on the appraisals as we will point out, and we will use the authorities that we have in forcing cr-a to try to eliminate that kind of discrimination. >> to you think that it will help to close the racial well gap. i believe it can be traceable there. that should be the outcome. >> house and senate passed a bill with a bipartisan vote, and not only a great step in mitigatingias to help to increase the appraiser
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pipeline for rural communities, and i am pleased to introduce this legislature with klobuchar and and also from a few of my colleagues from across the isle because we can tackle this critical issue that is not only improve the economy as we close the racial gap, and we all have a stake in that. one final question on a topic that i am very interested in, and chairman powell, as you know, the community re-investment act addresses how the banks must meet the needs and the capital investment of the banks that they serve, and i asked your client, mr. farrel with the occ or the fed's objective to work with the occ or the ocd to protect and
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communicate with the communities, and can you provide us with an update of the cd extensive group of comments, and then to go through the ocd to come up with a group of things that i speak process, and we would like to get the three agencies together on the cra proposal and i'm very optimistic a lot of work to do, but i am optimistic that the work product is going to be a good one. >> thank you so much. >> thank you, senator warnock. i understand that the chair cannot comment on the importance of the tax credit, and i appreciate his leadership in the
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first six months on a 92% of children in my state who will benefit from it, and not everybody is going to be getting checks today or tomorrow or saturday, and we encourage people to go to tax credit.gov who are the people who are eligible. so senato warnock, thank you for your work on that. and senator powell, thank you for providing the testimony today and for senators who want to submit questions, they are due one week from today, july 23rd to respond, and with that, the hearing is adjourned. thank you, jay. this is an hour.
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>> good afternoon everyone. thank you for joining

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