WATCH: Fed Chair Jerome Powell testifies on Capitol Hill

The committee will come to order. The chair is authorized to declare a recess at any time. This hearing is entitled 'Monetary Policy and the State of the Economy.' I now recognize myself for four minutes to give an opening statement. I'd like to welcome back Chairman Powell. As I discussed earlier and at our last hearing with you, I remain very concerned about the president's efforts to interfere with the Fed's independent monetary policy. A recent news story noted that Trump has tweeted over 100 times about the Fed since your nomination, many of those tweets appear to be attempting to exercise pressure on the Fed. Chairman Powell, you and the Fed Board of Governors must not be swayed by these aggressive tactics in upholding the past independence. You should also be mindful of public perception. Trump continues to try to claim credit for economic growth that was put in motion by the policies of President Obama, congressional Democrats, and the Federal Reserve. His irresponsible trade war and the GOP tax cut have blown up the national debt, slowed our economic growth, and harmed hard-working American families. Trump continues to squander this inherited economy. Let me note that I am disappointed in the Fed's efforts to deregulate mega banks, most recently by proposing to further rollback the Volcker Rule. The Dodd-Frank Act made our financial system safer, but it depends on agencies like the Fed to prudently use the tools available to monitor and mitigate threats to our economy. The committee is carefully monitoring the developments in the repo market. The Fed should not arbitrarily reduce liquidity requirements in response to the repo market disruption as some on Wall Street have asked for. Instead, the Fed should make appropriate adjustments to promote a well-functioning repo market while ensuring we have strong capital rules that can't be gamed through window-dressing, a practice where banks alter their balance sheets to appear less risky and reduce their capital levels. In addition, the riskiness of various financial assets is increasing as climate change poses a more serious risk to our economy. The Fed and other regulators should utilize financial stability tools under Dodd-Frank, such as incorporating climate-related losses into supervisory stress tests for big banks to address this growing risk. I would also like to discuss recent developments involving the Community Reinvestment Act, the CRA. We've had a series of hearings on this issue, and I'm very concerned about OCC Comptroller Otting's harmful proposal to turn CRA into the Community Disinvestment Act and allow banks to escape their obligation to make responsible investments in the communities where they are chartered. I urge the Fed to take a careful, deliberate approach to any changes to the implementation of the CRA and to not join Comptroller Otting's misguided efforts. Governor Brainard's statement—and I'll quote—'It's more important to get the reforms done right than to do them quickly'—is absolutely correct. The OCC and FDIC should heed that advice as well and extend the public comment period as community banks, state regulators, community and civil rights groups, as well as committee Democrats have called for, so that all stakeholders have an opportunity to voice their concerns. I also encourage the Fed to keep a watchful eye on Facebook's efforts to launch a cryptocurrency and digital wallet, which as we discussed at our last hearing could have profound implications for monetary policy and compete with our own US dollar. In light of the many risks Facebook's plans create, I and other Democrats have called on Facebook to halt their plans until Congress can examine the issues associated with a big tech company developing these digital products and take action. I look forward to your testimony today, Chairman, and to discussing these matters. Now I recognize the ranking member of the committee, the gentleman from North Carolina, Mr. McHenry, for four minutes for an opening statement.

Thank Chairman Powell for appearing before us once again. Under the Trump administration, we have the best economy that we've had in decades. The numbers are irrefutable: we added 225,000 new jobs in January, and the unemployment rate is essentially at its lowest level in half a century. This prosperity is being shared by all Americans, from African Americans and Hispanics where their unemployment rate has reached record lows. Last year, prime-age labor force participation reached 2.2 million people that were previously out of the workforce, and not surprisingly, consumer confidence has increased dramatically since the month before the president's election. Every member of Congress should celebrate these remarkable outcomes, which have resulted from Republican leadership on pro-growth policies like tax reform and regulatory right-sizing. But sustaining our economic prosperity also hinges on the Federal Reserve having good policy. The central bank is currently undertaking a review of its monetary policy framework to determine the tools it may need in the future. Chairman Powell, I raised the concern that we have regulatory policy that is impinging upon your capacity to make proper monetary policy, and that is why I think it's important that you have a regulatory review of the limitations that those regulations can put on your broader monetary policy decisions. That includes systemic risk concerns that I've raised as well as open market operations, especially the mocha open market operations in the repo market. I thank you for your prompt response to my questions about the repo market operations, but I'm not sure there's been a satisfactory answer to what caused the market spike in the first place, and that's troubling. I've also voiced my concerns with the transition from the LIBOR reference rate. Nine months later, I'm still concerned consumers will be impacted by the transition. We still have contracts written to the LIBOR reference rate, and I think given the recent volatility in the repo markets, I'm concerned about the subsequent volatility in consumer-facing products, including mortgages, auto loans, business loans, and other consumer loans as this new reference rate derived from secured overnight financing. At previous hearings, I've spoken about the cyber threats posed to our financial institutions and your institution in China in particular. Yesterday's news about the Equifax data breach is deeply troubling and is a wake-up call to every single policymaker that we need to take the threat of China and the Chinese communist regime quite seriously. If we're not taking them seriously, have no fear, they are taking us very seriously, and now they have basically all of our data too. So the spillover effects of this question of Chinese policy is significant, not just for cyber security but what we're seeing with the coronavirus and the destabilizing effects it has on global health. I know you're not a global health expert, but you can give us some sense of your measurement techniques and response to these economic changes that are being driven out of the coronavirus challenge in China and the spillover effects it has to its neighbors and the supply chain as well that's derived through China. The nature of the Chinese regime may not fit neatly into the Fed's risk assessments. The Fed has acknowledged in its financial stability report that cyber risks don't fit neatly either, but the risks are real. Even though our data is limited coming out of China and the limited data we have, we should reflect appropriately upon what we know and how we respond as an American government and to the Western world in response to these threats, both cyber and health risks, and the spillover effect it has on our economy. So again, Chairman Powell, thank you for being here, thank you for your openness, thank you for your approach as chair of the Federal Reserve to be in the language of the people rather than simply the language of the PhDs. With that, I yield back.

I now recognize the chair of the Subcommittee on National Security, International Development and Monetary Policy, Mr. Klieber, for one minute.

Thank you, Madam Chair. Mr. Chairman, first of all, I appreciate very much your willingness to travel around the country to do the 14 of those Fed Listens sessions. One of them you did in Kansas City at our Fed building, and I think it's a great opportunity for most people to get a chance to sit in a room and discuss economics with the Chairman. So thank you very much. When you came to guess today, people were sitting around the table with you and giving you a picture of their struggles and strives. I am trying to make it in the economy, and people are also concerned about inflation. They believe that it's like toothpaste—once it gets out, it's hard to get back in. So we're concerned about that, but also appreciative of your work, and I look forward to getting a little further into this as we proceed with the clearing. Thank you.

Thank you. I now recognize the subcommittee ranking member, Mr. French Hill, for one minute.

Thank you, Madam Chair. Chair Powell, thank you for being here today. We appreciate your willingness to come and field our questions and provide your insights. I want to take just a moment to echo the comments of the ranking member on the Community Reinvestment Act. I know this has received a lot of attention. I read Governor Brainard's very comprehensive views on the topic, and we had Mr. Otting here recently to discuss the OCC's point of view. As a former community banker, it's my view that we really should have ultimately one approach to CRA among the financial services regulatory agencies. I've had 40 years of dealing with inconsistency in delivery of regulatory proposals, so I do think ultimately it would be productive for us to have one approach to that regulation and modernize it for the digital world that we live in today. I look forward to your presentation today, and Madam Chair, I yield back.

I want to welcome to the committee our distinguished witness, Jerome Powell, Chairman of the Board of Governors of the Federal Reserve System. He has served on the Board of Governors since 2012 and as its chair since 2017. Mr. Powell has testified before the committee, and I believe he does not need any further introduction. Without objection, your written testimony will be made part of the record. Mr. Powell, you are now recognized to present your oral testimony.

Thank you very much. Chairwoman Waters, Ranking Member McHenry, and other members of the committee, I'm pleased to present the Federal Reserve's semiannual monetary policy report. My colleagues and I strongly support the goals of maximum employment and price stability that Congress has set for monetary policy. Congress has given us an important degree of independence to pursue these goals based solely on data and objective analysis. This independence brings with it an obligation to explain clearly how we pursue our goals. Today I will review the current economic situation before turning to monetary policy. The economic expansion is well into its 11th year and it is the longest on record. Over the second half of last year, economic activity increased at a moderate pace, and the labor market strengthened further as the economy appeared resilient to the global headwinds that had intensified last summer. Inflation has been low and stable but has continued to run below the FOMC's symmetric 2 percent objective. Job gains averaged 200,000 per month in the second half of last year, and an additional 225,000 jobs were added in January. The pace of job gains has remained above what is needed to provide jobs for new workers entering the labor force, allowing the unemployment rate to move down further. Over the course of last year, the unemployment rate was 3.6 percent last month and has been near half-century lows for more than a year. Job openings remain plentiful. Employers are increasingly willing to hire workers with fewer skills and train them. As a result, the benefits of a strong labor market have become more widely shared. People who live and work in low- and middle-income communities are finding new opportunities. Employment gains have been broad-based across all racial and ethnic groups and levels of education. Wages have been rising, particularly for lower-paying jobs. GDP rose at a moderate rate over the second half of last year. Growth in consumer spending moderated toward the end of the year following earlier strong increases, but the fundamentals supporting household spending remain solid. Residential investment turned up in the second half, but business investment and exports were weak, largely reflecting sluggish growth abroad and trade developments. Those same factors weighed on activity at the nation's factories, whose output declined over the first half of 2019 and has been little changed on net since then. The February monetary policy report discusses the recent weakness in manufacturing. Some of the uncertainties around trade have diminished recently, but risks to the outlook remain. In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy. Inflation ran below the FOMC's symmetric 2 percent objective throughout 2019. Over the 12 months through December, overall inflation based on the price index for personal consumption expenditures was 1.6 percent. Core inflation, which excludes volatile food and energy prices, was also 1.6 percent. Over the next few months, we expect inflation to move up closer to 2 percent as unusually low readings from early 2019 drop out of the 12-month calculation. The nation faces important longer-run challenges. Labor force participation by individuals in their prime working years is at its highest rate in more than a decade, but it remains lower than in most other advanced economies, and there are troubling labor market disparities across racial and ethnic groups and across regions of the country. In addition, although it is encouraging that productivity growth—the main engine for raising wages and living standards over the longer term—has moved up recently, productivity gains have been subpar throughout this long economic expansion. Finding ways to boost labor force participation and productivity growth would benefit Americans and should remain a national priority. I will turn now to monetary policy. Over the second half of 2019, the FOMC shifted to a more accommodative stance of monetary policy to cushion the economy from weaker global growth and trade developments and to promote a faster return of inflation to our symmetric 2 percent objective. We lowered the federal funds target range at our July, September, and October meetings, bringing the current target range to 1.5 to 1.75 percent. At our subsequent meetings, with some uncertainties surrounding trade having diminished and amid some signs that global growth may be stabilizing, the committee left the policy rate unchanged. The FOMC believes that the current stance of monetary policy will support continued economic growth, a strong labor market, and inflation returning to the committee's symmetric 2 percent objective. As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate. Of course, the policy is not on a preset course. If developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Taking a longer view, there has been a decline over the past quarter century in the level of interest rates consistent with stable prices and the economy operating at its full potential. This low interest rate environment may limit the ability of central banks to reduce policy interest rates enough to support the economy during a downturn. With this concern in mind, we have been conducting a review of our monetary policy strategy, tools, and communication practices. Public engagement is at the heart of this effort. Through our Fed Listens events, we've been hearing from representatives of consumer, labor, business, community, and other groups. The February monetary policy report shares some of what we've learned. The insights we've gained from these events have informed our framework discussions, as reported in the minutes of our meetings. We will share our conclusions when we finish the review, likely around the middle of this year. The current low interest rate environment also means that it would be important for fiscal policy to help support the economy if it weakens. Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn. A more sustainable federal budget could also support the economy's growth over the long term. Finally, I will briefly review our planned technical operations to implement monetary policy. The February monetary policy report provides details of our operations to date. Last October, the FOMC announced a plan to purchase Treasury bills and conduct repo operations. These actions have been successful in providing an ample supply of reserves to the banking system and effective control of the federal funds rate. As our bill purchases continue to build reserves toward levels that maintain ample conditions, we intend to gradually transition away from the active use of repo operations. Also, as reserves reach durably ample levels, we intend to slow our purchases to a pace that will allow our balance sheet to grow in line with trend demand for our liabilities. All of these technical measures support the efficient and effective implementation of monetary policy. They are not intended to represent a change in the stance of monetary policy. As always, we stand ready to adjust the details of our technical operations as conditions warrant. Thank you. I look forward to your questions.

Thank you. I now recognize myself for five minutes for questions. In December 2019, when the OCC and FDIC issued a notice of proposed rulemaking on Comptroller Otting's proposal, the Federal Reserve did not join this proposal. FDIC Board Member Mark Gruenberg voted against Comptroller Otting's proposal, describing it as 'a deeply misconceived proposal that would fundamentally undermine and weaken the Community Reinvestment Act.' And in remarks last month, Federal Reserve Board Governor Brainard said that 'given that reforms to the CRA regulations are likely to set expectations for a few decades, it is more important to get the reforms done right than to do them quickly. That requires giving external stakeholders sufficient time and analysis to provide meaningful feedback on a range of options for modernizing the regulations.' Chair Powell, Governor Brainard also suggested in a speech last month that the Federal Reserve created a database of 6,000 public CRA evaluations, looking at how various CRA investments support low- and moderate-income communities. Has the Fed used this database to evaluate how bank activities would be assessed under the OCC and the FDIC's proposal?

Do you intend to do this assessment? Excuse me, do you intend to do the assessment that I referenced regarding the database to evaluate bank activities—how they would be assessed under the OCC's and FDIC's proposal?

So given the magnitude of reform in CRA regulations, do you think the comment period should be extended to allow the public to weigh in on such an important undertaking?

So are you completing your assessment? Are you continuing to look until you come to a final decision? We are. Don't you think the public should have an opportunity to have more time to do that also?

Well, as you may be aware, all of the Democrats on this committee urge regulators to provide a public comment period of at least 120 days on any major CRA reform, instead of the 60 days the OCC and FDIC have provided. Community banks, state regulators, and community groups have called on these agencies to extend the comment period. Even though you said it is not your place to comment on whether or not that should be extended, I wish you would think about this. I wish you, as you were doing the assessment and as you have said it is important for the public to be able to comment, would review what you are thinking. If you change your mind, let us know about commenting on whether or not we should extend the comment period. You don't have to respond to that. Thank you very much.

So it always is rich, right? When somebody else has a negative comment about the Federal Reserve, that's bad, but when I as a policymaker on the Hill have a negative comment about the Fed, it's good? So it's all about the eye of the beholder when it comes to the political debate here in Washington. Congress made a decision over a hundred years ago to outsource monetary policy to the Federal Reserve. You're a construct of law; you're given independent operations and you have a set term of office. So the independence of the Fed for monetary policy is appropriate and long-standing. Every president in the last 100 years has had some private criticism, and we find out about that criticism either through press reports at the time or later or some biographer's work about the president. But here on the Hill, we can make negative comments about the Fed and attack the president for having negative comments about the Fed. So all this stuff is just rich politics. Let's get down to the essence of this. You are the biggest regulator in town when it comes to the financial world. I have concerns that I want to address that our regulatory nature that I think impinge upon monetary policy. The repo market, for instance. These operations you said are temporary in nature. Is that still true?

Are you doing a review on your capital requirements for institutions that should be participating in the repo market?

I raised this in my opening statement about China. Now you've spoken publicly about your assessment—your thinking as you see what is happening with China's response to the coronavirus. We wish them well; we have high hopes that they're going to be able to tackle this public health crisis they're facing. But walk me through your thinking in assessing the situation in China now in terms of the economics and that potential spillover effect.

Thank you, Chairwoman. Chairman Powell, I would like to follow up on Ms. Waters' question on CRA. What aspects of the proposed changes to the CRA do you find most troubling?

But I would just like to ask you: if the Fed is unable to reach an agreement with the OCC and the FDIC on a joint rule, do you expect the Fed to issue its own proposal?

Are you meeting regularly with the OCC and FDIC on this issue?

Would you agree with Governor Brainard's comment that it is more important to get the rule right than to do it quickly?

As you know, Representative Porter and I have been concerned about banks' growing reliance on cloud-based service providers for their data storage needs. Does the Fed have all the access authority it needs, or are there any contractual or legal limitations restricting the Fed's ability to obtain data held by third parties that it needs to properly understand and manage this growing reliance?

I thank the chairwoman, and thank you for being here, Chairman Powell. We're all very interested, as it just happened on January 29th, the repo spike. I know the ranking member mentioned it. I know you're in the middle of your review. But could this be a little more specific question? Could this repo market turmoil be symptomatic of deeper difficulties for the financial system?

I hope you will find that there isn't anything symptomatic of deeper difficulties, and we look forward to that. Turn the page. Chairman Powell, in December of last year, I asked Vice Chairman Quarles for an update on the status of updating the GSIB surcharge and plans for finalizing the stress capital buffer proposal, which I understand will require a re-proposal with a comment period in January. Vice Chairman Quarles delivered a speech where he spoke about bringing 'reasonable transparency' to several aspects of the Federal Reserve's supervisory and regulatory framework. Last week, the Fed released the 2020 stress test scenarios. To my knowledge, there has been no progress or update on the status of the stress capital buffer apart from continued assertions by you and Vice Chairman Quarles that aspects of the proposal will be incorporated in the 2020 CCAR. Given the acknowledgment by principals at the Fed of the importance of transparency, I'm concerned about the lack of transparency in this process. When can we expect progress on this proposal that has been in process since April 2018?

Do you feel intractable to do that?

Committee Republicans have underlined the importance of cyber threats as a potential systemic risk. We have recently seen malware attacks undermine government infrastructure, and according to research last month by economists at the New York Fed, a simulated cyber attack on just one major US bank could have spillover effects impacting 38% of the wholesale payments network. What can the US do better, Chairman Powell, in order to prioritize this constant flow of cyber risks and strengthen the resilience of our financial sector?

A couple of responses to what the ranking member had to say. The stock market's way up. Wages are up a bit more than 1% in real terms after inflation. Wages at the bottom have risen chiefly in those states where we raised the minimum wage. When we have a Democratic majority in both houses, we will raise the minimum wage nationwide and deal effectively with those states that have not seen such an expansion of wages at the bottom. I've spent many decades in this room. I've seen your predecessors, and every time they come in, the Republicans attack them for expansionary monetary policy, both traditional and newfangled. Now we have a new president, and all of a sudden they're pushing on the other side. I have consistently, from the days of Mr. Greenspan, been pushing for somewhat lower interest rates and an expansionary policy, particularly quantitative easing, because you returned $55 billion to the Treasury last year. That is not your purpose, but think of the kids that will get an education because we could fund aid to local education. Think of the medical research and the lives that will be saved because we were able to fund medical research. I don't think the $55 billion should be regarded as an irrelevance or an embarrassment. Finally, as to the jobs growth we've seen recently, I do need to point out that jobs grew much faster in the last three years of the Obama administration than the first three years of the Trump administration. It is as if Trump inherited a plane—as he inherited so much else—the plane was on autopilot and it was going in the right direction, and he hasn't managed to completely screw it up. We've got an issue that I think ought to be completely bipartisan, and that's LIBOR. It's going to hit us in a couple of years. Chairman Powell, should Congress simply give the Fed the right to prescribe backup rates when the debt instruments do not do so, or should we explicitly adopt SOFR, or what can we do hopefully this year and actually solve a problem 12 months in advance?

Have you figured out whether you need a federal law change?

If you could get us an answer, because there are people who want to wait around until two or three months before things blow up and then come to Congress and say 'Now fix it.' Two years is actually too short a time because we're impairing the economy today because you and I are talking about this, and there's this slight risk of litigation and uncertainty with regard to legacy LIBOR. We ought to take that off the table. That's one of the things we can do to help the economy. So I hope that you would act within a month to let us know what you proposed rather than wait till next year. Another area we've talked about before is the wire transfer system. We've seen $150 million lost to scams, and those scams arise chiefly because when you wire money, you do so to a number but there's no payee identified. The British have gone to a confirmation of payee system. The International Standards Organization has prescribed changes that would require at least identification of payee. We don't—I know you have raised issues of state law. I've analyzed that. I can't see what would prevent the Fed from prescribing what the wire transfer system would be. It looks like I'll have to ask you to get back promptly for the record on that question. The witnesses are requested to provide an answer in writing for the record.

Thank you, Madam Chair. Chairman Powell, during your testimony before the Joint Economic Committee last year, you were asked about what steps the Federal Reserve is taking to assess the impacts of climate change on our financial system. In your testimony, you made the distinction between the purely informative stress test for climate risk that the Bank of England does and what the US stress testing regime under CCAR does, which is impact and inform capital requirements for capital distributions. My understanding is that the Bank of England is conducting research and asking financial institutions to think through their portfolios and how they could be impacted, but they're not currently integrating those measures into capital requirements. Would you outline some of what the Fed is doing in terms of research and engagement on global climate risk?

Are you planning on joining the Network for Greening the Financial System?

Chairman, I can't help but think about as a young man, as a boy, I spent a lot of time around my parents, my grandparents, I should say, and my great aunts and uncles. They were born just before, just after the previous century, so their tales of first-hand experience in the pandemic of 1918 and 1919 were very graphic as it rolled through rural western Oklahoma. The reason I bring this up is their description of that particular virus at that particular time in that particular rural society was literally it brought everything to a stop for weeks in rural western Oklahoma. Now, my mother's family, my father's family were very fortunate, no one died from what was called the Spanish flu, but it brought society to a stop. The reason I ask that is with 43,000 cases worldwide and the critical impact in China, could you describe for a moment how China and its neighboring countries are responding to the economic impact of coronavirus in general and from the perspective of your fellow central bankers in those countries?

Thank you, Mr. Chairman. Yield back.

Madam Chair, the gentleman from New York, Mr. Meeks, who is also the chair for the Subcommittee on Consumer Protection and Financial Institutions, is recognized for five minutes.

Thank you, Madam Chair. Welcome, Mr. Chairman. Let me touch quick initially on asymmetrical growth. It's been discussed at length in my community and others that 40% of Americans don't have adequate savings for a $400 emergency, and similarly, one in five Americans skip essential health care or fail to pay important monthly bills due to the lack of funds. So finally, a large share of the population is also underbanked or unbanked, and we talked about that a lot in the community on the committee of which I chair the subcommittee. So my first question to you then is, why haven't circumstances improved for low- and moderate-income Americans more rapidly in the past few years given the so-called state of the economy?

So also during this period of time, would you say that a number of us have been arguing and finally we're moving toward a $15 an hour minimum wage for individuals on the bottom. Would you think that that has something to do with helping them, also the fact that many states have adopted a $15 or higher minimum wage than would have been put in place?

So the other concern that I have, because it also seems as though as unemployment goes low, et cetera, it's still when you look at black unemployment, it still remains nearly double that of white unemployment, and it seems to stay that way whether the cycle is a down cycle or an up cycle. So are there any signs of how we close those gaps? And maybe because that is all these gaps that seem to happen between the African American community and whites, where you know it's a good economy, that gap stays the same.

Okay, let me ask. I know Chairwoman Waters is asking some questions on CRA. There were some questions that came up that maybe you can answer. The framework that was put forward by Governor Brainard not too long ago, is that the saying framework of the Federal Reserve Board, or is it just her opinion and it's not that of the board? So maybe you can clear it up. Is that the board's view?

Thank you. The gentleman from Florida, Mr. Posey, is recognized for five minutes.

Thank you, Madam Chair. Mr. Chairman, the world is experiencing a dramatic growth in the space economy, and many are marveling at the expansion of civilian space launches. I represent the Kennedy Space Center, and obviously we're really excited about all that. Now, several estimates put the current level of global space economy at well over 400 billion dollars a year, with a growth rate of 8% from 2018 to 2019. In December, the Bureau of Economic Analysis announced creation of a space economy satellite account, a new collaborative effort to measure the relative importance of the space sector on the US economy, with a special emphasis on the growing commercial space segment. This effort will use input from industry experts and multiple government agencies. Obviously, I recall over the years the Atlanta Fed has applied its expertise to report on the economy of the space district. First question: can you work with me to ensure that the Federal Reserve joins this multi-agency effort, with an eye to avoiding financial bottlenecks and keeping this important space industry on path to a healthy growth rate?

Great. Over the years, we've developed a rather expansive policy of Federal Reserve independence, and I believe in assuring the freedom of the Fed to act independently on a day-to-day basis to manage our economy and the critical payment system. I would not expect a member of Congress or other officer of government to insert himself or herself into a decision by the Federal Reserve Chair, the Board, the Open Market Committee, or the Fed's monetary policy. Congress does not direct day-to-day monetary policy, and Congress also does not direct generals on battlefields, nor should we. However, the GAO routinely conducts policy audits of the defense policy and strategy, yet the GAO is restricted from conducting policy audits on the Federal Reserve. I'm challenged to understand how policy audits of critical national defense strategy is okay, but policy audits of the Fed are off-limits. The defense industry is surely at least as sensitive as monetary policy, and I'd like your thoughts on that.

What do you think makes the Fed more immune to review than the defense? What's the rationale behind it?

Well, the former chairpersons of the Fed have indicated they simply did not want to be second-guessed on their decisions, that the public really doesn't have a right to know. I find that illogical, quite frankly, and that's why I asked you these questions.

The gentleman from Missouri, Mr. Clay, who is also the chair for the Subcommittee on Housing, Community Development, and Insurance, is recognized for five minutes.

Thank you, Madam Chair, and thank you, Chairman Powell, for being here today. For most of the constituents in my congressional district, they are not focused on the Dow maintaining the 30,000 level, but simply trying to make ends meet. In fact, the St. Louis Fed, in an essay as part of its Demographics of Wealth series, examined the connection between race or ethnicity and wealth accumulation over the past quarter century. It was the result of an analysis of data collected between 1989 and 2013 through the Federal Reserve's Survey of Consumer Finances. More than 40,000 heads of households were interviewed over those years. Median Hispanic and black wealth levels are about 90% lower than the median white wealth level, yet median income levels of Hispanics and blacks are only 40% lower. The larger racial wealth gap could be due to Hispanics and blacks investing in low-return assets like housing, as well as borrowing at higher interest rates. Hispanics and blacks can also feel less need to save for the future because society's progressive old-age safety net program will replace a relatively larger share of the normal income they earned during their working years. Could you comment on why many communities continue to lag, and how the Fed via its monetary policy might seek to address some of the underlying factors that have led to gross inequality?

I will say I think it's important that those issues be addressed. It's really not for the Fed to prescribe the measures to address them. We need to stay in our lane. We do have this grant of independence, including the GAO exemption, and I think to keep that, we need to stay with what you've given us to do, which is maximum employment, stable prices, supervise the banks, look after financial stability. On another subject, will the Federal Reserve release its own proposal on the Community Reinvestment Act, one that takes into account the needs of low- and moderate-income communities?

Well, traditional monetary policy works through a single economy-wide variable, a single interest rate or perhaps the money supply or growth of credit. Credit policy, by contrast, aims at directing credit in specific forms towards specific groups of borrowers. Credit policy consists of central bank operations targeting specific segments of the private debt and security market. What is your view of shifting from traditional monetary theory to one that involves the use of more tools in order to enhance borrowing for certain segments of society?

The witness is requested to continue. The gentleman from Missouri, Mr. Luetkemeyer, is recognized for five minutes.

Thank you, Madam Chair, and welcome, Chairman Powell. Good to see you, sir. I'm sure you saw the speech, or probably read or heard the speech by Vice Chairman Quarles on the need to reform banking supervision. One area I think needs clarity in the supervision regime is the role of guidance. I've pushed regulators to clarify the use of guidance, and in 2018 they came out with an interagency statement on guidance. Vice Chairman Quarles, in his speech, suggested an additional step of doing a rulemaking on the role of guidance. This fits with the Trump administration's recent actions out of the Office of Management and Budget. My question is, do you believe we need an official rulemaking out of the Fed on the role of guidance?

Mr. Quarles was here recently. I think he made the comment that he intended to look at all the guidance and separate out what he believed needed to be under rule, and the rest of it then be clarified as strictly guidance. I think that's a great approach, but I think the question is, do you anticipate a rule to be able to do that and force that in the future? So you're looking at trying to do that?

Okay. Mr. Quarles also discussed how regulations have a framework under the Administrative Procedures Act, but there is no real framework for supervision, and he used the example of supervision that was conducted without appropriate oversight and does not have specific guardrails. In fact, the GAO said this should have been conducted as a rulemaking. Do you believe we need to change the list of systemically important financial institutions, and what should we do to the firms that are already under this regime?

Okay, very good. Something that is kind of concerning to me is the fact that we have a lot of banks and non-banks that are in the home mortgage lending space. Non-banks in general were roughly at 250 billion in 2016; this next year is anticipated to triple to 750 billion dollars in 2019. Non-banks originated 85% of all loans sold into securitization guaranteed by Ginnie Mae, 53% of loans sold to Freddie Mac, and 60% of loans sold to Fannie Mae. Non-bank mortgage originators make up 87% of FHA's portfolio, and in the most recent FSOC report, non-bank mortgage originators were designated as a potential systemic risk. You're a member of FSOC. Can you explain that? Would you like to talk about that a little bit? Do you have any concerns?

Do you have a timetable on when you might come out with a statement and say you will or will not do something, and if you want to do something, what it may be?

Okay, very good. One of the things that concerned me a little bit is also with regards to home lending is just the stack of forms you have to go through. I mean, we had a gentleman here who represented a credit union at the time, but the stack was literally this tall, and I asked him how many pages are in there, and he said, 'Congressman, we don't know. I measured by the page, we measured by the pound.' I said, this is how off the charts we have gotten when you have a stack of papers this tall to do a home loan. I've talked to the FDIC and the CFPB, and hopefully we engage you in a way to kind of reduce that down to where it's manageable, but still have protections in there for the consumer when they sign for a loan, and there's enough information to allow the bank and the regulators to see it. But this has got to change. This can't continue to grow. This is crazy. Do you have an opinion on that?

I just want to note for the record, I did not ask a question about CRA today. Thank you very much.

The gentleman yields back. The gentleman from Georgia, Mr. Scott, is recognized for five minutes.

Welcome, Chairman Powell. Good to have you, Chairman Powell. Concerning LIBOR, the Alternative Reference Rate Committee is pursuing New York legislation to address legacy contracts in New York State. What is the Fed's support for federal action in that regard?

Very good. Let's move over to Great Britain for a moment. The UK regulators have been very direct with their financial institutions, and they've recently established a goal for their institutions to cease LIBOR-based lending by the third quarter of 2020. So why has the Fed not been so direct, and do you have plans to set clear goals and guidelines for your regulated institutions?

Okay. And Chairman Powell, your Fed Board recently finalized its rule on tailoring, in the hopes of providing more clear and well-defined risk indicators to determine the regulatory requirements that are placed on firms based on their size and risk. But the board has never disclosed nor provided clear and quantitative criteria under which firms are placed under its enhanced supervisory regime that is called the Large Institution Supervision Coordinating Committee. And even your Vice Chairman, Mr. Quarles, recently gave a speech where he said that he would like to align their portfolio with the tailoring categories and make the designation criteria transparent. And you even recently indicated that you agreed on the need for brighter lines. So could you outline what changes the Fed is considering to make in this supervisory framework?

Thank you. No, let's move on. And you're a great man and a good man, a good friend. I respect you tremendously. But Chairman Powell, the Fed is the axle of our financial system. You are the most powerful regulator, and I want you to stand back up to Mr. Mnuchin on this business of him coming with this rulemaking change to the Community Reinvestment Act. Let him know that you not only have a mandate for inflationary monetary policy, you have a dual mandate: employment, jobs. And here's the other thing: you need to remind Mr. Mnuchin that this piece of legislation, this law, the Community Reinvestment Act, is precious to the nation, but is precious to African Americans more than anybody because one of the Civil Rights Acts, the Voting Rights Act, dealt with the big issue facing African Americans: financial stability. And the two anchors for that are owning a house and having a job. And this bill was the bill that outlawed redlining that kept African Americans out. He needs to back off that. You need to assume your power and let him know we're serious and to back off this rule change.

The gentleman from Ohio, Mr. Stivers, is recognized for five minutes.

Thank you, Madam Chair. Appreciate you holding this hearing. Good morning, Mr. Chairman. How are you doing today?

I want to do some yes or no questions. You covered them in your testimony, but just to remind everybody, the labor participation rate is now 83.1%, which has increased in the last three years. Is that correct?

Has it increased or decreased in the last three years?

And wage growth has outpaced inflation for workers in the last three years?

Is that correct over the last few years?

And we have record low unemployment rates for African Americans and Hispanics. Is that correct?

So the economy's fundamentals are in pretty good shape. Would you say that's correct?

Great. And I think the fundamentals are strong, but I think a lot of people are worried, and I hope that they don't talk themselves into a recession. I agree with you on that. Given that about two-thirds of all lending and capital formation occurs in the capital markets, I'm curious to hear about what the Federal Reserve is doing to coordinate with the SEC and the CFTC as prudential regulators for the capital markets to make sure that there's actual coordination on the capital markets.

Well, I would urge you to increase that collaboration because the lines between securities, banking, and capital markets are blurring more than ever before. I would ask you and Vice Chairman Quarles to redouble your efforts for that coordination because I do hear from some of the firms that are regulated that they feel like it's not coordinated. So if you could redouble those efforts, I think that would pay dividends for the American investor and the American economy. A couple of other quick questions. What do you think the most significant risk to the financial system is today?

Thank you. And an interesting note, Mr. Chairman, you are in line with the CEOs of the biggest institutions. I asked them the same question, and the consensus, although not completely unanimous, was that cyber attacks were the issue. I think Congress needs to focus on it, I think our regulators need to focus on it. Two quick things because I'm running out of time. I know you're focused on the transition between LIBOR and SOFR. Some people have asked that question. I hope you'll pay particular attention to the impact on both small businesses and our community banks as we make that transition. They are particularly vulnerable. And with regard to the repo market, I hope you will continue to focus on the origins of the problem that caused it. Some are regulatory, some are market-based. I know you're focused on it, you and I have had private discussions about it, but I'd like to see that solved in a way that you don't have to provide Federal Reserve capital at the end of every quarter, at the end of every year. So if you can stay focused on those things, I'm out of time. Thank you, Mr. Chairman.

The gentleman from Texas, Mr. Green, who was also the chair for the Subcommittee on Oversight and Investigations, is recognized for five minutes.

Thank you, Madam Chair. Thank you for appearing today, Mr. Powell. Mr. Powell, this is an observation, not a criticism. You indicated that the fundamentals are strong. However, you also indicated at the last FOMC press conference that you were a bit surprised that wages have failed to move up despite being well into an expanding economy, sustained levels of historically low unemployment, and increased labor force participation. Fundamentals are strong, yet nearly half, 42.4% of working Americans in 2019 made less than $15 an hour. Fundamentals are strong. Many of the people in my congressional district, Mr. Powell, are more concerned about the supermarket prices than the stock market. When they go to the supermarket, they are concerned about the price of Procter & Gamble products, not the stock market price of Procter & Gamble itself. The stock market means nothing to them. It is what they have to pay for products in the supermarket. This brings me to my question: has there been a study to give us some sense of what a $15 an hour wage will do for the economy? A study for what a $15 an hour wage will do for the economy. Has the Fed done such a study?

Well, let me just address that if I may. Don't mean to be rude, crude, and unrefined, but let me just call to your attention a study that I found quite interesting: the Carbon Disclosure Project. Based on thousands of disclosures, they concluded that the 500 largest companies by market capitalization are exposed to a trillion dollars in risk. Now, someone could argue that that's probably not something that you ought to do, although I understand that climate change is something that is important to the Fed because it will have a global impact. But I think you can take a closer look at this. You are the ultimate authority on price stability, on wages. Let's have a study to determine what impact a $15 an hour minimum wage will have on the economy. A wage disclosure project, if you will. Give me some thoughts, Mr. Powell. Can you help us, please?

I'm going to thank you for it. I've got 46 seconds, and I'm going to applaud you for it. Personal applause. Madam Chair, with that, I will yield back the balance of my time. Thank you very much.

The gentleman is requesting to have an answer in writing for the record on this question to the chairman. Yes, Madam Chair, thank you. The witness is requested to provide an answer in writing for the record. Thank you. The gentleman from Kentucky, Mr. Barr, is recognized for five minutes.

Thank you, Madam Chairwoman. Chairman Powell, welcome back to our committee. I want to first touch on your testimony about the importance of fiscal policy in supporting the economy in general. What would you say is the lag time associated with a major change in fiscal policy?

Well, let me ask you this. Let me ask the question this way. Fiscal policy has changed profoundly in the past three years: tax cuts, deregulation, a less restrained energy sector, a pullback from Dodd-Frank, repeal of the individual mandate, new trade deals. Are any of these policy changes impacting current economic conditions?

As you noted in your testimony, the US economy is presently exceptionally strong. Since the 2016 elections, 7 million new jobs have been created, the unemployment rate is at a 50-year low, more Americans are employed today than ever before, wage growth is the highest in a decade, and the lowest income workers have been seeing the fastest pay increase, growing at 16% since the 2016 election. And just over the weekend, this was the headline of The Wall Street Journal, which I'm sure you follow, and the reporting was that a tight US labor market is drawing Americans off the sidelines at a record rate. Despite this, after last week's State of the Union speech, Speaker Pelosi said that it was 'appalling' to hear the president 'try to take credit' for an economy he inherited. Now, Chairman Powell, I'm not going to ask you to weigh in or arbitrate a domestic political dispute, but when the FOMC conducts monetary policy, given what you said about the lag time of fiscal policy, is it fair to say that this president's policies are impacting today's economic conditions?

Let me follow up on Representative Wagner's question about the G-SIB surcharge. In your response to our letter, you maintain that you aim to have the key components of the stress capital buffer finalized in time for the 2020 CCAR. Can you describe in more detail what the key components are and a more precise timeline, given that the Fed announced last week scenarios for the 2020 CCAR?

Understand. Well, let me try to get just a little bit more detail. Is it still the Fed's view that the activation of the countercyclical capital buffer is a suitable replacement for the dividend add-on, in light of the board's Financial Stability Report from November which stated that vulnerabilities have not significantly changed?

Okay, thank you for that. We're looking forward to that decision. Final question. The Business Roundtable, as you probably remember, announced last summer that it was redefining corporate purpose to elevate so-called stakeholders ahead of shareholders. A large investment firm recently announced its intent to divest from fossil energy, effectively limiting investment options for clients to a subset of sectors that check the environmental, social, and governance box. I am concerned that firms which arbitrarily limit investment offerings based on social and political pressure may choke off capital to perfectly legal, productive, and profitable sectors of our economy, and cause retail investors to miss out on returns that they need to fund their futures. As a leading voice on the Financial Stability Oversight Council, will you commit to raising this issue with your colleagues at FSOC and urge that body to examine the extent to which a misallocation of resources away from shareholders to serve unrelated political errands might stifle capital formation, compromise investor returns, and ultimately undermine financial stability?

The concern is that if shareholders are not a prime concern of corporate boards and directors, if stakeholders who have no ownership interest in the company are the focus of a corporation, then I would submit that there is a tremendous risk of misallocation of resources away from maximum shareholder returns. I would like FSOC to take a look at that.

Thank you. The woman from Ohio, Ms. Beatty, who is also the chair for the Subcommittee on Diversity and Inclusion, is recognized for five minutes.

Thank you to the chair and to the ranking member, and thank you, Chairman Powell, for being here today. Let me also acknowledge the advocates in their green t-shirts for being here today, and thank you for coming to my office yesterday and sharing what I thought was valuable information with my team. Appreciate you sitting through the hearing, Chairman Powell. In the latest edition of the Federal Reserve's Survey of Consumer Finances, published in 2017, it gave the breakout between whites, blacks, and Hispanics as it related to their net worth. We've heard the statistics, I think my colleague Mr. Meeks talked about it, and I'm sure some others, so I'll spare going through all of those details. But what's very interesting to me, while that data seems great for those who are researching the issue, is there any way your office could break it down by regions or cities? Because when we go back home, this is one of the number one things that I'm hearing. People are coming into my office, once you get through healthcare, and this couples in with jobs and education, they're saying we look at the wealth gap, that it's getting wider, it's not coming in. And while we're talking about unemployment rates being better, many people have to work two and three jobs just to try to survive. Someone talked about the minimum wage. Certainly, as we're advocating for a higher number, it's not enough. In my district, you'd have to make somewhere between $18.70 and $20 to be able to have a livable wage. So the first question is, can this information be localized to a region or to a city to help us as members of Congress when we go back home? The second thing is, I just recently introduced a bill, Closing the Racial Wealth Gap, which requires the Federal Reserve to further break down the data. And this is something that I didn't realize until really studying the Federal Reserve, listening to some of the individuals like the folks here today, they have some really good ideas. So my second question is, could you tell me if you would entertain having your folks look into looking at wage as a measure? Because oftentimes, many folks don't work a full-time job, but they have a wage. So could we be a little more creative in looking at the data based on what some of the things that I'm hearing from the group that came in?

They've met with your folks and you know some of their issues, so I'll start with: can it be localized? Can we entertain looking at some of the things that they think we should look at when we calculate or present all the good news that is not the good news for many of the individuals sitting here or in my district?

And what about some of the individuals' ideas about looking at wages in your calculation?

So then the next thing: will your agency work with my office? I am so excited about this bill, and as I understand it, part of the reason for asking for the data is the Federal Reserve actually collects the data that sets the policies that then get married with the allocations that come back to the districts. So I want to make sure I'm on the right path when I go back home and I say I have a bill that's asking the Federal Reserve to collect data that can help us in the end. Is that in the ballpark?

Thank you. The gentleman from Colorado, Mr. Tipton, is recognized for five minutes.

Thank you, Madam Chair. And Chairman Powell, thanks for taking the time to be here this morning. I did want to follow up a bit on the CRA. We've had a fair amount of conversation on that, and just wanted to have the clarity that the Fed has been involved with the CRA process with the OCC and the FDIC. Is that correct from the very beginning?

And I also want to get some clarity: were you comfortable not only with Governor Brainard making the speech but the content of her speech in regards to the CRA?

Okay. To what extent has the Fed been doing analysis and comments coming in to work on CRA modernization?

It was really encouraging reading your comments in your statement that people who live and work in low- and moderate-income communities are finding new opportunities, wages have been rising particularly for lower paying jobs. That's an area that I have a lot of concern about. In my state of Colorado, I represent the rural areas, and we oftentimes have two economies where the metropolitan areas, resort areas, have been doing well. Rural areas continue to often struggle. We're now starting to actually see some real movement. But when we're looking at that CRA reinvestment, talking about the community banks, I really would encourage you to look at that OCC and FDIC proposal. I believe they do reach further into rural America. And you talked about policy. Have you done any assessment in terms of the opportunity zones that were included in the Tax Cut and Jobs Act? We're certainly seeing some benefits and some investments coming into rural areas in my district. Are those some of the policies that we need to be looking at?

Great, thank you. And Fannie Mae and Freddie Mac just took some steps talking about SOFR to be accepting SOFR-based mortgages. And I've noted that other agencies have been taking this step separately. Is there any kind of uniform effort at a high level to coordinate the adoption of SOFR?

And to follow up on Mr. Stivers' question in regards to community banks, do you see any pluses or minuses in regards to using SOFR over LIBOR for community banks?

We've had a little conversation about the coronavirus, China, the impacts on the economy. The president just signed into law the USMCA. Do you see that as creating a runway for further economic expansion in the US, job opportunities, and wage growth?

Thank you. The gentleman from Illinois, Mr. Foster, is recognized for five minutes.

Chairman Powell, first off, I'd like to thank you for facilitating our meeting with Governor Brainard. Representative Hill and I had one on digital currency. We really enjoyed that, as well as the meeting with the staff who are excellent, and it's great to see how plugged in they were to this issue. Now, in a speech last week, Governor Brainard highlighted the role of central bank digital currencies in ensuring that sovereign currencies stay at the center of each nation's financial system. Do you agree with her characterization? In particular, do you think that establishing a digital dollar would help ensure that the US dollar continues to serve as the core of the US and the world's financial system?

So how would you characterize your state of progress on this compared to other countries? You know, the Swedish central bank developing an e-krona, the Chinese... the reason there was so much concern about the Libra project is they would immediately have scale if they just rolled out the product. Another entity in a position to do that is the Chinese government, to roll out at scale using their already established payment systems. They would immediately have a scale comparable to Facebook if they rolled that out. So how would you characterize our ability to respond to this potentially competitive threat?

But do you feel as though you have adequate visibility into what the Chinese are doing on this? Do you have sort of working-level contacts that give you some idea of what their rollout is likely to look like?

Thank you. The gentleman from Texas, Mr. Williams, is recognized for five minutes.

Thank you, Madam Chair. And thank you for coming back to our committee, Chairman. We appreciate it. And with baseball season slowly approaching, I wanted to make sure one thing before I continue: that you still are on Team Capitalism.

Experian recently released their 2019 Consumer Credit Review, and I wanted to read a section from the report because I think it accurately depicts the state of our economy. As you know, I'm a Main Street business guy, and the economy is really good right now: 'Indeed, the US economy exceeded expectations. Record job growth caused unemployment rates to drop to historic lows, while the stock market flexed throughout the year. Consumers in return showed their confidence as they continued to borrow and spend energetically, most recently evidenced by the strong 2019 holiday shopping season.' The report goes on to say that consumer credit scores rose to an all-time high in 2019 at an average of 703. This translates to people being able to get better rates to borrow money to buy a house, get a small business loan, or whatever they need financing for to live out their American dream. So Chairman Powell, what should we be focusing on in this committee to continue the jobs explosion and new jobs that we have seen the past few years?

Thank you. I know you're aware about the Fed's work on the international insurance capital standard that is being developed for the world. I've had my reservations about entering into an international agreement that does not conform with our current state-based approach to regulating our domestic insurance companies. One particular piece of the international standard that I want to ask you about is the flexibility that our government was given to develop an equivalent solvency standard that would better fit our insurance ecosystems. So my question to you is, how does the Fed plan on assuring the standards being developed in the US will be deemed equivalent by the international group, given the continued resistance you're facing from the Europeans?

That's great. We're leaders, not followers. Some of my colleagues on the other side of the aisle have called for a financial transactions tax. I think this is an extremely short-sighted approach to raise revenue that will greatly impact the amount and the ways that Americans save for the future. Additionally, the thought that adding an extra layer of taxation to other assets is redundant, since capital gains taxes are already in place and they should be lowered. That would take away money from successful investments. So if we want to further expand economic growth, we need to focus on continuing to lower the personal and corporate tax rates so Americans can keep more of their hard-earned incomes and businesses can invest that profit back into their operations. So Chairman, can you explain how implementing a financial transactions tax would impact the US economy?

I understand that. I'll tell you from a Main Street standpoint, it will really hurt the economy. An extra layer of tax is not what we need; we actually need to cut taxes. So looking at financial trends across the world, and with being in business for over 50 years like myself, one data point that catches my eye is negative interest rates. Can you help me understand the economics behind negative interest rates and talk about the potential threats that this phenomenon poses to financial stability?

Thank you for being here. The gentlewoman from Michigan, Ms. Tlaib, is recognized for five minutes.

Thank you, Madam Chair. I don't know if you know, but in 2013, the city of Detroit filed for Chapter 9 bankruptcy, which was marked as the largest municipal bankruptcy filing in US history. In July, when you were here, I asked you why if the Federal Reserve is willing to backstop or support big banks and corporations during periods of credit market distress, that we wouldn't want to make equally sure that state and local governments also had access to credit as well. And you mentioned that you didn't have the authority to lend to local and state governments. Madam Chair, I'd like to submit for the record Section 14(2)(b) of the Federal Reserve Act, asserting that the Federal Reserve actually does have the authority to buy municipal debt. Without objection, so ordered. So Chairman, given that you actually do have the authority, can you explain to me why the Federal Reserve should not ensure that state and local governments have access to funding during times of stress?

So you are opposed to the solvency? Yes or no? The Federal Reserve retains the ability to open emergency lending facilities. Is that accurate?

So when the Fed stepped in to rescue banks in a crisis, is that because you believe their role in the economy is vital?

No, I mean my city's bankruptcy was devastating to so many retirees. Fifty years they worked for the city of Detroit saw their pensions completely diminished, gone. Do you not believe that the governments of Detroit and Puerto Rico also play a vital role that should be preserved even if financial crisis makes it hard for them to borrow money?

I do believe you do have the authority. Now you've mentioned that in the face of another financial crisis, you would use the same tools of expanding the balance sheet and purchasing long-term bonds. In other words, more of the same. Correct?

So I'm afraid that's simply not good enough. I think your predecessors, former Chairs Yellen and Bernanke, seem to agree based on remarks both gave last month. For instance, Chairman Bernanke has suggested a money-financed fiscal program might be helpful during the next recession. Do you agree with that? Would that be helpful?

How do you see something I haven't? And Chairman, look, the federal government is supposed to be about people. And I don't see that we're treating pensioners in a city like Detroit, which is a frontline community that was really hit hard by the financial recession, fairly. I mean, we haven't... they keep saying Detroit's coming back. If I show you neighborhoods, they'll tell you we don't know what you're talking about, because poverty has actually increased, access to housing has decreased. All of those things, we start reflecting and understanding that I believe the Federal Reserve Act actually gives us authority to help in treating, just like we bailed out big banks, that we can do the same for our people, the residents of the city of Detroit. So I thank you for that, and I would actually ask and push you to look at this from a different lens, versus the same old policy mold process which I believe hasn't really worked for working-class people. Thank you so much, and I yield the rest of my time.

Thank you. The gentleman from Arkansas, Mr. Hill, is recognized for five minutes.

Thank you, Chair Waters. Chairman Powell, welcome back to the House Financial Services Committee. I want to thank you for your discussion with Dr. Foster a few minutes ago. I too want to thank you for your work with Governor Brainard and the discussion we had with her and the staff about the concept of a digital dollar and the work being done at the Treasury about that. I won't belabor some of the points that Representative Foster made, but a couple of comments I'd have for you on that: would you advise our committee or ask the Fed to advise our committee what legal authorities the Federal Reserve might require in order to consider the use of a digital dollar?

I wouldn't say we're specifically focused on that, though. More broadly, we think it's a good idea to look at the whole landscape of oversight of our payment system, and that would be a piece of that. And as you may know, Governor Brainard talked about that in another of her speeches last week.

Last month, Chinese regulators bailed out HNA Bank. It was a $14 billion loan they arranged through one of their sovereign wealth funds. Chinese banking assets are $41 trillion now, 47% of world GDP. Is instability in the Chinese banking industry a financial threat to the global financial system? Is it a financial virus like they've already contributed a physical virus?

Mr. Barr talked about their misallocation of resources. At 47% of global GDP, that seems like an over allocation in the banking sector in China, and could pose a threat to our system. In your report on page 24, you talk at length in the financial stability section about the decline in bond yields, particularly the high-yield market. Ratings have fallen. I was looking at a mutual fund annual report the other day, and it says a particular concern is the continuing high rate of issuance of triple-B bonds, the lowest category of investment grade rated bonds. If the economy stumbles and rating downgrades issue, could be a flood of fallen angels. This particular mutual fund said they're staying away from the lower end of the high-yield market. Are you concerned about the high-yield market?

Well, I commend you for noting it in the report and thank you for your continued attention to it. I yield back.

The gentleman from Illinois, Mr. Casten, is recognized for five minutes.

Thank you, Madam Chair. And thank you, Chairman Powell. I appreciate you sticking around all the way to the bottom of the dais. If I get elected to eight more terms, fingers crossed, I'll have as much experience in this line of work as I do in the energy sector. So I still come here primarily as an energy nerd. And I have a real concern that we are not dealing with the realities of climate change. Scientifically, we understand viscerally what rising sea levels mean, but we haven't really thought about what it means to have an accelerating rate of change. Compound interest confuses people, and compound changes in the environment we don't even really think about as well as we should. Just a couple of data points that I hope all of us can appreciate. The first evidence that hominids made fire is a cave a million years old. James Watt invented the steam engine 244 years ago and ushered in the Industrial Revolution. And 50% of all the CO2 we have ever emitted as a species since Back to the Future came out in 1985. This is a massively accelerating shift. If we went to zero CO2 tomorrow, we're looking at two feet of sea-level rise coming. The more realistic trends, we're on at least six feet of sea-level rise coming. At that level, there's an estimated $23 trillion of economic loss to the system, $900 billion of US property at risk before factoring in debt losses and insurance pullouts. There are some serious systemic risks to the economy if we leave those unaddressed. And I just want to understand a little bit how you and the Fed are thinking about those risks. Number one: given that the assets exposed to climate change exceed the entire subprime mortgage market prior to the global financial crisis, how, if at all, is the Fed thinking about climate change as a systemic risk to the economy?

If I may, part of the concern I have is that the actors in the space do not have planning horizons that match the reality that you and I do. There are people signing 30-year mortgages right now for properties in Miami Beach, and they may plan on reselling that mortgage a number of times, but somebody's going to be left holding the paper with that sea-level rise coming. The insurance industry typically has a one-year holding period. And even if the US is successful at reducing carbon emissions, there still is a massive reallocation of capital. Have you looked at the transitional risks in thinking about how that starts moving around and dislocating the economy?

Let me give a specific one that's been bugging me lately. If you look at the fossil fuel industry, the oil and gas companies, the coal companies, the debt they hold relative to their assets, given that their assets are so heavily dominated by fossil fuel reserves, if they were to extract all their fossil fuel reserves, things are going to be way worse than the $23 trillion I just told you. Have you ever considered stress testing to see whether their failure to fully monetize their reserves might effectively make them fiscally insolvent? Because that to me sounds like a materially adverse event. I wouldn't want to bet that the economy is going to commit suicide. But if I look at the financial statements of a lot of those companies, it's not clear to me that they can monetize those assets. That is a meaningful effect on the risk of money that's held today. I think there was $700 billion lent into fossil fuel companies in the last couple of years. Do you consider that as a systemic risk?

Thank you. The gentleman from Georgia, Mr. Loudermilk, is recognized for five minutes.

Thank you, Madam Chair. Chairman Powell, thank you again for being here. First of all, I kind of want to touch back on SIFI. I know that some have already touched on this subject. As you know, several weeks ago Vice Chairman Quarles gave a speech where he outlined a number of changes that he would like to make to the Fed's supervisory and regulatory process. He said he intends to bring transparency to the SIFI regulatory regime by developing clear and transparent standards for designating firms. He also proposed aligning SIFI designation with the Fed's tailoring categories and limiting it to only Category I firms. So my question is, at a press conference after last month's Federal Open Market Committee meeting, you said you generally agree with Vice Chairman Quarles. Appreciate that. But can you give us an idea of when you expect SIFI designation to be conformed with new tailoring rules?

Okay, hopefully sooner rather than later.

That's very good to hear. Real quickly, I'd like to touch on the CRA. I believe that all three banking agencies need to have a unified CRA framework. And I know you're hesitant to speak on behalf of the other agencies, specifically OCC and FDIC and their proposals, I understand that. What are some of your ideas or the Fed's ideas for CRA modernization?

Do you believe that we can remove some of the ambiguity on what projects do and do not qualify?

I appreciate that because I would like to see us make changes where it's not financial institutions just checking boxes to get credit, but actually investing in projects that do help revitalize these communities. As you know, the Fiscal Year 2020 Appropriations Law directs the Treasury Department, in consultation with the banking agencies, to study whether any changes in banks' regulatory capital requirements are needed because of CECL. If the study concludes that that is the case, are you open to modifying regulatory capital requirements accordingly?

Thank you. I probably don't have time to get into any other questions, so with that, I yield back the balance of my time.

Thank you. The gentlewoman from California, Ms. Porter, is recognized for five minutes.

Thank you. Chairman Powell, you've frequently spoken about your belief in the importance of maintaining the independence of the Federal Reserve. Do you still have that belief?

Anything changed in the new year?

And I know you've had some experience with the president publicly and aggressively attempting to lean on you to lower interest rates, and I appreciate your continually affirming the importance of the independence of the Fed. But it's not just our president. There are a lot of people out there who would love the opportunity to weigh in on Fed decisions. Outside of administration officials, what other kinds of people might want to influence Fed decision-making?

But it's not limited to that.

You don't feel unduly pressured by political or special interests?

Would you say that someone like Jeff Bezos, the CEO of Amazon, one of the richest men in the world, could benefit from having influence over the Fed's decisions?

And what about Jared and Ivanka Trump? They're very wealthy people. Do they have savings and make different amounts of money depending on what the Fed does with interest rates?

And what about Kellyanne Conway? In her role as advisor to the president, and the president's expressed these public views, does she potentially have an interest in amplifying the president's message? That is after all her job.

Mr. Powell, I'm going to project a picture up here so that the audience can see, but I'm also going to hold it up for you. Is this you?

Where was that party held?

And when was this picture taken?

Can you imagine how attending a lavish party at Jeff Bezos' $23 million home, along with Jared and Ivanka and the CEO of JPMorgan Chase, Jamie Dimon, might give off the sense to the public that you are not in fact immune from external pressures?

What did you talk about at the party with them?

You didn't talk to anybody?

Can you tell me who you did talk to?

I would just suggest that this attendance at this kind of event with these kinds of people is inconsistent with what I would otherwise commend you on for doing a very good job of reaffirming to the public the Fed's independence. It plants in the public's mind something that is counter to what you have been doing. Quickly, Mr. Powell, if you can just name a couple of the biggest drivers of economic growth in this country since the recession in the 1970s, what factors have been making our economy grow?

I think what you've seen is tremendous growth in some sectors and less in other sectors. Of course, the big...

The gentleman's time has expired. The gentleman from...

Technology companies, they weren't around 40 years ago. So I think we've seen lots of growth in some areas. I think other areas much less so. Mr. Powell, would it surprise you if I told you that women in the workforce are actually a bigger driver of economic growth than technology companies? In a span of four decades since the 1970s, 38 million women joined the workforce, and without those women, our economy would be 25% smaller. So when we talk about the health of our economy and GDP growth, what I don't hear a lot about, and I'd like to hear more from you about, is the economic effect of things like child care availability. In those same four decades in which women grew the economy 25%, the cost of child care shot up 2,000%. Do you know, Mr. Powell, how much child care in America costs today?

Could you put a little firmer number on that? You're an economic expert. Could you put a little firmer number on that?

I'll get back. The gentleman from Ohio, Mr. Davidson, is recognized for five minutes.

Thank you, Madam Chairwoman. Chairman Powell, thank you so much for your time here today. Thanks for the good work you and so many of your colleagues are doing at the Federal Reserve. You know, just to address a comment that came from my colleague recently, is it unprecedented for the Chairman of the Federal Reserve to attend a party or reception? I know it's certainly not the first time a Fed chair has attended a party. I'm certain it's not the first time a member of Congress has attended a reception or party. And so I don't know that we want to say, hey, just because you're at an event, somehow this is nefarious. I mean, heck, you might have actually talked to a Russian on a subway or something. So the way that these things are linked for political motives is embarrassingly partisan and bad. And I just thank you for resisting all those pressures. Many of them are public, of course. But one that I'm concerned about right now is the repo market. You know, back home, a lot of people don't know that there is such a thing as repo, but it is a big factor for our economy. And I think some of the warning signs in it have given rise to the Fed, in a kind of a blend between regulatory action and monetary policy, to inject a lot of cash into that market. Chairman Quarles spoke recently about the need for that to continue for some time. Can you explain the process about how the Fed is going about reviewing the factors that are contributing to this repo spike and what you've learned from the review?

So I mean, some have called this quantitative easing. I know you've objected, but essentially we're artificially interjecting cash to produce an outcome that the market isn't producing of its own accord. So I think it's odd that our action is to inject cash from the Federal Reserve to grow the balance sheet at the Fed, instead of looking at the underlying regulatory things. What has the board talked about in terms of regulatory factors that, instead of injecting cash to fix a problem, treating the root cause of the problem and changing the regulatory framework?

Okay, so thank you for that. One of the changes, as LIBOR is going away and market forces are coming, we're talking about replacing the benchmark rate. And of course, ARRC includes 250 entities. But there's a concern that as you've done this, the best rate isn't necessarily being provided. So is the Fed taking the best proposed rate offered in these repo deals, or are we giving it out at a special rate to maybe the top 10 or so banks?

What are they settling at? A rate that is paid out at the high rate? Is it paid to the best available offer, or is it paid to the best available customer?

Thank you. My time is expired. Would the... I'd like to ask the witness to provide a more answer in writing for the record. I appreciate the chair's suggestion. I would love to see a written answer for how that is actually working. The witness is requested to provide an answer in writing for the record. Thank you, Chairman.

The gentlewoman from North Carolina, Mrs. Adams, is recognized for five minutes.

Thank you, Chairwoman Waters, for convening the hearing today, and Chairman Powell, thank you for your testimony. The FDIC board member Martin Gruenberg voted against the OCC's proposal, describing it as a deeply misconceived proposal that would fundamentally undermine and weaken the Community Reinvestment Act. So can you comment on the deficiencies of the OCC's misguided attempt to gut the CRA, an essential piece of civil rights and banking law?

So will the Federal Reserve release its own proposal on the Community Reinvestment Act, one that takes into account the needs of low and moderate income communities?

Okay. As you know, the Federal Reserve has a dual mandate: price stability and maximum employment. So will the Fed set a goal for wage growth, and are you considering this approach as part of the framework review?

Okay. So have you considered adopting a floor for wage growth? For example, once we set a certain percentage increase in pay and wages, that the Fed may consider switching to a 2% inflation rate?

Let me ask a question about the Volcker Rule. Why has the Fed decided to support further changes to the Volcker Rule, given that banks enjoy certain benefits including access to the Fed discount window, and that the rule was intended to limit banks from engaging in risky investment activities that could contribute to a future financial crisis?

Okay. I understand that you collect a large number of daily trading metrics from banks subject to the Volcker Rule, yet it's never been made clear exactly how these metrics are used to determine whether the bank is complying with the rule, nor have any of the metrics been released to the public. Is that true?

Okay. Thank you.

The gentleman from North Carolina, Mr. Budd, is recognized for five minutes.

Thank you, Madam Chairman. Chairman Powell, welcome. I want to start by thanking you and Governor Quarles and your federal staff in charge of insurance regulation for your collaborative work with the U.S. state insurance commissioners on solvency regulation. I also wanted to thank you for the pushback against the European efforts to try and force their system of insurance regulation onto our unique and sound 50-state insurance regulatory regime. Notwithstanding the progress achieved to date, many in the industry are telling me that the Europeans are still resistant and they ultimately seek to change our regulations so that they mirror theirs. So given that, here's my question: Will you commit to directly reaching out to your peers in Europe to tell them explicitly that the U.S. will not be adopting a European-centric ICS or international capital standard, and that we have our own rules that work very well?

Chairman, they're seeking to change us. And so I fear that if we're passive, that it will migrate towards them. But have you had any conversations with any senior European leaders yet about the ICS international capital standard?

Is there any reason why not, or has it been something that's been avoided?

I would encourage you again, Governor Quarles, to continue to press that we have a great system that continues to work well. So also, Mr. Chairman, as part of the Basel III finalization efforts, a number of changes to the capital rules will have the effect of raising capital requirements on capital market activities. So can you discuss your views on the appropriate level of capital markets related activities such as market making or underwriting?

Chairman, can you share how your views on capital requirements and things like market making and underwriting could affect the balance between bank-driven and market-driven finance in the U.S. system?

Good. So, Mr. Chairman, there's been a lot of discussion in recent months about leveraged loans. FSOC and others monitoring the market. In fact, you've had a couple of questions on this topic today. But when people discuss the issue, sometimes I think they're referencing different things. So to help us get on the same page here, in your opinion, how would you define leveraged loans?

Do you think there's a difference in leveraged loans in the banking sector and in the non-banking sector?

Thank you, Chairman.

The gentleman from Illinois, Mr. Garcia, is recognized for five minutes.

Thank you, Madam Chair, and thank you for being here, Chairman. I'd like to return to the topic of climate change for a bit. Extreme weather events have had a great impact on the Midwest and working-class communities like those in my Chicago district, and they're often the hardest hit during such disruptions. Climate change is also a risk to the financial sector. Jim Cramer, host of Mad Money on CNBC, in a discussion last week said major institutional investors want nothing to do with fossil fuels because of concerns about climate change. To guard against climate change impacts, the Bank of England has decided to stress test the UK's largest banks and insurance companies against the risks associated with climate change. Will the Federal Reserve follow suit and develop climate-related stress tests?

Good. I'm encouraged. Looking ahead, incorporating climate change into economic forecasts will become more important. Climate disasters such as Hurricane Maria in Puerto Rico or the wildfires that swept through California last year are currently labeled transitory risks by the Federal Reserve. But we know extreme weather events will become more frequent and severe, the likely result a corresponding increase in economic losses and physical risks, the brunt of which to be felt by communities of color and working-class communities. So, Chairman, when the Fed develops its economic forecasts, at what point should climate change shift from being considered a transitory factor to a structural factor?

Okay. In a recent speech at the San Francisco Fed's conference on the economics of climate change, Governor Lael Brainard said, quote, 'By participating more actively in climate-related research and practice, the Federal Reserve can be more effective in supporting a strong economy and a stable financial system.' Do you agree with Governor Brainard's statement? If yes, what more will the Fed do in the future to identify and mitigate the financial risks of climate change?

Do you agree with her statement generally?

Okay. Thank you. The big bank mergers and market concentration. Three months ago, the Federal Reserve approved a merger between BB&T and SunTrust, which created the sixth largest bank in the U.S. with more than $450 billion in total assets. And the Federal Reserve's own research suggests that the failure of a single $250 billion bank would be far worse for the economy than the failure of five separate $50 billion banks. Furthermore, the former FDIC Chair, Mr. Gruenberg, has warned that the FDIC would not be able to wind down a bank the size of the combined BB&T and SunTrust without imposing significant losses on the deposit insurance fund and potentially destabilizing the financial system. In this light, can the Federal Reserve justify its conclusion that this transaction would not appear to result in meaningfully greater or more concentrated risk to the stability of the financial system?

Thank you, Chairman. I yield back.

The gentleman from Tennessee, Mr. Kustoff, is recognized for five minutes.

Thank you, Madam Chair, and thank you, Mr. Chairman, for appearing today. I heard your statements in your opening remarks about the coronavirus, and certainly in regards to some of the questions that you've had today. I noticed this morning in a report that Axios listed, they quoted from the Global Port Tracker, and it said that traffic at U.S. ports is expected to decline in February almost 13% and in March between 9 and 10% year-over-year. Now, assuming that those numbers are true and correct, what impact, if any, would that have on the retail sector, and what impact, if any, would that have on the overall economy?

Along those same lines, and I'm also from Axios, they've quoted from a Bank of America Securities report. They surveyed 3,000 companies about the global supply chain, and that many companies around the world are looking at relocating. They called it in the report a 'tectonic shift' in global supply, looking to other areas of South Asia, India, also North America. My question to you, first of all, I don't know whether you're familiar with the study, this Bank of America Securities study or report or not. Are those numbers or those anecdotal statements consistent with anything that the Federal Reserve is seeing?

Based on what you just said, I think I know your answer, but I'll ask anyway. The report also mentioned a number of reasons: one is the tariffs between our country and China and the impact that they've had on China and subsidiary companies, but also automation and the increase in automation. Does that sound consistent with relocating these supply chains?

Yes, thank you. Or relocating back to the United States. I guess along those same lines, I represent part of Memphis and Western Tennessee. In Memphis, just outside my district, there was an announcement Amazon made two or three weeks ago that they are locating a new facility there, a thousand jobs. And incidentally, you had questions on the minimum wage. They're going to start their wages at at least $15 an hour plus benefits. But it talked about these new jobs in combination with automation, automation in terms of packing and shipping. You've talked about your concerns of automation and the effect that that will have on unemployment in the future. Can you see the two coexisting, risks like with this Amazon plant?

The gentleman from Florida, Mr. Lawson, is recognized for five minutes.

Thank you, Madam Chair, and Mr. Chairman, welcome to the committee. And I would like for you to explain to me, for the past almost three hours, two hours and maybe 45 minutes when you were talking and members of the committee were speaking in terms of how well the economy is doing, how we have more opportunity for jobs in the economy. When you started speaking, the Dow was up 125 points. Why, as you were speaking, it went down? Can you contribute to tell me why something like this occurs? Who is listening to your speech this morning in front of the Financial Services Committee that would call the Dow to go down? Is it because of the cuts in interest rate? How do you explain that?

Okay. Well, I know the president tweeted out something similar, that when you started off the Dow was up and then the Dow went down. Do you react to that? Or does it not really mean that much to you?

You know, we're... My colleagues and I are completely focused on using our tools to support the American people, to support the achievement of our goals. And that's really all we're focused on.

Yes. We were really looking at a few things when we did that. And yes, the intention was definitely to support the economy. Part of it was to offset the effects of global factors. And I would say just the slowdown in growth in the global economy just went on and on, and we felt the need to offset that. And also take out some insurance against the effect that might have on the U.S. Trade policy uncertainty was weighing on the U.S. economy. We tried to offset any potential effects and take out some insurance there. And the third reason was that we wanted to do what we could to guard against a more prolonged shortfall of inflation from our symmetric 2% objective. So we've supported growth to support inflation moving back up. So those were the reasons why we did those three things, and that's the thinking that we had and that we announced.

So I would say that the rising student debt is certainly a concern. It's been rising fast and is now large. There's increasing evidence that shows that students who can't pay that, who can't service that debt, have difficulty having normal economic lives and buying homes and things like that. I haven't seen any evidence that would suggest that it's an important factor currently today driving the housing industry. I would say the housing industry is actually... Activity in housing has been moving up here over the course of the last seven, eight months as the effect of lower rates and just overall good labor market and things like that are showing up in more home building and also housing sales.

Thank you. The chair wishes to remind members that we have a hard stop at 1:00 p.m. today. The gentlewoman from Massachusetts will be the final member to ask questions today. With that, the gentleman from Indiana, Mr. Hollingsworth, is recognized for five minutes.

Well, I appreciate the time. And I both in private and in public have been extremely complimentary of the work that you and your colleagues have done, not only in calibrating conditions to match the current economy, but also the framework by which you make many of your decisions and how you present that in public. I can really appreciate it. I know a cornerstone of what you've been trying to do with the Fed is bring even more transparency to the Fed, and some of the decision-making and the press conferences that you've had have added a lot of transparency to it. So it's hard for me to understand some of the challenges in CCAR and the stress capital buffers and some of the more vague language or inability to pin down a timeline for changes to that expectation, especially when 2020 CCAR has already started. I know Ms. Wagner also asked about this. I had asked Lael about this in December. I think I sent a letter to you and Quarles signed by every member on this side of the aisle on Financial Services, just trying to get a feel for what are the changes that are going to be made, what's the timeline for those that would undertake these stress tests, getting those changes. They're trying to make decisions with trillion-dollar balance sheets, multi-billion dollar balance sheets, trying to make their plans. This time is now upon us, and I feel like we're still being very vague about what's coming down the pike and when we can expect even whatever that may be that's coming down the pike, when we could expect that to arrive before us. And so I wondered if you might give some more color on that or give some reasons why you and your colleagues have been a little more hesitant to answer that.

Okay. In our previous conversations, I think we'd had just kind of a general agreement, don't let me overstate that if that's incorrect, that some of the aspects of this need to be calibrated right. We put a lot of this into place post-Dodd-Frank. We felt like we were doing the right thing in doing so, but perhaps we either had unintended effects, maybe the intended effects weren't as great as we thought they would be, or maybe perhaps this wasn't the area we needed to focus on. And I think we'd agreed that some of this requires significant calibration going forward. And do you expect that there will be further review and calibration of these tests to reflect either current conditions or alternatively what we've learned since the crisis about what works and what doesn't work, and what may be adding to significant reserves at many of these institutions?

Just out of curiosity, tell me when you say 'about right,' buttress that with data. Help me understand what do you look at to say this means about right?

Well, that's undoubtedly true, but I think we all agree that during the crisis or pre-crisis, capital levels weren't adequate. So to say that they're higher isn't definitive in terms of are they too high, are they still too low, are they about right? What do you use to indicate this is the about right level of capital?

Yeah. So I think you could see how it might be concerning for institutions that feel like they're caught in a bit of a circular logic, right? We contrived these stress tests, and then if they chin the bar on the stress test, then we believe that's right. That's exactly right. Without going back and changing some of the underlying factors that go into the stress test, you can always say that right. You can always say as long as they chin the bar, that it's about right, no matter what the bar is. They want to go back and just look underneath the hood and say, gosh, are these assumptions still correct? The way that we have done these stresses, is it the right way to do that? So maybe in a relative sense, yes, it's higher. The capital is higher than what the stress tests have indicated. But in an absolute sense, we're not asking the question, is this testing the right thing? And are we doing this test correctly? And does it include all the right variables? And I think that that's what they're looking for is just further clarification on when we can expect that review comprehensively that the Fed is talking about for so long.

The gentlewoman from Massachusetts, Mrs. Pressley, is recognized for five minutes.

Thank you, Madam Chair. And I also want to thank the activists in the room who have been organizing for a more responsive Fed. I know, having been raised by a tenant rights organizer, that activism is a full-time job, and so we thank you for taking it on. And I thank the Chairman for testifying before the committee today. Just as with Fed now, the decisions you make do impact everyday working people. Your decisions impact how many jobs we have, who has what jobs, how much they're being paid, and who is most harmed when unemployment is high. Now, in the past, you've said we want prosperity to be widely shared, we need policy to make that happen. However, the Fed's approach has never successfully ensured enough well-paying jobs are available to everyone who wants to work. Even for a small time, in a 1944 address, FDR called for a second Bill of Rights, which included the right to a useful and financially rewarding job. Justice Thurgood Marshall argued that the right to a job is secured by the Fourteenth Amendment. And Martin Luther King, Dr. King, called on the government to guarantee a job to all people who want to work and are able to work. Dr. King's legacy is often reduced to just one speech and the March on Washington, often mischaracterized. The March on Washington was actually the March on Washington for Jobs and Freedom. It was a march for economic justice. And I take special claim to the fact that Dr. King and Coretta actually met in Boston. I represent Boston, and I don't think that she gets enough oxygen for the role that she played in the movement. And so after Dr. King's assassination, Coretta Scott King picked up the mantle, pushing the Fed to adopt a full employment mandate, and was actually standing behind President Carter as he signed the Humphrey-Hawkins Act into law. And that's the reason that you are here today. So in the interest of time, if you would indulge me, an answer as succinctly as possible, yes or no, Mr. Chairman. Given persistent concerns about inflation, do you believe that the Federal Reserve can achieve full employment? And by full employment, I mean anyone who wants to work and can work will have a job available to them.

I'll take that as a yes. Could a federal jobs guarantee succeed where the Federal Reserve has not? Yes or no?

Okay. So, Chairman Powell, by all indications, the U.S. economy has had output well below potential for eight of the past ten years, and for most of the decade prior. Is it true that most of that period has seen unemployment well above target, while we almost never seen inflation above target?

Okay. So meanwhile, black unemployment remains double that of white unemployment. Now, the Fed began raising rates in 2016, even though inflation was still below target. And when rates go up, unemployment tends to as well. Did the Fed consider how raising rates would disproportionately impact those who were already struggling to secure employment, like communities of color, individuals who were formerly incarcerated, our immigrant neighbors?

But again, did the Fed consider how raising rates would disproportionately impact those who were already struggling to secure employment?

But in the interest of time, given that there have been no signs of the economy overheating since then, and you're now cutting rates, is it possible you began cutting rates too soon?

So bearing that in mind, knowing what you know, would you still have supported raising the interest rates when the Fed did?

Would more Americans have jobs today if the Fed had not increased rates over the past three years?

Thank you.

Thank you. I would like to thank Chairman Powell for his testimony today. Without objection, all members have five legislative days within which to submit additional written questions for the witnesses to the Chair, which will be forwarded to the Chairman for his response. I ask you to please respond as promptly as you are able. Without objection, all members will have five legislative days within which to submit extraneous materials to the Chair for inclusion in the record. Thank you all, and this hearing is adjourned.