Transcripts For CSPAN3 Federal 20240703

Public service, along with these other television providers, giving you a front row seat to democracy. Federal reserve board chair Jerome Powell outline the Central Banks Monetary Policy before the Senate Banking housing and urban Affairs Committee. He also talked about the state of the u. S. Economy, inflation, Interest Rates, and bank Capital Requirements. This is to 15. Thank you, hows urban Affairs Committee will come to order. Give it again, you can certainly do that. The fed has immense power in shaping our economy. Your job is clear. Promote stable prices and maximum employment. Today, the cost of living is still far too expensive for most americans. The fed has only one tool available to fight those high prices. Interest rates. That tool does nothing to address the real cost, the real cause for why costs remain too high. Corporations price gouging to boost profits and make their shareholders richer. High rates dont force higher Interest Rates dont force corporations to lower their prices, but high Interest Rates are raising housing costs, hindering wage growth, stifling Small Businesses. We all know that. Now is the time for the fed to decide if its going to make good on its commitments to workers and to their families by lowering Interest Rates by protecting our Financial System from wall street executives who have used their wealth and their power to influence Economic Policy and avoid accountability for their, excuse me, for their risky bets. Excuse me. Keeping rates to thank you. Keeping rates too high for long, for too long strangles the economy. No one wants this. It makes it harder for Small Businesses to expand and hire more workers, undermining drop creation. Higher rates also stifle overdue investments that are creating high quality, good paying jobs, and that are necessary for us to remain the most competitive and innovative economy in the world. High Interest Rates are raising housing costs, higher and higher for families. Families already facing a tough market with too few options and too high prices. I hear from so many ohioans who feel trapped. Those who rent feel like theyll never be able to afford to buy. Those who already own their homes feel like theyll never be able to afford a larger one if they decide to grow their family. If theyre fortunate enough to have an Interest Rate from a couple years ago, they obviously dont want to give it up. That limit their choices, it limits the housing supply, and by driving up construction costs, higher rates make it even harder to build new apartments and homes. So we have even less supply at exactly the same time when its harder to afford a mortgage. Families are stuck delaying the purchase of their first home, and rent or renting for longer. That cycle drives rents up even further. Americans pay a steep price for higher Interest Rates, continued high rate are not going to make life less expensive for workers and their families. We know why prices are high years after supply chains have improved. Its the same cause of so many of the problems in our economy. Corporations want bigger profit to reward their executives. In 2022, at the peak of inflation, corporate profits soared to historic levels. Thats not hyperbole, thats fact. Corporate profits soared to historic levels. As you know where those profits went, right into the pockets of their top executives. That same year, the largest multinational corporations gave out nearly 1. 5 trillion, 1. 5 trillion in stock buybacks and dividends. Americans today pay more for groceries than they have in 30 years. Ohioans every time you go to a Grocery Store, ohioans pay for Corporate Executives bonuses and stock buybacks. Every time you go to the Grocery Store, Grocery Shoppers are paying for Corporate Executive bonuses and stock buybacks. The biggest corporations are always finding new ways to charge people more to increase their profits. Restaurants, big stores are experimenting with electronic price tags so they can change prices constantly, making it easier to sneak prices up little by little, making it harder for people to comparison shop and find their store, find the store with the lowest price. Many Companies Increase their profits by charging more for less. The media started calling it shrinks elation. Senator casey, our colleague from pennsylvania, has particularly been a leader pointing this out. A bottle of gatorade used to be 32 ounces, now its 28 ounces. But the price hasnt gone down. If anything, its gone up a bit. Its why insurance legislation would stop that kind of deceptive corporate practice. The kind of solution we need to take on corporate price gouging has nothing to do, mr. Chairman, as you know, with higher Interest Rates. The fed doesnt only set Monetary Policy. You also make the rules that keep our Banking System safe and sound and consumers money safe. Thats some positive development. Mr. Chair, since the last time you testified in june, like the update to the Community Reinvestment act. Thank you for your work on this. This took years of listening carefully to all stakeholders. It was long overdue. Well be watching to make sure you implement this quickly so banks are fulfilling the purpose of the Community Reinvestment act. I spoke to ohio bankers yesterday, most of them small banks. They understand the importance of this. You also issued an updated Capital Requirements proposal called also three, the subject of much discussion in this committee. Strong Capital Requirements, how we ensure if wall street bets dont pay off, shareholders and investors are on the hook, not taxpayers. Also many examples in this committee, in this congress, in this country of Taxpayers Holding the bag for corporate misfeasance and malfeasance and greed. We need these guardrails in place. I urge you remain committed to protecting the public, despite the massive amount of money big banks and their lobbyists are spending to try to kill, trying to kill these taxpayer protections. Lets finish the job, lets finalize basel three. Last years Bank Failures also demonstrate the dangers of letting the banks chip away at rules and oversight. Its entirely predictable. Bankers desperate to increase their already massive profits take big risks that undermine our economy. When things go wrong, Bank Executives come to regulators with their hands out, accepting no responsibility. Its why Congress Must finish the job and pass our bipartisan recoup act. Senator scott and i worked on 212 in this committee to hold senior Bank Executives accountable when they gamble with customers money. When the big, biggest banks exercise special privilege, they do so at the peril of our broader economy. Weve seen that too many times. We know thats the source of so much thats wrong in this country. Big corporations using their power and influence to write the rules of our economy to benefit of them and their executives and their investors, to the detriment of everyone else. Its why i stand up for workers, and why i stand up for their right to organize. Its why i stand up to take on railroads and Drug Companies and the biggest inks and corporations who, time and time again, try to rewrite the rules to increase their profit margins. Chair powell, i look forward to hearing from you today. Thank you. How the fed, and how the fed will work to promote an economy where everyone who wants a good job has the opportunity to find one. Senator scott . Thank you. Chair powell, thank you for coming this morning. Good morning. Appreciate you being here. Certainly three days, march 10th, itll be the one Year Anniversary of the failure of the Silicon Valley bank. Sab marked the Third Largest bank failure in u. S. History, and certainly the largest since the 2011 2008 financial crisis. I said it many times before and ill say it again today that there are three major components to stb failure. First, the bank was rife with mismanagement. Second, there was a clear supervisory failure, and our regulators were certainly asleep at the wheel. And third, president bidens reckless spending caused record high inflation, which resulted in drastic Interest Rate hikes and tremendous loss. When you print and spend trillions of dollars at the end of covid, we should not be surprised that we have record high inflation. Record high inflation translates into today, still, 40 higher for gas for your car. 30 higher for your food. But he present higher for your energy costs. Devastation the average american is facing because of biden onyx is undeniable, but certainly measurable. So im glad to spend some time talking about the state of our economy, an economy that has been ravaged, as ive just spoken about, by inflation, suffering under the weight of an open border and millions of Illegal Immigrants, and drowning in disastrous regulations. I hear from a constituent all the time that inflation and an unsustainable costofliving continue to impact their families. For far too many, the American Dream seems further and further out of reach than ever before. And frankly, the past three years of this administrations failed policies have landed a right in that spot. In fact, last month, treasury secretary yellin sat before this committee and attempted to spin a narrative of how strong the economy is, how welloff consumers are, and how much people have in the bank thanks to bidenomics. But in the midst of this, she also admitted that many prices are not going down. In fact, she said, and i quote, we dont have to get these prices down. Tell that to the mechanic working in south carolina. Tell that to the teacher trying to put gas in the tank. It is simply unacceptable. Because the truth is that american are now spending more of their income on food than they have in 30 years. The truth is that Housing Affordability remains at its lowest level in 40 years. But inflation isnt the only concern id like to raise. Id also like to address the Economic Impacts of ilLegal Immigration. During a recent interview on 60 minutes, you stated that over time, the u. S. Economy has benefited from immigration. Lets be clear. America is a nation of immigrants. No doubt. But when we talk about ilLegal Immigration today, we must also face the dire reality that our towns in our cities are suffering from the adverse impacts of ilLegal Immigration facilitated by the biden administrations open, unsecure, and unsafe southern border. Because of president bidens policies, weve seen over 7 million Illegal Immigrants cross our borders in just three years. By the time this election happens this year in november, the numbers suggest it could be as high as 10 million Illegal Immigrants coming into our country. So we cannot have an honest conversation about the benefits of Legal Immigration in our label force without also addressing the elephant in the room. Our country is strained. Our economy is strained under the weight of ilLegal Immigration. In fact, recent reporting has highlighted that cities and states across our country are struggling to keep pace. And some have been forced to cut Public Services to americans in order to fund the cost of feeding and housing Illegal Immigrants. One clear example i saw in new york city were the poorest kids in the city, minority kids in the city were stuck at home because the city was using the schools to house Illegal Immigrants. Another example. The city of denver recently announced that some of its employees may have their hours cut in order to reallocate funds toward the citys migrant crisis. How in the world is that fair to americans . Its not. We must get the ilLegal Immigration crisis under control, because if we dont, our local economies will continue to be crushed, and opportunities will continue to be stripped from our citizens and their families. Finally, as if inflation and the negative impact of ilLegal Immigration were not enough, the tsunami of regulatory red tape coming from our financial regulators further threatened Economic Opportunity across the border. For months, weve heard bipartisan criticism of the fed spousal three endgame proposal, which will respect lending and access to credit for those who need it the most. I was certainly pleasantly surprised to hear your comments about basel iii and your thoughts on its future, when 97 of the comments that you receive are negative, thats good news. Good news for the american consumer. Good news for entrepreneurs who would like to start a business, but do not have access to capital. Perhaps even good news for millennials who would love to become a firsttime homebuyer the opposition to basel iii comes from diverse array of interests, from community leaders, farmers to housing groups. Weve even heard opposition in this very room on this very committee from democratic senators. I look forward to hearing your testimony, and looking forward to asking some questions as well. Thank you, senator scott. Were here today, as we do every six months at least from chair of the Federal Reserve Jerome Powell and Monetary Policy the state of our economy, please proceed. They give for your service to our country. Thank you, chairman brown, Ranking Member scott, and other members of the committee. I appreciate the opportunity to present the Federal Reserves semiannual Monetary Policy report today. Federal reserve remains squarely focus on our dual mandate to promote maximum employment and stable prices for the American People. The economy has made considerable progress toward these objectives over the past year. While inflation remains above the fomcs objective of 2 , it has eased substantially, and the slowing in inflation has occurred without a significant increase in unemployment. As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment inflation goals have been moving into better balance. Even so, the committee remains highly attentive to inflation risks, and is acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials, like food, housing, and transportation. The fomc is strongly committed to returning inflation to its 2 objective, restoring price stability is essential to achieve a sustained period of strong labor Market Conditions that benefit all. Ill review the current Economic Situation before turning to Monetary Policy. Economic activity expanded at a strong pace over the past year. For 2023 as a whole, Gross Domestic Product increased 3. 1 , bolstered by solid consumer demand and improving supply conditions. Activity in the housing sector was subdued over the past year, largely reflecting high Mortgage Rates. High Interest Rates also appear to have been weighing on business fixed investment. The labor market remains relatively tight, but supply and demand conditions have continued to come into better balance. Since the middle of last year, payroll job gains have averaged 239,000 jobs per month, and the Unemployment Rate has remained near historic lows at 3. 7 . Strong job creation has been accompanied by an increase in the supply of workers, particularly among individuals aged 25 to 54, and a continued strong pace of immigration. Job vacancies have declined, and nominal wage growth has been using. Although the jobs to workers gap has narrowed, labor demand still exceeds the supply of available workers. The strong labor market over the past two years has also helped narrow longstanding disparities in employment and earnings across demographic groups. Inflation has eased notably over the past year, but remains above the fomcs longer run goal of 2 . Total personal consumption expenditures prices, or pce prices, rose 2. 4 over the 12 months, ending in january. Excluding the volatile food and energy categories, core pce prices rose 2. 8 , a notable slowing from 2022 that was widespread across both goods and services prices. Longerterm Inflation Expectations appear to have remained well anchored, as reflected by a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. After significantly tightening the stance of Monetary Policy since early 2022, the fomc has maintained the target range for the federal funds rate at 5 1 4 to 5 1 2 since its last meeting, its meeting last july. Weve also continued to shrink our Balance Sheet at a brisk pace and a predictable manner. A restricted stance of Monetary Policy is putting downward pressure on Economic Activity and inflation. We believe that our policy rate is likely at its peak for this tightening cycle. If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the Economic Outlook is uncertain, and ongoing progress toward our 2 inflation objective is not assured. Reducing policy restraint too soon, or too much, could result in a reversal of progress that weve seen in inflation, and ultimately require even tighter policy to get inflation back to 2 . At the same time, reducing policy restraint too late or too little could unduly weaken Economic Activity and employment. In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks. The committee does not expect it will be appropriate to reduce the target rate until it has gained greater confidence that inflation is moving sustainably toward 2 . We remain committed to bringing inflation back down to our 2 goal, and to keeping longer term Inflation Expectations well anchored. Restoring price stability is essential to set the stage for achieving maximum employment and stable prices over the longer run. To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Federal Reserve will do everything we can to achieve our maximum employment and price stability goals. Thank you. Thanks, mr. Chairman. Youve acknowledged the fed likely waited too long to raise rates when prices shot up in 2021. We cant make that mistake again, mr. Chair, at the expense of workers. If the fed waits until unemployment starts increasing, it may be too late to cut rates in time to save american jobs. Why shouldnt the fed act now to prevent workers from losing their jobs rather than, rather than reacting after the fact . So were well aware of that risk, of course, and very conscious of avoiding it. And what we said is if, what we expect and what were seeing is continued strong growth, strong labor market, and continuing progress and bringing inflation down, if that happens, if the economy evolves over that, that path, then we do think that the process of carefully removing the restricted stance of policy will, well, can, and will begin over the course of this year. And i know weve had this conversation publicly here or privately also that you know working people are hit the hardest, inflation, theyre also hit the hardest when companies try to cut costs with layoffs. This town, too often, seems to forget that maximum employment is part of the feds dual mandate. Let me ask you about bank supervision, senator scott mentioned that. Last years Bank Failures illustrate the need for strong oversight. Svb grew too big too fast. Fed supervision didnt react decisively enough. The fed, in response, undertook an assessment of its supervisory process to identify and address gaps related to the speed, the force, the agility, if thats the right word, of its supervision. Explain what concrete steps the fed reserve has taken to strengthen supervision in any specific areas where work to make improvements is ongoing. So this is a very broad area of work. Theyre, you know, many, many people in the federal resources and who are involved in supervision, thousands of them, and its a very, theres a rulebook. And so theres been careful study and thought, and a lot of listening, to understand how we can meet those goals of being, you know, being quicker and more effective, basically, is how i would say it. If you look at Silicon Valley bank, we werent quick enough, and we werent effective enough where we were in. Were working hard to develop a new rulebook and another set of practices, which is still going to be evidencebased and fair, but its going to involve earlier interventions and more effective ones. And, you know, i think this is work that ongoing and will be for some time. Thank you. The job of the fed, all Public Officials is to serve the American People, not their stock portfolios. Weve seen abuses in this body, weve seen abuses with the Federal Reserve. I wrote you last month asking the fed to identify substantive penalties for board officials who violate the trading rules. Where is that in the process, and i expect these rules in place before the next Monetary Policy hearing in six months. We, so we got our own Inspector General gave us six things to work on. We, i read, i read the list from beginning to end, and the sixth one was what he said, and i just that were going to do all of these. Lets get it going. So we dont fight over them, and were working on the sixth. And it will be finished within six months . I want to get it right. I certainly hope so, and expects so. Expects so is a better answer than hope so. One last question. More and more, Many Companies use algorithms that combine competitors price information to engage in what they call dynamic pricing, or search pricing. You know that corporate pr teams worked hard on this. Just another way for corporations to make it harder for consumers to seek out lower prices and to pad corporate profits. Are you concerned that the wide adoption of these price gouging strategies, these pricing schemes, if you will, will contribute to inflation . I, i mean, i think it works both ways. Let me say this. You know, were well aware of this trend, and were monitoring it. Member the prices go down when theres no one in the store, and they go up when there are a lot of people, if youre doing dynamic pricing. Same thing with the right companies. It works both ways. I dont know the implication for, you know, for inflation. It would certainly have applications for consumers who need to be informed. You think that this kind of surge pricing might lower prices overall . I mean, thats my, my understanding is that the idea is that in slow, in slow periods, prices actually go down, and in higher periods, in busy periods, they go up. But these are sophisticated economists working for these big companies, and theyre not going to do things to lower their profits. I think the price mechanism is incredibly important in our economy. I think we need to give companies the freedom to do that. As long as theyre, as theyre not fixing prices or failing to disclose the, you know, the nature of the price changes to the public. I have a few seconds. Research has indicated constraints applied was behind a significant amount of the inflation weve seen over the last few years. Its a supply chain, for instance, of all those have been more resilient, or if there have been more housing availability, would that have made your job easier . Yes. In a word, yah. The big part of the inflation was, when we saw it in 2023, when the supply chain problems unwound and when the, when the labor supply shot that we had unwound as well, we saw inflation come down very quickly in the second half of the year. But its also down to, you know, tight monetary policies playing a role as well. Which leads me which leads me to the, to the plea with you to speak out about inflation, about the contribution of corporate profits and greed to inflation. Thank you. I know you are done. Youre finding yourself agreeing with me more and more often. That would be a nightmare, and im awake. So what i would say, however, is that the fact of the matter is that so often, if, in fact, 60 i actually listened to what you sent, which was remarkable. The fact that 60 of americans today cant afford a 1000 aff 1000 emergency, i cant imagine how the average millennial affords a down payment for a home. I cant imagine how they take that into consideration when they are looking at a financial snapshot of their future having to plan for obsolescence that happens to every homeowner in the country. I think the issue is more complicated. I would love to delve into that over the next 4 18. But my first question is a combination between the challenges of ilLegal Immigration and crime. It seems like every single week, there is another story of another city underwater, attempting to feed and house millions of Illegal Immigrants, and american taxpayers are footing that bill. Like i mentioned just recently, in denver, we saw city workers having their hours essentially zeroed out so the city could allocate more resources for the Illegal Immigrants. In San Francisco, they say the average cost between San Francisco and oakland, because of crime, is almost 4 billion. Couple that with, and you see governor hogle bring out the police to combat crime. They need more money because of the state of affairs of Illegal Immigrants in the city, reducing the opportunity for business as usual to return to new york city. My question is, can you explain how our economy is expected to continue shouldering the burden and the costs because of ilLegal Immigration, and what, if any information do you have as it relates to the impact of this surge of crime. When you have more folks in the store, and more shoppers. These days, sometimes, people are there to steal. You quoted my statement earlier. It was an accurate quote, but right before that, i said immigration policy is important and under discussion. It is none of our business. We dont set immigration policy and we dont comment on it. You commented on immigration. My point is if youre going to tell a story, please tell the whole story, especially when the nation is frustrated with all the folks coming into the country, having a negative impact on prices, on crime, on challenges that everyday americans, especially americans living in the poorest parts of america, face on a daily basis. So as you quoted, i was referring i said overtime. I wasnt referring to the history which you agreed with. I was staying as far as i could from the current political context. And you know, it is really not appropriate for us point we are independent. We like to remain that way. The way we do that is by staying out of political issues that we really arent assigned. The kinds of issues you are talking about are real. I dont deny that, but theyre really not for us. So the fed does not consider the impact of 10 million Illegal Immigrants coming to our country and the costs associated with those Illegal Immigrants, nor do they consider the impact on states like new york or california or illinois or the devastation of crime, ravaging the poorest americans we dont take that into consideration . We do and so does the Congressional Budget Office point we try to estimate population point we try to estimate the effect of immigration on the size of the workforce and on gdp. If you look at the Congressional Budget Office, as you probably know, with detailed assessments we dont really have a way we do look at the finances and the aggregates of state and local government. That is the hiring that they do. That is something we look at. We wouldnt do a specific assessment like that. Cbo probably would, but we wouldnt do that. Senator menendez is recognized. I want to celebrate that in the past year, we have seen the first latino Federal Reserve governor and the first ever Federal Reserve bank president. These are historic milestones that show that we are making progress to the leadership of our economic institutions, so i want to applaud that, and mr. Chairman, i hope that progress can continue and extend to the rest of the Federal Reserve staff. Thank you. I agree with my friend, the Ranking Member, that when you tell a story, you should tell the whole story. Mr. Chairman, are you aware of the Washington Post article that says the economy is roaring and immigration is a key reason . I dont recall that, but i wouldve read it. Let me read it to you. Immigration has propelled the u. S. Job market further than just about anyone expected, helping some of the countries economic rebound from the pandemic as the most robust in the world. It goes on to say, economists and labor experts say the surge and employment was key to solving unprecedented gaps in the economy that threatened the countrys ability to recover from prolonged shutdowns. Would you take issue with those statements . You know, there are a lot of adjectives and adverbs in there that you would not see in fed world, take out the adjectives and give the substance . The story broadly is this. It is that there was an increase in the size of the workforce last year. It was happening all during the year. We were wondering what it was. The answer was it is two things. It is labor force participation, but it was also immigration. If you look at the congressional budget numbers, it makes sense because there was a lot of growth. Wages were coming down. The economy is bigger, and those are probably this is without making any judgments on immigration or immigration policy. Im just suggesting the facts are that we had 10 or 11 million jobs going unfulfilled in our economy. They liked the productivity necessary for success economically. As part of that, clearly, immigration helped fuel part of our revival coming out of the pandemic. In fact, those were the people who were the essential workers when the rest of us were staying at home. So i agree we need to do what is necessary to have a regularized border, but i think, just to create the context of immigration as a scourge is absolutely wrong. Let me turn to another question. In my view, the sticky inflation we have seen in the housing sector is princely due to the massive nationwide housing shortage. The feds Monetary Policy attributes the shortage to restrictive zoning. High Interest Rates, and title underwriting by banks. I would also add to that list, unfunded programs that shore up and expand our supply of Affordable Housing. If the housing supply shortage continues to grow, are we likely to see continued housing inflation . Yes, we are. And housing is already becoming less and less affordable for low and middle income americans. According to the National Low Income housing coalitions 2023, outreach report, a worker earning the minimum wage in new jersey would have to work two fulltime jobs to afford a modest onebedroom rental home at fair market rent. Do you agree that increasingly unAffordable Housing is a problem for the economy . I think there are two things going on. One is longterm housing shortage and the other is the pandemic ethics and the associated high Interest Rates, which are things that will pass through. When all that passes through and rates are normalized, we will still have the underlying housing shortage, and it will cause upward pressure on housing prices. No, the Monetary Policy report said, quote, home purchases have fallen disproportionately because mortgage lenders impose maximums on the payments. Im worried about how this dynamic will interact with the recently proposed Capital Requirements proposal, which, according to analysis from the urban institute, with disproportionately increase the cost of mortgages for black, hispanic, and low and moderate income borrowers. Isnt there a risk that if the capital rules are limited without changes, that it could make it even harder for disadvantaged borrowers to attain homeownership . There is a risk like that. We are focused on addressing it. Hopefully you are working to mitigate it. Yes. Thank you, chairman. Welcome back. First of all, ive appreciated the weight you approached the discussions in front of this committee. I understand your desire to state neutral with regards to the politics involved in an Election Year. I have questions with regard to the endgame proposal. An analysis of that proposal found 97 were either opposing it or expressing substantial concerns. In the hearing last march, you stated that the Federal Reserve is a consensus organization, and you said, and i quote, i will do everything i can, possibly i will do everything i can possibly to bring people together in consensus, and have a capital framework that could be broadly supported. My question to that is, do you currently believe that there is a consensus on this capital framework . I believe that we will have one. Im fairly confident that we will have such a consensus when we do move forward. So we could expect that you will probably not call a vote on the proposal until you believe that there is a consensus . I think that is right. We are just in the process of digesting the comments and making the appropriate changes. Thank you. As you are aware, ive waited several times with the concerns i had about basel iii end game. They primarily help firsttime homebuyers. Im concerned that the proposal will make buying a home harder than it already is for many. Further down the road, i fear that it could this incentivize mortgage lending from the largest banks, particularly with regards to the secondary market and their mark impact. Would you be willing to withdraw the proposal or re proposed with significant modifications, particularly addressing the concerns i and others on this committee have, with regard to the impact and im thinking of freddie and fannie in particular and what the impact might be. What would you see is the process involving those particular issues . So on those issues, we are well aware of and focus on those issues. We havent decided what to do about that yet, but we get its on those issues. In terms of process, we are not at the stage of making that decision. If it turns out to be appropriate, we will get to that point for us to re propose parts of the thing then we wont hesitate to do so. Okay. Thank you. It makes me feel better because i do think there are some very Serious Problems that will occur if the basel iii end game proposal goes into effect. I am hoping that the Federal Reserve will find a consensus on this , and it sounds like that may very well include some significant modifications, if it were to be brought at all. Is that a fair statement . I expect there will be material and broad changes to the proposal before it comes back to the committee for consideration the board, for consideration. Thank you, sir. With regard to the economy, limited level of price growth is believed to help facilitate economic expansion, reduce the risk of recession and help businesses and consumers plan, however, during the biden administration, we saw inflation climbed to 13 . Those prices are now the new norm. I know that you make it a policy not to comment on the administrations fiscal policy, but it is well known that i i really do believe that high inflation and high prices have been a direct result of president bidens policies, failed in many cases, that the Federal Reserve does and that the Federal Reserve has limited tools to address some of the problems that these policies created. We talk about supplyside versus demandside on these costs. What have been some of the unintended consequences from raising the federal funds rate as rapidly as you felt that you had to, as the chair and as the committee . What are some of those . I know we talked a little bit about svp and the failure there, their coat inability to look at it. What was negative with regard to seeing the high inflation . High Interest Rates are hard for businesses and people. They are the tool that we have to use to bring inflation down. Our job at this time, when high inflation comes, it is the feds job to restore price stability and that is what we are doing. You point to the losses of banks. That was a substantial thing. Obviously, the supervisors that was us we didnt get to that problem. We were aware of it, but we probably didnt appreciate it enough. Another surprise was that we were able to get this far and get inflation down this quickly without seeing a big increase in unemployment. That is a great result. That is a surprise. It is not consistent with the historical record, but it is a positive thing. Thank you. I know the only tools you had available or demand side tools. Thank you. Thank you, mr. Chairman. Its great to see you. I would point out to my friend from south dakota, i do think, you know, if we had gone back up one year to 18 months ago, nobody would have predicted a soft landing. The fact that inflation has come down i think some of the things like the infrastructure bill and some of president bidens policies have actually kept the economy growth continuing at levels that have allowed you to bring down inflation without seeing a dramatic rise in unemployment. Again, that will be something we will probably have the opportunity to litigate over the next eight or nine months. To take my time on issues around Monetary Policy and about regulation. You know, we can never presume that we are out of the woods on Financial Stability, as we saw with the bank yesterday. The stock plunge and the capital infusion. One area that i raised with you a year ago that we raised today and that is non bank lending. The fact that nonbank lending and nonfinancial firms now it is exceeding related bank lending. Let me be clear. That nonbank sector has done productive things in our society over the years, but when folks like former fed president dudley and grossinger recently said that they had worries about this reliance on this sector could lead to a lack of stability, i guess, what do you think i have a three part question. What do you think are the risks as we see this push out affect of more and more lending outside of the regulated minimum to that nonbank sector . How much do we really know about these institutions. One of the things is they have smart, sophisticated investors. If they said, hey, we dont like the lending profile right now, and we want you to not make any additional loans for the next 6 to 9 months, do you think our system would be able to pick up the slack . So we have the regulated Banking System, or you have a lot of transparency. You have deposit insurance. You have access to the discount window and all those things. Regulation. If you go outside of that, most of the funding we see now for these vehicles is sophisticated investors who are limited partners, meaning that they cant pull their money out. They signed the contract. They funded these deals. What you see now and that Non Bank Financial sector is it is that kind of thing. It doesnt have the one risk. The point is the bigger it grows and the more diverse it gets, it is happening outside the regulatory perimeter. We worry that when there is another crisis, youll be surprised, but there will be ways that that Financial Sector can break down. It does break down in ways that we dont anticipate. I think we need to be smart about the way intermediation is moving out of the banks into the Capital Markets and Non Bank Financial institutions. That has been happening for a long time. I think we need to be thoughtful about understanding where the risks are emerging. And that investor may say, we dont want to lend to you anymore for x period of time. But at that moment of crisis that may mean the lending completely dries up. One thing i didnt understand until i got a better explanation recently by the most related banks are they complaining about this . As i got understand a little bit more of it and im not criticizing the lenders, but many of the banks lend to these large institutions. They make money off of those relationships. Maybe that is an explanation of why they are not being more critical. I only have 40 seconds left but i would like to come back to another thing that we have talked about a lot, and that is the question of use of the discount window. I believe one of the original tools the fed had i know banks say, well, we are concerned about the stigma. I have legislation that would require mandatory use of the discount window. I would like your comments on that. And also, just the idea that having the mechanics of the discount window open potentially 24 seven point we saw svp one, they didnt know how to use it, but two, if they wanted to use it in non bank hours, could they use it . Theres a lot of work. We need to do more to eliminate the stigma problem, and we need to make sure that banks are actually able to use it when they need to use it. And those things that is a broad work program that we are on right now. It is very important. I know you are working on it. I really do think before we start adding a whole host of other regulatory issues, we have to use some of the tools that are out there. Youre not gone. Is. Thank you, mark. I was about to take control, senator warner. Welcome, chair powell. L3 p. We sent a letter l3 p. Thank you for being here. I want to get back on this basel proposal. We indicated our concerns and the proposal. I think it is worth noting that the number of other organizations, a Diverse Group that are not normally aligned on policy dish you have National Housing conference, naacp, habitat for humanity, national Community Reinvestment coalition the list goes on those they have concerns with the current proposal. Here is my concern. We are trying to make the best of what was foundational he a bad proposal. Im in the category of people who think that it should be re proposed. Because one of the reasons why i did not support mr. Barrs nomination is i felt like we were going to be here. It was clear to me that we were going to be at this place some months or years later. And here we are. I think that the industry felt the same way. All the stakeholders. Some are in trade. Some are on the other side of the spectrum. So i would like to cast my vote , or provide some weight to the idea that we should repropose it. What we ought to do is talk about the reality of increasing capital, or the prospect of increasing Capital Requirements that doesnt concern me. I think the prior fit supervisor had made comments publicly that maybe we needed to raise capital standards, but what we did in this proposal and i heard it in that dialogue lets deal with puts and takes. Lets talk about raising Capital Requirements, but lets also talk about reducing the cost of the Regulatory Burden today if we can do it responsibly. There is no evidence of that with the current proposal. I think that may actually produce a different set of comments that would be instructive to a final proposal that i think realistically will include an increase in Capital Requirements. Over what time horizon do you think we would expect to either see try to make the best of this foundation or go back and take a look at it at any foundation and repropose it . You know, we are going to work through it as quickly as we can. It is more important to get it right then to do it fast. We are not in a hurry. But my guess is we will work this out over the course of this year. But if you take a look out the outsized cost, the Operational Risk the list of concerns i have publicly and privately expressed, i think sometimes, it is easier to knock down what i think is a Poor Foundation and build a better house. So again, just wanted to make that comment publicly. I have a question about shrinkflation. President biden was chastising manufacturers for creating smaller Portion Sizes for potato chips. Ill use that as one example, but if you have rising input cost, and you are not able to control that, and you are in a marginal business to begin with, and now you are saying you cant even reduce the quantities, how does a business that is not making a profit make that work . We see inflation at the aggregate level as a mismatch between supply and demand. As we have seen supply get better and demand cool off a little bit it was hot coming out of the pandemic we sought food inflation between 2010 and 2021 at 18 over 11 years. Over the last three years, we have seen it at 21 . I think we have an industry that is trying to provide products that consumers want, and now they are being chastised for trying to figure out how to make the numbers work. This idea of shrinkflation is confounding to me. Im going to submit something for the record. But i have a question. I think the chair mentioned in the fight misunderstood this , im sure the chair will clarify. I thought in his opening comments, he suggested that stock buybacks and dividends, were a factor in inflation. Do you, as a matter of policy, see stock buybacks and dividends one of the reasons we are seeing the inflation we have right now . It is just the same thing in a different form. I dont know. I wouldnt comment on anything the chair even may have said. I would like to avoid that. But im not going to ask you about policy because i think your consistent on that, but i just cant imagine that if we decided to outlaw stock buybacks and dividend payments, that it would have a material effect on inflation, so not going to ask you to respond to that. There are some people that by inference, you could assume that they think that that would be helpful. I, for one, am not an economist. I cant imagine that she would be one of the things that would make your job easier. Could you opine on that . Banning stock buybacks and dividends . Yeah, i think it would be quite a change in our stock markets. This is money going back to shareholders. Okay. Thank you, mr. Chair. Well done, sir. Senator smith of minnesota is recognized. Thank you, chair powell. It is great to see you here again. I appreciate your testimony. Im going to focus my questions on housing and Housing Affordability. As you have pointed out, prices have moderated considerably since the fed raised rates, yet, housing costs have remained stubbornly resilient or high, leaving us no closer to addressing the affordability crisis that i think we have, that was there will be for the pandemic. Shortly before the feds begun, i asked about how higher Interest Rates could exacerbate this problem by making mortgages more expensive. At the time, he argued that we have in excess Housing Demand during the pandemic. That was at the root of higher costs, and that your goal, the physical, was to bring demand closer in line with supply. So my question my first question is this. So the Housing Market has cooled significantly over the last two years. Is it your view that it has cooled enough that housing supply and demand is better in balance . Following that, giving dose given the feds limited tools, at what point will you think you have done all you can to lower Housing Demand . My view is that we are well past time in congress to take action on the housing supply side, but im interested in how you see this dynamic. s we are really focused on the aggregate, which is goods and Housing Services. That is more than half of the inflation. There are things in the housing sector that we didnt fully anticipate. One of them was that people in very low Interest Rate homes with low Interest Rate mortgages are not selling, so the quantity of homes available is incredibly low. That is why there is little in the way of existing home sales point that drives up existing home sale prices but also new home sale prices. Again, there are two sets of factors. The longer issue and the effects associated with the pandemic and the inflation and our response to it. I think as the overall inflation continues to come down and the rates come down, you will see the Housing Market start to heal and get better and Housing Affordability should be going up again, but you are still left with the longerterm problem of supply. Right. I think that is right. What i see in minnesota is that higher Interest Rates are driving up the cost of construction there. Driving up the costs of Mortgage Rates. You are seeing people who are not leaving a house that is a little too small for them because they cant afford it. Just as you are saying, people are staying in their homes longer. And so, there is this double whammy of construction slowing at the same time that there is this great need to address housing supply. One of the things that is happening and a recent analysis by zillow found the monthly mortgage payment theres let me get this right. The monthly mortgage payment on a 343,000 home, assuming 10 down payment, is about 2200 a month. Okay, so 2200 a month. That means the cost of owning a typical home is higher than 30 of median income, which is the measure of affordability. And so, we have a lot of issues with people just being priced out of the Housing Market. So, from where i sit, the cumulative issues of higher Mortgage Rates are really a challenge, and until we can get to the bottom of that, we are going to have a hard time addressing the Housing Affordability challenge that we have. Would you like to comment on that . Yes. I agree with all of that. We dont actually home prices dont actually go into the calculation of inflation. It is rent and owner equivalent rent. But i agree. The Housing Market is in a difficult situation. The sooner we can get back to price stability and restore Interest Rates to lower levels, the sooner you can start healing. Thank you. Thank you, mr. Chair. Thank you, senator smith. Senator kennedy of louisiana is recognized. Mr. Chairman, thank you for being here. Thank you for your service. I think, as ive said before, i believe you and your team probably saved the World Economy during the pandemic economic meltdown, when the whole world wanted dollars, by establishing the currency swap lines. I appreciate that. You gave an interview, mr. Chairman, on february 4th this year, to cbs. 60 minutes, i think. Is that right . I ordered a transcript of that hearing, which i read. I learned a lot by reading it. You are asked a question about inflation. You asked a question about prices declining. Here was your response. I would like to quote you, if thats okay. Quote, so, the prices of some things will decline. Others will go up. But we dont expect to see a decline in the overall price level. That doesnt tend to happen in economies, except in very negative circumstances. Did i quote you accurately . I believe you did. Okay. Later in the interview, you are asked about the national debt. Do you recall that . I dont, actually, but im sure thats right. Well, at least, according to the transcript, your answer was and again, im putting you. In the long run, the United States is on an unsustainable fiscal path. The u. S. Federal government is on an unsustainable fiscal path, and that just means that the debt is growing faster than the economy. So it is unsustainable. Do you remember saying that . I said that many times. I think that is uncontroversial. Okay. Later in the interview, you said, im going to quote, you know, i will just say this. Integrity is priceless. And at the end, that is all you have. And we plan on keeping ours,. Is that an accurate statement . Yes, it is. That is why i want to ask you about the fdic. Have you read the article in the wall street journal entitled, quote, strip clubs, lewd photos, and hotels, the toxic environment at the fdic. I think i did read that a couple of months ago. Did you read the article entitled fdic lawyer state on paid leave for weeks after child porn arrest . I dont recall that one. Do you remember the article, fdic chair, known for temper, ignored bad behavior in the workplace . Honestly, i dont. I remember the broad story, but not particular stories. Did you read the article in which a former female employee allegedly called her male colleagues, saying that women needed to use sex to get ahead at the fdic . Okay. Did you read the article in which a female riskmanagement examiner during lunch with a male examiner said she had become friendly with that examiner and he complained to her about his marriage, allegedly, telling her, he wasnt getting enough sex, and she allegedly said, obviously, or he allegedly said, obviously, if i walk into this office and you are naked, i would you right here. I do not remember that. I think i would. Do you remember the article about mr. Randall dig, a supervisor examiner in denver that was allegedly committed in 2014 to eight nonsupervisory examiner position in tulsa after having sex twice with a subordinate female employee and a number of other rule violations . In this article, it says allegedly, mr. Ditch told the woman to not be a and drink a shot of whiskey during work hours. Do you recall that . I do not recollect that. Here is my question. I could go on for a while. You could go on, but you are not going to go on. You passed your five minutes. Do your question wants. Your time is already expiring. He did five minutes, consuming the whole five minutes with your monologue. You did six minutes. I timed it. You did six minutes. Senator kennedy, for months, i have let you go over the five minutes. But you did six minutes. I chair this committee. I understand. You still did six minutes. You are going to be at six minutes and 15 seconds if you continue this argument. Mr. Chairman, in light of these allegations, if they are proven, how can the fdic lead this charge for basel endgame three, which will turn the community upside down . I dont know how i will make the connection to basel iii. I will say these are deeply troubling things, obviously, but your point was, if proven. I think we have to decide basel iii on its merits. We are not looking for fdic to lead this, by the way. We are looking for the fed to do what they think is right. They dont look to us to lead them. Thank you, chair powell. Thank you, mr. Chairman. Senator butler is recognized. Thank you so much, chair and chair powell. Good to see you in person and thanks for the time to talk. I want to pick up a little bit where senator smith was in relationship to housing, Housing Affordability, and hopefully draw a little bit on the point you were making about rent. It definitely is an important crisis in my state of california, and i know, across the country, where at least according to the california at the prompt of housing and urban development, mentors in san diego are paying about 50 of what is their spending 50 of what is considered affordable and statewide the majority of hunters, more than 3 million households, are spending more than 30 toward rent. Nearly 1 3, more than one in 5 million households pay 50 of their income towards rent. In the chicago fed, president goolsby even referred to housing as a missing piece of the puzzle. In the feds path to lower inflation. So to the continued conversation, and i know a point that you have made about how inflation has a disproportionate impact on lower income households were focused on spending more of their monthly budgets on housing but how is the feds Monetary Policy impacting the supply of Affordable Rentals . I dont know that we are affecting the supply of Affordable Housing. If you think of Affordable Housing as something connected to Government Programs that is not our bailiwick. The Interest Rates afford the affordability of housing. There was a key point you made, in response to senator smith about the Monetary Policy and the collation of rent. Can you spend a couple just briefly talk about that. I have one less thing i want to get to before i run out of time. It is hard to talk about it briefly. It is conceptually difficult to think about. You include the cost of financing it. You include the sale prices. The answer is we dont. We convert ownership into an imputed rent. That is two thirds of homes. And then we actually measure rents. The leases only turnover once per year. You look at market rents and what is happening with the newly signed leases may be different from what is happening a year ago. It is complicated, but the good thing is, we understand all that. We look through that. We look at Housing Services overall as one of the three important categories. Housing services and goods inflation. Thank you for that. In the line of affordability and housing very general to the broad Monetary Policy and the state of our economy and unique to california, and i raise this with secretary yellen, when she was here, as well, the insurance gaps that are presenting themselves due to the impact of Climate Change and, where one in five residents in california live in areas that risk floating, and all 58 counties have a history of the flood damage. And we are seeing more and more insurance providers, Home Insurance providers, withdrawing from the state. You and i talked a little bit about this in our preparation for todays conversation. Can you talk to me or share with us, how it is, what you think the impact might be of this sort of protection gap in Insurance Coverage on the overall stability of Financial Institutions in the broader economy. It is clear that insurance of different kinds, Housing Insurance and things like that, that has been a significant source of inflation over the last few years. It is to do with 1 million different factors. It is nothing we can control from a regulatory standpoint. In the longerterm, companies are withdrawing from renting insurance in some coastal areas. You have to think 10 years from now, how are you going to get Housing Insurance . It is a significant issue. Thank you, chair powell. Thank you. Senator vance of ohio is recognized. Thank you, mr. Chair. My gratitude to you for doing this hearing. In queue, chairman powell for being here. These hearings are important to give us an opportunity to provide some oversight into what is going on with the fed. Wanted to focus on the basel iii regulations, chairman powell. Specifically, ways that there have been proposals to draw them down to focus on the Regional Banks, and to just go back to one of the most significant crazies in our banking center, of course, the collapse of svb and first republic. One of the concerns i had when we talk about increasing Capital Requirements on the banks if they want higher Capital Requirements, there is an argument that svb wouldve bought more longterm treasuries, which would expose their Balance Sheet to even more treasury bond risk, and that would maybe taste in the collapse of svb. I guess i want to start here with, you know, we talk about some of the basel regulations. What was the original intent . What was the original proposal for which banks would fall under those relations and which ones would escape them . This time around or earlier on . This time around. So it is the 37th largest banks it is down to well, there are four categories of thanks. Banks. The proposal that is out there now, i think does extend to category four, as well as three, two, and one. What is the minimum of Asset Management that you proposed . 100 billion. 100 billion point and that gets to my concern here. I know there is some discussion about whether you apply them at 700 billion or 100 billion. Maybe you could walk me through that decision process at the fed, where you guys are, and what would justify drawing down 700 billion threshold to a 100 billion threshold . There are the gsibs. They are category three. One of them is a two, i guess. They have different level of regulation than category four. Category four had significant tailoring but we have to ask the question since svb was category four, we had to ask the question, what, if anything, needs to be changed from a capital liquidity standpoint . There was tailoring all the way down. And then below that, there are community banks, and that is a different regime, as well. This makes sense. We want to have a diverse banking sector. That is a great benefit to our country and very unusual for an advanced economy. Yeah. Im sure you know, chairman powell, but to put this on the record, a lot of the Real Estate Lending a lot of the Consumer Lending about half of that is provided by the Regional Banks. I think huntington in my home state of compasses columbus is the number one provider. You hear a lot of people talk about the American Economic miracle. I think part of that is because we dont have the same type of Financial System that is dominant in western europe and other first world economies. Im curious in the process, of amending the basel requirements, i mean, have you guys made a decision about where to set the threshold . When do you expect to set that threshold . We havent made any final decisions. We put up for proposals months ago. We have gotten a lot of comments, as im sure you are aware. We are chewing through those and digesting them, and we are just beginning now to sit down and talk about the changes that will appropriately be made to the original proposal. And when do you expect them to issue the final proposal . I think it will take some time. I think it is more important to do it right than it is to do it fast. My guess is we will get through this and be done over the course of this year. It could be faster than that. It could be slower than that. Im wondering, being mindful of time, have 30 seconds left. Would you be willing to commit to say that in the process of amending, the fed will remove the Regional Bank drawdown and limit basels applications to gsibs or 700 billion or above . I cant get that specific. We are clearly looking at the whole issue. I appreciate that. I want to repeat chairman powell, given what happened with the banking sector, with svb and first republic, i encourage you guys to not apply relation that doesnt solve the underlying problem. I think if you apply this, youre doing just that. With that in mind, i will yield. Thanks, mr. Chair. Thank you, senator vance. Thank you, chairman brown. Thank you for being here, chair powell. We appreciate your work. It is a difficult situation, but i think you have done a really good job so thank you for that. Look. The success of the fed is critical for Small Businesses on main street, for farmers, for ranchers, for montana families. You follow all the metrics. From your perspective, where is the economy at now and where is it going . You know, the economy is growing at a healthy, sustainable, solid, strong pace, and that is one thing. The second thing i would say is the labor market is very strong, and quite tight still. 3. 7 unemployment for the last 24 months. That is the longest dp for 50 years. In the third thing is inflation. Inflation was too high. It has come down sharply since the beginning of last year. If you look at the 12 month number, it has come from the fives down to 2. 4, and the court number is at 2. 8. I think it was at 4. 9 a year ago. These are big, deep lines. We are going to use our tools to keep that Strong Economy and that strong labor market, while we make progress on inflation. One of the areas where there has been inflation, and i dont exactly know where it is at now, but food costs rose rapidly. We didnt get much of that. In fact, we didnt get any of that. Prices compared to where they were a year ago are actually off. Six years ago, they were off. Compared to a year ago, they are down. My question to you, chairman powell, is there anything you do specifically to deal with that . Im telling a farmer his business, but if you look at the food cost of the consumer, part of that is commodity cost. Part of that was spiked because of ukraine. Ukraine has oil in that kind of thing. The rest of it is the cost in the supply chain, from when it leaves the firm, to get collected and processed, and trucked around, and put on the shelves, and in the stores. All of those costs are part of the general economy. As the labor market cools off from its overheated status two years ago, you will see, and you have seen, you know, food inflation flattening out, and so, the really high rates of inflation have come down. The prices, of course, have not. Correct. I would say that cattle is doing better. Green has dropped in price. I dont want to get into that debate with you at all. We probably agree, but it would take too much time. We have other stuff to talk about. You said in it previous hearings, the effect that the pandemic has had on economies globally. How does the u. S. Economy look today, compared to our competitor nations, particularly china . Well, i start with the advanced economies, you know, we are doing the best of anybody. We have the strongest growth and the lowest inflation of the advanced economies. China is a whole different story. China is having significant difficulties with its economy right now. They are in a different place than we are. And so, to repeat what i heard you say, the economy of the United States is basically in better shape than any other economy in the world . Any other major economy, yes. Look, one of the other challenges out there is housing. In communities all across this country, whether you are in montana or the city of ohio, workforce housing, in particular, is a top priority, top commodity, so to speak. Plenty of folks, great organizations, are working to address this. I meet them every day. I appreciate what theyre doing. How do these housing supply issues show up in the data that the fdic uses to make decisions . Hasnt decisions dont go into the data. Housing starts and renovations and things like that, thats just Business Activity and that shows up, but when it comes to inflation, you know, we convert ownership into an imputed rent, and then we look at rents. So thats how we look at all of that. We are not directly affected by changes in housing prices, but over time, those will drive rents up, so. So is it fair to ask, are there economic factors you see for housing . There are two big things going on. 1, we had this underlying shortage of housing due to things like difficulties of zoning. A lot of the closed in cities that were already built so we have more difficulty to get zoning and people and materials and all of that. That is one thing. That is not going away. There are a ton of things happening because of the pandemic, because of inflation, because of higher rates. In the shortterm, those have really they are waiting on the Housing Market, but as rates go down and that all goes through the economy, we are still going to be back to a place where we dont have enough housing. Once again, thank you, chairman powell, for your work. I very much appreciate it. Thank you, chairman. Senator kramer of north dakota. Thank you, mr. Chairman. Chairman powell, thank you for being here. It has been a rather uneventful couple of days, considering he spent two days in this place. Im not going to upset that, by the way. Just so you know. But i did appreciate your response earlier to senator scott when he asked about immigration. You said that if it has not been assigned that. So i want to bring up Something Else we havent been assigned to. That is the role of climate in your job. The risk in banking. In you have often said and i think the most common statement was, we should stick to our knitting. Stay in our lane. Similar to what you said probably to senator scott. With that said, in october, the fed, the occ, the fdic issued claimed guidance, as you know, for management of covered institutions. Im just kind of curious, did congress somewhere along the line give fed authority over climate policy, as well, or is that something Somebody Just took on . I realize you are not the dictator of the fed, but i would be interested in your views on it. No. Our assignment is the safety and soundness of banks, and if they can understand the risks they face. That is our assignment. We said inclement world, we would do two and only two things. One of them was to do an illustrative stress scenarios scenarios not stress scenarios. Scenarios that banks are already doing. The large banks are already doing it. They are doing business internationally. They dont have a choice. We do that. We also said that we would offer guidance not on the level of climate risk or anything like that, but just on what you had to do to be in a position to assess. For my thinking, that is what we are doing. There are no initiatives. We are not going to change our Capital Requirements to reflect climate risk or anything like that. Im really determined that we are not a climate policymaker and that that is really the business of elected officials. Very good. Thank you. I want to bring up another topic. That is Central Bank Digital currency. I think, from a lot of my friends out there, i know there is some confusion. Im easily confused. There are a lot of people that confused about what is meant by the administrations admission to continue researching, experiment and, looking at some sort of, you know, Central Bank Digital currency. I think people back home look at that and go, oh my gosh, they are going to control this, now. And could you maybe just differentiate a little bit what people think of in terms of that coin or their Health Digital currencies, versus what a central bank does, who maybe should emulate cash. It should be about the dollar, not about some other kind of currency. Could you help people back home better understand why they shouldnt be so frightened . First of all, i want to say that we are nowhere near recommending or let alone adopting a Central Bank Digital currency in any form. The idea is that as technology has evolved, money has become digital. But the government doesnt issue digital money. It is digital if you look at your bank account. People dont hold those physical dollars. The thought was that the government could create a digital form of money that people could then transfer among themselves. Now, of course, that raises the concern that if that were a government account, the government would see all of your transactions, and that is just something we would not stand for or do or propose here in the United States. That is how it works in china, for example, but if we were ever to do Something Like this, and we are a very long wait from thinking about it, we would do it through the Banking System. The last thing we would want would be to have individual accounts for all americans or any americans for that matter. Only banks have those accounts. That is the way we are going to keep it. It is really a question of following technology as it evolves in a way that serves the public better. People dont need to worry about a Central Bank Digital currency. Nothing like that is remotely close to happening anytime soon. That was very helpful. Thank you, mr. Chairman. Thank you. Thank you, mr. Chairman. Chairman powell, its great to see you again. Thank you for all of your good work. I want to talk a little bit about commercial real estate and what is happening there. The Financial Stability Oversight Council to doesnt either annual report identified commercial real estate as a financial risk, and the feds monetary reports also noted commercial real estate prices continue to decline, especially in the office, retail, and multifamily sectors. Im especially concerned that because of the low levels of transactions in the Office Sector prices have not fully reflected the true decline in the value. So can you expand on the emerging risk the Federal Reserve has identified in the commercial real estate market, one, and im curious, can you discuss the compound risks identified in commercial Real Estate Lending, particularly at banks with large cra concentrations . Sure. Let me see. I think there are very few transactions in commercial real estate right now, particularly in troubled areas. Dont have th discovery. You assume the prices are very low and come down a lot. On commercial real estate we have a secular change in people working from home. This is one big part of it. That means, in many cities the Downtown Office district is very underpopulated and very major and minor cities. In all the retail that was there to service the thousands of people who work in those buildings there under pressure. Banks will have made loans not all that many. This we have known for some years. What do we do . We have identified the banks that have high commercial real estate concentrations particularly office and retail and other ones that have been affected a lot. We identify them and we are in dialogue with them around do you have your arms around this problem, and of capital . Liquidity . Youre going to take losses here . Are you being truthful with yourself and your owners . We have been working with them. For some time we have been doing that. This is a problem we will be working on for years more im sure. There will be Bank Failures but this is not the big banks. It is not a firstorder issue for any of the very large banks. Its more smaller and medium sized banks that have these issues. We are getting through it. I think its manageable is the word i would use but it is a very active thing for us and the regulators and it will be for some time. Thank you. Do you have concerns let me ask you this, as youre talking with these small and medium banks because we know theres always ache contagion we have seen in the past do you have concerns that if they fail that somehow this is going to impact the Financial Sector and are you prepared and trying to address that and prevent that from happening . We are trying to stay ahead. We reached out to banks that had high concentrations of uninsured deposits and particularly uninsured deposits and a lot of commercial real estate in the Office Sector. We are well aware of the issue. We are trying to stay ahead on a bank by bank basis and overall. So far we have been able to do that. Let me jump to another issue that has been on my radar. The federal Housing Finance agencys report on the federal home loan banks concluded that the distinction between the fhl bangs role and that of lender of last resort has not been cleared especially during times of market stress. During the 2023 terminal we saw banks rely on advances from the federal homeland banks and didnt have relations with the Federal Reserve to use this discount window. I know youve talked about this with senator warner, how is the Federal Reserve working with the federal home loan banks to ensure banks establish protocols to borrow from the feds discount window prior to times of stress . We work with the federal homeland banks because banks were moving their loan from the federal loan banks to the feds so we need to have smooth transfer and be in good touch. Even more important is that any bank in the United States needs to be in touch with the discount window, know how to be able to access it, be able to access it, have appropriate collateral, control of the collateral. In many cases its incredibly inefficient and took a long time for banks to actually go through that function. The federal homeland banks are actually ahead of us in technology. We know we really need to invest in technology to modernize the discount window and also do more to get our banks, all of them, in touch with the discount window in a bank they can use it should they need to do so. Thank you. Thank you. Welcome. Under your tenure, the fed has taken the stance that the 2 inflation target shouldnt be viewed as a snapshot in time, but rather it needs to be achieved sustainably. When inflation was running well above 2 back in 2021 and early 2022 the fed was patient and allowed rates to offset the below target inflation that occurred years prior. It strikes me as odd now that while we are still well above target inflation and have been well above for the prior year the market seem to expect the fed to immediately cut even before we reached the 2 threshold. My question is this, if the inflation rate reaches 2 would that be considered a return to the target rate on a sustainable basis or is it still the case that inflation would need to more or less over correct well below 2 before the fed makes the rate cut adjustment . It would take us a while to get comfortable that inflation had settled in sustainably at 2 . Thats not our test for changing Interest Rates. The rates right now are well and restrictive territory in above neutral. We said we would not wait for inflation to get them to 2 because if you wait it works with long variable lags so we have set for some years that we would start restoring the federal funds rate to a more normal almost neutral level. We are far from neutral now. Assuming the economy moves along the lines of expect we do plan on starting the process of dialing back. Im trying to look for symmetry. I know we allowed the economy to overshoot when inflation was high and we have made up for prior years of trying to square that with the fact we didnt do that. We adopted a framework that said we would do that but a few months later we got almost an explosion of very high inflation. We sat modestly above 2 . We reacted. We thought the mistake we made was that inflation would go away. Transitory. It goes away quickly without effort by us. We figured out at the end of 2021 that was not the case and we acted. You dont see that dynamic the other way . I think we are in the right place. We are waiting to become more confident that inflation is moving sustainably at 2 . When we get that confidence and are not far from it it would be appropriate to dialback the level of restriction so we dont drive the economy into recession rather than normalizing policy as the economy gets back to normal. Can we go to the Balance Sheet . Weve seen an expansion over the past couple decades. 2005 was at 800 billion, its at 7. 5 trillion a day. Its doubled since the pandemic was underway. Through quantitative tapering the fed is attempting to reduce its footprint. The concern i have is on the other hand. Government spending tends to just continue to be we are running now 1 trillion deficit every 100 days and flooding the market with treasury and putting up the pressure on Interest Rates as a result. When i think it is lost on many of us here is the spending levels will only make your job harder when it comes to lowering Interest Rates, not to mention an expectation that the fed will step in once the markets can no longer absorb. I think this a serious problem and deserves more attention and i think we are now at a point where your actives may be very much at odds with the behavior of our physical policy. Am i missing something here or does increase net issuance by the treasury lead to higher rates . Principal more supply should lead to higher rates but thats not going to affect what we do. Thats not a problem for us. Our Balance Sheet normalization is running very much as expected. He decreased the size of our holdings by almost 1 1 2 trillion dollars. I think its troubling we continue the pressure by continuing to put we are running a deficit of 1 trillion every 100 days and its putting a lot more pressure i think on the fed. Making your job harder i think we need to take that into consideration. Another component, your colleague governor waller said we would like the fed to shift toward shortterm treasuries. Prior to the financial crisis a third of the holdings were in bills now they are about 3 of your total security holdings. Do you share the goal . How long would it take us to get there . A while. Thats an issue in our meeting in a couple of weeks we are going to have our first really deep dive on what to do with the Balance Sheet. Thats one issue i dont think we will do with at this meeting but over time you would love not to own a lot of mbs and i can see a case for shortening the maturity but its not something that would happen quickly. We are not actively looking. Thats a longerterm aspiration. We are in an Election Year and getting a lot of pressure from lawmakers to adjust rates. Im not telling you to raise or lower but the size of the fact that the credibility of the fed depends on your remaining data driven and the credibility is the reserve currency. I encourage you to continue everything. Thank you. Senator warren of massachusetts. Its been a year since we had the second, third and fourth largest Bank Failures in American History. Gree Bank Executives were part of the problem. The fed is the chief regulator of the biggest banks was part of the problem. Under your leadership and direction the fed steadily weakened rules for the biggest billionaire banks, exactly the banks that failed last march. You failed to do your job to keep these big banks online. When these banks blew up you went into spend most promising that the fed would do better. After years of having and hauling you agree to put in place rules that would strengthen capital standards for the biggest banks. I mean the biggest banks. These are the feds proposed rule that would apply to only 37 of the nations 4500 banks, only the banks that have 100 billion or more in capital. When you testified before this Committee Last june i asked you about taking responsibility for Bank Failures. You said, quote, the main responsibility i take is to learn the right lessons from this and to undertake to address them so we dont have a situation like this where we have unexpectedly a large bank fail and spread contagion into the Banking System,. As part of learning those lessons you also said, quote, that you agree with and support, recommendations for strengthening the feds rules and supervisory practices for the big banks and that your confident they will lead to a stronger and more resilient Banking System. I just want to be clear. You have it fact down from any of your comments from a year ago have you . Right lessons, dont let this happen again, supporting vice chair bars recommendations which include stronger capital standards. Still stand by that . Im glad to hear that. I understand those 37 big banks dont like higher capital rules because they are like insurance. They would make the bank safer but they cost a little money and would net into the banks profits. These 37 banks are swinging their very considerable weight around to try to weaken the capital rules. They spent tens of millions of dollars running ads during sunday night football and millions more for an army of lobbyists to try to twist arms here in congress. Impressive spending, but who are they trying to impress . A man on the inside . Despite all you said last year when the banks failed about supporting vice chair bars recommendation to strengthen rules for big banks public reporting now says you are driving efforts inside the fed to weekend the capital rule. You even told the House Financial Services committee yesterday you think it is very possible that you withdraw the rule. As one analyst put it, i dont think they will pass the final rule without powells support suggesting that the rules will have to be weekend to appease powell. Im having trouble reconciling the statements you made last year which you say you hold onto, statements you made when the headlines were all about three giant Bank Failures and now your reported efforts to quietly weaken the rules that would strengthen capital standards for giant banks and prevent more Bank Failures. Let me give you a chance to clarify the record here. Are you committed to finalizing the strongest version of the basil three capital rules this year . Let me say we are taking many more steps to deal with the problems that revealed themselves with Silicon Valley bank. Thats around supervision. I appreciate that but im asking about the basel iii rules. The ones you acquired for years now to put in place and have drag your feet on. Basel iii rules are not directly related to Silicon Valley bank. As you point out, they are a longer run thing and i would say that we put them out for comment, we got the comments, everybody is free to read the comments. My view is it will be appropriate to make material and brought changes to that before we finalize it. Material and brought changes to strengthen the rules . Material and brought changes, we are talking about what that will mean. I did not say we would withdraw the rule. Theres a concept every proposal and i said we had it made a decision on that but if that turns out to be appropriate in the view of the board of governors then that is something we will look at. Everything you said a year ago about supporting the vice chair responsible for writing these rules yes we did. I have. You will see him doing exactly what i said i would do. He said he would support vice chair bar to get us strong rules and now he is putting out rules. Speech the pfister has every right to bring proposals. That has happened. As i made clear in our colloquy you are not the comptroller of the currency. When i do Monetary Policy i have one vote. Theres 11 other voters and thats the way it works. You are the leader of the fed and when the heat was on last year you talked a lot about getting tougher on the banks, but now the giant banks are unhappy about that and youve gone we need on this. The American People need a leader at the fed who has the courage to stand up to these banks and protect our Financial System. Thank you. Thank you. Chairman powell, good to see you. I can tell you we continue to see the impact across the board from inflation thats been brought on by the policy of this administration i commend you for the job you have done in trying to raid in inflation and encourage you to continue the fight despite political pressures you may face. Last time i checked its going to get more political between now and november. Contrary to my colleague from massachusetts, im encouraged to your comments yesterday that there will be broad changes to the basel iii proposal which, as its currently proposed, would have significant detrimental impacts to credit cost and availability to Small Businesses. Lastly, i commend your answer yesterday that the fed is not a Climate Agency and considering the impact of Climate Change is not a factor in achieving your given mandate, congressional mandate of max employment and stable prices. I joined many of my colleagues in writing to you about my concerns of the longterm debt proposal that would mandate Regional Banks, issue new long term debt. Im concerned that this will have a disproportionate impact on the smaller Regional Banks because they are required to hold their longterm debt at both the Parent Holding company and ensure the positively bank levels. Could you explain how this aligns with the tailoring requirements set forth in the financial reform bill we passed back in 2018, senate bill 2155 . I have a longerterm debt proposal aligns with that. Thats been out for comment on that one. We are reviewing it. I dont want to say too much, but the theory of it in the first place was those banks are not subject to the living will process to the extent the g sibs are. This was meant to be a middle step to make them more resolvable without imposing all of the burdens we impose on the gsibs to have very elaborate resolution plans. That was the thinking i think on the calibration. We have voluminous comments and we are looking at them. We will make an assessment and move forward as appropriate. I know are smaller Regional Banks would be happy to hear that thoughtful deliberation. Understandably youve had to raise Interest Rates to fight the fires inflation brought on by reckless democrats spending, however a major side effect of that is the impact that rising rates are having on the cost of servicing the outofcontrol national debt. Senator haggerty addressed this a few minutes ago. Looking at cbo reports, Interest Payments on our debt will increase 32 this year and will now exceed spending for the entire defense department. I have significant concerns, then he do in washington. We eventually reach a point where fiscal policy and Monetary Policy converge, meaning that the fed would ultimately have to worry about the impact rate setting would have on government that or even potentially the risk of a default. Chairman powell, i know fiscal policy is not in your purview. Could you ever foresee a situation where fiscal irresponsibility snowballs to a point that the fed would have to factor this into its decisionmaking . I think we are a long way from that. That is a terrible place to be. Thats a place where some poor emerging Market Countries have found themselves over the years for the United States to get to that point it is unlikely. I do think, its not our business and we should stay out of this fiscal business, but i will say what other pictures of said which is we need to get back to that discussion about fiscal sustainability. Both sides need to get together. The kinds of things that have to happen can only be done on a bipartisan basis. I really hope we go back to a place where those discussions are happening again. Ive heard from a number of stakeholders about upcoming changes to liquidity, including an ultra shortterm liquidity requirement. As with any policy decision establishing the facts matters. Its important that financial regulators have a complete thorough understanding of the financial environment before releasing a halfbaked proposal role for guidance. My question is, what do you believe is a sufficient time period that would allow your agency to accurately calibrate new sound and reasonable liquidity requirements . Thats a question we struggle with particularly with other things going on. This is in response to the Silicon Valley bank. We are looking at liquidity innovations and asking ourselves which form should that take and how long should it be up for comment . We are not ready but that is the question. Will you confirm that prior to the Federal Reserve issuing any new liquidity requirements it will first conduct all necessary Data Collection that would allow for meaningful analysis of all potential policy options . Maybe. We can talk about this more. I dont want to make a specific commitment without talking to the people who are carefully in touch with this. Thats the right thought. Thank you. Senator fetterman from pennsylvania is recognized. He got here last. Senator warnock, are you ready . Youre also generous. Senator fetterman is recognized. All right, senator warnock from georgia. Thank you very much. Thank spending on buybacks is rising. Has sharply increased. Interest rates are high. The interest being paid to depositors, ordinary working families, working people with Bank Accounts. Not a lot of money in wall street remains low. Chairman powell, im concerned with banks not increasing the Interest Rates on Bank Accounts families are losing out on dollars that could be in their pockets. They dont have the portfolios that other folks in this room would have. Is that good for the economy and are you concerned that things under your supervision are doing this . Not pain sufficient that is a question i havent heard. They have the option of putting their money in money market funds and banks compete with each other but ill be happy to look into that. I had heard that concern. I think it is worth taking a look at lower income families. They dont have the sophisticated products. Money markets are available, but we saw high Interest Rates and that not been reflected in what depositors are able to benefit from. Could those individuals and families benefit from a high Interest Rate on their deposit . Sure. For a long time, we had a lot of mail from people at the fed saying you should raise Interest Rates because we arent getting anything on our checking accounts. I dont think we are asking for that. Given the reality, yeah. Let me pivot the Monetary Policy. The demand for housing has fallen strongly, the labor market kept prices high. That matches what ive been seeing in georgia, too many folks cant afford a home. According to the Monetary Policy airport Mortgage Rates were averaging around 7 last month. Thats tough for lower income homebuyers. Increases of just a percentage or two can be the difference between owning a home or not. Are you concerned about this interplay between lower demand get stubbornly high prices and what it means for folks trying to buy a home . What do you think is driving these high prices . The Housing Market is in a very challenging situation. You have this longer run housing shortage but at the same time you got a bunch of things that have to do with the pandemic and inflation and our response. You have a shortage of homes available for sale because many people are living with a very low Rate Mortgage you cant afford to refinance so they are not moving which means the supply of regular existing homes for sale is historically low and very low transaction rate. That pushes up prices of other existing homes and also of new homes because theres not enough supply. The builders are busy but they are running into all kinds of supply issues still around zoning and workers and things like that. Its quite challenging. Rates are high. People who are buying, a lot of the buyers are cash buyers and able to pay without a mortgage because mortgages are expensive. The first problem, supply is a longrun problem. The other problems associated with low Rate Mortgages and high rates and all that, those will abate as the economy normalizes and is rates normalize. We will still be left with a Housing Market nationally where theres a shortage. Theres no question theres a supply issue. This issue of high prices, lack of supply, disproportionately impacts some communities more than others. According to Monetary Policy report the employment rate for the black prime age labor force persons between 25 and 54 years of age reached a historical peak in 2023. The gap between black and white prime age employment dropped to a nearly 50 year low at around 3 . We appreciate progress but a 3 gap is still significant. Would you agree its important to continue narrowing this gap and what tools does the Federal Reserve has a do this . Its very important. The single thing we can do is get prices and inflation under control so we can have a long expansion and the record is clear that a long expansion really gives significant benefits to people at the low end of the income spectrum because the labor market gets tight, inflation is low and they benefit more than anybody. Thats where we were before the pandemic and we would like to get back. Thank you. I think theres some other tools the congress could use and im happy to continue to work with the chair and the ways we have already done to improve that rate. Thank you. Thank you, mr. Chairman. Nice to see you, mr. Powell. My first question is about some chatter lately on the social media that people are concerned about the fed creating a cd b. C. Without legislative authorization. You and i have discussed that before. There are other means other than a cbdc that could use Digital Assets to create a secure and instant Payment System other than a cbdc. The question is this, do you agree the Federal Reserve cannot introduce a u. S. Central Bank Digital Currency without congressional authorization . I do. That really calms peoples fears. The people who are concerned we can end up with Something Like the digital used as a means of surveillance. I think that will come some discussions down. My next question is about your course cpe. As you know, there is a disconnect between how you measure inflation and how the American People see inflation because the American People are spending their money on gasoline and food and rent. Things that have gone up a lot. They hear about these improvements in the economy but they are not seeing it in their everyday lives. Can you explain what measures you use to evaluate and inflation and just explain to the American People why you dont factor in the things they spend money on every day like food and gasoline . We do. Our statutory target is inflation. If you look at headline inflation over the last 12 months that is our goal. Its 2. 4 . Core inflation is higher than that, its 2. 8 . The reason is some energy and food prices have come down. Those dont count. Our overall legal target is headline inflation which is our best effort to capture the cost of living that people face. Its not perfect. You have to make all kinds of judgments that arent easy. How you measure housing inflation . Thats what we target. The reason we look at core is the headline inflation tends to be more volatile and pushed around by Commodity Prices which really dont relate to the overall state of the economy. Cora tends to be a better predictor of overall inflation then overall inflation is. I know its complicated but our target is headline inflation which does include food and energy. I would like to include a letter in the record that two democrats on this committee have submitted with regard to basel iii. Thank you. My question is what do you think is more likely that it will be harder for consumers to buy a house and Small Business to obtain a loan under basel iii or will lending my great outside the Banking System which may be harder to assess because its opaque . I did get your question. With regard to basel iii , if there are more constraints on lending activity what is more apt to be the consequence of that . Its harder for consumers to buy a house or Small Business to get a loan or that lending migrates outside of the traditional Banking System . If there were anything that constricted credit in the Banking System they would probably be both. If you are loans made but Non Bank Lenders were than happy to make that. I have a chicken in the egg question here. Starting with tarp in 2008 there has been a very aggressive printing of u. S. Dollars up until today. It particularly went on hyperdrive during that 22 month period of covid. Which comes first, Congress Spending more so you respond by printing more money or are they separate considerations . I think its hard to get my mind around that question. We dont print money to fund the deficit. Thats not what happens. When the government borrows, it borrows. The government borrows to fund deficits. That would indicate you do respond. We, in deficit spending, are creating a demand to borrow. We are not making loans. We are not lending money to the government. We are not financing these deficits. So theres no chicken in the egg relationship . No. I would have to think about this. I have to think about it. I would love to continue this. Your thoughts early about fiscal sustainability and how we can work with you and bipartisan maybe next year to address these issues. When you say things you have to be careful because what you say has ripple effects outside of this building. It would sure be nice if we could sit down with you on a bipartisan basis and have those discussions in a frank way. Senator fetterman of pennsylvania is recognized. Senator van hollen. Let me start by thanking senator fetterman. Good to see you. Real wages are up. Thats good news. Over the last couple years wages have gone up more than inflation that means families have more spending power in their budgets right . Worker productivity is up . Corporate profits are up . Worker productivity is rising faster than corporate profits right . I dont know. The charts i shall suggest that. That would indicate in the last corporations deciding to pocket as profits more of the gains they get from their workers labor that we should be able to continue to have increases in real wages, is that right . Its important i think people recognize these corporations are doing better than ever and they are deciding now to essentially return the gains made through their workers productivity which is going up more to shareholders. They will obviously get a profit, but the question is whether or not workers share in that profit to the extent of their productivity. As you know we have seen a great gap over decades between rising worker productivity and real wages. We are hoping to close that gap. Would you agree it would be good for a more inclusive economy if worker wages tracked worker productivity . I think if you include benefits that is a significant part of the gap. Ive looked into that but not for some years. Generally speaking peoples compensation should be overtime equal increases in productivity. Theres a tradeoff on workers wages and also an issue with price gouging. We have seen record profit. We have also seen very high prices these corporations are charging for things like groceries. I listened to some exchange with the chairman earlier. I think your answer was people will charge what consumers will pay. It should be no these corporations are reaping much larger profits now than they were precovid for example, right . Some are. Im not super focused on individual corporate profits. Corporate profits i gather have been high overall. They are high for a couple reasons. One is that they are charging consumers at the Grocery Stores a lot of money. The other would be if they are not sharing the benefits of Labor Productivity with their employees. I think because weve heard a lot of claims by some republican colleagues about the causes of price increases and i think its very important that American Consumers recognize that corporations are choosing to charge them more at the Grocery Store or engaging in things rather dashing in order to have more on their profits. Let me turn briefly to a letter that i sent to the vice chair of supervision and some other federal regulators in january of this year regarding the basel iii Capital Requirements. I support the overall effort. We did raise concerns to a specific issue which is a harmful and we think unnecessarily harmful impact it could have on Clean Energy Tax credit investments. All of the regulators testified that including the vice chairman and said they recognized this was a significant issue and hope to address it. Would you agree with that . Thank you. Senator fetterman of pennsylvania is recognized. Its great to be here with you today. Maybe some people in america were talking about a cookie that was 18. I was alarmed. I hope we investigate there is a cookie that cost 18. Do you believe that an anecdote on twitter about a cookie that cost 18 is reflective of our economy and where we are at or not . I hope not. I dont do much shopping these days but that sounds like an expensive cookie. I believe the American Economy now is the envy of the world after everything right now, correct . We are performing very well compared to our peer group. Is it fair to say the stockmarkets are all up at record highs . Pretty close. Inflation has been pretty effectively addressed right . Yes. We have a ways to go but we have made progress. Corporate profits are pretty robust is that fair . I believe it is. I dont understand why it seems more people are talking about a cookie that cost 18 but it seems to be against the evidence as well. Given that since things are pretty great and we are excuse me. Place. Theres rumors going around that basel is going to change and reduce the capital. I guess im concerned about that because i dont know why i also want the record to reflect you are smarter than i am but i would concerned teens are in a great place right now, we can all agree. I would be concerned to change Something Like that because i wouldnt want to have something again like what happened with svp and i just wanted to get your take on that. U. S. Banks are well capitalized and generally speaking quite well capitalized. We are not talking about reducing current capital levels at all. In the basel iii and game capital may well go up. We are talking about whether the proposal that was put out by the Bank Agencies including the fed which has now been the subject of quite a lot of common and what changes would be appropriate to that is what we are talking about. We are talking about reducing existing Capital Requirements. I want to play off of a comment made by my colleague from tennessee. I agreed. Hes concerned about the deficit. Its 1 trillion for every hundred dollar day. If the federal government added three and half trillion to the deficit by extending the trump tax cuts with that increase or decrease inflation . Im going to fall back on our longtime reluctance to comment on fiscal policy. We take them as they are and conduct Monetary Policy to achieve 2 inflation but we dont score inflation. Cbo does that. Its not something we do because we are an independent agency that requires us to stay out of politics. I want to put you on the spot with those kind of tax cuts think that would help addressing inflation or inflamed inflation . I dont know what the effects would be. Broadly speaking, we need to get to a place where revenue and spending is better aligned and i think Everybody Knows that. We used to talk at this a lot 10 years ago and not so much anymore. The pandemic was a special thing. I do think it would be great to get back to that on a bipartisan basis. I want to go on the record and say youve done a great job. I think our economy i agree it is the envy of the world as well. Im confused that more people are talking about cookies or mcdonalds meals and those kind of thing not reflective on the strength of this as well too. I just want to thank you for your service. Thank you. That is the last question. Thanks for your generosity in yielding to colleagues from whom you got here before if i said that right. Thank you to chair powell for joining us today and every six months and sometimes more often. I look forward to working with you. Senators who wish to submit questions for the record are due one week from today, march 14th. Chair powell, please submit responses for the record no more than 45 days from the date you receive them. Thank you for your testimony. On wednesday United Health grp o Andrew Whitty testifies on the recent cyber atta ainst the company and its impact on Healthcare Providers and patient data. Watch the house energy and congress of Committee Live at 2 p. M. Eastern on cspan three. Our free mobile video app or online at cspan. Org. Cspan is your unfiltered view of government, funded by these Television Companies and more including wow. Saturdays, watch American History tv congress investigates as we explore major investigations in our history by the u. S. House and senate. Each week authors and historians will tell the stories , we see historic footage and examine the impact and legacy of key congressional hearings. This week, the 1975 Senate Committee hearings led by idaho democratic senator examining alleged abuses within the u. S. Intelligence community. Watch congress investigates saturdays at 7 p. M. Eastern