Transcripts For CSPAN2 San 20240705

Highlights rebounding from covid19 and Silicon Valley bank which was under the regulation of the San Francisco Federal Reserve. This is just under an hour. Good morning im director of the hutchens center at brookings i want to welcome everybody and pleased to have mary daily, president of the Federal Reserve bank of San Francisco with us today and mayor daily an economist joined the San Francisco fed in 1996. And she worked on a number of issues labor market dynamics, inequality and throws to be director of research and became president in 2018. Now shes one of 12 reserve Bank President s. And except for new york, the other 11 are sort of considered the same. But mary daily has the distinction her district because we do the lines in 1913 represents fifth of the nations population but unfortunately for her they dont do population waiting when you vote on the f1c. Maybe they should. [laughter] so president i wanted to start by talking a little bit about how do you read the economy right today and there seems to be a fence of the federal Market Committee that we need to raise Interest Rates at least a couple of more times. In order to bring inflation down to 2 target and i wonder how you think about that. Thanks everybody for being here and thanks for having me. Let me start with the economy. One of the surprising things about the economy is just how much momentum it continues to have. So what has been notable is if you started at beginning and you ended last year december you looked at summer of economic projection that the f1c put out in december, which was for forecasting Slower Growth than we have now. More higher increase in Unemployment Rate and more slowing inflation than we see. So the data have come in and the surprising strength with inflation persist too high and theres more that we need to do. We need to continue to raise rates in order to bridle economy more so that man comes back in line with supply. So in that context we also had the banking stresses in march and theres banking stresses can can add credit shock and they themselves restrain so were balancing risk of the economy Going Forward against incoming information which is about strength, and im very i was very supportive, in fact, swelling pace of tightening by standing paths in the june meeting but also recognizing like median of the c projection does is rate hikes over the course of this year to really bring inflation back into a path that is along a sustainable 2 path so important part about this is word in projection is projections those are things that you suspect could be true. But we have to be data dependent to really understand how to make policy. So when Interest Rates were zero and inflation at 9 and unemployment at hicks lows i dont think you needed a ph. D. To decide Interest Rates had to go up. But the fed is raised Interest Rates quite a bit 5 Percentage Points in a relatively short period of time. And as you said in public the decisions get harder as you get closer to your destination. So i wonder when you look at the economy today, do you worry more about the fed doing too much and unnecessarily causing a deep recession . Or do you worry about fed doing too little and failing to get down to 2 target. Thats a great question and risk is more balanced so if you look to even last year, the risks were decidedly i said this publicly a lot of my attention was on doing too little that we could really run the risk of doing too little and then end up with persistently high inflation which is a tax on everyone but speacialg especially those tax, but thats where my focus was. Over the course of the time as the economy has started to show signs of slowing and importantly we have put in over 500 basis points of tightening already then the see the risk is more balanced. But today, right now, with the labor markets still being very strong, we have gdp growth comes in above what we think we need to do to get the demand and supply and inflation persistently high. Yes theres coming down but its still not 2 its not our target then im still waiting on doing the risk of doing too little are outweighing risk of doing too much but that gap is getting narrower and narrower. So thats why the decisions get harder. And it is why i was completely supportive and i think it was appropriate to turn back the dial on this speed at which we adjust in standing pat . The june meeting just slowing the pace. So we have more time to assess the economy. And determine that ultimately we dont make error dont want to go too far or too little but its a tough problem. So more time to evaluate is really what we took in june. But more team to evalwit and looking at everything we know today you think we food at least a couple of more rate hikes. Projection to say rate hikes will be necessary but im holding o myself to what i think my team calls extreme data dependent where imm watching d looking, and people ask me this question i think it is really an important one. Well how many more public data releases will we get before the meeting . Cant youwi decide today . And i said well, if data just meant public data releases we could decide last one will mac a decision but thats actually not what we mean by data. We mean talking to firms and households and worker groups and Community Groups and you can do that ul a the way up to the meeting and then, of course, you have the debates and conversation at the meeting. Which help us make up best decisions. Besides looking at data that comes in and all of the economists who work for you with the different ways to slice and dice inflation and labor market data, how else do you go about getting information about whats going on in the economy . So Regional Reserve banks are very well equipped to do this and it is one of the things that if youre a president of the reserve bank you take seriously how many people helping you with. So theres some very formal ways we doop it through the beige brk many of you have heard of the beige book so we have a formal survey thate banks put togethe. And another way we do this is through our boards of directors so we have boards of directors for head offices of each of the 12 reserve branch and Community Advisor council and Economic Advisory council a community dispose story and were looking at Councils Meeting regularly to understand what the economy is doing and they see in the economy. And you have ceo round tables and worker group round tables we have teams in the field doing focus groups to collect this information. And then as you might imagine, i enjoy talkingio to people so im out in my communities and i travel all over my district. I have nine states and big portion of the population and the geography and i spent a lot of time talking to people. Talk about your sunday afternoon. Rng my sunday afternoon, i will do that. So on sunday afternoons i like to go to, you know fairly sizable retail outlets and it can be retail outlets that you buy lots of goods at or you can be ones you buy Home Improvement things at but i like to go to retail outlets and i like to wander round and i manage without getting thrown of the store. Thats the first thing and i say im a economist and im really interested in how youre feel about the trade opts between jobsg and price increases. And interestingly what i keep hearing and i like to go to areas where those margins will be binging for people if i go to the wealthiest areas theyll say neither one is affecting me. It is really the low and modern income communities where theyre least able to bear tradeoffs that i go and i keep hearing is a imthing and ive been hearing this for well over a year. Inflation is our number one problem. And one young man and this was several months back, you know probably earlier this year late last year i cant actually remember. But it was so striking to me so he has a daughter, wife, and what is problem mat egg for you own challenging and what do you worry about . I have more Job Opportunities than i can take because theres only 24 hours a day and 7 days in a week. And im working already three jobs and i cant do anymore jobs and any time i come to the store i can afford less in my cart and he picks up eggings and the milk and he p says i cant afford ths so im making tradeoff and more money than ive ever made in my life. And i cant im falling behind. And he said it was a treadmill and in my mind it is a treadmill of indignity right because inflation you know you work hard everything youre supposed to do. And inflation arose so people ask me why are you getting inflation down and peemg people and tradeoffs mean less severe but still are believe in the fed that our s job is to have price stability and the current inflation rate is not the definition of price stability. So thats why i spend my sunday afternoon that informs mes a policymaker because we you know being a resolute is something we need to do. Youve heard all of the policymakers say it. Ne but being thoughtful about how we carry that out is also important. So i dont to take that young mans job nor do i want him to have to worry about price of eggs doubling every time he goes to the market so these are kinds of things that i learn on sunday afternoon. And people dont love that you like some kind of nut . I have that midwestern personality that i get away with a lot of stuff i dont think im very threatening but i also i think one of the things you have to have is is a policymaker its such an interesting thing economist by training so people dont think, i mean they dont think you have a personality. Or emotion you know emotions what ar they good for kind of mentality but truthfully, people want to tell their stories about how theyre faring in the world but you have to be willing to listen and not say well heres how i think youre feeling do you agree . It is really how are you feeling in the world and how is what are your struggles so i dont ever ask do you care more about inflation or employment i say youre here with the how is the job going for you or how is the how you faring in materials of this basket of goods youre period offing and those questionst tends it invite peoe thinking im crazy and i never take a book but i was walking with a book and inflation request unemployment then i might get thrown out of the store. How do you make sense of where we are in the economy now . I think most of us thought if you raise Interest Rates by 5 pointsu that the labor market n particular would be at least if not screeching to a halt wouldnt be we have 200,000 jobs last month and people say wow. Like we finally got it undid and what you said that is twice what we need to keep up with growing population. Why do you think the economy has been so resilient given amount of tightening that youve done . I think thats going to be a question that many economists then lots of young researches study. How did this happen so theres many theories right. Let me start with things like must be material. First, weve put a lot of support into the economy. The fed did. We had Interest Rates moved to zero rapidly with lots of support through the Balance Sheett and Forward Guidance. So that was one piece of support. The fiscal agent also gave lots of support to the economy. I mean, we wereav fighting a pandemic and then desire i think policymakers monomonetary or fiscal of mine was not to let something that nobody had created nobody had done this to themselves derail lives and livelihoods for long periods of tile. So theres a pouring in of resources to support to get people through the pandemic. But then that is coupled that support coupled with the fact that for many people theyre just stuck at home you keapght do anything. So you start saving money, saving money accidentally because you cant use the money. The job market for many people remains strong. Se i mean, you know we know of the people who got laid off in mass and given support. But from if ur yo a tech worker you are living well right youre working at home you dont pay commuting cost your salaries are going up and lots of demanding for your services. So those are all money in peoples pockets so a stacking up of lots of support for the next part of the puzzle which is we dont like to be locked down as at people ive learned that o we got locked down for good reasons for Health Reasons and then we came out with a vengeance in spending so we end up with lots of money to spend in a great desire to do so, and supply did not cooperate. And thats True National supply chains were not cooperating Global Supply chains werent cooperating. Covid left its weak in different ways at different times across the world. So it just took a long time for Global Supply chains to get to back to where they were meanwhile demanding recovered very rapidly and it dupght matter what country youre in right all countries demanding recovered rapidly once the restraints were lifted for Health Reasons and people had income, and so then we miss it. So so i think when i look back you know, three reasonsen why the economy hasnt slowed more given what weve done. One, is that theres just longer lags than we assumed. Two is that the Monetary Policy transmission is weaker than it used to be. And three is the economy had more underlying momentum than we have really understood. And i think all of those could be true and we should study all of them but i really do see again and again and again, this idea that the economy has a lot of momentum. And it takes a while and we do have lags. So thats why we have to be soda data dependent but we wantst to get out to participate so does everyone else on the dwhroab and we have the income to do is so far. So what do you look at to know when youre say youre data dependent what do you look at . A large rake of data and useful to remind everybody of so we have a lot of data that we can you see in the newspapers on you know inflation, employment, the dashboards underlying eep of those things it is not like we look at a single data point say thats whatsy, going on we hava labor market dashboard looking at things geographic you know, collection of real time data. Data that looks behind so all of l these are public data and thoe are rich and we have models that understand how theyre behaving relative to history. Rs but the data and data you know first thing owe learn when you go to school is data is a plural term soda it is quantitative and quality at a and collective and both are important so we learn a lot from our conversation not just sunday conversation but conversations that my colleagues at the f1c are having when were out in the communities were talking to firms. E weve put that together, and really theyre important because tata we get from public sources there are few leading indicators but theyre telling us about what happened last month. Or in the last six months but theyre not event if theyre real time theyre just as of today. But what we really need to know to make policy well and reduce the chances will make over, under correction errors is to look forward so we have surveys about what are people planning to do anden playing to hire more and planning to quit you know are you planning to raise wages or plans to ask for wage increase these are all things that that help us fill out the picture and i believe make bettere policy for us. One of those tell you the latter target what do they tell you about whats happening with the pace . Were right here and we have our Economic Advisory counsel meeting so thats people from you know, people who have businesses from all over the nine western states. And this isth a very diverse set of states inner mountain and coast the states and then i have alaska and hawaii so this is a very Diverse Group of businesses and firms. And what im hearing is that there are signs the economy is slowing. Heres an example. Its easier to find workers than it was last year. And then right after that they say but its still hard. For input prices arent rising as fast as they were last year but theyre still rising it is not as easy for me to pass along coast increases to final goods or my sale. But i still can. So what im hearing is things are getting better. In terms of the sustainability were trying to get between supply and demanding but were not there yet. Too early to declare a victory. And thats why if you look at the sep projections from the f1c for june. Summer of Economic Projections that we released where it said median was two additional rate hikes this year i consider that a reasonable projection with a great deal of data dependence around that we may end up doing less. Because we need to do less we mayened up doing just that and could end up doing more. Data will tell us and its data like these. So i say that when you look back over the last three years s how the fed handld pandemic and got to unwelcome unanticipated burst of inflation, how the economy performed differently than many of us including those at the fed forecast. Ud what are one or two lessons youve learned about making Monetary Policy from the last threer yews . Thats a great question well start by saying well continue to learn these lessons but were really at the beginning of learning the things we will need to earn will and well have another framework review coming up and you know thats one of the things i hope we will dig into is what did we learn from the last five years that will help us inform the next five years. But when i think back to what ive learned, ive learned this. That its really challenging and it is challenging hindsight is always your friend in these regards but its challenging to just know how long the impact will be. Of a kind of seismic shock like a pandemic. I had the same experience when we came through the public crisis the financial crisis was a big shock and economic model are not built to understand exactly how long that tale will be from that shock. And what we found here in the pandemic is things just persisted for longer it took longer than we imagined for supply to come back. It took its been taking longer than we imagined for people to get past idea that theyre revenge spending. Its just been a learning period that we have to bee bring a lot of humility when a big shock occurs our models dont usually incorporate how thats going to play out in the economy so i think thats a lesson. Another lesson ive learned and definitely im thinking about it as we bo through the next framework is you know we came out of the financial crisis with a whole suite of tools. We have the Balance Sheet tool we have Forward Guidance, and we were using that to some extent before that but we have all of these tools Forward Guidance, fund Balance Sheet and all very, very helpful. Essential i would say. But one of the things you learn from them is that, theyre not all equally agile. And so for guidancegi thats a fairly easy agile tool we can change what we say. Fed funds rate turned out to be a pretty agile tool. The Balance Sheet thats not such agile tool you get that thing going and it attacks a while to change its direction because abruptt changes could influence or dislocate Financial Markets so when you think of that we have to communicate stance of policy and how we dont make all of tools work exactly the same way at the exactly same time so ive learned to have a lot more comfort are raising funds rate and tapering asset purchases and figuring out how to communicate that quell so that people understand were normalizing. Were starting to normalize. But we cant wait to raise the funds rate untilil the Balance Sheet, you know, we can get that tapering the assets because it could be then later than we would like and Forward Guidance cant solve all of the problems we have. Another lesson. The third lesson is it is true i think of most institutions, whether you are in private sector or Public Sector institutions, we are often fighting the last war. In this case, we could not get inflation so getting inflation up to our target. At no matter what we did we kept working, working, working in 2019 were trying to get up to 2 . And so you go into the next thingfe the same features are going to be with us for the transitory blip in inflation will be pulled down by the Gravitational Force when inflation is going back too 1. 8s. That did not turn out to be true. So i think this discipline of not always fighting the last war having an eye on the last where the lessons we learned in having an eye on the future so you can see where t we headed and what might make that . Makes us more agile and able to move forward. The thing you have to learn if you are a central banker in the Public Servant it is a humbling service you do your very best work you are as earnest as you can be. You try as hard as you can and you still have to find you did not do everything you wish you would do if you hadd the benefit of hindsight. But we had the benefit of learning. We take those lessons in and using Going Forward. Want to make sure i understand. Lesson one is these big shots have longerlasting effects. It is true for the crisis. Secondly the fed had said were not going to raise Interest Rates until we get done with the tapering of the quantitative tightening and linking those he would not do that again for. I would not do that again i wont speak for anyone else but i dont think linking them served as well. The third thing is a mindset thing. We were so used to having too little inflation it was hard to see we need to deal the other. Ask those are my three things. But again the young researcher older researchers. Our deterrent to the banking situation. So, just to review we had a couple of bank failures. For historical reasons we have many Different Bank regulators in the u. S. The Federal Reserve is responsible for the overall Financial Stability and has some responsibilities signed law for the very biggest banks. But the smaller and midsize banks it depends on their organized for some of the banks have failed were not n quote members of the Federal Reserve system. So you do not have to take the blame for their failure. But probably the most spectacular when the Silicon Valley bank was in the San Francisco district. So first of all could you talk a little bit about how much does this a Bank Supervision work . What is the responsibility to the board of governors on what is the responsibility of the supervisors who were on your payroll in San Francisco . Sure absolutely, happy to take that question. And the supervisory efforts affected. The vice chair of supervision michael barr and chair of the fed, jay powell, chairman powell had said different parts of the system of different roles and responsibilities. Let me walk through those roles spand responsibilities. And often given to us by congress. So at the very topop will start with Regulatory Framework as we call it. The responsibility of the vice chair of supervision. In this case michael bar they are different chairs of supervision and those individuals hold the decision rights and the responsibility to set the Regulatory Framework. And as david mentioned we have a complex regulatory system in e United States and regulate his International Device or supervision i would work in that ecosystem. Not just by themselves but work on that. Butag he sets the regulatory agenda spoke this morning talking about that. If there is a required that be a board of governors about that the governors would vote on this. The reserve banks do not play any role in policy. That is the very first thing to know we do not have a voice and policy we did have a pen and policy. We dont have a boat and policy. So the second piece of the supervisory system once the Regulatory Framework is in place it evolves and changes it is not static framework. But once it is there which is a supervisory framework. How you get the policies in place of the fed purview. That again is the responsibility of the vice chair of supervision. In this case michael bar would set the supervisory framework. That is going to be in everything from how will perform for banks of different sizes but the intensity, how do we do the stress test . That is all the purview pfister of supervision. The thirdfo thing this is what reserve mix comes in is the execution of supervision but once the Regulatory Framework of the supervisory framework are set then you have to go out and do the day today at work to supervise the institutions in the system. It is a joint process it is a joint effort. So toba all the other 11 banks e Federal Reserve system and the board ofhe governors. Those teams Work Together to supervise the institutions across the country for u. S. Specifically what is the responsibility of the team in San Francisco . Youre something many know and some do not. In San Francisco they were for the San Francisco fed if you work in i kansas city work for e kansas city fed. With the supervisory activities that those individuals do report up to the board of governors. The reason you want that to be these case is because you want supervision to be executed homogeneously, similarly across the country. You want a bank in north dakota have the same expense as a bank in new york a bank in florida, bankingif texas or bank in california you do not want variation depending upon which regional fed you are at or who is the president. President s play an Important Role in the following way. The most important thing to take away is the support role. My job is to support the supervision the vice chair of supervision has set out. So how do i do that question how do all regional fed president s do that . We staff the bank with people who can do the job. And do the job well. We ensure they are being the best in Public Service for doing what is required of them as supervisors we are interacting on a regular basis with the board because the board oversees these teams. When gaps are exposed we work collectively to fix them. Or if we see gaps we raise into the pfister supervision and the Supervisory Staff so we can get better. The second role original Bank President would play, that i play is banks into our system do not work in a vacuum, they work in the ecosystem of the company. One of things i take responsibility for is saying here is what is going on in the economy and heres what i see happening in the banks protective banks all w the time about their experiences in the economy for they could influence the economy and the economy can influence them. And we report that back. But some of the impact for Monetary Policy is also the input for michael bar and supervision. I will conclude because i want to make sure you will ask me more questions were the clarifications are needed but i want to conclude with this. The thing about what vice chair bar and chair powell said and i want to reemphasize is that supervision and the fed is a system effort. And while many of us do not own the decision that is solely with the board of governors, michael bar, the vice chair we all on the outcome is free when outcomes are not we want them to be we collectively work to make them better Going Forward. Quick so roughly how manyrk supervisors work for San Francisco . Our tally is roughly a little bit under 400. They work for you and that you are their boss but what they do is dictated or overseen by the board of governors . Yes, that is absolutelyt correct. As we said their badge to the sample cisco fed but when the badge they have to get in to the San Francisco fed they would be an employee of the San Francisco fed. They participate in all the aspects of being a San Francisco fed Employee Holding up to the values and things that we us found. But their work would be dictated and overseen by the board of governors. Then again i want to add because it is so important this is the future of the system thats built into get continuity. And because Congress Gave the board of governors the responsibility of supervising and regulatingng banks. Its often said the Federal Reserve board in washington it is delegated its responsibility. Quickset is correct. This was not a great example of excellent supervision. One of those with the management of Silicon Valley bank but michael bar supports and things at the supervisory approach at Silicon Valley were it was too deliberative, focus on the accumulation of supporting evidence, before he did anything. I am of curious what lessons have you learned from this recent experience and how what is changing as a result . One of theof reasons we do reviews i was very supportive of the review mark michael bar did there is another report coming out in the fall and the oig report. These reports and reviews are essential to us learning from people outside of the exact system where they think we could have lessons. The pfisters report has already identified several areas. Totem pole on one of them you mention specifically. That is the deliberative nature of things. Which is another piece of a language to say there is a slowness between when things are spotted and when the Enforcement Actions or other things are taken. That pipeline of speed the pipeline is not speedy at any juncture. One of the things we do exactly as a sample cisco fed is not make everything perfect before you raise your hand. They are raising their hand you see clearly in the report identifying issues. But at every juncture if you are identifying issues but theres another level of vesting then you sometimes can be slower than you need to be that is one of the things thats pulled out. That is not just a San Francisco thinker board of governors thing. That isf a way in which you can improve the supervisory process by just making it, we are spotting things, we are raising our hand you do not have to be absently sure because we are capable people we can raiseai ts enough by the system not me because again i do not play an active role in supervision. But raise issues and have deliberation and see. The bias has to be to raise issues as opposed to wait until you have every shred of evidence that is what being too deliberative have meant spray that is a lesson. The other lesson i got from this and it is something we can use. You say not have the strength that all there . I would say absolutely not we have a lot of strength in this area. We know from periods of a banking stressor. Its all hands onro deck moment like the pandemic theres not really banking stress but when he had the banks to intermediate we are really good at moving things speedily. Look at the agility with which the fed, the fdic backed by treasury active after Silicon Valley bank and Signature Bank failed. It was a weekend we have a new facility open. We have banks that were caught up in a spillovers getting the liquidity theye needed. That is a rapidity that is obvious for the question is how do we bring that same sense of casualness i would call this agility how do we bring that to your everyday work so we things as well and as studiously and carefully as we are you stupid and we can still move actually threw them so we do not end up with a finding that is too deliberative. I will conclude with a lesson and i want to use a specific example but the lessons can be broader than the specific example. I already mentioned were always fighting the last war if you think about the Financial Stability report you think about all the things we do after the financial crisis we are very we have lots of study going out with vulnerabilities and things. But we also have to really havent ie get what is going on around the corner. An example is a difference between uninsured and insured deposits. The stickiness factor that we believe we have a fun insured i think banks believe they had it but we as regulators and supervisors not just her and then across the globe that these were near neighbors. And they turned out not to be when people can move money quickly you have people who know each other you can have runs on institutions when when they are not insured when their past the limits those runs are easy to think about doing might money might not be safe im moving. We have to look around the corner and ask ourselves how can we see things that could be occurring more quickly . Klbut ultimately we will not knw everything we do not have a crystal ball thats why having a wellcapitalized Banking System is critical to having a healthy Banking System for goods would you change a thing and super ocean at the San Francisco fred fed question request working actively with michael bar its not just San Francisco this is one aspect of the fed i hope you will all take away. The way we work is as a system. The vice chair is working on how do we think about revising the supervisory framework at large how do we use all of us to do that . How do we Work Together so its not just San Francisco fed it is supervision in general. Because i ultimately yes it happened in San Francisco. But when a bank fails in a nether district the think i have been my mind is will we learn from that . Ultimately as a system iter can happen anywhere it happened in San Francisco. The lessons for me are very direct. I am owning them, im taking account of them and making sure my team, i tell my teams all the time our job is really simple. We learn from what happens, we take all the feedback very, very seriously. And we get better right away. And so one of the ways we do that is we raise our hands we are always raising our hand that maybe we race them higher always say what is the escalation pattern for that . I think that is what is desired of us very much does your staff feel their concerns were not heard loudly enough in washington . I dont think can say that. No. To be very clear i cannot say that. This is not a failure of a specific group really detailed this. This is a step back but lets look at the process lets find the process of deliberation. When you think about deliberation i want to be very clear, why are supervisors deliberative . Because they want to be careful. They want to be rights. Give private Sector Companies doing jobs they want to make sure they are not over and under correcting to do not want to ratchet down the Financial System out of fear. So you want to be careful. You can easily move yourself one way or another. So this is aic delicate balancey teams are going to work in teams across the system and do their best work. Quickly ask you one final question on this before return to the q audience. Each Federal Reserve bank has al nine member board of directors. Three of the directors are banks, bankers elected by the bankers of the district. Three are not bankers elected by the t bankers of the district ad three are appointed by the Federal Reserve board of governors from washington. Of the bankers on your board what was the ceo of Silicon Valley bank. That leads of course to speculation that somehow the supervisor went easy because the president was on the board of directors. So when people tell you and i know im not the first person. Practice not to but let me tell you why. When you lookel at it you wonde. We to why that is not having the board of directors are completely separate from one another. We started the conversation about banks we talked about how supervision is done in the United States. It is dumb to the board of governors paid my team in San Francisco it worked for the board of governors of the supervisory role. Those issues are never ever discussed at the board of directors. The rep managing other aspects of the bank and learning about the economy and getting the boats on the discount rate for Monetary Policy but we talk about supervisory issues at the board meeting. We will focus on the economy at large. Also the aspects of running the bank more generally. That is critical and so it allows us to have by statute bankers on the system. Another fact is bankers are recused on appointing Bank President s. Dont get to do any interviews. They are completely separated. I see all these checks and balances e in play has the right things to do given that you want to get information from the Banking System as part of collecting information about the economy. But you definitely do not want to blur thoset lines. So while i understand optics would be such to ask the question, i can absolutely say the protections in place to prevent those types of things are happening. I believe when new Bank President s are chosen it is the six members of the board of directors who are not bankers who have that authority ex bankers are not participators of that process. Next you have time for questions . Heres what i would recommend. Come over here and stand up so we can ceiling tell us who you are. Try not to give a speech. Or i will cut you off. With the National Academy of social influence but you mentioned your focus on data. Would you talk about the extent to which the fed has access to highquality ethnic data so you can look at impacts of Monetary Policy but sure as many of you in the audience out and you would certainly know there is a lot more Information Available now. A lot more attention paid to aggregating the data if you will fully understand whats happening on the geographic areas but ethnicities, racial groups by gender, by scale and we do have a lot of information about that. The limits to understand that elmore completely is the data collected. Which is why we have to go out of talk to our communities as well to augment that. You could not just look at the Current Population survey data come do the cuts sample sizes are not sufficient inc. Communities and get realtime information. I do happy have a Community Advisory council. Thats what we meet with groups regularly to ask how they are experiencing the economy. As well we have added San Francisco many other districts insights or perspective of the thats a recent edition of the last of years. We are actually going into communities, largely communities of color or other ethnicities we have not as much information bird i feel we are eons further along. It is also true you think you have insight into one group and have a pretty good handle on it. But it is a pretty diverse world out there the aggregates do not like the expense of anyone. We have to keep digging and find this types of information. There in the back . Start there. Hugs i sam representing a 2020 vision. You spoke about the guidance during the comet. Right now. I know they are moving away potentially from required costbenefit analyses for potential nonbanks there others you have designating banks that come under the increased need for the evaluation . Let me start as an example of a Federal Reserve Bank President does not have policy. I do not have any inputs in the policy process so i cannot really speak to what you are asking directly but i can say our process is in place to designate the different groups of banks, nonbanks et cetera. Part of the Public Comments and getting theic information is understanding how people feel about those distinctions. I cannot really comment on the specifics. Thank you, i was wondering how much have you seen or heard about since the crisis and is there any concern the rebound in bond yields back to the levels could lead to another wave of issues m . Let me start back in march. This will be again just reflecting my views. There is no come as far as i dont know precisely to calculate this for thinking about what happened to loan volumes, what is happened to lending standards and is that more or less than we would expect in the economy . Back in march i actually and i have said this publicly back then, i was thinking the credit tightening that could come from banking stresses not just a failure of Silicon Valley bank but signature, first republic, were onr banks that risk list from investors that could end up with maybe a 25 of the basis point rate hike. At this point it seems to be less than that so far. In fact if you plot aggregate lending you will see its not really different than what you would expect. Given the swelling of the economy. You will get lending standards. Quick senior loan officers. What we are an acronym free zone. Re luckily i have an interpreter at. [laughter] but its really important me. Sometimes i remember the acronym but forget what it is stand for its embedded into my dna now. If you look at all this indicators what you see as they were starting to share tightening and slowing growth before the bank stresses. That is consistent with what we expect. We are raising Interest Rates, youan want to banks to look at their Balance Sheet, understand the economy is going to slow and start positioning for Interest Rate risks and other things for this is exactly how we would want it to behave. So at this juncture, if you look at history it takes a while. Banking credit checks have a leg. We cannot declare there is no credit shockt from the banking stress i think we could still see it coming in the next number of months. I have an open mind about what that is going to be is another reason i was very supportive in june and waiting for more data to comeda out. The other thing i will say is we are seeing a lot of difference depending on which size the bank is the big banks even the pretty large regionals they seem to be just in line with the slowing of the economy but i still care for my Community Banks they are definitely tightening more out of concern about the larger banking stresses. But how much more is hard to say at this point. And then the final thing is that ultimately what i walk away with is the Banking Sector is sound and resilience. That is partly because of the swift and Decisive Action the fed, the board of governors the fdic the treasury took. And the backstop facility we have the bts v. The Bank Term Lending facility at. [laughter] it is really hard toit do it whn youre on stage if i was in my office. This should be like some regulation note acronyms without vowels. That would be helpful. [laughter] that would be really helpful. Youre doing it on theu week ad its hard to come up with the name. I think thats another part that is hard. [laughter] you have the swift action which combed the stress quite considerably. Now it is about understanding getting their Balance Sheets in order. They are responding to the fact and investors and consumers have a new line of sight and the Balance Sheets of their institution. And managing throughtu that. Our job and my job as a policymaker is to understand that can s still have an impactn the economy and be watchful for that as we did the very hard job of trying to get to the last part of the rate hike cycle. Is a part of the question is yields going up that meet the banks losses on theth portfolio. Quickset just recently happened. I guess i try to hold myself to not weeks worth of market data not a months worth of employment that data we will come back to that. The economics profession has a problem with diversity. It has a problem and has been seen as w hostile to women and o people of color. It has become very much physics like on the math that may turn off some people because it seems so unconnected to their lives. I was wondering if you could think for a minute the audience were first and second year in economics about why you think it has been rewarding for you and how you dealt with the fact you did not look like a most of the other people were getting a phds you got yours. Yes, absolutely. Heres the thing about economics, and order to do economics well you have to know a lot about Human Behavior. You have to be a student of psychology and a student of psychology and math. And economics, wainwright love it . Because every day i do something it matters for lots and lots of people. I do not take that responsibility lightly but i like that i get up every morning thinking what i study, what i say, how i think about the world matters for people i will never meet and i better do my job well. When i dont do as well as i like i better do it again and try harder next time. There are few professions for me that i found that havet that kd of rewarding thing you have to deeply understand Human Behavior you have to go on sunday afternoons and ask people what they are thinking. You have to combine that using models and history, yet be good history have to put that altogether and you have to combine the science of that with the arch of understanding the data it will not fit together today the same way they fit together just a year ago or two years ago. Figure out what that picture is soon get the best policy outcome is extremely rewarding. And when i, like many young people when i t said not to mend people around your look like me or think like me or want to do what i want to do so is this the right profession to me . One of my early early mentor said if not you, then who . The world need you to do this. So my response to each and every one of you who may get a little wiggly as i dont know its not that welcoming. Our job is to make it more welcoming. My job is to make it more welcoming for those who welcome mate that will pass on to you and you t will come. My bottom line for inviting you to be dedicated to profession like i have is it is extremely rewarding. And we need you. Look at the world we live in. It needs a lot of support from people who have a great empathy for humans. A great understanding ofum the data and d dedication to histor. You put all the sinks together every young person i meet i am an ambassador for economics. Everything i say is if you are on a dark night and it doesnt feel like you belong just call me. A lot of people have my text by the way luckily they text incident call me at. [laughter] please join me in thanking. [applause] thank you. If i can ask a favor for the people in the room to just stay in your seats and then you are free to go but the rest of your day again thank you all for coming. Ive been told i can step out and mingle is that okay . Its okay with me i thought you didnt want to . You are in charge for which i am a federal cap is a difference in what people want me too do what i want to do. [laughter] they want me in the box and i want to rope regrets all right mingle. [laughter] [background noises] [background noises] [background noises] here is a look at what is coming up tonight on cspan2. First a conversation on Voting Rights and election laws. By juice united for democracy and justice for them will hear discussion on human rights and Racial Equity in u. S. Foreign policy. Later Deputy Assistant secretary of state steve lange and others talk about the importance of the eu u. S. Data privacy framework for those programs and more tonight on cspan2. s watch live coverage of the National Governors Association Annual summer meeting from atlantic city. On thursday beginning at 10 00 a. M. Eastern live on cspan three governors will address issues around youth mental health, maternal and infant health and Public Health along with disaster response. First later dr. Jill biden will also speak and then on friday begin at 10 00 a. M. Eastern live on cspan2 governors address political polarization. Watch the National Governors Association Summer meeting live thursday on cspan three and friday on cspan2. Cspan now a free mobile video app. An online at cspan. Org. Cspan is your unfiltered view of government. Funded by these Television Companies and more including media calm. Ask at media, we believe whether you live here, or right here, are way out in the middle of anywhere you should have access to fast for libel internet. Thats all we are leading the way. Expedia, select cspan as a Public Service along with these other television providers. Giving you a front row seat to democracy. Next a conversational Voting Rights and election law hosted by juice united for democracy and justice. From university of california election professor and Los Angeles Times journalist pat morrison. The discussion is about an hour. Thank you so much thanks to everyone who makes this program possible